Searching for the Perfect Manager

Back to Contents of Issue: September 2003

Foreign companies in Japan need advanced technology, IP assets and, especially, solid employees: bilingual, bicultural and driven to succeed. But does such a "perfect" combination exist?

by John Dodd

DESPITE A SHORT POST-IRAQ war market recovery that saw the Nikkei stock index peak at 9,990 (closing level) in July this year, the rally has since faltered, and Japanese consumers continue to keep their purses closed and either pay down their debts or set aside some savings for an uncertain future. Managers of Japanese and foreign companies all over Japan are now faced with the reality that there is going to be no easy return to reasonable profits -- and that improving the business is going to be through single-minded focus on the key internal issues of staff performance, technical assets and execution of the business, plus brand power or intellectual property rights.

Is Japan a basket case for foreign companies, or is there still hope? The answer is that for those companies that understand the changes taking place, the pickings are still good. After a substantial set back two years ago, IT companies are once again starting to see business growth -- particularly in the ERP, CRM, and SCM industries -- so long as they can save their Japanese clients' money. The typical savings resulting from a small- to medium-sized ERP implementation is about 10 to 20 percent due to the inherent costs of running a company in the Japanese style. Thus, if the client is doing $100 million or more in sales, then even a 10 percent cost saving is a huge benefit to the bottom line and worth the investment in the software.

Then there are the consulting companies, ranging from management consultants to IR firms. These companies sell on the basis of their brainpower -- providing clients that have always valued generalists with specialized capabilities that the modern world demands. From restructuring to spin-offs of unwanted subsidiaries, the impact of some intelligent strategic advice can cut a corporation's financial burden by hundreds of millions of dollars in just a single action. Witness the public listing of subsidiaries such as NEC Electronics, which, although troubled, yielded huge paper returns to their parent companies once they went public.

Certainly technical (not just technology) competence appears to be a huge point of leverage for foreign companies in Japan. Kouichi Takagi, CEO of Human Associates, comments, "With a few exceptions, companies have stopped worrying about market share and general expansion, and instead are focusing on lifting profits through improving quality and engaging in value-added businesses. In particular, we are seeing a lot of change and improvement among the technology and technically oriented industries, such as IT, finance, medical and medical devices."

But what about foreign consumer products companies and retailers that deal directly in the market and which have already cut operations to the bone? Even in this sector, we see that the best performers are those who focus on product/service innovation, company-wide technology, quality of service and strengthening sales. The secret is that they have the cash to invest in bringing operations and staff up to the next level.

Companies such as Walmart (which is acquiring a majority share of Seiyu) are bringing global Best Practices to Japan in a way never seen before. Walmart's weapon is its IT sophistication and the all-embracing nature of its enterprise systems. Then there are various consumer products companies -- in cars, bags, and household goods -- that have understood that the edge is to be found in finely honed marketing. They are still able to entice young Japanese women to spend their way into a dream of personal, materialistic satisfaction -- despite the desperate straits Mom and Dad might be in.

Admark CEO Scott Woodford specializes in marketing and advertising, and thus is in a good position to confirm that consumer products firms are gearing up for a continued big push. He says, "I can say that the consumer sector seems to be moving full steam ahead despite the economic rough waters Japan and many other markets have been experiencing for quite some time. The levels of available positions range from president down to assistant product managers and advertising account executives. In addition, we are expecting the medical and pharma/biotech companies to drive a financial recovery similar to what IT did back in the 90s."So the big contributors to any foreign company that is improving its business in Japan appear to be excellent resources and execution. This implies the need for excellent technology, IP assets and people -- in particular, managers who can transcend the normal and produce a functional team using world-class know-how and investment. It is no wonder, then, that the recruiting market, after a long period of consolidation, is starting to become very focused on sourcing and supplying skilled managers with strong track records.

A.C.E. International Managing Director Krishna Mahalingam confirms this trend. He says, "A mature recruiting environment in Japan is now creating demand for very niche but highly critical positions to be filled by people who not only have extensive experience and exposure but who also have an entrepreneurial approach to clients. In other words, every person who wishes to further his/her career in a difficult employment market will have to contribute to the bottom line."

