The HR Agenda Magazine - April-June 2014 Issue (English Version) by The HR Agenda Magazine

Volume 3 Issue 4 ISSN 2186-277X

April-June 2014 Print: ¥1,620 Digital: Free!

THE

AGENDA ®

Japan’s first bilingual

HR magazine published by The Japan HR Society (JHRS)

eward and emuneration

Surviving Globalization in Japanese HR 3 Does Pay for Performance Pay off Today and can Cold Hard Cash Warm the Work Spirit? 11 CEOs Pick Great HR Directors and Ignore Them – Sometimes... 28 Reward & Remuneration 30

a leader

The quality of is reflected in the standards they set for themselves. Ray Kroc

HR Japan Summit 9 – 10 July 2014 | Hotel Chinzanso Tokyo | Tokyo | Japan In an increasingly complex and competitive business environment, the volatile global economy and recent natural disasters in Japan have added more to the myriad of challenges faced by modern Japanese HR professionals. In the historical time we live, only the companies that persist to invest in their people are the ones that are able to make the transition from crisis to recovery. Sourcing and developing talent, providing employees with long-term career prospects and building resilient leaders are all essential for navigating effectively through turbulent times.

awaken genius pioneer ideas – illuminating exchanges Developed via a profound dialogue with key market players and our extensive proprietary research, the HR Japan Summit programme offers indispensable insights.

WORLD CLASS BRIEFINGS BY THE LIKES OF Terumo Corporation, Former Director and Honorary Chairman, Takashi Wachi 8bitNews, Representative, Journarist, NHK, Former anchor Jun Hori Hosei Graduate School, Associate Professor, Nobutaka Ishiyama DHL Japan, Inc., Organization Development Manager, Jin Ushijima and more…

For more information about summit please contact us at

2Summits-apac@marcusevansuk.com

CONTENTS APR-JUN 2014

PUBLISHER’S MESSAGE

Surviving Globalization in Japanese HR

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bal Leaders Glo hip 14 C 20

Shinya Yamamoto JHRS COMMUNITY NEWS

JHRS Academy Accredited by SHRM

The HR Agenda

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Expanding Possibilities – A Women’s Leadership Event

Elizabeth Handover, Mireille Watanabe Handover & Kristin Engvig F E AT U R E S TO RY

Does Pay for Performance Pay off Today and can Cold Hard Cash Warm the Work Spirit?

Hilda Rosca Nartea KNOWLEDGE@WHARTON

Why It Pays to Link Executive Compensation with Corporate Debt

ASK HR

Will a Western-based Performance Management System Work In Japan?

Andrew Manterfield & Yoshiharu Matsui HR LEGAL CLINIC

Is the Representative Director Covered by Employment Insurance?

Atty. Jiro Oyama H R R I S I N G S TA R

Tomonori Nagase on Becoming a Stronger Management Partner

The HR Agenda COUNTRY FOCUS

How to Succeed at Business – in China

Hirota Kotatsu H R TO O L B OX

CEOs Pick Great HR Directors and Ignore Them – Sometimes...

Roy K. McCall EDITORIAL

Reward & Remuneration

Annette Karseras ch

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To facilitate the exchange of up-to-date and relevant knowledge, information and resources affecting and influencing human resources (HR) professionals in Japan, and to become a bridge between Japanese and non-Japanese HR management1systems so that we can facilitate the exchange of information and HR best practices, standards, and HR body of knowledge.

The HR Agenda: A Ground-Breaking Platform As Japan’s first and only bilingual HR magazine, The HR Agenda offers an incredibly unique platform. By sourcing material written in both English and Japanese, funding translation and encouraging bilingual submissions from contributors, we offer a genuinely two-way exchange. For a century and a half Japan has been translating Western knowledge into Japanese. We create a forum where Japanese voices can also be heard in international circles. Our aim is to understand both sides of the coin; all facets of an issue. We want to encourage collegiality through open and sincere dialogue amongst our readers in Japan and overseas, and amongst HR professionals, researchers, and key opinion leaders throughout the world.

The HR Agenda magazine is Japan’s first and only bilingual human resources (HR) magazine, published quarterly by The Japan HR Society (JHRS) and produced by the HR Learning & Publishing Division of HR Central K.K. (The JHRS Secretariat). Publisher The Japan HR Society (JHRS) HRAgenda@jhrs.org www.jhrs.org www.jhrs.org/hr_agenda Managing Editor Jun Kabigting, MBA/MS/HRMP managing_editor@jhrs.org Editor in Chief Annette Karseras editor-in-chief@jhrs.org Editing Team

Hilda Rosca Nartea, Hiroshi Okamoto Stephenie Overman, Masanobu Sawada

Translators Syra Morii, Hiroshi Okamoto, Norio Okawa, Masanobu Sawada Design and Boon Prints Production Design Director

Annette Karseras

Ad Sales, Marketing, HR Central K.K. and Distribution advertising@jhrs.org Editorial Assistants Marc Cillo, Emiko Suyehiro and Researchers Address

The HR Agenda c/o HR Central K.K. (The JHRS Secretariat) Shinagawa Intercity FRONT Bldg. 3F, Desk@ MB28 2-14-14, Kounan, Minato-ku, Tokyo 108-0075 JAPAN

Telephone/Fax

+81 (0)50-3394-0198 +81 (0)3-6745-9292

Disclaimer The opinions expressed by contributors in this magazine are their own and do not necessarily reflect the position or views of The Japan HR Society (JHRS), its general membership, its Secretariat, advertisers, friends, or supporters. We are not liable, in whole or in part, for the accuracy or truthfulness of any data, statistics, or information found in any of the published articles or advertisements herein. Further, any advice, opinions, or views found herein should be considered for informational purposes only and are not meant to substitute for competent legal and/or financial advice from qualified legal and financial professionals.

Magazine Subscription Looking for PDFs of past issues? Magazine subscribers and JHRS members get access to PDF downloads of all previous issues and iOS/Android app. In response to readers' feedback, PDF versions of the magazine effective from Vol. 4, Issue 1 are no longer available for public download. Want to read current issues for FREE? To view current articles for a 3-month period, visit the JHRS website. Subscribe today! Support the JHRS mission. See below for details on how to subscribe to The HR Agenda. Subscribe online at http://www.jhrs.org/hr_agenda/subscribe Japan Domestic Subscription • Single Print (Anniversary) Issue: Y1,620 (tax & postage included) • Single Print (Anniversary) Issue + Digital Versions (current & past issues): Y3,240 per year (tax & postage included) • Digital-only Version (current & past issues): JPY Y1,620 per year (tax included) • Multiple/bulk orders: Email HRAgenda@jhrs.org with your name/company, postal address, number of copies required, and preferred method of payment. We will send you an estimate of price including postage before confirming your order. International Subscription • Digital-only Version (current & past issues): Y1,620 per year (tax included) • Multiple/bulk orders: Email HRAgenda@jhrs.org with your name/company, postal address, number of copies required, and preferred method of payment. We will send you an estimate of price including postage before confirming your order. Advertising Please contact us for a media kit advertising@jhrs.org International Distribution Agents Wanted: Email us at HRAgenda@jhrs.org The HR Agenda and JHRS logos are registered trademarks and properties of The Japan HR Society (JHRS). ©2014 The Japan HR Society (JHRS). All rights reserved. Cover Image Concept by Annette Karseras, Reward and Remuneration Art by Ives Lira and Ardie Coloma, compilation and design by Boon Prints, Bell curve adapted from University of Kansas Medical Center, Occupational Therapy Dept. Washi paper by Carlanichiata, Church Bell by Albund, Technical/Statistical input by Jun Edo Orlanes

Article Image Sources Earth by Alexstar, Quick snack by Dragonimages, Plastic window by Ives Lira, Stormy clouds by Mladen Bozickovic, Businessman throwing the dice to make a decision by Pertusinas, Insurance solution by Helder Almeida, Success in China by Ardie Coloma, Washi paper by Carlanichiata, Church Bell by Albund

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PUBLISHER'S MESSAGE APR-JUN 2014

Surviving Globalization in Japanese HR Shinya Yamamoto Partner, Pricewaterhouse Coopers Japan & Professor, University of Tsukuba Originally written in Japanese

Companies gearing to go global should first identify the reason behind such a move, and ensure plans match the unique contexts of their business. In HR consulting, not a day goes by where I do not hear some Japanese company’s concerns about guro-baru JinZai BuSoku グローバル人材不足 or the dearth of globally minded people in the workforce. Japanese companies consult me about a wide variety of globalization issues. The list is endless, ranging from the inability to develop a globr o f al HR department using local emkay t is o i r ployees, whether English should e . .S eth the U g wh n n i i k be the company language and r s A age man l s a e whether to establish a unified r l e a en op s ting g the t n global HR system, to how to t u n o c ere he ac e diﬀ v create a globally competitive a and t h n to have Japa corporate culture and how to y n e i h r ht age houg man t build a global talent mann e e h v e is t les e d a c a agement system. r s g pay pany rs m a c o c r What never ceases to ame ht fo ’s rig the s t i surprise me is the sheer f i n ha ing ore t s ask m a amount of knowledge t e s co sam nd to a l and skills that these i . a n pa in Th in Ja sold d companies need to l o s les bicyc be really successful globally, aside from basic English communication. For instance, a limited labor market tends to go hand in hand with a lack of awareness about the market value of different skills and experience. As Japanese companies expand globally and their HR staff consider the merits of implementing a global grading system there is often confusion about the distinction between grading and salary level. In Japan, whether a person works in sales or accounting, if they have the same grade or rank, their salary is also the same. This kind of system is characteristic of countries that lack a domestic labor market. HR staff simply do not realize that this is not how things work globally.

