The Journal The Authority on Global Business in Japan

Yu Sasamoto of Twitter speaks about the company’s HR approach.

Yu Sasamoto of Twitter speaks about the company’s HR approach.

The young are lucky. Twitter Inc., the micro-blogging platform, launched in 2006, enjoys high growth and has created the kind of environment that attracts the staff it wants.

Without the constraints of long-term employees who are difficult to dismiss, the company has been able to choose staff attracted to its brand. Those that come on board are generally comfortable with the company’s ideas.

“Most of us come to Twitter because of an interest in the product itself, which is an open communication platform,” Yu Sasamoto, the company’s manager for Japan, told The Journal.

That has allowed Twitter to foster an environment that shuns the top-down approach to management in favor of participation by all involved in the company’s creative decision-making process.

“I don’t think many [employees are] very surprised when they understand that the company and culture are aligned with its product,” Sasamoto says.

It should not be difficult to come by staff who want to participate in the day-to-day running of companies and managers who embrace that approach. But the government feels that is not happening. Abenomics, as the centrally planned economic revival policies of Japan are known, is focusing on internationalization as essential to reviving the economy.

“Steadfast policies are required to overcome the yoke of supply constraints due to the decreasing population,” the government states in a revision of the nation’s growth policies, released July 10. Translation: Fewer Japanese due to a declining population means more need for foreign cash, and Japan is not doing enough to attract it.

ISLAND MENTALITY
Japan has an obsession with internationalization, or kokusaika in the vernacular. But population worries aside, the sting of a declining electronics sector as Silicon Valley goes from strength to strength, the rise of companies such as South Korea’s Samsung that can compete on hardware, as well as being overtaken by China as the second-largest economy in the world, have all taken their toll.

Back during his first tenure as prime minister in 2007, Shinzo Abe said, “It has become obvious that many of the basic frameworks—from the constitution down to the administrative system, education, the economy, employment, state–local relationships, foreign policy, and national security—have become incapable of adapting to the great changes taking place in the 21st century.” All these ills, so the logic goes, can to an extent be remedied by internationalizing.

Defining what characterizes internationalization is difficult, but the Ministry of Economy, Trade and Industry attempted it in 2010. It sees the following as some of the key requirements for internationalization:

Human resources departments that can take measures to expand the company overseas, treat all company branches equally, and pay attention to all staff
The ability to recognize skills and deploy them appropriately
Tie-ups with business schools and other relevant educational institutions
Clear job descriptions, career paths, and feedback
Teams comprising staff from many countries
Diversity in management and no tolerance for harassment

There are plenty of headlines that suggest more can be done to achieve these goals. Julie Hamp, Toyota Corp.chief communications officer until recently, resigned after a package sent to her was found to contain a substance the United States considers a medicine and Japan a drug.

Takata Corporation, a Japanese company, has been slammed in the United States for its faulty airbags, which have caused deaths. It recently rejected the idea of setting up a compensation fund for victims in the United States. Toshiba Corporation, meanwhile, has made headlines after owning up to cooking its books.

Multiple problems require multiple answers. Rakuten Inc.’s CEO Hiroshi Mikitani is placing his bet on “Englishnization.” His idea is to make staff conduct all business in English, and incentivize those who master the language.

“Englishnization is, in my opinion, not just a Rakuten strategy, but a global strategy for Japan,” he wrote on LinkedIn. “Other Japanese companies are taking note.”

Honda Motor Co., Ltd. is among those. “It is vital to develop an environment that achieves close communication between associates in [Honda’s] six regions worldwide,” the company wrote in a June 29 news release. “Therefore, Honda is working to set English as the official language when we engage in inter-regional communication by 2020.”

A strategy such as Rakuten’s, however, perhaps misses a point that Twitter seems to realize. Speaking English alone is not enough. “In theory, Englishnization is fantastic,” one former Rakuten employee, who did not want to be identified, told The Journal.

“In practice, [there are] lots of challenges. Let me put it this way, the foreigners nicknamed this place gaijin (foreigner) graveyard.”

The employee felt Rakuten failed to listen to foreigners, instead focusing on maintaining wa, or the Japanese tradition of harmony, in the office. Strong and risky opinions were sacrificed in favor of more conservative ones, whether expressed in English or not.

Rochelle Koppe, managing principal at Japan Intercultural Consulting, a human resources consultancy, believes it is essential to make sure staff go beyond learning the language and get on board with Western customs.

“English is, of course, something very important,” she says. “It’s kind of the entry ticket to global business. But I think also necessary is cross-cultural understanding, a comfort level with interacting with people who are not Japanese.”

WAKE-UP CALL
The government is trying to make sure that, alongside reforms that affect all staff, executives are also made to change their ways. Codes for stewardship and corporate governance introduced over the past 18 months, aim to encourage investors to question the way companies are run and discourage docility in shareholders, as is often found in the West.

By giving shareholders more of a voice in the way a company is run, for example, the codes can make a difference to work culture—at least in theory. The reforms “are a good start, but it takes years to produce enduring behavioral change in organizations and among investors,” says Nicholas Benes, representative director of the Board Director Training Institute of Japan.

“It takes a lot of learning of new concepts, structures and procedures.” Benes sees adding foreigners to boards as one way to make sure the corporate culture in Japan improves. “Who you have on your boards sets the tone for a company. And the number of foreigners on Japanese boards is low.”

For Benes, a major issue is that the stewardship code is not being used effectively. “The most important thing to happen next is for the [Government Pension Investment Fund (GPIF), Japan, an administrative agency] to be a steward,” he says.

“Today, it just shuffles paper. If you look at similar public pension funds overseas—all are smaller—most of them have publicized detailed corporate governance practices that they encourage portfolio firms to adopt, or at least point to the country’s corporate governance code.

“The GPIF has nothing like that. When the GPIF hires fund managers, it has no governance filter for making sure they are active as stewards. They do not have a filter for making sure fund managers are following the code—and in fact, the GPIF has not ever publicly supported the code.”

Still, with or without leadership by the GPIF, Benes believes that the codes mean change is coming. The only questions are how much and how soon. “What you will see in the next few years is a divergence between those companies that get it and those that are doing the old stuff,” Benes says. “The ones that get it will serve as examples for those that don’t.”

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Richard Smart is a copy editor at the Nikkei who has been living and writing in Japan since 2002.

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