Japanese companies embrace diversity

The International Herald Tribune
Japanese companies embrace diversity
By Miki Tanikawa
Friday, June 1, 2007

TOKYO: In the middle of 2006, Nissan Motor's auto development division summoned a team of 10 women to develop a small car that would appeal to female buyers. The team, made up of designers, product planners and advertising and marketing staff and ranging in age from their 20s to their 30s, came up with the Pino, a minicar to be produced in pastel colors and with a wide array of options, like cushions and special ashtrays, that it felt young women would want.

When the Pino was introduced in January, Nissan was hoping to sell 2,600 vehicles during the first month and beyond. It got 5,500 orders during the first month and has sold steadily above target ever since.

"You are able to make good products by letting women participate in all aspects of the business process," said Yukiko Yoshimaru, general manager of the diversity development office at Nissan. "That way, we can meet the customers' needs satisfactorily."

That Nissan even has a diversity officer may sound startling to those who are used to thinking of Japanese companies as dominated by men, and Japanese men at that. But the automaker has made visible progress on the diversity front under a management team that includes Carlos Ghosn and other French executives from Renault. Aside from bringing in foreign managers from overseas, it has increased the proportion of women in managerial ranks to 4 percent from 1.6 percent three years ago.

And Nissan is not alone in making a visible commitment to diversity. Big employers from manufacturers like Matsushita Electric and Toshiba to large lenders like Mizuho Corporate Bank are setting up departments, holding seminars for management-track women, and soliciting foreigners as regular, full-time employees to work at headquarters in Japan.

Of the 750 new employees Matsushita Electric hired last year in Japan, 30 were non-Japanese; of the 100 non-engineering positions, close to half were filled by women, according to the company. Nissan also boasted a 50-50 ratio of women to men for non-engineer new recruits last year.

"To meet the diverse needs in the global market, you need to have diversity in the composition of your employees," Yoshimaru said. "A homogeneous group can only come up with something homogeneous."

This is radical talk in corporate Japan, which previously took pride in its homogeneity, especially during the go-go years of the 1970s and 1980s, saying it make them efficient. Today the new buzzword is "daiba-shitii," or diversity.

As a general manager of diversity development office at Tokyo Electric Power, the largest electricity producer in Japan, Hiroko Amemiya's job consists of publishing in-house magazines and leaflets meant to raises awareness of the issue and holding seminars for employees and managers to discuss habits and customs in the workplace that might stand in the way of creating a diverse work force.

"There are certain ingrained habits and thinking that are difficult to shake off immediately," she said. "People say, for example, that women aren't good at driving. But some women are good at driving, and to conclude that women can't drive well leads to a bias, and bias leads to discrimination."

Japanese business, like Japanese society and many other countries, still has a long way to go to be truly gender- or ethnicity-blind. According to the most recent survey by the Ministry of Welfare and Labor, in 2003 women held just 3.3 percent of managerial jobs at companies with more than 5,000 employees - among the lowest in mature economies.

And only about 1.6 percent of the population was foreign-born at the end of 2006, according to the Justice Ministry - the highest it has ever been. Xenophobia still runs deep in certain segments of society, and "No Foreigners" signs are found in some commercial outlets in the countryside.

But things are changing - largely, say corporate managers and analysts, because they have to. Demographics and globalization demand it.

In Japan, one of the fastest aging societies in the world, labor is increasingly becoming a scare resource. A big lump of workers in their late 50s, the so-called baby boomers, are retiring, while the pool of younger workers is shrinking, driving big companies to scramble for workers to plug the gap.

"In certain businesses such as the info tech industry, companies are structurally and chronically short of workers," said Yukihiro Yamao, president of AXIS Consulting in Tokyo, an employment concern that has helped big Japanese employers like Fujitsu, Hitachi and their group companies find workers from overseas.

He has placed about 30 Chinese white-collar workers with Japanese companies in the past year and sees assignments from clients zooming to several hundred in a few years.

"These days, a third of new Japanese employees quit their big employers in less than three years," he said. "At a time when Japanese workers are leaving, you don't have a choice to say, 'I want only Japanese workers.' "

Second, big Japanese companies are turning to global markets for growth as their home turf grows more slowly.

