The Journal The Authority on Global Business in Japan

It’s been a banner few years for diversity and inclusion (D&I) in Japan. Government-sponsored initiatives and preparations for the Tokyo 2020 Olympic and Paralympic Games have given rise to meaningful change across the country—particularly with women’s participation in the workforce. For the first time in history, Japan surpassed the United States in the percentage of women in the job market. But, to remain a top-ranked first-world economy, Japan must do more. And the hardest part lies ahead, in changing mindsets and corporate culture.

Data from the Organisation for Economic Cooperation and Development (OECD) shows a rise of four percentage points—to 64.7 percent—in Japan’s female employment rate since 2012. This far outpaces the OECD global average of 58.6 percent. Still, women’s workforce participation in Japan is 17 points below that of men, and there is a 27-percent gender pay gap—the third largest in the 34-member OECD.

Janelle Sasaki, cofounder of EY’s D&I advisory business, said that, while progress has been made, it’s important to note that Japan started its D&I journey some 15 years behind countries such as the United States—so this is just the beginning.

A third-generation Japanese­–American, Sasaki came to Tokyo six years ago to lead the Japan D&I program for Cisco Systems. “When I started in my role, it was like treading the Sahara Desert,” she told The ACCJ Journal. “Awareness was low, and very few companies had a dedicated D&I manager; it was thought of as kaigai (foreign).”

American Chamber of Commerce in Japan (ACCJ) Treasurer Nancy Ngou, co-founder and leader of EY’s D&I advisory practice with Sasaki, added: “In the United States, D&I leaders are often members of management and report directly to the CEO. In Japan, the D&I manager is usually a member of human resources, reporting to the chief HR officer.

This structural difference indicates a lot about a company’s commitment to D&I and leadership’s understanding that D&I is a business strategy, not an HR strategy.” Ngou spent 24 years working in the United States before moving to Tokyo in 2008.

“With Japan’s jobless rate at 2.5 percent, and an aging and shrinking workforce, the need to hire, retain, and advance women and other diverse individuals will become a higher-priority business imperative,” she said.


ABENOMICS = WOMENOMICS?

Since his election in 2012, Prime Minister Shinzo Abe has included the promotion of women as a priority agenda item. In 2015, at the World Assembly for Women (WAW) in Tokyo, Abe boldly declared that Abenomics is Womenomics. If the number of national women-oriented events is any indication, it’s clear that Womenomics is indeed a hot topic. In addition to WAW, there’s the ACCJ Women in Business Summit, the Global Summit of Women, the Women’s International Networking Conference—and the list goes on.

In terms of legislation, the 2016 Act on Promotion of Women’s Participation and Advancement in the Workplace was a pivotal step. Among other measures, the act requires businesses with more than 300 employees not only to report on the number of women in managerial roles, but also on its action plans to promote more women. This aspect is often overlooked by companies with short-term D&I goals that only serve to fulfill quotas on mixed workforces without taking into account the leadership pipeline for female talent.

The Tomodachi MetLife Women’s Leadership Program is a good example of how companies can support future leaders. Each year, the program provides leadership training and one-on-one mentoring to 50 Japanese female university students.

Though corresponding legislation is still pending, Abe’s push for workstyle reform has also spurred businesses to rethink working conditions such as excessive overtime and fixed office hours, policies that tend to exclude sectors of the workforce. “Business strategies promoting work-style reform have included the adoption of robotics, measuring and rewarding productivity—valuing output not input—and reducing a company’s real estate foot­print, which forces the adoption of flexible and virtual working,” Ngou said.

Cybozu, Inc. is a Tokyo-based software firm that champions its “100 types of workstyles for 100 people” initiative, which began more than a decade ago. Rather than conforming to one way, place, and time of working, the company adapts to an individual’s work style and needs, promising a flexible working environment to attract all types of talent. Since adopting the system, Cybozu has reduced its job turnover rate from 28 percent to just 4 percent.

The flexible work policy, together with Cybozu’s Career Mama Internship, attracted Naomi Ehara to the company two years ago. Ehara left her job at Sony upon marrying and was out of the workforce for 16 years before joining the frontline of Cybozu’s B2B PR efforts in 2016. She received Forbes Japan’s Career Change Award in December 2017.

Ehara told The ACCJ Journal about her impressions upon returning to work. “I was so surprised at how the number of working mothers has increased dramatically compared with when I was working for Sony. It’s become much more common for women to continue their careers even after marrying or having children. Another thing is how more flexible work styles, such as teleworking, are allowed than before. It was almost impossible to work from home when I left Sony 18 years ago.”

In a bid to encourage shorter working times, the Abe administration launched its Premium Friday campaign in 2017, urging people to leave the office at 3:00 p.m. on the last Friday of each month. Though the campaign has gotten off to a slow start, many department stores and retail outlets in Tokyo advertise special deals on Premium Fridays, and some travel agencies have built packages around the campaign.

