Wednesday, May 12, 2010

Why are Japanese white-collar workers inefficient?

"Why are Japanese companies so slow in decision-making?"
"I never know who is responsible for what in Japanese companies."

These are common complaints made by foreigners who conduct business with Japanese companies. Even Japanese people including me often feel frustrated in the same way.

Japanese companies can be very different from those in the West. A Japanese company does have a organizational chart that is very similar to one in a western company. However, the way they actually operate is very different. In a Japanese company, its formal hierarchical organizational chart is less relevant than its informal power structure. In Japan, power is much more spread toward the lower rank than in the West. More than often, a Japanese boss can be a mere symbol that integrates his or her section rather than an active leader who command his or her employees. You can recall the position that the Japanese emperor occupies in the constitution. Probably, this implies something more than only a coincidence.

Even if you are a businessperson in negotiation and have reached an agreement with a person who is supposed to have authority in a Japanese company, therefore, you can never feel relieved. His or her promise will not fulfilled unless his or her boss, coworkers and even subordinates in the company also agree with it. People have to go through a prolonged process of soliciting supports from other "interested parties" in the same company. This process is called "nemawashi" in Japanese, and one of the most important techniques you have to be proficient in to get work done in a Japanese company.

Cumbersome as it might look, the lengthy solicitation process or nemawashi has a positive aspect. Unlike an imperative working environment in the West, Japanese employees are encouraged to participate in decision making processes even if they are low-ranking. Japanese employees can have a high morale and feel that "we are supporting our own company". This mechanism seems to have worked very well until 1990 when Japanese economy enjoyed a rapid development.

However, the serious pitfall of this "all-participatory management" is that it is very obscure who has real authority and responsibility. When a company has to embrace a drastic change, it suddenly becomes paralyzed. Since nobody seems to take a responsibility, it is extremely hard for the company to make a risky but potentially profitable decision. Nobody takes initiative. Every single employee becomes quite conservative and sticks to status quo as much as possible, even if they are subconsciously aware that things won't last forever.

In a nutshell, this is where we Japanese are. These phenomena are quite pervasive and can be observed in every single aspect of Japanese society now. Probably, many people outside of Japan have already realized how ineffective Japanese politics are. This is only one example of the wide spread "indecisiveness syndrome" that inflicts Japanese society.

As a Japanese national, I long for the solution that addresses to this problem. However, I am also aware, with a little resignation, that it will take a long time before Japan gets rejuvenated by overcoming this issue because the problem runs deep in the very Japanese culture itself.


AndyM said...

Hello Eiji-san,

I saw your Japanese blog. I think that Japanese companies are now at the cross road. I heard the news about Japanese companies such as Rakuten that are going to make English as their official language. I think it is a natural and positive move. For global companies that happened be founded in Japan, it doesn’t make much sense to use a minor language such as Japanese as their official language. I hope that the change will trigger the much needed reforms to their inefficient status quo.
I suspect that Japanese executives also want to reduce the head counts of their non-globally competitive middle aged workers (so called “non working rich”) by using the move. To attract young and talented foreign workers they need to offer competitive salaries. The easy way to free up the money is to reduce a number of these expensive middle aged workers. Sun Tzu will be proud. ;-)
After all, there is no turning back from globalization. Whether Japanese people like it or not globalization continues. Some Japanese companies rightly recognized that they have no choice but to adapt to globalization of their businesses. The next ten years will be interesting. It is said that Japan will have financial crisis in 5 to 10 years due to the ballooning public debt. The crisis will give Japan a rare opportunity to restructure its economy. Otherwise it will take decades to have any significant change there.

Andy M.

Anonymous said...


Absolutely fascinating to read your posts. Because they are exactly the thoughts that me and my colleagues are sharing about Japan.

I am an international student in my fifth year in Japan and attending one of the most prestigious universities (or so called) in Japan. Me and my other fellow international students discuss this issue of Japan very regularly. We all love Japan and want it to be in the forefront. But unfortunately, because of stubbornness of the Japanese society (especially the older generation who are the CEOs and presidents of big companies) Japan is fastly becoming irrelevent in the tech world. Which is sad, but I don't see Japan able to revert it, or reclaim their throne.

One example I can give you is Softbank. Japanese people have a bad taste about Softbank. Professors in my university say they would never buy a Softbank mobile. They stick to Docomo. They think Softbank is not Japanese-ish. In my opinion, Softbank, or Masaoyoshi Son is exactly the kind of companies and CEOs Japan needs if it is to have any hope of coming out of this self-dug hole.

But it wont happen. Not just the Japanese people, but also the Japanese govt. is doing wha they can to stop people like Masayoshi from coming up. Japan deserves to go down for their attitude. For their unwillingness to change.

I loved Japan so much. I wanted to find a job here and live here. Not anymore. It's risky to be here. Japan would collapse. Not soon. But eventually if they keep this attitude and let South Korea and China and Taiwan walk all over them.

Thank you for doing this. It's nice to see some people really recognize this problem and voice about it. But on how many ears does this voice land on? Probably not many. Because many people simply refuse to accept there's a problem or they simply don't have time to think about it.

Sussan Nikoomanesh said...

Hi Mr. Eiji we would like to deeply share the condolence from the bottom of our heart to You, your family and especially to family of victims caused by that natural disaster. We strongly believe Japan will overcome and recover from this tragedy very soon.

Please accept, our deep sincere condolence.

Sincerely yours
Sussan & Nikoomanesh Family