If, in the future, changing jobs becomes the norm in Japan and a proper labor market develops, then supply and demand will determine people’s value in the labor market and how much they should be compensated. Accounting and sales belong to two different markets, so the market value of these employees differs around the world even if they have the same company grade. Without this understanding, discussion of globalization and local management overseas does not take into account the labor market for the particular specialization or country and consequently is a pointless exercise. Asking whether it is okay for the top sales manager in the U.S. and the accounting general manager in Japan to have different pay scales even though they have the same company grade is the same as asking if it’s right for cars sold in Thailand to cost more than bicycles sold in Japan. As I talk with clients, I find the problem often comes down to a lack of awareness of specific objectives related to the “whys” of globalization. Certainly no one disputes the need for globalization. The problem is that even if the argument that companies can’t afford to put off globalization any longer is broadly accepted, hardly anyone can articulate anything more than a vague generalization about the reason why, let alone describe how they plan to go about it. In reality, it does not matter what a company’s definition of global HR is or whether its global HR system has job grades. Global HR development, an integrated global HR system, making English the company language – these are all just the means to an end. Unless the HR division’s goal and reason for existence is simply to advance globalization, there is no need to create a global HR system. The HR division’s goal and reason for existence should be to contribute to growth, business success and winning in the market. All too often this is forgotten or overlooked. If employees have English-language skills, they will be better able to communicate globally and hold direct dialogue, which may facilitate more effective internal discussions. It is undeniable that this would also have 3

Shinya Yamamoto is a partner, PricewaterhouseCoopers Japan, and Professor, University of Tsukuba. He has 20+ years of career as a Human Resources Management Consultant. His experience includes HR strategy, HR policies and programs, HR development, globalization of HRM and HRDD and HR post meger integration at M&A’s. He is a frequent speaker at HR related seminars. He is also a member of the JHRS Board of Advisers.

Chad Stewart • Daniela Ploberger • Shinya Yamamoto • Warren Arbuckle • Norio Suzuki, Ph.D. • Yutaka Sugimoto • Noboru Minamoto • Rochelle Kopp • Shabeer Ahmad • Elizabeth Handover • Susumu Shinbori • Celeste Blackman • Dan Harrison, Ph.D. • Atty. Mie Fujimoto Shigeki Egami • Hiroyuki Akaso • Dana Gallagher • Mikki Tomoeda • Peter Capelli • Ozlem Battal • Atty. Jiro Oyama • Prof. Ikujiro Nonaka, Ph.D. • Pranvera Zhaka • Nimalan Nadesalingam • Yumiko Shito • Atty. Grant Stillman • Atty. Vicki Beyer • Radoslava Angelova • Mio Araki • Kiyo Ogushi • Hideki Ikeda

beneficial effects on business as a result. It is clear to everyone global business leaders are needed and people are also right in thinking that an HR management system to develop these leaders is necessary. That said, is there sufficient discussion of exactly what kind of leaders are needed and during what timeframe to achieve a certain business goal by a certain date? If a division only has a domestic business plan for the coming 10 years, how much does it really need global HR? If a company has 10 divisions and only three are doing business overseas, it is really necessary to consider a company-wide global HR system? In terms of globalization, while some businesses may need to globalize their entire value chain from R&D to sales, in others only the sales side may have global activities. Although Japan is a world leader in some industries, in other industries the nation is underdeveloped and companies will fall behind if they continue only to do business domestically. The Japanese market is still a substantial one for some businesses, but for others the only new projects they are likely to get are going to be from overseas and therefore multinational project management skills are required. Globalization is a blanket term. It means different things for different businesses depending on the historical and industrial context, market competition, available resources and many other factors. Taking this argument further, while some businesses are at risk of falling behind if they do not immediately set up a multinational management system with a decision-making body open to diverse ways of thinking, for other businesses the time and money being invested in globalization could be better spent strengthen-ing their Japanese operation. Recently, even major Japanese corporations have begun taking a look at Dave Ulrich’s model of HR transformation as part of their globalization exercise. However, before looking at creating Centers of Excellence (CoE) to offer specialized head office support or designating HR advisors as business partners (HRBPs) in each division, the HR division and HR managers first need to reaffirm for themselves the fact that they are indeed both management’s business partner and management’s HR strategy advisor. In today’s uncertain business environment, three-year management plans get rewritten practically every year. Unlike facilities or systems which are relatively easy to replace, changing people takes time. HR must continually re-evaluate ways it too can achieve short-term business performance goals in line with changes in the corporate mission. At the same time, HR is also responsible for communicating the company’s long-term direction including the management philosophy and dream. Executing on both long- and short-term business plans will help make HR a formidable business and strategic partner in the face of challenging global competition.

Call for Contributors

How many faces can you name?! Each issue, The HR Agenda invites contributors to be our special guests at a JHRS event.

Be Heard. Get Published! The HR Agenda regularly invites contributors to share their ideas at JHRS networking events as our special guests. If you have an idea for an article we look forward to hearing from you. Please send your articles to HRAgenda@jhrs.org. We cannot promise to publish all submissions, but our policy is to reply to all emails we receive. We welcome your feedback on any aspect of the magazine. We would also like to hear what topics you would like to read about in future issues.

COMMUNITY NEWS APR-JUN 2014

Get to know the latest news and updates within the JHRS Community.

JHRS Academy Accredited by SHRM The HR Agenda Originally written in English

The Japan HR Society (JHRS) Academy is now accredited by the world's largest human resources organization, the Society for Human Resource Management (SHRM) to be its first ever training partner in Japan to offer HR certification preparation programs and seminar courses utilizing the globally ranked SHRM Learning System® to HR professionals and organizations in Japan. Japan-focused HR practitioners, educators and experts are the core audience for these course offerings which are designed to equip participants with the skills and knowledge that are critical for delivering value to the business as well as earning professional distinction. These SHRM seminars will feature selected tools from the two components of the SHRM Learning System:® • Education, which offers a wide range of products and modules covering topics such as strategic HR management, HR business partnering, and diversity and inclusion; and • Certification, which covers expert-developed exam preparation modules for HRMP, HRBP, and GPHR credentials. Instructors for the courses are selected to meet the rigorous standards agreed to by SHRM and JHRS. Qualified instructors, at the minimum, have at least five years experience in HR practice and proven training experience in the classroom and corporate setting. They also hold the appropriate HRCI certification related to any SHRM education course they are teaching. With more than 250,000 members in more than 140 countries, SHRM is an influential voice in the global HR landscape. Its initiatives and programs are anchored in the Society’s mission to create platform learning solutions and expertise on people management issues – which also reflect the JHRS Academy’s mission of strengthening the HR body of knowledge, skills and competencies to be on a par with global HR standards. JHRS Chief Community Officer Jun Kabigting, MBA/ MS/HRMP, believes the partnership between the Academy and SHRM to be a crucial driving force in advancing the standards of HR practice in Japan. He says, “Internationally-acclaimed HR courses developed by SHRM’s panel of experts in tandem with the JHRS’ local

training delivery expertise can create unique, relevant and transformative opportunities for the HR community in Japan facing unrelenting change in today’s globalized workplace.” About JHRS The Japan HR Society or JHRS is a community of Japan-focused HR professionals worldwide and corporate leaders doing business in Japan. Our mission is to help advance the HR management practices in Japan through continuing HR education, knowledge sharing, and use of HR best practices. For more information and membership, please visit our website at http://www.jhrs.org. About SHRM The Society for Human Resource Management (SHRM) is the world’s largest association devoted to human resource management. Representing more than 250,000 members in more than 140 countries, the Society serves the needs of HR professionals and advances the interests of the HR profession. Founded in 1948, SHRM has more than 575 affiliated chapters within the United States and subsidiary offices in China, India and United Arab Emirates. About The JHRS Academy The JHRS Academy is the continuing HR education and certification arm of the Japan HR Society (JHRS). Its primary mission is to define, set, and evolve standards of HR practice in Japan, through foundational, ongoing and advanced education of Japan-focused HR professionals. Founded in 2009, the Academy offers continuing education programs or courses in both generalist and specialist HR tracks as well HR certification preparation courses for the HRBP, HRMP, and GPHR credentials developed by the HR Certification Institute (HRCI).

Prac cal. Business-relevant.

