Psychologist Thinks Japanese Companies Are Sick

[Mulboyne]

[floatl][/floatl]Yomiuri: Psychologist claims company climate poisons performance
Koichi Okamoto, social psychology professor at Toyo Eiwa University, says many Japanese companies suffer from an organizational climate that revolves around person-oriented thinking and encourages decision-making based on the people involved rather than the issues at stake. According to Okamoto, person-oriented climates are susceptible to breaking the law or violating rules, as well as covering up infractions. Notable examples include the restructuring of Snow Brand Milk Products Co., which was rocked by scandals over food-poisoning and false-labeling of beef, and the bankruptcy of Yamaichi Securities. He believes this climate is behind last year's spate of false food-labeling scandals. For example, decisions made by presidents or other high-ranking executives are regarded as right and absolute, while those made by younger employees are not, according to Okamoto's definition of this thinking. In these companies, bosses tend to evaluate subordinates based on subjective likes and dislikes, and employees often take it personally if somebody objects to their proposals. "Your decisions should be based on analyses of the pros and cons [of an issue], which is, in my word, an issue-oriented style of thinking," Okamoto said. However, Okamoto, who studied the correlation between person-oriented organizational climates and the 1999 criticality accident at JCO Co.'s Tokaimura nuclear fuel processing plant in Ibaraki Prefecture as member of the government's accident investigation committee, said person-oriented thinking is not peculiar to Japanese. "I found [person-oriented thinking dominant] in American companies located in Japan," Okamoto said. "If you seek differences, the differences may be that [employees and bosses in American firms] are expected to be replaced rather frequently." In Japan, person-oriented climates tend to be self-reinforcing within corporations because employees are expected to stay with one company for many years and executives are selected from among these employees, he added.

[bolt_krank]

I think it's a common thing in many companies.
Especially in mine. Whenever a comment is made like "we didn't just look at your results." - we know there's going to be a dash of favouritism to follow.
It's not an over the top thing, but it does place a little too much subjectiveness in decision making.

[Kuang_Grade]

In Japan, person-oriented climates tend to be self-reinforcing within corporations because employees are expected to stay with one company for many years and executives are selected from among these employees, he added.

I think that's a true statement in almost any organization be it in Japan or else where....it is just the case that are far more of those type of organizations in Japan than elsewhere.

[Mulboyne]

Okamoto's research may be more detailed than this short article can show but the summary doesn't seem particularly impressive. I think most people will know what he's on about but as an analytical tool it is difficult to know how to make it practical. How do you determine that a decision was made through a person-oriented process rather than an issue-oriented one?

If you screw up in a Japanese company, there are rarely any second chances. Promotions are often awarded to individuals who have been able to avoid problems so if the personnel department has given you a black mark for something along the way then you'll usually be sidelined no matter how well you may have done elsewhere. At one level, this creates an incentive system which discourages risk-taking - a common complaint aimed at Japanese companies - but it can also create a culture in which people may try to hide problems in the hope that they will go away or else in order to buy time to deal with them before anyone realizes there is a problem. That kind of behaviour is by no means unique to Japanese companies but it is exacerbated where someone fears losing their place on the corporate greasy pole more than they fear falling foul of the law.

I worked for a company where one of the board directors was nicknamed "jailbird". I discovered later that the company had broken the law in the US during the seventies and the guy was offered a board seat if he would take personal responsibility for the crime to distance the company and more senior executives from the investigation. He agreed and spent two years in prison. When he came out, he had a guaranteed pension. That's an example of someone placing his interests closer to the company than to the law.

[Mulboyne]

Yomiuri: Japanese firms need to study EU, U.S. cartel laws

The number of Japanese companies facing penalties for violating antimonopoly laws abroad has been increasing of late. And with the European Union and United States strengthening their investigations of possible cartels, Japanese companies need to take action to ensure they are not flouting foreign laws. Japan Airlines on April 17 announced it would pay the U.S. Justice Department a 110 million dollars fine (about 11 billion yen) after it admitted engaging in a cartel that fixed rates for international cargo shipments to and from the United States between 2000 and 2006. The European Commission also has been investigating a possible cartel involving air cargo shipments to and from European cities. In December, the European Commission sent JAL and other firms a letter notifying them that they were suspected of operating a cartel. Receiving the report, JAL was given an opportunity to deny the allegation. However, if the allegation is confirmed, the European Commission will likely impose on the firm a larger fine than that sought by the U.S. Justice Department.