Tim Ondo of JCI agrees. "Obviously, companies in this market need results from their managers. More than ever our clients are demanding hard-chargers with proven achievements. Companies are less inclined to take a risk and are more selective. Successful managers are generally flexible, tightly wound in a positive way, and are proven leaders. People with these attributes are always in demand, particularly in Japan, and even more so in the current market environment."

Todd Miller, MD of Ingenium, points out that the market is becoming competitive from a candidate point of view. As he says, "Managers need to produce results, be proactive and have strong communication skills. Setting objectives is one thing but implementing them and getting results is the real differentiator." CEOs of foreign companies all over Japan are indeed looking for that diferentiation and are beginning to replace poor or stolid performers with new staff who can make a difference. They're starting to realize that having a few quality people at the top of an organization provides tremendous leverage around the company and provides a path to better response to market challenges and thus to better profitability. In short, they're looking for the "Perfect Manager."

Why things are different for foreign companies
Clearly there is no such thing as a Perfect Manager. A person who does well in an autocratic environment would be considered less than perfect if they tried to use the same management and personal techniques in a thoroughly Westernized company. So, first, we need to set a base line on what the companies own values are, so that "perfect" can take on some meaning. Many CEOs and senior managers do not realize that they have a responsibility in building this base line of corporate values, so that employees can know what is expected of them and the HR team can understand what kind of people they are now supposed to be bringing into the company.

Although there are around 5,500 companies in Japan with substantial foreign capital invested in them, the actual number of companies functioning as foreign businesses, with bilingual needs and international operations, is probably around 2,500 to 3,000 companies. The needs of these companies are substantially more complex than those of a standard Japanese company, because of the continual pull on employees to provide solutions both to support the company in Japan but also to comply with Head Office directives and corporate governance requirements. This includes Finance, Accounting, HR, Legal, Technology and general senior management.

The best performers focus on
product/service innovation,
company-wide technology, quality
of service and strengthening sales

Foreign companies in Japan start with a number of negatives in the market, including the cost of having bilingual people, training in international corporate systems and processes, communications, accounting/legal compliance and mid-career recruiting. Typically, then, they have to compete with their Japanese counterparts with industry know-how, technology, global Best Practice processes and quality of execution. As a result, even though costs are high, foreign companies have found secure niches in Japan as providers of quality and capability. Thus, it is only natural that these companies are continuously looking for individuals who meet the same standards -- or base line values that we referred to earlier -- that the company has set for itself.

And what are those standards? Although generalizing, a US-based company will probably be looking for compliance with US laws, a merit-based culture, tolerance of minorities, accountability for one's individual performance, and regular reviews. Such companies also have swift reaction to the overall health of the business -- thus requiring continuous performance, not just effort.

A European company on the other hand may prefer more fidelity in following senior management decisions and demand high levels of performance but be more forgiving to individuals who make the effort but need more time to adjust. Yes, these are stereotypes, but as recruiters understand, you need to look at the company culture and ask yourself whether a particular candidate, no matter how good their resume, is going to fit.

What is a Perfect Manager?
It is taken for granted that an employee of a foreign company is likely to be intelligent -- given that they need to learn to function in a foreign language, develop international-grade skills, achieve certifications such as an MBA, et cetera. But at the same time it is a proven fact, and particularly in Japan, that the success of an individual is not just predicated on their intelligence (IQ) but also on their ability to interact with other people. The so-called Emotional Quotient (EQ) of a person's make-up becomes extremely important in a group-oriented society such as is present in Japan.

Panache's Cynthia Sato, gives a good definition of core EQ values that multinationals are looking for in their staff, particularly senior staff.

You might be forgiven for thinking that many of these values are the same as would be found in any Western company. And actually, that is the point. In a Japanese company, many of the attributes of the "Perfect Manager" are the exact opposite -- emphasizing submissive teamwork, group harmony and loyalty over individual characteristics. The problem is that since 95 percent of the workforce works for Japanese companies, there is indeed a lack of people willing to demonstrate the attributes that foreign companies are looking for -- hence the need to use professional recruiters to identify such people.