Brought to you by:

Expanding Possibilities

A Women’s Leadership Event

The 4th Japan WINConference, 17, 18 & 19 April 2014, Shangri-La Hotel

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Elizabeth Handover JHRS, Women in HR Advocate Leader

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Mireille Watanabe Handover JHRS, Women in HR Advisor Kristin Engvig WINConference Founder

Originally written in English

The Japan WINConference 2014 opens new possibilities. World-class plenaries, experiential workshops and professional networking all within the unique context of Japanese business culture. Three WINConference organizers give us their perspectives on WIN's mission. Elizabeth’s perspective What started as a dream at a kitchen table 17 years ago has now grown into a global phenomenon. WIN (Women’s International Networking) has conferences in Europe, India and Japan, with 4,000 members, more than 80 member associations and an impressive list of major corporate sponsors, business school support and media partners. The WINConference is the brainchild of Kristin Engvig, who believes that women “embody the power to influence, decide, lead and be an agent of change. Women lead with grace while being true to themselves, restructuring organizations into caring environments, making conscious decisions for long-term results, handling communication with empathy, and in every way ensuring that lives and careers blossom worldwide.” Mireille and I first went to the 2010 Global WINConference in Paris. The sheer size and scale of the event, the global diversity, the passion and vision of the speakers and the shared positive energy of 1,000 committed people in the room stunned both of us. In 2011, as a workshop leader at the Rome WIN, I was thrilled to meet with Kristin on the last day. We discovered a shared connection to Japan and a kindred inspirational drive and in 2012 the Japan WIN Conference was born. In Tokyo we stayed true to the WIN vision by attracting speakers who bring passion and extraordinary per-

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Kristin’s Perspective WIN is best known for its WINConferences, the global women’s leadership conference that we have successfully run 16 times, attracting more than 11,000 women leaders from around the world. We host and mobilize women's events in order to develop, empower and connect women with a feminine, authentic and global vision. The WINConference has become the reference for women working internationally and companies that are active in conscious leadership, gender and women’s management, diversity and inclusion.

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The Japan HR Society’s Perspective The Japan HR Society (JHRS), through its Women in HR Advocacy Program, proudly supports and endorse the Japan WINConference 2014. We consider this a unique opportunity to champion change by raising awareness of the contribution of women HR practitioners in Japan. We also recognize the value of this conference in creating professional development opportunities for our members to support the advancement of women HR practitioners so that they can fully express their talents and career aspirations.

Japan WIN Conference Registration JHRS members benefit from a special ¥10,000 discount to the 2014 Japan WINConference on 17, 18 & 19 April at the Shangri-La Hotel. Places are going fast so register your attendance right away at http:// www.winconference.net.

Elizabeth Handover is president of Intrapersona K.K. and a Lumina Learning partner for Asia. She is co-chair of the ACCJ Women in Business Committee, co-founder of the Women's Leadership Development Centre and special adviser to the Global WIN Conference.

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Mireille’s Perspective From the moment I got in the queue for registration at the WINConference in Paris in 2010 (the first women’s conference I had ever attended), I was aware of a friendliness and warmth unlike anything I have experienced at any other conference. And I soon found that this warmth reflected Kristin’s own positivity which became apparent the moment she went up on the stage. But Kristin is also very serious about WIN’s purpose, and this was reflected in the conversations she was having with others over lunch or in the networking breaks. Women were discussing their career concerns and aspirations with each other or sharing business ideas and seeking new connections. Alongside the smiles, laughter and morning yoga sessions, the women at WIN are just as serious about business. I am very proud that in bringing the WINConference to Tokyo we have been able to keep this magical mix of friendly seriousness. We can combine important discussions about gender equality in the workplace with violin playing and business skills workshops with Indian dancing. This is what makes the WINConference so special. It might not be the only women’s leadership event in Japan, but I’m sure it’s the only one where you can listen to a speech by the chairman of Calbee on one day and be waving your arms in the air to the sounds of Indian music the next. I don’t know what special treats Kristin has in store for us this year but I know I want to be there to find out.

WIN puts this exciting event on the agenda to actively facilitate women leaders’ success by inspiring, empowering and developing women and welcoming men active in the transformation process. This will be WIN’s fourth event in Japan and the times have never been more promising. Today, business and politics alike understand that the key to a thriving future lies in allowing women into decision making and work creation. We gather in Tokyo to expand those possibilities and to see how best we can go about actively (and consciously) creating the future.

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sonal stories. Aside from corporate leaders, we also had performers, journalists and entrepreneurs bringing their own individual vision. We loved the atmosphere of spontaneous energy and did not give the agenda power over the interactive flow. Kristin herself sets the interactive bar high by never using a script and speaking directly, informally and “in-themoment” to the audience. She is also very serious about WIN’s purpose and, in fact, it is the uniquely open atmosphere Kristin creates which makes it even easier for the women to discuss their career concerns and aspirations, share business information and new ideas while gaining valuable new connections. As one of the speakers I also seek to contribute by sharing my own journey of personal growth, by deliberately setting out to take more risks on the stage, to speak out freely and authentically.

Mireille Watanabe Handover is a Lumina Learning partner for Asia. As a Lumina faculty member, she trains and supports licensed Lumina practitioners to deliver inspiring and practical workshops in the areas of global leadership, diversity, teamwork and presentation skills.

Kristin Engvig is the creative mind and engaging spirit behind the face of WIN. She is a visionary who transformed her idea of "bringing a more feminine, global and sustainable vision to work, communities and life" into an annual conference to empower, develop and connect women leaders.

F E AT U R E S TO RY APR-JUN 2014

Does Pay for Performance Pay off Today and can Cold Hard Cash Warm the Work Spirit? Hilda Rosca Nartea Contributing Editor, The HR Agenda Originally written in English

No one-size-fits-all formula works for pay for performance. The company must consider its own culture, employeesâ&#x20AC;&#x2122; needs and the value each employee contributes to the business. Honda, Fujitsu and Fujisawa Pharmaceutical were among the first Japanese companies to make the departure from traditional seniority- to performance-based pay back in the early 1990s, applying the new policy to workers both on the factory floor and in white-collar positions. It shook the workforce. Two decades on, in conservative institutions such as the Japan Post and the school system in the Nagano prefecture, peopleâ&#x20AC;&#x2122;s reaction to this transition remains the same. However, over the years, many companies like computer giants NEC and Fujitsu have found a way to maintain morale by adapting their approaches and striking a better balance between both performance-based and tenure-based systems.

Private companies and government agencies in Japan were not the only ones to initiate merit-based pay during the 1990s. South East Asian countries such as Singapore, Malaysia, Papua New Guinea and other newly industrialized economies facing the accelerated entry of world trade and foreign investment also started introducing and adapting ways of measuring performance and skills to improve productivity during this period. Types of Performance-Related Pay Today, as businesses continue to weather ever increasing economic turbulence, pay for performance is once again becoming a buzzword, with many viewing 11

performance-based pay as a necessary action step for survival. The most common types of performance-related pay include individual incentives (such as sales commissions), profit-sharing pay, stock option plans, pension schemes, and group performance pay such as gain sharing, where the payouts are based on profits generated from specific operational measures or activities applied by the employees. When these measures lead to improved organizational performance, the savings are distributed to members of the scheme. As the number of international assignments increase, companies are also adding into their rewards system policies that are specifically designed for the expat worker. Tax incentives are seen as a practical option for globally mobile workers as it can help both employee and employer manage the cost of international assignments. Deloitte notes that implementing some form of a tax equalization policy is now a prevalent trend for companies in the United States assigning their people to another country, as well as for an increasing number of Japanese companies. The benefits of tax equalization are mutual: the taxes that workers pay abroad are the same as the amount they pay when they are in their home country; meanwhile companies that pay the difference will be eligible for tax deductions.

It is important that HR establish a strategy that is sophisticated enough to provide feedback on behavior and improve performance in a way that employees feel intrinsic reward rather an attempt to control them.

Non-Monetary Incentives Organizations also can look for incentives aside from cold, hard cash. A few years ago, Goodyear Tire & Rubber Company wanted to improve the sales of their new line of tires. They introduced a two-type incentive scheme: one group of salespersons received money incentives, while the other group received non-monetary incentives. The second group (probably motivated by the thought of vacationing for free on a paradise beach) generated 46 percent more sales. For companies wanting to increase employee engagement without burning a hole in the company coffers, nonmonetary rewards can also be offered in the form of meal vouchers, shop discounts, travel packages, movie tickets,

gym membership, coffee shop coupons, vehicle access and more. As a performance bonus, benefits-in-kind can be offered as a form of recognition (such as for the outstanding employee of the month), or based on a rewards scheme that corresponds employee performance with an equivalent value of non-monetary benefits. Organizations that don’t know where to start can try the one-stop shop solution designed by AnyPerk, a startup San Franciscobased company founded by a Japanese team. Small perks can also come in the form of simple pleasures, Chiisa-na Shiawase 小さな幸せ, that warm both the stomach and the spirit: One company in Japan allows its workers to make each other miso soup on work time each day as part of their lunch routine. Another firm based in Seattle, excuses from work employees who join the company’s weekly running club. Rewarding Work and Making Work Rewarding For performance-related pay to pay off, companies should understand that a simplistic approach (more money = better performance) is not the solution. The complexities of the work-and-money connection are illustrated by Dan Pink in his animated lecture that went viral a few years ago. Experts like Pink, and many before him, show us that money as an incentive works great when it comes to manual, algorithmic tasks. But it is an entirely different matter when the task involves cognitive skills. For even the most rudimentary conceptual skills, higher monetary rewards can actually lead to poorer performance. In other words, the paradox of using money as a motivator is that money is relevant only when it becomes irrelevant. “Pay people enough that they're not thinking about money, they're thinking about the work,” Pink says. Science shows that taking the issue of money off the table will lead many people to the most important elements of better performance: personal satisfaction, autonomy, mastery and purpose. It’s also helpful to be realistic about how people view the idea of “performing” for money. Work is a form of exchange, but some are more comfortable taking a transactional stance to professionalism than others. Sales staff and accountants may consider a numerical target helpful and clear. Other professionals may consider any attempt to quantify what they do an insult. So does Pay for Performance Pay off Today? The consensus is that it is important that HR establish a strategy that is sophisticated enough to provide feedback on behavior and improve performance in a way that employees feel intrinsic reward rather an attempt to control them. The International Labour Organisation recommends consulting employees in the formulation

and monitoring of the performance pay plan, citing how in Japan the participation of employees in these processes enabled the workers to acquire a deeper understanding of the organization’s growth and how they contribute to it. A crucial task when developing performance compensation is to choose the schemes that best suit the company’s culture, are relevant to employees’ needs, and are clearly based on the value the employee contributes to the business. A strategic HR department is expected to look at the numbers to ensure that every reward they offer is aligned to company objectives and will generate measurable results. A tricky task, given the host of emotional and psychological variables to consider. Since there is no one-size-fits-all formula, it’s a matter of seeing each employee as an individual and carefully considering how the person’s unique contributions can create that connection to the organization. The thoughtful HR leader won’t be surprised to hear that money alone won’t cut it.

