HR Directors Discuss Successful Change Management Approaches in Japan

The Chapman Consulting Group co-hosted another series of HR roundtable discussions for select Japan HR Heads over the last week. Japan HR leaders from high-profile multinationals in the Financial Services, Consumer Goods, Hospitality, Retail, Industrial, Technology, Media, and Life Sciences sectors met over a series of breakfasts, lunches and afternoon teas at the Japan headquarters of BP, General Electric, Kraft Foods, Morgan Stanley and Stryker. The topic of discussion was how HR leaders can successfully encourage change within international corporate environments in Japan.

In many ways corporate culture in Japan is no different than in other countries in the implementation and acceptance of change: in many circumstances it can be difficult; it can take a longer time than expected; and whether positive or negative, there are always elements within any organisation that can put up resistance.

In these small group sessions, Japan HR Directors discussed the circumstances that can give change projects a better chance of being successful. They then also discussed methods and techniques that can be used to help speed up the process of implementation and acceptance of change. And finally, the groups also debated whether any of these methods were specifically successful in the context of Japan, and whether the definition of ‘business in Japan’ is in itself going through a process of change.

1) Does Your Company Have the Right Environment in Japan to Help Accept Necessary Change?

a) The Credibility of the Messenger

If HR is to successfully spearhead change, it must start from a position of credibility in the first place. Therefore before an HR leader can successfully suggest changes, it’s important for them to have demonstrated to the business that the HR function has the best interests of the business at heart. In short, you need to get the ‘hygiene factors’ of operational HR management running well before you can push the envelope in suggesting more sweeping business changes.

In cases where HR has historically not had the full trust of the business, but where change is still necessary, participants agreed that it’s best to use someone else, particularly a business leader (or even the President) as the ‘mouthpiece’ for change within the organisation. Indeed even where HR already has a high standing in the organisation, it is still helpful if messages can be transmitted directly from the business, so that there’s no risk that change initiatives can be discounted by sceptics as a meaningless ‘HR initiative’. It can also be helped to further engage the business in the change itself, especially in companies where there’s a culture of the business relying too heavily on HR and just ‘sitting back’ and waiting for HR to do something.

The amplification effect of using the Japan President in managing change cannot be under-estimated, particularly in Japan where seniority and hierarchy are much more revered than in other cultures.

b) The Mandate for Change

In some situations there is a clear mandate for change, and employees have a much higher chance of anticipating and accepting change. For instance, while mergers and acquisitions can be destabilising times within a corporate environment, it does at least have the key advantage of setting a clear backdrop towards impending change.

In situations where there is no clear external force necessitating an immediate change, it’s often the job of HR management to carefully negotiate this change with the business leaders and employees. In these cases, the HR leaders at the meeting agreed that it’s often best to use a gradual approach to implementing change rather than any drastically speedy activities. In one example, an HR leader discussed how difficult it had been to ‘force’ a manager to use a new template to undertake a talent management assessments of their team. So instead of pressuring the business leader to comply with the new template, the HR leader just presented it as a good example of what can be used, and offered the manager the choice to use it or not. In the first year, quite a few managers didn’t follow the template, and it took the HR leader more time to decipher the results of the talent assessments in creating a talent plan for each individual employee. But when the next year came, each manager was happy to be asked to use the original template, since they had seen and experienced the beneficial results of the process the year before.

c) The Diversity of the Leadership Team

One of the greatest factors impacting a company’s ability to successfully implement change is the diversity of the management team in Japan. For too long, diversity has been defined in terms of ‘fairness’. For example in the Japan context, females have often been discriminated against in the past, so it has been important to promote fairness so that women can take their deserved place within the Japanese workforce. However diversity is not just about fairness, its true power comes in its ability to affect decision-making at the highest level within an organisation. For example in the context of change, it’s very unlikely that a Japan HR leader will successfully be able to roll out change initiatives if the whole Japan management team is too cohesive and homogenous. A group of 12 Japanese men in their 50s who come from the same social class (and who may have even attended the same university) are not likely to feel any external pressure to contemplate doing things differently to how they’ve done things over the previous 20 years.

However if the Japan business management team is comprised of a diverse mix of males and females, Japanese and non-Japanese, younger and older generations, there can almost be an ‘electric’ atmosphere in board meetings, where the efficacies of any particular decision can be debated from a number of different viewpoints. In some cases, it can make decision-making take longer than usual, which can sometimes be a disadvantage when making quick or emergency decisions. But in most cases, it creates a much more ‘open-minded’ business culture and allows the company to make decisions and changes that it might otherwise have resisted.