That Essential Something
But the search for the Perfect Manager goes deeper. Despite a person's demonstration of the basic EQ values, the "right" individuals also exhibit traits of success that are hard to pin down but are immediately identifiable. JCI's Markus Leach says it best: "If I could clone candidates, they would be highly bilingual and bicultural, have an MBA, have several years of work experience with proven results and a high level of positive nervous energy... a real spark about them. That's what most global companies are looking for and you can feel it within 30 seconds of meeting a candidate."

The success of an individual is not
just predicated on their intelligence
but also on their ability to
interact with other people

Fundamentally, these are people that have all the characteristics of an entrepreneur, and yet who thrive in the structured environment of a corporation. DaiJob's Jon Doherty, clarifies this concept. "Our customers are companies which are looking for people who can make a difference, who are able to focus on a goal and get results even though they may have to ignore some of the cultural values that they have had to learn to get where they are. Essentially they're people on a mission -- but they're smart enough to know when to call in the team and solicit opinions, and when they can drive things in a top-down manner. We call these people 'Business Builders' and there probably isn't a CEO out there right now who isn't looking for such a person to run his new sales expansion plan or technology roll-out project."

Do they have to be Japanese?
A major question that many foreign CEOs ask themselves when recruiting is whether the person they take on should be Japanese. After all, a Japanese person is more likely to have the personal relationships needed to gain advantage over the competition, and is more likely to understand the issues for his/her Japanese team. Most foreign companies answer this question by automatically reverting to a Japanese-only policy -- which is why with very few exceptions in the financial sector, most foreign companies are 98% staffed by Japanese.

But it doesn't necessarily have to be that way. As we have seen in the news ad nauseam, Nissan's turnaround was achieved by a foreigner -- CEO Carlos Ghosn. Many successful foreign-owned small-to-mid-sized businesses are also testimony that some foreigners are capable of getting it right.

Why is it that Nissan could do what smaller foreign operations in Japan are apparently unwilling to? Ingenium's Todd Miller makes the perception, "It very much depends on the industry and size of a company as to whether they are willing to hire foreign managers. Nissan is a global company, where the CEO had to focus on strategic initiatives. Smaller companies need management that really understand the Japanese local business culture, can be hands on, and are bilingual -- so it's only natural that they would consider Japanese candidates first. That said, we're noticing an increase in the hiring for foreigners who really are qualified."

Speed&Pride's Akio Sashima adds, "Companies, especially those seeking to break down the 'bad old ways," really just want people who are familiar with Japanese ways of doing business. They are willing to take on foreign senior staff to produce pressure, or 'gaiatsu' on the rest of the employees. Unfortunately, the number of companies feeling that they should make these changes is quite small."

The general feeling among Tokyo recruiters is that employers should judge candidates on their merits and perhaps not be so conservative in their search. After all, if they are looking to change the performance of the company, then there is already a realization that conservative is not necessarily best.

JCI's Markus Leach observes, "I think there is a misconception that the only way to succeed in Japan's conservative business environment is with local managers. A foreigner can often open doors faster than a Japanese manager, simply because he/she isn't constricted by Japanese sensibilities, and the Japanese clients themselves seem willing to accept that."

The problem is that Japan is conservative, and ironically the local CEO of a foreign company, unless he/she is possessed with an extraordinary sense of vision (clearly a trait that corporate recruiters need to look for more), will start to identify with. Panache's Cynthia Sato points out how Japanese employees may feel about having a foreign CEO or manager:

EWill a foreign CEO or manager have the ability to communicate properly with his/her employees? Will they be able to empathize and solve problems in a Japanese sense?
EWill the foreign CEO or manager understand the Japanese style of business and be able to avoid making fatal mistakes that might kill off a promising piece of business?
EForeign CEOs in particular conjure up images of drastic and rapid change, which is anathema to many Japanese employees, who value stability
EWill the company be able to cope with the lack of top-level contacts with politicians and other senior business leaders? After all, as industry is tightly bound to the bureaucracy, such relationships become essential as the company gets bigger.

These are all valid points, which of course can be addressed. But the fact remains that it is easier to hire someone who meets the job specifications than it is to change the habits and atmosphere of an entire company.