Hilda Rosca Nartea heads the writing team of a Sydney-based PR agency. She is also a content producer for non-profit organizations and has done projects for the United Nations Development Programme under the Philippine Department of Energy.

Japanese Pension Schemes Simplified There are two main types of pension schemes in Japan: Defined Benefits (DB) and Defined Contributions (DC).

DB contributions, include:

pension schemes, in which the employer makes

• Employees' Pension Fund (EPF): Companies pay a portion of the employees' pension and a supplementary amount (about 10,000 JPY/month) which is added to employees' pension insurance. As a result of the April 2014 law regulating dissolution of the EPF, many are expected to transfer their pension assets from EPFs to state and/or other pension schemes. • Corporate Pension Plans: Based on legislation passed in April 2002, this benefit varies by company (50,000–60,000 JPY/month) and can be either a whole life annuity, a fixed-term annuity or a combination of the two.

Note: The company is responsible for installment payments, asset management and the benefit process (pension resources are accumulated externally), which provides reassurance, but there are cases such as JAL in which the benefit was cut.

DC •

• • •

pension schemes, in which the employer or a self-employed person makes contributions, are also known as Japanese 401K. DCs can be made in addition to national or employee pension payments. If the company makes contributions, the individual employee selects the financial products (mutual funds, saving deposit, insurance products, etc.). The employee also assumes the risk of a loss. Contributions are tax deductible. At the time of receiving DC benefit, tax is levied as it is considered in the same way as other pensions.

Disclaimer: The advice, views, and/or opinions expressed by the author(s) in this section are for general informational purposes only and do not constitute legal advice.

Q. How is individual income tax calculated in Japan?

An Illustrative Example Step 1) Calculating Tax Liability on Salary Assumptions

• Housing Allowance = 0 • Gross salary or Total Annual Income • Commutation/Transportation Allowance = Reimbursed up (A) = Y12,000,000 per year Bonuses = N/A to Y100,000/month • Dependent = 0 • No other source of income aside from salary • Social Insurance Contributions (approx. 15% of A) = 1,800,000 The “Income after employment income deduction (B)” (kyuyo shotoku) is equal to the “Total Annual Income (A)” minus your “Employment Income Deduction (B)” as per Table 1 below: Employment Income Deduction (Table 1*) – (B) Annual Income (A) (Yen) From

To 1,800,000

Rate

Plus

Employment Income Deduction

40%

Annual Income x0.4 (650,000 Yen when it's less than 650,000 Yen)

1,800,001

3,600,000

30%

180,000

Annual Income x0.3 + 180,000 Yen

3,600,001

6,600,000

20%

540,000

Annual Income x0.2 + 540,000 Yen

6,600,001

10,000,000

10%

1,200,000

Annual Income x0.1 + 1.2 million Yen

10,000,001

15,000,000

1,700,000

Annual Income x0.05 + 1.7 million Yen

15,000,001

2,450,000

*As of 1 April 2014

(A) Total Annual Income 12,000,000

–

Employment Income Deduction 12,000,000 X 0.05 + 1,700,000

Earned Salary Exemption 2,300,000

Thus, the employee’s “Income after employment income deduction (B)” is: (A) Total Annual Income (kyuyo-shunyu 給与収入)

Earned Salary Exemption (kyuyo-shotoku-kojo 給与所得控除)

–

12,000,000 Yen

(B) Income after employment income deduction

(給与所得 kyuyo shotoku) 9,700,000 Yen

2,300,000 Yen

Step 2) Calculating total taxable income (kazei-shotoku 課税所得) The taxable income (kazei-shotoku 課税所得) is the income after tax on salary(kyuyo shotoku 給与所得) – the total after step 1 - minus any fixed-rate allowances for social security payments, or dependents. • Everyone gets a basic allowance of 380,000 for income tax. • Taxpayers with dependents or individuals with certain circumstances may, in some cases, be eligible for tax exemptions. Hence, using the above assumptions, the employee gets additional tax deductibles such as 1,800,000 Yen exemption for his Social Welfare Insurance contributions and a basic deduction of 380,000 or a total deductible total of 2,180,000 Yen. B) Income after employment income deduction (kyuyo shotoku 給与所得) 9,700,000 Yen

total fixed-rate exemptions (shotoku-kojo 所得控除)

–

Total Taxable income (C) =

(kazeishotoku 課税所得) 7,520,000 Yen

2,180,000 Yen

Step 3) Calculating total income tax liability Tax brackets for total income tax calculation

Taxable income rounded off to the nearest 1,000

Taxable Income (Yen) (a)

Rate (b)

Exemption (Yen) (c)

1000 to 1,949,000

1,950,000 to 3,299,000 3,300,000 to 6,949,000 6,950,000 to 8,999,000 9,000,000 to 17,999,000 Over 18 million

10% 20% 23% 33% 40%

97,500 427,500 636,000 1,536,000 2,796,000

*As of 1 April 2014

A person’s total national income tax liability = a x b minus c National Tax = Y7,520,000 x 23% - 636,000 = Y1,093,600 + Reconstruction tax surcharge (2.1% of National Tax) = Y22,965 + Local/Inhabitant’s Tax = Total Taxable Income x 10% = Y7,520,000 x 10% = Y752,000 (approximation) TOTAL INCOME TAX LIABILITY = Y1,868,566 (or net effective tax rate of 15.57%) Sources: National Tax Agency; HRCKK Consulting

APR-JUN 2014

Why It Pays to Link Executive Compensation with Corporate Debt Knowledge@Wharton Originally written in English

Paying top managers with inside debt is emerging as a solution to align risky decisions with investors' best interests, serve as a cushion against the volatility of the economy and protect the firm's value in the face of bankruptcy. For decades, companies have tied executive compensation to equity, such as stocks and options, but the idea of adding debt-like instruments to the mix – such as pensions or deferred compensation paid to executives from inside the firm (known as inside debt) – is gaining new attention. “[This] is a positive move which should hopefully prevent future financial crises and more closely align managers with all investors, both shareholders and bondholders,” says Wharton finance professor Alex Edmans. In a paper titled, “Inside Debt,” Edmans and doctoral student Qi Liu contend that these types of incentives protect bondholders’ interests and the value of the firm, particularly when a company’s solvency is in question.

Edmans notes that when companies run into difficulty, executives with compensation packages that are based largely on equity, rather than debt, may decide to take on large levels of risk to salvage the enterprise – and their portfolios – even though they may be placing the value of the firm and its bonds in even greater jeopardy. Since the value of managers’ equity would be close to zero at this point anyway, Edmans says, managers in this position might be tempted to “gamble for resurrection.” If their gamble fails, executives who are compensated heavily with equity have nothing more to lose. The remaining loss in the value of the firm is borne by the bondholders and other creditors, who may need to take a sharp reduc-

tion in the value of their investments if the firm goes into bankruptcy. For managers at companies close to bankruptcy, equity compensation is a “one-way bet,” Edmans points out. “If the risk pays off, the value of the equity shoots up. If the risk doesn’t pay off, the worst their equity can be is zero.”

