The Journal The Authority on Global Business in Japan

It’s often said that men are from Mars and women are from Venus. A similar concept might apply to working for a traditional Japanese company versus a US one. On the surface, they may appear mostly the same; but underlying differences color how they see the world—and business.

Tales of conditions and requirements at Japanese companies are legendary. New statistics on karoshi—death from overwork—all too often attract the wrong kinds of headlines in international media. Long work hours, a strict hierarchy based on seniority, a requirement that the customer be seen as God, and a sense that taking annual holidays equals disloyalty to the company and imposes burdens on colleagues define the external image of Japanese corporations.

While these attitudes may be present at some companies, there is also a sense that Japan’s employment norms have served business well through the generations and can still contribute to Japanese society in a broader way.

But in an ever more globalized world, Japanese companies are beginning to cherry pick ways in which foreign companies do business and manage their staff, and are incorporating the best approaches into their own operations.

Analysts and businesspeople in Japan suggest that this is creating a hybrid of the best of both business worlds.

“Traditionally—and even today—Japanese companies have focused on their employees in terms of training and providing them with an environment that is almost a family,” said Keith Henry, president of Tokyo-based business strategy and government policy consultancy Asia Strategy Inc.

“Companies here value employees who have a general skill set, so they can understand the different functions of the company,” he told The Journal.

And there are positives for both sides, he points out. As well as developing a clearer comprehension of the work of different departments, staff obtain a wider range of skills, build a more extensive network, and can narrow down the areas in which they are most interested, helping focus their future career. It benefits the company to have multi-skilled staff who can move more easily between divisions. This also enables employers to identify potential high-fliers while simultaneously making it harder for them to jump ship to a rival company, because they are so “embedded in the fabric of the firm,” Henry said.

In contrast, Western companies are more “flexible” in their handling of staff. They have far fewer qualms about letting staff go when they experience a downturn in their business, and then hiring again when the outlook is more positive. They generally employ professionals with specific skills and make the most of their capabilities by keeping them in those positions. More dramatically, the failure of a project can often mean termination—a term rarely heard at a Japanese company.

Yet Henry, who is originally from Pittsburgh, Penn., but has been in business in Japan for 34 years, says he has detected subtle changes in how companies do business and handle employees.

“Any business system is a reflection of the culture that underpins the society in which it is operating,” he said. “It may be hard for old habits to be changed, but there is a generational change taking place.”

Henry went on to explain: “Japanese companies are increasingly looking overseas for business opportunities and, consequently, are internationalizing their operations in Japan. Similarly, US companies that want to do business in Japan must look at their ways of doing business and ask themselves if it is appropriate for this market.”

So, both sides have a choice: Japanese companies can opt to stay the same or US companies can try to impose an existing model on their operations in Japan. Henry believes there are significant drawbacks to both approaches and that a third option—a hybrid system—is by far the most effective.

Debra Hazelton, general manager of the Global Talent Acquisition and Development Department of Mizuho Financial Group, Inc., agrees that bringing together the best of both worlds may be the most effective—but she cautions that change is difficult to achieve overnight.

“Traditional large Japanese companies effectively have an unspoken social contract that they will employ new university graduates every year, give them access to self-development opportunities, and ensure job security pretty much for the rest of their lives,” she said. “And that creates a completely different sort of relationship between employer and employee than when, as is usual outside Japan, people choose to join a company mid-career or are poached from a competitor.

“If you are a young person and are given a career—a wage, job security, healthcare, transport costs, and sometimes even subsidies on your accommodation and meals—then your relationship with and loyalty to the company, your company colleagues, and its customers is going to be vastly different from those of someone who sees themselves as having individual market value. And that attitude is then reflected in the business relationships that you build with customers and other companies.”

For a foreign company entering the Japanese market, the way in which staff are treated will have an impact on the success of the venture, but this is just one component that a new arrival must get right.

“Business in Japan is, like the culture, more relationship-driven and much more long-term in its outlook, while Western approaches are more short-term and results-based,” Hazelton explained. “This is also a reflection of the different cultures: Japanese culture is much more collectivist while the United States is very individualistic. The Japanese build the relationships on behalf of their company, not just themselves as individuals.

“But I also believe it is important that US companies do not come here and simply try to adopt the Japanese way of doing things, because that will not be authentic to them,” she said. “They need to understand the cultural and business environment, and then work out how they can most effectively work in this culture to build competitive advantage. It is more a case of adjusting their ways of operating at the same time as communicating closely, both internally and externally, so there is no misunderstanding.”

The biggest potential pitfall, she suggested, is “not knowing what you don’t know.”

And, analysts point out, there are Western companies that have paid a heavy price when they tried to simply transplant an operating and employment model that has worked elsewhere to Japan.

French supermarket operator Carrefour S.A. announced in 2000 plans for 12 stores in Japan, but only ever opened eight outlets and had sold them to Aeon Co., Ltd. within five years. In contrast, Costco Wholesale Japan, Ltd. is going from strength to strength in this market. More recently, Uber Technologies, Inc. has failed to get its ride-sharing service out of first gear in Japan and is currently reconfiguring its operations for this market. It remains to be seen if the alterations are sufficiently attractive to encourage Japanese people to swap their tried-and-trusted domestic taxi for an Uber vehicle.

“Companies that want to come into this market and make a success of it need to localize their product and their personnel, but also adapt to the local culture,” said Jonathan Kushner, vice president in charge of communications for McDonald’s Company (Japan), Ltd. and a vice president of the American Chamber of Commerce in Japan. “Many of them will develop a hybrid of how they operate elsewhere with the best ways of operating in this market, a blend of the global and the local.”

Since first arriving in Japan in 1971, McDonald’s has been an appropriate example of that hybridization, he said. The company offers a combination of global products together with those developed specifically for Japanese consumers. It does so under the standards of globally consistent best practices in all areas of operations, including work style.

“It is important to note, however, that these are constantly evolving,” Kushner said, pointing to the increased use of digital displays in stores and the introduction of an open office system with free seating at the company’s Tokyo headquarters.

“I see the hybrid model as the future for Japan,” he said. “And the more that Japanese firms have operations overseas, the more they, too, will understand and appreciate the best working styles that can be incorporated here.

“Ultimately, when it comes to operations and staff, a company that wants to come into Japan needs to do its research, it needs to listen very carefully to its local partners, and it has to be humble in this market,” Kushner added. “Diligence is rewarded in Japan, but if a company tries to come in and shake the system up, then that is not going to be a recipe for success.”

Julian Ryall is Japan correspondent for The Daily Telegraph
Business in Japan is, like the culture, more relationship-driven.