Manager Basics - Part Three: Difficult Terminations

Manager Basics - Part Three: Difficult Terminations

The worst situation for a manager, and indeed for a company, is an employee who has been fired but who won't leave. Although in theory Japanese companies can hire and fire as they need to, it is the gray zone of the labour law and the power of the Labour Standards Inspection Office (Roudoukijun-kyoku) which holds most companies back from doing so. As a number of foreign firms have found out to their dismay, an employee who is fired the wrong way can come back with a law suit and most likely win damages for unfair dismissal - as well as create a public embarrassment for the company. Furthermore, should the Labour Standards Inspection Office take a dislike to your company, I understand that they have similar powers to the tax office to enter your corporate premises and investigate your company and its labor practices - doling out guidance and restrictions as a result.

So what do you do if you have a persistently poor performer or someone who flagrantly breaks company rules, or, as more frequently occurs in foreign firms with a lot of local independence from head office, someone who has committed fraud or stolen from the company?

Your overt actions should be seen later as a reasonable response within the Japanese context. For example, if the person is suspected of legally prosecutable wrong-doing, prohibit the person from the office, but leave them on salary, while you call in the lawyers then the police to see if you have a case. Be sure to keep your actions low profile, and if it turns out you don't have a case, everyone can keep face while you figure out another strategy.

If the person is a misfit who likes challenging the company for the hell of it, your major dangers are employee conflict, such as a unionization, an employee uprising or management-worker warfare, or court charges of unfair dismissal. Therefore, consider bringing in a labor consultant who can assess how much influence the individual has with the rest of the employees. If it's insignificant, you can embark on a series of discipline actions which you can be reasonably sure the employee will rebel against, and when they take you to court, you can produce the documentation of the person's inability to meet requirements as evidence to mitigate the amount of damages.

However, if the person has significant influence, you have trouble on your hands. My guess is that you either have to bite the bullet and do a private but expensive deal with the person, or you transfer them to the remotest office your company has in Japan (or outside Japan for that matter). In the traditional way of doing things, Japanese employees may not refuse a reassignment - either to a remote location or to a subsidiary company, and many Japanese companies have used this strategy to good effect.

If you don't have another location to transfer them to, try moving the employee to a sales role - the justification being that the company no longer has the need for the previous type of job, but is still providing for the welfare of the person. Most people these days will resign if given such reassignment. Finally, you could simply send the person on extended leave. I had to do this once with a CEO of a subsidiary, and by the time he returned 2 months later, I had been able to remove/reassign his power base of managers and retake control of the company.

Another strategy that Japanese companies use is isolation - classically portrayed by the "mado giwazoku" (window gazing tribe). This involves taking usually older unproductive employees and putting them at an empty desk with menial work to do, and where they are left on the same salary for many months or years until they realize they should resign. This doesn't happen so much any more, but there were several cases back in the late 90's where companies took the psychological pressure to a whole new level by shutting their unwanted employees in a windowless room, with no one to speak to and no work to do, for 8 hours a day, until the employees started to get the message that they weren't wanted! In one case where the employees lasted almost a year, the impass was only broken when the employees took the company to court - and won.

I wouldn't recommend this strategy to Western firms, and feel that dealing with a difficult termination is purely a matter of money and public face. If you have to pay to get the person out, try to do it privately. My experience (luckily not frequent) has been that if you are taken to court, you can expect an award in about 4-6 months separation allowance for employees who have been with a company for between 1 to 5 years. Thereafter, you can add an extra month for each year of service. This amount can be halved if you can present evidence showing that the person had a case to answer for. This evidence should be of actual wrongdoing, or signs of a sincere effort by the company to help the employee improve.