Adding debt to compensation schemes is a simple way for corporate boards to balance the interests of shareholders and bondholders when times are good and when they are bad. According to the model, adding inside debt to the compensation packages of top management is a better approach in companies with a high risk of bankruptcy, and where investment decisions and managerial effort are likely to have a big effect on the liquidation value of the firm. The paper cites leveraged buyouts (LBOs) as an example of this scenario. LBOs are usually targeted toward mature firms suffering from excessive investment in which the manager – often a private equity firm – steps in and takes control of operations while holding debt and equity positions. “Where debt has the strongest effect is when the firm’s solvency is threatened,” says Edmans. The model also suggests that companies with more debt should use more debt compensation in their executive pay packages. AIG adopted a compensation structure in 2010 that pays bonuses in the form of what it calls “long-term performance units.” Eighty percent of the value of these

instruments is based on the value of AIG’s junior debt and the rest is keyed to the value of AIG common stock. The new compensation plan helps reduce the volatility of equity-based compensation during the company’s restructuring. The restructuring is being overseen by the government, which put up $102 billion to save the company and has approved the new debt-based bonus plan. Edmans notes that AIG’s decision to add more bonds to executive pay is a more clear-cut way of tying compensation to bondholders and the liquidated value of the firm, as opposed to promoting other forms of inside debt, like pensions. Pensions might pay out slightly differently than the company’s secured debt, reducing the effect on management. Adding debt to compensation schemes is a simple way for corporate boards to balance the interests of shareholders and bondholders when times are good and when they are bad, potentially muting the volatility of economic cycles, the research suggests. If an executive receives a balance of equity and bonds, equity will rise in good times and so become much greater than the value of the manager’s debt. This is efficient, the authors argue, because debt is less necessary when the firm is far from bankruptcy. In contrast, when a firm is troubled, the value of its equity declines and debt makes up the bulk of the manager’s incentives – precisely at the time when he or she should be most concerned about bondholders’ interests and not take excessive risks or avoid tough decisions, such as closing plants. “The nice thing about compensating with debt and equity is that it is self-balancing,” says Edmans. “It runs on auto-pilot.” Editor’s Note: Abridged with permission by Knowledge@Wharton from the original version, “Why It Pays to Link Executive Compensation with Corporate Debt”

ASK HR APR-JUN 2014

Andrew

& Y o s h i ’s

AskHR Helping you solve your people issues.

Ask Andrew & Yoshi: email us at AskHR@jhrs.org

Will a Western-based Performance Management System Work In Japan? Does the Western-style performance management system really work in the Japanese work culture? If not, what suggestion or alternative form of performance management would be effective in the Japanese environment? Or, is there a best practice approach to performance management that has been proven to fit across all types of workplace environments?

ANDREW SAYS…

Article originally written in English

My first observation would be about the phrase performance management: Over the years I have seen this

than breaks relationships. This is managing performance through shared and open conversations and based on valuing other people. My personal experience is that successful companies

phrase evolve from “How do you manage performance

and leaders focus on how to get the best from people

and get the best from people?” to “How do you manage

wherever their performance level is. This can work in any

poor performance?” to “How do you dismiss poor per-

culture.

formers from your business?” When a company gets to

There are many books and much research to support

the final version of performance management, it can often

this approach – recent work in the area of neuroscience

lead to difficulties as things seem to become driven by

shows how the brain reacts to threat or reward. For exam-

processes and that can make line managers and employ-

ple, SCARF (Status, Certainty, Autonomy, Relatedness

ees feel scared and threatened.

and Fairness) is a model that maybe worth reading about

Best practice from my experience starts from a belief

(Editor's note: see also The Neurobiology of Inclusion:

in your people’s ability and their potential to do more.

Celeste Blackman). There is also Gallup’s book Strengths-

You can then focus on the question “How do you get the

Finder, which is based on decades of interviews with

best from people no matter what their performance is

almost a million leaders and followers. It shows people

now?” This, for me, is a more positive approach based on

look for four things from their leaders: Trust, compassion,

a belief in the ability of others. It also allows for a differ-

hope, stability. Managing people's performance with

ent type of conversation with people about how they can

these areas in mind as your key outcomes may also help

be their best. An outcome of this type of conversation

manage any form of performance.

might be that an individual leaves your company; however it is a more constructive conversation which builds rather

This leads to the final part of your question: What does work everywhere? StrengthsFinder findings are 17

worth repeating as they give us a few clues – Leaders who demonstrate and create trust, compassion, hope and stability and create a caring and nurturing environment rather than an environment of fear probably manage the performance of their people more effectively. Organizations that have similar cultures do the same.

I question what is important to manage performance: Is it having a system/process or is it your philosophy and beliefs and the way you approach the issues?

Andrew Manterfield Executive Coach and Senior Consultant, SudaManterfield Andrew has an innate belief in people and their desire and ability to achieve more. His purpose is to find the greatness in every person he meets and to ensure that greatness lives and breathes every day and is fulfilled. He has worked in the global FMCG industry for over 27 years for Diageo Plc, the world’s biggest adult drinks company. Andrew has over a decade of director-level experience in both human resources and sales. He has lived and worked in Japan, Australia, and the U.K., and he has worked with organisations across Asia, Latin America and Africa.

YOSHI SAYS…

Translated from the Japanese original

What do these leaders do? In my experience they talk honestly with their people, they ask them the obvious and

Thank you for this important question. A performance

sometimes difficult questions, they want to help, they

management system is essential not only to achieve the

value their people. When they manage poor performance

organization’s strategy and objectives, but as a foundation

they do not judge the person, they judge the performance

upon which to build a high-performance culture. Many

and they tend to manage the situation with the person

Japanese and Western companies are concerned about

rather than force the person through a process.

their performance management systems. I am not going

My final thought would be on culture. Some years

to get into which type of system is better, but instead

ago I was interviewing candidates for an HR director’s

introduce factors critical to the success of an effective

role based in Asia. One of my questions for candidates

performance management system.

was “How do you personally manage cultural differenc-

First, some problems I often hear about performance

es?” One answer that left a lasting impression on me was

management systems are that employees do not accept

from a Japanese candidate who said, “When you get past

their evaluations, that motivation does not go up and

culture, every person is a different and unique individual.”

that the system is not connected to future performance

This thought was, and still is, very powerful for me. It

improvements. These problems are inconsistent with the

made me question the role culture plays in my mind and

original intent and principles of management by objectives

the barrier it can become if I start to believe that a large

(MBO) popularized by Peter Drucker in 1954 as a way

number of people all act in the same way. Then there is

to enhance an organization’s performance while raising

a risk that I will treat them as one big group rather than

employees’ initiative and motivation.

individuals with their own gifts and uniqueness. When I

The causes of many of these problems include: a lack

see people as individuals it can help develop feelings of

of clarity or acceptance regarding the goals or standards,

recognition and respect. This may be something worth

a lack of understanding about the system itself, system

reflecting on.

management without clear design and a lack of trust with

When I re-read the above, I question what is impor-

management. Removing the causes of these problems

tant to manage performance: Is it having a system/pro-

is the quickest way to achieve an effective performance

cess or is it your philosophy and beliefs and the way you

management system. That said, at a minimum ensuring

approach the issues? Having the best system and process

the following three points is essential. 1. Clear, agreed-upon goals, evaluation standards and performance management system mechanisms. First, make sure everyone understands the objectives and how the system works. Next, make the goals and evaluation standards clear to enhance transparency. To enhance acceptance for the system, follow the principles of Peter Drucker’s MBO and have employees

is a bit like having the fastest vehicle. The way to get the highest performance from that vehicle requires the most skilled driver – someone who is physically and mentally prepared, someone who can drive with courage and at the same time, someone who cares about the other drivers and their passengers. Drive carefully and enjoy the experience! 18

consider and set the objectives in cooperation with management. When objectives are set from the top, employees are more likely to feel that they are being forced upon them. In addition, to increase individuals’ acceptance of their evaluations, use 360-degree feedback from stakeholders both inside and outside the company. In doing this, however, please keep the evaluation system simple. 2. Connections among the organization’s mission, values, business strategy and HR/organizational systems. To simultaneously enhance both results and motivation, the organization’s mission and business strategy must be connected to individual performance targets. The key is not to list job duties, but to focus on core assignments that are connected to the organization’s mission and/or business strategy. Conduct and ability are included as evaluation items, and it is important that they are consistent with the employee ideals and competencies sought by the company. And evaluation results must be linked to the competency development program for the coming year. 3. Trusted managers. No matter how well-crafted a system, employees will not accept evaluations from a manager who is not trusted, so manag-

ers must earn the trust of team members. Here, the role of the human resources department is to raise managers’ business-building and communication skills, their management and leadership capabilities as well as their commitment and sense of responsibility to professionally develop their team members. Lack of trust in management is in fact a major cause of problems with performance management systems, so make sure you are addressing this issue. If you do the above, your performance management system should function effectively. Please review the root of the problems you are having and take steps to improve and reform the areas that need it, starting with the most important first.

Yoshiharu Matsui President, HPO Creation, Inc. Yoshi specializes in leadership and organization development leveraging his more than 12 years of marketing experience and 12 years of HR/OD experience. He provides executive coaching, leadership development, organizational change and marketing and sales development to help clients strengthen their business performance, organizational health and employee engagement. He has a BA in intercultural communication from Kita-Kyushu University and an MBA from Northwest Missouri State University. He is currently working on his doctoral degree in organization change at Pepperdine University.

Disclaimer: The answers, opinions, or viewpoints expressed by Andrew and Yoshi are their own and do not necessarily represent the general views and sentiments of The Japan HR Society and its members, Secretariat, friends, and supporters. In addition, the answers, advice, or opinions expressed by Andrew and Yoshi are for informational purposes only and are not meant to substitute for legal and/or financial advice from qualified legal and financial professionals.

LEGAL

In association with:

CLINIC

"Ignorance of the Law is no excuse."