Many companies in attendance were recognising this fact, and had a variety of measure in place to promote further diversity in their organisations. In one industrial company, the Japan HR Director lobbied hard to hire someone from the FMCG industry to be chosen as the new head of their sales department. When this person was eventually brought in, they brought in such a new perspective to consumer-focused sales that the company has totally changed its sales approach over the course of the first year of this person’s tenure. And in another company, whic h had traditionally been highly male dominated, the Japan HR Director instigated a new policy whereby a decision-maker cannot close the process of recruiting a new hire until they can show that they’ve had at least one viable female candidate as part of the slate. Also, no new recruit can be hired without having been interviewed by one female manager during part of the interview process. In this way, long-ingrained behaviours and perceptions are slowly beginning to be challenged, and the HR Director is convinced that the ‘top-down’ initiatives towards diversity is also being mirrored by this ‘bottom-up’ policy that will alter the male/female constituency of the company in the years ahead.

2) What Can be Done to Speed Up or Improve the Chances of Successful Change Management in Japan?

a) Adopting a Cohesive Communication Strategy

One of the key aspects to change management was in the communication strategy. In some more traditional corporate settings in Japan, it’s often very common for an employee to focus on their job in a ‘silo’ mentality, so it can be very difficult to explain the reasons for change. Therefore it’s important to 1) clearly and 2) repeatedly and 3) consistently explain why change is happening. It should never be assumed that employees are equipped with the same knowledge and acceptance of the information that you are using upon which to base a decision.

In some companies, this communication was delivered in a very ad hoc approach, with a variety of methods used to get the messaging across, including through town hall meetings, one-on-one meetings, and other information sources such as emails, newsletters and intranets. This methodology can be successful, however the most successful examples given in the meetings were when companies followed a very strict communication guideline.

In one notable example, a company had a very advanced process in communicating change, where all stakeholders were given a very clear timeline indicating the timing, the format, the messenger and the content of every piece of communication. The timeline even included follow-ups and employee surveys that help to measure the acceptance of the change. This template has become so successful that it had in turn made the company more receptive to change, since all the stakeholders had got used to the process and were never in a position where they got a surprise.

In another example, the company decided to spend time teaching every employee exactly where the money came from within the company, so that each ‘cog in the wheel’ could have a firm appreciation of what makes the company run. This included teaching employees to read and understand the company’s financial statements, and to truly appreciate the effect on profits of over-spending on overheads. This helped the company explain why their compensation was not as high as in other companies, and in the next employee satisfaction survey, there were far fewer comments about salary levels.

And in a contrasting example, one HR director discussed a situation where communication had been done wrongly. A new CEO had been brought in to make the company more profitable, and immediately started communicating about the importance of profits. The company’s culture had previously been very much centred along the values of putting employees first, even above clients. Although the CEO was brought in to make changes, the company had a process of ‘organ rejection’, and the CEO was eventually removed. The new CEO made it very clear from the start that no matter what changes need to be done, the core values of the company will no longer be compromised. In any communication strategy, participants agreed that it was important not to use too much HR jargon. The communication should explain how the change will contribute to the business, and use clear business terminology to explain why the change was needed.

b) Using ‘Influencers’

Change management does not always need to be ‘top-down’. In fact it can be best to use the power of change advocates from within the company to help spread the word of change throughout the rest of the organisation. These influencers can act as ambassadors for change, and offer a powerful message that more formal communication methods lack. Two examples were given for this during the group meetings.

In one case, the HR Director was able to convince one senior manager to accept an unconventional new compensation strategy for their team. A sceptic at first, the manager soon realised that the strategy had improved the motivation of his team and had delivered impressive results in terms of both sales and employee engagement. The HR Director made sure that they brought this business manager into discussions with other team leaders, who soon readily accepted the new proposal. Without using the example of first business manager, it’s highly unlikely that the idea would have ever been experimented.

In another case, the Country HR Head invited one of the key influencers into a ‘steering committee’ behind a large change management exercise. This committee was comprised of employees from various parts of the business. While this key influencer was not very senior, they were the office ‘Otsubone-san’ — a character that you find in many Japanese corporate environments. The Otsubonesan is stereotypically a female senior administrative employee who has been in the company for many years and who holds great unofficial sway among the employees at large. Therefore by ensuring that the decision had the consent and buy-in from this individual from the start meant that this person helped spread great ‘PR’ for this change within the rest of the organisation once it was implemented.

c) Acting Fast and Decisively if Necessary

Despite the sensitivity around change, sometimes prolonged decision-making can cause unnecessary confusion and insecurity. Therefore even in Japan it can often be best to act quickly and decisively with change. It’s always better to say that you’re going to do something, and then to do it.