THE BUSINESS CASE
At SATO Holdings, a global technology company, fathers in the heavy workload and male-dominated research and development unit are encouraged to leave work at 4:00 p.m. several times a month so they can participate more actively in childcare and household duties. Shigeki Egami, chief human resources officer at SATO, joined the company in 2015 and was tasked with making the workforce more global. Formerly the head of HR for Daimler Trucks Asia, he has seen firsthand the benefits of working on multinational teams, namely enhanced creativity and problem solving.

While at Daimler, Egami was part of a team that implemented global HR practices for managers on a local level in Japan. Position-based compensation schemes and performance evaluations were changed to reflect global benchmarks. If managers did not comply, they were either demoted or chose to resign. Gradually, he said, corporate culture was changed.

EY’s Sasaki took a similar approach in her former role at Cisco. “Inclusion competency” was part of a manager’s evaluation, with 10 percent of their role linked to D&I. “Having a metric was critical,” she said, as data and metrics are at the heart of real D&I change. When presenting the business case for D&I to her superior—the then-CEO at Cisco—she armed herself with benchmarking data, hard evidence, and case studies to support her proposals.

After winning over executives on the value of D&I, the secret is in the execution of new policies, Sasaki said. True commitment to D&I requires engaging employees at all levels of an organization—particularly middle management. When comparing her work in Japan with her experience in the United States, she admits having to spend more time and energy on the business case to convince Japanese leaders of the tangible benefits D&I can bring. However, she said, “Once the Japanese commit, they really execute well.”

Until now, companies in Japan have done a fair job focusing on diversity, but the inclusion element of D&I is still elusive. Sasaki pointed out that there is not a direct translation in Japanese, so while companies may try to hit certain numbers of diverse employees, how to make such individuals feel valued is more elusive.

“Our data shows that with an inclusive manager—and only 30 percent of employees feel they have this—you get higher participation, productivity, and innovation.” From that standpoint, she sees the market trending toward that structure.

RESOURCE GROUPS
Establishing networks within companies is one way to approach inclusion. AIG in Japan has introduced five employee resource groups (ERGs) as a grassroots strategy to encourage like-minded employees to share interests or concerns. Corporate Officer and Chief Human Resources Officer Mika Matsuo said: “In addition to the richness these connections bring to individuals’ working lives, these new friendships have been very good for our internal communication across functions and regions, which is a benefit we didn’t necessarily foresee at the outset.

“By being open to everyone and driving a positive climate of inclusion and employee engagement, ERGs are playing a key part in transforming our corporate culture, making it less hierarchical and more inclusive.

“We see diversity and inclusion as a business imperative—it’s no longer a ‘nice-to-have,’ but a ‘must-have.’ In our own direct experience, we know that we benefit from having all of society represented in our meetings when we make business decisions. We’re able to hear those different voices, and that helps us bring new ideas to market, provide better services, and reach customers in new and innovative ways.”

Japanese banking giant Mizuho Financial Group, Inc. has also implemented employee groups such as its Women’s Initiatives Network and LGBT+ & Ally Network. The company stands out for its exemplary pro-LGBT stance, with same-sex partners of employees receiving the same company benefits provided to spouses of married staff. The bank has an LGBT-focused internal help line as well as an external line that employees can call with any questions or concerns that they prefer to address to an independent advocate.

All Mizuho employees are required to attend two training sessions focused on LGBT awareness, and the company was the first Japanese bank to offer joint financing of housing loans to same-sex couples.

In 2016, Mizuho officially positioned D&I as a core tenet of its business strategy. “As advancements in technology continue to disrupt and transform the business environment, the traditional finance business model is losing its relevancy,” said Mayuka Inuzuka, general manager of Mizuho Financial’s Diversity & Inclusion Promotion Office. “Collaboration among people with diverse perspectives and experiences is a well-known catalyst for generating new value and innovation, so it is our belief that promoting diversity and inclusion at the organizational level is key.

“By continuing to emphasize the value of D&I, we are beginning to see how increased awareness encourages employees to be engaged in pursuing higher-level organiza­tion goals beyond their own roles and responsibilities.”

Ngou also points to other advances in LGBT awareness in corporate Japan. “We are seeing companies embrace LGBT inclusion at a surprising rate.” In June 2016, Japanese nonprofit Work with Pride announced an index to evaluate corporate efforts to support LGBT employees and groups. In its first year, 53 of the 82 companies that applied were awarded gold status.

JUST THE BEGINNING
Over the past five years, such government action as new legislation, as well as private-sector actions including linking D&I to compensation and the creation of ERGs, have signaled a promising road ahead for a more diverse workforce in Japan. But this is only the start, and the active involvement of leaders across the nation is essential to securing Japan’s position as a top global economy.

Reflecting on the changes taking place, ACCJ President Sachin N. Shah, who is chairman, president, and CEO at MetLife Insurance K.K., said: “I believe companies and leaders must be role models for the behaviors and actions we want to see and raise awareness of the need to do more, which is a key to further progress. The challenges to boosting D&I in Japan are structural, and more public–private partnering is required.”

Brandi Goode is a freelance writer and editor based in Manila, and previously Editor-in-Chief of The ACCJ Journal.
All Mizuho employees are required to attend two training sessions focused on LGBT awareness