Is an online search relevant for managers?
There are two major ways to find the Perfect Manager. One is to advertise for the person, usually in print or online, and the other is to engage a professional recruiter to help find the person for you. It might seem obvious to the Western CEO or hiring manager that if you want a good candidate, you need professional assistance -- and thus a recruiter is a logical choice. But this is not necessarily so. In Japan in particular, the use of the Internet is a relatively new occurrence for most people and along with the general trusting nature of Japanese people, the quality of candidates who submit resumes over the Internet is surprising. Some might even say that the level of response borders on naivety by some of the candidates -- but whatever the reason, online recruiting in Japan really does work.

The key to successful recruiting online is a combination of exposure, brand name (of your company) and proper presentation of your vacancies. As Richard Bysouth, CEO of CareerCross, a leading bilingual Internet job site, points out, "I am often asked what makes the difference between an effective recruitment campaign and an unsuccessful one. Of course, there are many reasons, but one of the most important things to remember is that a well-written job description, posted in both English and Japanese, will generally receive the most appropriate replies. The best applicants, especially Japanese nationals, want to know as much about a position and the company as possible -- after all, if they are good at their job, they are generally well looked after and will only make a move if they feel it will be a good career move."

Is China relevant?
China is becoming ever more relevant to Japanese multinationals in particular, and for the first time such companies are looking at recruiting mid-career people instead of just their usual intake of college graduates. Speed&Pride's Sashima says, "Bicultural people are really sought after recently. As quite a few companies are starting to hire foreign staff, such as Chinese engineers who have studied at Japanese universities, they are also looking for Japanese staff who can understand overseas cultures and take on a liaison role with these foreign employees."

Many foreign multinationals in Japan are also deeply involved in the China market, and surprisingly, some of them run some part of their China operations out of Japan -- Motorola's cell phone business being one. The demand for China capabilities seems to mainly fall into the engineering and plant operations categories.

A number of firms agree there are
real opportunities in China and
are looking for ways to relate
them to clients in Japan

JCI's Ondo comments: "Some of our clients, particularly those with manufacturing or call center operations in China are interested in people with China experience. Recently we placed a trilingual Chinese engineer with a US software company whose regional headquarters are in Japan, but whose business is now more focused on China. The fellow had the right technical skill set and spoke all relevant languages, so they were very happy to get him. I think the trend will continue."

Human Associates' Takagi agrees, "We expect China to become a major market for us in the future. At this point, recruiting regulations and our own preparation for a China market entry are restricting what we do; however, we have a number of potential accounts and look forward to servicing them."

DaiJob's Doherty also thinks the China market holds some promise. "DaiJob recently set up a licensed operation in Hong Kong, DaiJob International, to handle China appointments. We have tied up with both HK and Taiwan companies to service foreign multinationals looking for trilingual candidates." The types of people most companies are looking for are English/Japanese-speaking Chinese nationals resident in Japan and who are interested in returning to China. Why are they looking for trilinguals? Usually to service Japanese clients based in China. Admark's Woodford wraps up the China discussion by commenting, "Two areas where China is a sure bet over the next 25 years are the consumer products and medical industries. Every high-level person I talk to says that China will become the preeminent market in Asia over the next 10 years, and the key growth market over that entire period."

A number of other recruiting firms agree that there are real opportunities in China and are looking for ways to relate those opportunities to existing clients in Japan. Ingenium's Brendan Morris, MD, comments, "We look forward to exploring the opportunity of opening an office in China in the near future. This would most likely be in Shanghai and we would expect to work with existing clients that operate in China."

The composite Perfect Manager
Just like a Mr. Potato Head doll, the perfect manager and their characteristics are in the eye of the beholder. But if we were to combine all the elements from the research for this story, we would say that the person most likely to win a senior management position would have the following attributes:

EBilingual (English-Japanese, if not trilingual -- English-Japanese-Chinese)
EHigh level of personal focus on getting the job done
EWell developed interpersonal skills, and an understanding of both Western and Japanese culture
EA commitment to get results and realizing that sometimes perfect results and perfect harmony in the workplace are not entirely compatible
EEducation overseas, and probably overseas work experience, so as to give the person an appreciation of how things get done outside Japan
EAnd last but not least, a proven track record @

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