APR-JUN 2014

Is the Representative Director Covered by Employment Insurance? QUESTION: We are UK-based company with a subsidiary in Japan. Our new managing director in Japan believes that, since he is now a so-called "employer," he is not covered by employment insurance. He wants our company to pay for unemployment insurance benefits in case he is out of a job. Is he covered by the government employment insurance? – Personnel manager of a UK company with a subsidiary in Japan ANSWER: Originally written in Japanese

Designed for the express purpose of protecting workers, unemployment insurance is an unemployment benefit given for a fixed period when a worker with an employment relationship loses his or her job. It is the same as what is called employment insurance. The representative director represents the company and is not a worker, and therefore is not covered by unemployment insurance. Following are three suggestions on how to deal with this situation: 1. Have someone else become the representative director and have the person in question covered by unemployment insurance as a regular director and worker (concurrent officer). The representative director cannot also be a worker. However, it is necessary for concurrent officers to hold a position such as plant director or office manager as a worker. Please be aware that you would need to submit a notification of the employee’ s insurance status to the local Public Employment Security Office. 2. Add an amount equivalent to the unemployment insurance to the person’s salary. If the representative director uses this to pay for the small-scale enterprise mutual aid system,** the premiums are deducted from income. Therefore, there would be no net increase to the person’s income tax burden. 3. Prepare a severance package a severance package for the representative director that serves the purpose of severance pay. **NOTE: Under this system, retirement allowances are paid through a mutual system as well as government aid, to small and medium enterprises that find it difficult to establish a retirement allowance system independently.

Atty. Jiro Oyama is principal of the Yokohama Partner Law Office. He is a graduate of the University of Tokyo’s Faculty of Law and Washington University in St. Louis Law School. He worked in the legal and IP departments of Alpine Electronics, Inc. and Sidley Austine Tokyo Office for 16 years before establishing his private law practice specializing in labor/employment matters as well as providing legal counsel to his clients.

LEGAL

CLINIC

Introducing our

Panel of Experts

Legal Questions?

If you have legal questions relating to HR practices, or would like to become a member of our panel of legal experts, please contact us at hrclinic@jhrs.org.

Vicki Beyer

Recruiting & hiring; benefits programs; termination; retirement; employee relations; discrimination & diversity; non-competition; investigations & disciplinary matters.

Toby Mallen

Doing business in the U.S.A.; labor and employment; real estate laws.

Jiro Oyama

Corporation laws; intellectual property laws.

Grant Stillman 20

Law of international organizations and trade. Disclaimer: The advice, views, and/or opinions expressed by the author(s) in this section are for general informational purposes only and do not constitute legal advice. Individuals requiring legal advice are encouraged to engage a qualified legal professional.

The best local HR lawyers in one global group With over 20% more HR lawyers ranked globally than any other legal services organisation*, Ius Laboris offers the best HR legal services to corporate Counsel and HR professionals. *Source: Chambers & Partnersâ&#x20AC;&#x2122; guides to leading business lawyers, 6 November 2013

www.iuslaboris.com

H R R I S I N G S TA R APR-JUN 2014

Tomonori Nagase on Becoming a Stronger Management Partner An Interview with an HR Rising Star by The HR Agenda 's Masanobu Sawada Originally interview in Japanese

Tomonori Nagase identifies the most urgent issues of HR in Japan today – and takes a serious look into its future as well. His call to HR: Stop the routine work and start with the more essential task of strategic corporate management. HRA: What led you to a career in HR? My reasons for aspiring to a career in HR are probably quite simple and not altruistic. Actually, my father worked in HR, so it felt familiar to me, and at the same time I thought that having specialized HR knowledge and skills would also increase my employability – in other words, give me an advantage if I changed jobs. So I didn’t start working right away after graduating from university, but I studied on my own to get certified as a social insurance and labor consultant and then went to work for a social insurance and labor consulting firm. At that time, the firm had more than 600 corporate clients, mainly SMEs, and I had the opportunity to learn about the internal workings of many companies through my work. When I started out I had the impression that the HR division held authority within the company, but when I actually met with HR staff through consulting work on employment regulations and administrative procedures, I saw the reality where HR staff took on a diverse array of roles and served almost like the company odd-job-man. In extreme cases, they were even at the bidding of the sales division like external contractors. Meanwhile, when I talked with executives on the management side, they would bring up one issue after another that HR was expected to handle. They built a factory overseas but didn’t have a staff who could run it. They couldn’t attract outside human resources even though they tried. They strived to develop their staff, but results didn’t live up to expectations. Through these experiences, I began to want to work in HR inside a company and see it for myself. So I changed jobs and after working at another listed company, I joined MonotaRO about a year and a half ago. HRA: What has been your biggest challenge since becoming an HR professional? Last year, we recruited new graduates from China for the first time. For a Japanese company with about 170

employees, hiring students who had no business experience, had never lived in Japan and couldn’t even speak Japanese was a challenging undertaking. We’ve hired Chinese and other non-Japanese who had lived in Japan and were already in the workforce, but this was something completely different. The hiring process took a lot of time and effort. We had to get their life set up in Japan and Japanese language courses were also costly. They needed to be taught business etiquette starting from the basics. Then there is the constant risk that they will be poached by another company. But we have come to view hiring them as very significant for us even though it took all this investment. In interacting with the new graduates from China, I get the sense that they have a stronger desire than Japanese people to make something of themselves. They have left their hometown and their aging parents as mere children to come to this foreign land of Japan, and they are highly motivated to do what it takes to achieve growth. They willingly take Japanese language training on their days off and look at overseas business trips as an opportunity to test their abilities. When I see these Chinese employees and how different their mental attitude is compared to Japanese students, I get the feeling that Japanese students are going to have a harder time finding employment in the future. HRA: Have you had what you would consider HR failures? It was not at MonotaRO, but I did feel I had failed when there were labor disputes. Many times I saw the difficulty of trying to settle a dispute with legal arguments. It took me a long time to realize the simple truth that since the other party is human, these disputes can’t be settled on legal principle. When you get just a little bit of knowledge, you feel compelled to throw it around. I should have been more attuned to the subtleties of human nature in these situations. That said, each case is continue on page 24 u

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u from page 22

different and of course you have to draw a line in the sand somewhere from the point of view of maintaining order in the company. HRA: What are the most important roles of HR in a corporation? I think it could be summarized in these four points. 1) Hiring and training talented employees and promoting them at the right time, 2) designing a compensation system befitting performance that heightens and maintains motivation, 3) creating an organization that is flat and frank (employees and divisions actively communicate with each other), and 4) managing the human resources and providing information to management. To realize 2), it follows that you have to create an HR evaluation system, but the system you create will vary depending on its purpose. Basically, do you want to directly link the evaluation system with salaries and bonuses and use it to select HR based on the evaluation results, or do you want to use the evaluation system as feedback for competency development and to cultivate shared awareness and understanding of what the company expects? The system will change depending on which of these is your objective. Here, what is most important is clearly telling employees what the purpose of the evaluation system is. Although it wasnâ&#x20AC;&#x2122;t full 360-degree feedback, we have had staff evaluate the leaders of their group and showed the results to the leaders. Although it seemed to be quite an ordeal for the leaders, we explained that the sole purpose of this was competency development and were able to gain their understanding. About 3), creating flat and frank workplaces, I think MonotaRO has an environment that facilitates communication with low barriers between divisions. Those of us who joined the company mid-career often say this: When there are about 20 employees, communication is good but in many cases the financing for investment is a challenge and people canâ&#x20AC;&#x2122;t do what they want to do. On the other hand, when there are more than 1,000 employees, each division has clear targets and in many cases this inhibits teamwork. But in companies with around 100 to 200 employees, there is some leeway in financing, good communication can be maintained, we can do the things we want to do and work is fun. This is where we are at MonotaRO right now which makes working here so interesting. But the number of employees we have is rising sharply, so the time is coming when the real value of the HR division will be tested by whether we can continue to maintain good communication and low barriers among employees and divisions. HRA: What do you see as the most challenging issue confronting HR in Japan? It would have to be hiring, training and compensating (maintaining an advantage over other companies) multinational human resources. Apart from this, handling the changes to Japanese law in a timely manner is also key, including steps to prevent non-regular workers from

remaining indefinitely in non-regular employment. [These employees may work 40+ hours a week, but they do not receive the benefits, pension, job security, etc. of regular full-time workers.] The minimum requirement for HR staff is to constantly update their knowledge and understanding of the basic labor-related laws and regulations. We also need to routinely ask management for its views on employment and give clear and easy-to-understand responses about the risks of the presented policy. What is essential here is conveying the danger or the probability of the risk occurring in terms that feel real. If we harp on about risks that have very little chance of actually happening, we will lose the trust of management as well as the sales division. HRA: How do you think HR work in Japan will change in the future? HR needs to be recognized as managementâ&#x20AC;&#x2122;s partner and position itself by providing invaluable information for company growth. Many companies nowadays outsource standard tasks such as payroll processing and social insurance administration. Many people in HR, however, still end up doing all the low-value work that falls in their lap. The ideal would be for HR staff to stop taking up this kind of miscellaneous work and concentrate on work that is aligned with corporate management. We have to explain that we are making a sizable investment to reduce our workload of routine HR tasks, but in return we can provide this much added value. Of course, persuading management of this is no small task. Therefore, first we have to continue performing routine work while also performing work with high added value... This sounds like an impossible feat but at MonotaRO we are, at least for the meantime, still trying to juggle everything.

Tomonori Nagase HR & General Affairs, MonotaRO Co., Ltd.