The average fine that Japan's Fair Trade Commission imposed on companies involved in bid-rigging or cartels in 2007 was about 200 million yen. But the average fine by the European Commission was about 74 million euro (about 12.1 billion yen)--a level that indicates how seriously the EU takes cartels. For example, in September the European Commission handed down a 150.25 million euro fine on YKK Group over an international cartel to fix rates for zippers. The illegal practice was conducted by YKK's subsidiary in Germany. In Japan, only the subsidiary in question would be punished in such a case, but the European Commission regarded the parent company as liable, and calculated the penalty in accordance with YKK Group's total sales. In the United States, competitors and consumers who suffer losses due to a cartel can claim three times their damages in compensation. As a result, many cases lead to lawsuits.

Behind the spate of Japanese companies fined for engaging in cartels is their lack of understanding of antimonopoly laws in Europe and the United States, observers say. A survey of Japanese companies conducted by the Economy, Trade and Industry Ministry found that some firms were puzzled by the actions of competition regulators in Europe and the United States. Answering the survey, one company recalled how one of its officials was accused of obstructing an investigation after failing to answer just one out of 10 questions posed by regulators [which is exactly how you would be seen if you did that in Japan]. Observers also say that Japanese companies have not shown sufficient understanding of antimonopoly laws in Europe and the United States. In October, the European Commission asked companies for their opinions regarding a settlement system for cartels that it currently is considering introducing. The European Commission received views from companies of various countries, but none from Japanese firms.

Hiromitsu Miyakawa, a lawyer at the Tokyo office of Jones Day, a law firm well versed in antimonopoly policies in Europe and the United States, compared the overseas policies with Japanese ones. "In Japan, the impact of a cartel on the market is the key element in deciding penalties for firms involved. But in Europe and the United States, once a cartel is confirmed, the authorities can impose punitive sanctions or fines on companies involved," Miyakawa said. In those countries, even drinking with a competitor could be regarded as engaging in a cartel. European Commissioner for Competition Neelie Kroes says low fines mean companies can still profit from cartel arrangements, explaining why the European Commission deals with cartels so severely.

The ministry plans to compile a manual for Japanese companies in May to warn them against behavior that could be construed as suggestive of a cartel. The manual will include several case examples with advice such as, "Try not to have meetings with competitors," and "Make sure a lawyer is present at a meeting of officials from the same industry." However, Miyakawa believes all companies should take action without waiting for the manual. "Japanese firms should improve their compliance systems based on European and U.S. [antimonopoly] policies," he said.

[gkanai]

An older Japanese anti-trust case:

http://query.nytimes.com/gst/fullpage.html?res=9F0CEEDA1E3CF931A15756C0A965958260

[Mulboyne]

Trading Markets: METI Unveils Plans to help Japanese Firms Expand Overseas

The Ministry of Economy, Trade and Industry has announced plans to aid service-sector businesses in making inroads into overseas markets by assisting in debt collection and facilitating turnaround efforts...The service sector has been slow to tap markets abroad because of differences in language and business culture. These obstacles have made it difficult for Japanese firms to smoothly collect on accounts receivable or undergo necessary bankruptcy procedures. To assist companies in these areas, the ministry will launch a study on legal avenues in Asia for collecting debt and rehabilitating operations...Despite generating some 70 per cent of Japan's employment and gross domestic product, the service sector suffers from one the worst productivity levels among leading developed countries. As the working population shrinks amid the graying of society, the ministry hopes to increase productivity by helping firms tap foreign markets. But critics say that without legislative steps or substantial government spending, the program's impact will likely be limited...more...

[Mulboyne]