"The weight of our business is shifting overseas," said Kimie Iwata, a board member and corporate executive for personnel at Shiseido, the cosmetics company. "To that end, we need to train and ready our employees for overseas responsibilities."

Today, 32 percent of Shiseido's business comes from its overseas units. To enhance its global business operations, Shiseido named Carsten Fischer, a German executive who worked as vice president for Asia-Pacific for Procter & Gamble.

"The more a company becomes global in its operation, the more global should the management become," Fischer said. "Shiseido is a company that has already done much in the field of diversity and we are determined to stay ahead. Obviously, the lack of international managers and the lack of English speakers are a challenge. The existing conservatism in business processes, rituals and at times unconditional following of rules is difficult to accept."

Iwata said that even the company's domestic business required diverse and flexible talents in ways that it did not before. "In the past, when the market was simply growing, all you had to do was to produce and sell given items in a most effective way," she said. "The market is shrinking now, and to survive you have to deliver new value. Where does new value come from? It does not exist inside the company. You get that from outside."

Despite all the movement to hire and promote more women and foreigners, some experts contend that the diversity movement is superficial at best and borders dangerously on a fad.

"Japanese people have this 'we are in the same boat' mentality," said Kimiko Horii, president of Gewel, a nonprofit organization that promotes the status of, and provides resources for, executive women. "If some companies do it, then others feel they must do it, too."

Many of the diversity officers, she said, are not sufficiently empowered and do not report directly to the chief executive. "They often aren't given enough resources and the budget to work with," Horii said. "What do you expect them to accomplish? In any case, the CEO should demonstrate a vigorous support for the cause."

Amemiya, the Tokyo Electric Power diversity executive, acknowledged that the chief executive's commitment was crucial to the success of any diversity program. She added that the issue of top-level support was a common topic of conversation among diversity officers, who meet regularly with each other. "But commitment by the top management is something you elicit as well," she said. "It's also a matter of how you communicate to other employees."

One common challenge is to remove small barriers. Executives in charge of diversity and human resources said flexible policy on working hours and job transfers was crucial. For instance, women with children need to leave the office in the afternoon to pick up their children at school, and cosmetics salespeople cannot, Iwata said - even though Shiseido has a program that lets married people take time off for children.

"That's around the time when the business picks up at the retail stores," Iwata said. "So, practically, they cannot leave work around that time."

Iwata said her company recently decided to hire 500 part-time staff around Japan to relieve their saleswomen with young children of their duties during the early evening hours.

Obstacles like these are blamed for causing many career-track women, who joined Japanese companies after passage of the Equal Employment Act of 1987, to quit after several years of working.

"There is a whole generation of women employees who joined after 1987 that are missing who would be eligible for management jobs by now," Amemiya said.

Osamu Yunoki, executive officer in charge of human resources at Uniqlo, the clothing retail chain, said his company recently imposed a rule whereby employees in the head office are not allowed to work beyond 7 in the evening. "Lights go off at 7," he said.

The burden of working overtime had been a turnoff especially for women and non-Japanese staff, Yunoki said. But after the no-overtime policy was enforced, "the number of meetings decreased, the amount of e-mails people sent went down, and the overall efficiency increased," he said. Yunoki added that when Uniqlo introduced policies that were friendly to women and foreigners, it helped create a good working environment for all. "Now, men appreciate it also," he said.

Because Uniqlo has 730 stores in Japan and 39 overseas, finding diverse talent is a serious strategic concern, Yunoki said.

The need to have women involved is acute in designing products, planning marketing and advertising strategies and conducting sales in retail stores. - 70 percent of Uniqlo's customers are women, Yunoki said. Many of them travel overseas and are well attuned to the trends in Europe and the United States, and clothing designs must reflect the tastes overseas.

At Uniqlo, product planning for all goods is initiated in its office in New York, which is heavily staffed by American designers and is executed in conjunction with their counterparts in Milan and Tokyo.

"To plan, design and execute the business, you have to have a very diverse team, or else you cannot win," Yunoki said. "We need them to compete effectively and that's what business is all about."