In one example of a successful speedy change, one company changed 70% of its management team in a very short space of time. They did this by repatriating some existing managers, and sidelining others into different roles. Because the company had the scale to do this, as well as the buy-in from senior leaders in Japan and overseas, it was deemed to be best to do things quickly rather than draw out the processes painfully over the course of a year. The new management team has just finished its first quarter and had already shown more positive results than the previous 10 quarters, so the HR Director has used these metrics to vindicate the necessity of change.

d) Creating Performance Management Metrics that Help Reward the ‘Correct’ Behaviours

Some companies have been able to tweak individual performance metrics so that bonuses are in part awarded to recognise the adoption of certain new behaviours. This can go some way to motivate and reward change, particularly in front line staff where performance bonuses constitute a large percentage of the employee’s overall package. But the Japan HR Directors in attendance were sceptical that it could be used for the majority of employees, where bonuses are often not a huge influencing factor in behavioural change, since most employees put more importance on base salary.

In one instance, a HR Director had actually set performance management objectives that affected the base salary of employees. This is still not very often used in Japan, but is certainly a good way of giving performance management techniques more ‘teeth’ in being successful.

3) Particular Issues Affecting Change in Japan: Fact or Fiction?

a) The Sempai/Kouhai System?

In many ways, corporate culture in Japan is by no means transparent. Relationships based on a linear understanding of a company’s organisational chart may bear little resemblance to the interplay of relationships based on the traditional ‘sempai/kouhai’ system in Japan. Put simply, this system means that younger employees (or employees with a shorter tenure within the company) are more likely to be diffident and deferential when dealing with their ‘superiors’. This tendency is by no means confined to Japan, but it is something that needs to be watched out for. There can often be a culture of saying yes in open communication, but then disagreeing and undermining the decision’ behind the scenes’. So it’s important to have a very cohesive communication and education process behind changes, particularly in companies where there has been a history of resistance to changes in the past.

b) Cultural Conservatism and Conformism?

Some argue that the Japanese are in nature more conservative and risk-averse than other nationalities in Asia, rather like Germany can be seen as the ‘conservative’ decision-maker in Europe. Historically, it is argued, the Japanese are proud with the way that the country has successfully reached the pinnacle of industrialisation and innovation over the last 65 years, and this can make them more sceptical to doing things in new ways, and can tend to make employees more ‘conformist’ in their way of thinking and behaving. However sometimes this perceived conformism can be used to help influence change rather than deter it. In one example, a company had been suffering because many of its remote workers were not accepting new changes and had started protesting by simply not turning up for work at certain times. The HR Director had not realised that this was happening for many weeks, because they had not been tracking employees very strictly. Rather than instigate disciplinary action with the handful of employees that they had evidence for, they instead decided to bring all 100 of these remote workers into one meeting, and explained that this situation was unacceptable. Once confronted with this message, 20 employees voluntarily gave in their resignations, and the remaining staff havegone on to be much more engaged and productive. It’s unlikely that this kind of strategy would work in many other cultures, but in Japan it can be useful to apply tactics that leverage group conservatism and conformism to your advantage.

c) The Language and Culture Barrier?

Particularly where change involves the implementation of a new regionalised process or system, one natural disadvantage with Japan is in the need to translate these into Japan. English language skills within international companies in Japan still remain much lower than in other countries across the region and indeed globally. To illustrate this point, In many examples, Japan is still the only country globally that employs interpreters to take part at meetings. However, the process of change in terms of data and systems integration is still the ‘easy part’ of change management in Japan. It’s not just a matter of language, its more a matter of behavioural and mindset change.

To take one example, arguably Japanese business executives tend to be more thorough and more ‘perfectionist’ than their counterparts in other cultures. Therefore, if you take an example of a new regionalised process that helps to boost productivity around the region, but at the expense of 100% accuracy, a manager in India is more likely to accept this change because of the business benefits. But a manager in Japan is more likely to focus on the negative side of losing the accuracy of a system that had been working perfectly well beforehand. Like with every stereotype, there are just as many exceptions to this rule as there are adherents, so it’s important not to assume that these objections and barriers will be part of change management processes in Japan.