The Journal The Authority on Global Business in Japan

There is a great video by leadership consultant Simon Sinek floating around, showing how companies say employees are important, but don’t really act like it. He lines up the typical CEO hit list of growth, shareholder value, customers, and—in fourth place—employees. He notes that even if you elevate customers to number one, employees still come in second. But shouldn’t employees come first before all else? Sinek says yes—and so does one of the greatest business leaders, Richard Branson. It makes sense. We want motivated, enthusiastic staff engaging with our customers and going the extra mile.

In many ways, Japan has long had a different order for these key components of Anglo-Saxon corporate philosophy. Workers first, then customers, and shareholders last. Can we learn anything from Japan’s corporate traditions to help us put staff first? This system worked fine in an environment of lifetime employment, with low growth protected by interlocking shareholdings and price fixing. The foreign ownership of Japanese company shares and the expansion of so many businesses outside Japan has changed things and created more pressure to show revenue returns.

We can’t rely on importing the Japanese nenko joretsu system of steady escalator career advancement, based on seniority and age. Many Japanese companies still use this system, but today talent is in short supply. In a global economy awash with disruptive technologies, waiting for the best and brightest to become older in order to be given their leadership shot won’t work.

On-the-job training—or OJT—is often still the focus of these old-style companies, who rely on technical training alone to develop their talent base. That is a slow burn into oblivion when your competitors are laser-focused on world-class training to improve their people’s performance. Japan also fears the Galápagos effect, in this case being leapfrogged by technology and finding that the old system can’t be relied on to the same extent.

In the past, with a worker surplus, there was no impetus for a company to work hard to hold on to people. The Japanese aversion to risk also kept workers in jobs they didn’t really enjoy, because they were scared of having no job and of having a tough time finding a new one. Mid-career entry rarely occurred in the bigger firms. After the Lehman Shock, Japanese companies moved to creating a lower-risk work environment by employing more and more people part-time. The thinking was, if the economy tanks again, it will be easier to fire these part-timers than regular employees. This was seen as a positive—a stable buffer against future unknowns.

The economics of this approach has led to a decline in consumer spending, the inability of part-time working men to find wives and start families, and difficulty moving into better-paying jobs. The Abe government is stepping in to force companies to change, to remove the labor liquidity attraction of using part-time workers in preference to full-time staff.

Fewer young people coming into the workforce will mean labor shortages. Women re-entering the workforce and older workers continuing on will be preferred to the perceived social disruption of having immigrants come in substantial numbers. The current mass migration to European countries—especially France and Germany—will be seen as a negative example by most Japanese and will make the whole immigration argument harder to promote.

Retaining staff will become harder. Recruiters will have a field day searching for talent whom they can lift out of their current company and place elsewhere. Automatically, this worker shortage will swing the pendulum from shareholder value and customers to workers. However, we are not going back to the cushy old days of “who cares about shareholder value and corporate performance.” Still, people will again be at the forefront of company business plans. Do we have the right middle-management skill set to be able to retain our people? This time around, the workers can more easily vote with their feet and leave. Are we giving staff the right training to actually lift their productivity? Are we ready for the revolution?

Engaged employees are self-motivated. The self-motivated are inspired. Inspired staff grow your business. But are you inspiring them? We teach leaders and organizations how to inspire their people. Want to know how we do that? Contact me at

Shouldn’t employees come first before all else?