Tomonori Nagase works in HR and general affairs at MonotaRO Co., Ltd., an e-commerce and mail-order business selling industrial parts and tools. After graduating from university he became certified as a social insurance and labor consultant and joined a consulting firm advising companies on employment regulations and social insurance. He later worked in HR and labor affairs at a corporation listed in the first section of the Tokyo Stock Exchange. In August 2012 Nagase moved from Tokyo to Amagasaki in Hyogo Prefecture to join MonotaRO Co. Ltd., a spin-off of his former company.

COUNTRY FOCUS APR-JUN 2014

How to Succeed at Business – in China Kotatsu Hirota Manager, Oji Management Office Corporation Originally written in Japanese

China remains a tempting market for Japanese businesses but it takes effort to understand cultural differences. In spite of the current political tension between

From these experiences, I can point out several key

China and Japan, the Chinese market – with its sheer

factors for HR managers to consider when dealing with a

size and extensive infrastructure – is fascinating in many

Chinese workforce:

ways. To take full advantage of that market, Japanese HR professionals and managers working or negotiating with Chinese business professionals for the first time must

Clarify Policy and Strategy First, it is critical to clarify corporate policy and strat-

learn to avoid stereotypical thinking and cultural misunder-

egy to all employees based on thorough analysis and the

standings.

specific realities of each division. While it is natural for

I know firsthand about the benefits and challenges of

Western countries to clarify and explain corporate policy

the Chinese market. I’ve lived, studied and worked in both

and strategy to all employees, often that is not done in

Japan and China and have experienced the differences

Japanese subsidiaries in China.

between the Japanese way of thinking and the Chinese way of thinking. 25

Corporate policy and strategy should be based on the

it is very hard for middle managers to transfer their jobs.

3Cs â&#x20AC;&#x201C; customer, competitor, company. Also, make sure

Under these circumstances, dinner parties and company

that the policy in each division reflects that of corporate

trips are effective ways to bring together employees, and

headquarters.

promote smoother communication.

To avoid any cultural conflict between Japanese and

A dinner party can be one of the most effective way

Chinese, corporate policy and strategy should be as con-

to better establish bonds. It is best for the management

crete as possible, and should have quantitative measure-

person to hold the dinner party personally because Chi-

ments. This can be a time-consuming process. It took five

nese people put much emphasis on the personal relation-

years to implement a workable policy and strategy when I

ship.

worked in Shanghai.

Finally, let me address the issue of loyalty in China. People who have lived in Japan for a long period of time

If Japanese headquarters and Chinese local employees are to work effectively together, both sides must have confidence in the performance management system.

will hear the word loyalty and automatically think of people who put 100 percent of their energy into the company. The strength of company loyalty in Japan is based on the fact that people tend to have just two main communities: their company and their family. In China, people tend to have a wider range of communities, extending loyalties also to neighbors, close friends from high school and

Simplify and Quantify Financial Rewards It is common for Chinese employees to share salary

university and so on. It goes beyond family and company. But loyalty to the company is still important and managers

information, so it is especially important to establish fair

should cultivate that loyalty to keep the company strong.

measurements for evaluating performance and rewarding

A good way to start is by encouraging allegiances be-

workers. The seniority-based pay is not typical in China so

tween employees from different regions such as Beijing,

this is one Japanese system that is likely to need drastic

Shanghai and Guangzhou and creating a single shared

changes.

focus on their common corporate goal.

If Japanese headquarters and Chinese local employ-

An understanding of loyalty, clarity of policy and

ees are to work effectively together, both sides must have

strategy and a fair reward system will all contribute to

confidence in the performance management system. And

better relations when working with Chinese business

itâ&#x20AC;&#x2122;s best to make sure that the system is not too compli-

professionals.

cated and that these measurements are made clear to everyone. Non-monetary Rewards Some people are surprised to learn that dinner parties and company trips fall under the purview of human resource management in China, but these are very effective forms of rewards there. In the eastern part of China,

Kotatsu Hirota (Li Guang Da) is of Chinese origin. He was born in Kobe and became a Japanese national. He is a manager at Oji Management Office Corporation, where he is responsible for corporate planning in overseas mergers and acquisitions and joint ventures with local companies. He is a steering committee member of SIETAR Japan, the Society for Intercultural Education, Training and Research.

UNIFIED JAPAN HR DELEGATION KIT & PRICING Special Thanks to

The Official Airline of the Unified Japan HR Delegation to the SHRM 2014 Annual Conference and Exposition

The Unified Japan HR Delegation is a collaborative effort of The Japan HR Society (JHRS), Japan Management Association (JMA), ACCJ HR Management Committee, and J-SHRM to bring Japan-based HR professionals to the world’s largest HR conference in Orlando, Florida from June 22-25, 2014 for learning and networking purposes. As a unified delegation, we were able to negotiate with SHRM to a very specially discounted registration rate (full access) of only JPY123,000/person, representing a 40% OFF from regular early-bird conference fees! WHAT’S INCLUDED • 4 days of conference programs; • 4 general sessions featuring world-renown keynote speakers; • more than 200 educational concurrent sessions divided into six (6) tracks (talent management, compensation & benefits, international HR, employment law & legislation, business management & strategy, and personal & leadership development) . Plus 3 thought provoking Master Series sessions, and Mega Sessions; • luncheons; • admission to the SHRM Exposition; • one ticket to the Tuesday night show;

• • •

online access to the conference sessions; access to the SHRM Global Networking Lounge; invitations to: International Welcome Reception (Sunday) and Global Networking Reception (Monday); • global table topics lunch discussions (Monday and Tuesday); • personalized certificate of conference participation; • complimentary ground transportation between the conference hotels and the Convention Center; • group hotel reservations available (attendees can also request reservations where other countrymen will be staying); • and more… Delegates may also take advantage of the Pre-Conference Programs such as the SHRM Education seminars, Pre-Conference workshops and Guest program. Additional fees apply.

PACKAGES AVAILABLE* Package Name A. Self-Service (Recommended) B. Flexi A C. Flexi B D. Worry-Free

Fees JPY123,000 JPY250,000 JPY270,000 JPY450,000

Conference Fee o o o o

INCLUSIONS Airplane*** x x o o

Hotel*** x o x o

*Prices are valid through 10 April 2014, the date by which payment is due by bank transfer. **Via Delta Airlines (NRT-DTW or ATL or JFK or MSP-MCO-NRT), leaving JPN on June 21 and Orlando on June 26. Economy class. ***Best Available Hotel at the time of booking (5 nights from June 21 to 26).

WAYS TO REGISTER

Thru JHRS: • Click here and fill out online a simplified Conference Registration Form. Payments can be made by PayPal, credit card, or bank transfer. • Choose Package Type as per above table. • Registrations will be processed when payment is received. • Each delegation team member will receive a confirmation email once payments are processed. • Registrations are transferable up through May 30, 2014 only. A request to transfer registration rights to another delegate must be made in writing to events@jhrs.org, and must provide registration details for both the outgoing and the substitute delegate. Thru JMA: • As an alternative, you can also consider the JMA Delegate Package and register thru JMA by contacting them at email: globalseminar@jma.or.jp

CANCELLATION POLICY:

• A cancellation must be submitted in writing to JHRS. • Confirmed registrants may cancel and receive a fifty percent (50%) refund of the registration fee for cancellations received from January 1 through April 18, 2014. • Cancellations received after April 18, 2014, are nonrefundable. • Please Note: (Video) On-Demand Conference Sessions purchases are non-refundable.

USEFUL TIP ON ARRIVAL: We encourage international delegates attending the regular conference program to arrive on Saturday June 21 to pick up conference materials and start the conference program on the morning of Sunday, June 22. For more information or any questions, please contact: Jun Kabigting, email: jun@jhrs.org Tel: 080-3434-8665 Conference Webpage: www.shrm.org/conferences/annual

We look forward to your participation in the world’s largest HR conference.

Be Relevant. Be HR. See you in Orlando!

H R TO O L B OX APR-JUN 2014

CEOs Pick Great HR Directors and Ignore Them – Sometimes... Roy K. McCall Corporate Consultant, Beijing Originally written in English

HR directors know that the balanced scorecard can be one of the best tools of their trade. And CEOs know sometimes it pays to take a different tack. In 1560 Oda Nobunaga (織田信長) with a force of 3,000 prepared to attack an army of 25,000 against the advice of Hayashi Hidesada (林秀貞), his top castle elder. Hayashi, in his role as HR director, could have used the balanced scorecard to illustrate his nightmare:

HR Director’s Nightmare Misaligned Goals Vision & strategy not actionable

Strategy not linked to dept. team and individual goals

Strategy & Vision Personal MBO & Incentives

Budget

Monthly Review

Feedback that is tactical, not strategic

Financial Plan & Capital Allocation

Strategy not linked to resource allocation

HR Director’s Dream Aligned Goals & Action • Strategy is reference point for the entire management process • Shared vision is foundation for learning • Goal alignment Clarifying & Translating • Feedback test from top to Vision and Strategy strategic bottom hypotheses • Open Community Strategic • Team problem communication and Budget Feedback & solving about Linking Learning • Continuous strategy strategy • Compensation Financial Plan development is linked to & Capital strategy Allocation • Stretch target established & accepted • Strategy determines investments • Budgets lined to long-term plans

A great HR director welcomes a way to corral personnel in a common direction where corporate players are coordinated through a shared playbook. The CEO, on the other hand, sets strategy, goals and objectives. All subordinate levels turn these high-level goals into actionable ones appropriate to their levels. The allure of everyone in an organization working together is so great, and the balanced scorecard seemingly so sensible, that it has been widely adapted as a necessary component of organizational due diligence and HR alignment. With such a convincing tool at the HR director’s disposal, what could a good CEO possibly find wrong with the balanced scorecard? Actually, the seeds for misunderstanding and disagreement between the CEO and a great HR director are plentiful. Balancing use of the Balanced Scorecard The balanced scorecard is useful in stable production environments, but can be difficult to manage in less defined pioneering business development. In the banking industry, for instance, the balanced scorecard would be useful in high transaction environments such as securities sales and trading, currency trading, debt capital markets and even loan generation. These are relatively high volume (and low margin) businesses with multiple transactions per week if not per day. Investment banking, on the other hand, represents a high margin but relatively lower transaction activity, combining both technical skill and extended relationship building. The gestation period of a mergers and acquisitions (M&A) deal can easily take a year or more, and the success rate might typically be one in ten. Therefore, a biannual or even annual review process might easily measure one area of the bank’s progress towards balanced scorecard transaction goals, but may completely miss the quality (or poor quality) of time and effort invested in an M&A transaction.

The balanced scorecard is well suited to processoriented, high-volume (low risk/low return) environments but not as applicable to less predictable low-volume, high-margin (high risk/high return) long transaction cycle businesses. The latter are more qualitatively subjective and require professional judgment.

A good CEO must pick a great HR director, knowing that the HR director’s best control system may at times fail. Gaming the System Another problem in implementing the balanced scorecard is the varying level of skills people have in interpreting or manipulating rules for their own interests. A well-meaning professional might set overly ambitious balanced scorecard goals, miss them and lose his job. A politically prudent but marginal producer might set extremely conservative but still credible goals, exceed them and be rewarded. Protective self-interest has led some to “game the system” by postponing goal setting until later in the balanced scorecard cycle, and adjusting the goals to approximate what has already been accomplished to date. When Intel International Corporation wanted to expand in inland China, it had no basis for measuring performance, except by taking a step at a time. The corporation opened opened offices in Chengdu, Wuhan, Xian, Chongqing, Shenyang and Jinan followed by Fuzhou – within two years. In retrospect a remarkable feat, but the business developer leading the effort was taken for granted. That business developer fell between the cracks

of the balanced scorecard and was forced out by a superior manager fearful of losing credit. A good CEO must pick a great HR director, knowing that the HR director’s best control system may at times fail. A balanced scorecard will distort professional contributions in long gestation product life cycles or in unpredictable ones, such as product life cycles of mobile applications with uncertain life spans. Inviting Innovation A great HR director needs to foster the unexpected innovation which the balanced scorecard cannot schedule. Innovation, as Wernher Von Braun of research and development says, is what you are doing when you don’t know what you are doing. Innovation is unscheduled, disruptive and key to an organization remaining relevant in the market. It is difficult to measure and manage on a balanced scorecard. In 1560, Oda Nobunaga with a force of 3,000 attacked an army of 25,000 against the wise advice of his HR director, Hayashi Sado no Kami Hidesada. Oda Nobunaga set up a decoy of dummy soldiers with flags and helmets, circled around to the rear, and after a night of thunderstorm, ambushed Imagawa Yoshimoto (今川義元) in the Okehazama gorge (桶狭間), and won. Good CEOs pick great HR leaders and ignore them – sometimes. When that happens, both can take satisfaction in fulfilling their destinies.

Roy K. McCall, CFA/CPA is a corporate consultant based in Beijing who has three decades of experience in Japan, Taiwan, China mainland and the Middle East. McCall is a member of the CFA Institute, AICPA and International Public Relations Association (IPRA-London). He has an MBA from Harvard Business School.

EDITORIAL APR-JUN 2014

Reward and Remuneration Annette Karseras Editor in Chief, The HR Agenda Originally written in English

Combine the best of the East and the West to create a system that keeps the right people in the right roles for the company to be most effective. Lessons for HR and distribution of reward are derived from many sources. With the 2014 football (aka soccer) World Cup just around the corner we look at what reward means on and off the field. We also see how reward systems used in Japan’s lifetime employment system could hold some clues to the critical issue of retention in many Western countries and for globally sustainable macroeconomic development. What Shape are your Goal Posts? “One percent holds the power, the middle class is not big enough and the poorest are not getting a look in.” Not the words of a political Bell Curve leader, but those of football’s future FIFA Macroeconomic sustainability of presidential candidate, a former diplomat, global operations is linked to microeconomic Jérôme Champagne. Champagne, 55, dignity through balancing the reward of wants to “re-balance the game” by curbemployment security with re-calibrated profit-sharing ing the power of elite European clubs in a way that better reflects a globalized 21st century. So goes his election campaign. Champagne seeks a shift in the power of governance, the intrinsic rewards of seniority and the instrumental rewards that come to those with the autonomy to control and make decisions. Equality and inclusiveness were also Same as others high on the agenda at the 2014 World Economic Forum, recognized as the best way to ensure sustainable global growth in line with IMF forecasts. Probably less Probably more Globally, reward systems need to betthan others than others ter reflect the market economies they are buying into and out of. Similar to FIFA’s dilemma, the underlying issue is about the ethical health and maturity of any organization to willingly shift the balance Definitely less Definitely more of power to include representatives from than others than others parts of the world that have not previously been given either governance rights or commensurable reward. Locally, ethical maturity includes professionalizing parttime positions to create rewarding work for those with responsibilities at home Performance-related pay, Cafeteria benefits plan, Economic dignity Intrinsic reward, Autonomy, Employment security, Simple pleasures and consulting options for more senior

Distribution of reward amongst the workforce

employees. Widening the pool of talent means more people are able to participate as ShaKaiJin 社会人, active members of society, through their work and, in turn, as consumers. Some organizations use what Microsoft’s Jeron Lanier calls a “power law… where you have a few winners and everybody else is a wannabe.” Typically, U.S. sales departments have this kind of steep curve bonus system set on top of near minimum-wage pay. Losers who, for example, achieve only 20 percent of their targets fall sharply and shamefully to the bottom and the star players who make 200 percent rise to giddy heights. Recent executive pay outs run on similar equations of risk and reward. While such highs and lows might fuel the shortterm excitement of a football final, steep-curve systems do not serve long-term macroeconomic sustainability. Neither do they provide microeconomic dignity: Emotionally, if people feel as low as their results they are likely to leave. And they typically do, taking valuable company-specific knowledge with them.

cent of full-time workers reported searching for new job opportunities is part of their regular routine.” In another survey conducted across Asia-Pacific, Europe, North America and Latin America, more than a third of the 418 executives who responded cited retaining crucial company-specific skills as HR’s leading focus. By contrast, anyone familiar with the Japanese workplace knows that retention is a non-issue in this country. Quite the contrary: The traditional assurance of life-time employment presents a different crisis for many companies that desperately need an injection of new skills and to prevent labor costs from sabotaging profit margins of healthy revenue growth. Unlike in the West, there is little recourse in Japan to refresh the organization’s skills-set through layoffs and rehiring. So what lesson of loyalty can Western companies learn from Japan’s lifelong employment model and can Japanese companies adapt this admirable tradition substantially enough to withstand fluctuations in the economic climate and differential demand for skills?

Re-calibrating the Biannual Bonus A mainstay in Japanese companies is the biannual bonus system whereby salaries are divided by 14 or 16 months rather than 12, with the additional two or four months appearing in summer Natsu no Bo-nasu 夏のボーナス and winter Fuyu no Bonasu 冬のボーナス pay checks accordPower Law ing to company profits over the same Steep-curve systems do not serve long-term six months. Glynn Brasington, country macro economic sustainability but rather result in manager of a Japan-based Fortune 500 the loss of crucial company specific skills company recognized the symbolic value of this bonus system. Worldwide his company was number one in its market. But Japan was flailing. Before his Low economic dignity for a high number arrival, it had been losing money quarof wannabes terly in its 32 million dollar operation. Brasington was brought in as a third-party manager to turn figures back to black. His strategy included values mining to find out what motivated employees both from the old and new company. His Western-educated Japanese HR manager was keen to push through monthly performance-related pay schemes with the strong encouragement of the U.S. head office. But after investing countless hours behind the scenes in “a mammoth amount of nomunication (after-hours drinking),” and playing football with staff on weekStar players ends, he began to understand someget very high reward thing important. Many people liked the fact they worked for this non-Japanese company, but they didn’t want to be Western. They wanted to be Japanese Cold hard cash with an exotic touch. This blend was important.

Economic Dignity & Retention In many countries, retaining talent is regularly cited as HR’s biggest concern. According to a North American CareerBuilder survey “as many as 69 per-

Distribution of remuration amongst the workforce

There is an entire incentivization industry developing an ever-increasing array of gamified solutions and small stretch rewards such as a month of free lunches or a parking spot close to the door. Such incentives alone however do not engender the kind of loyalty and pride that retains talent in the long term. By encouraging stronger business partnering between sales and HR teams Brasington’s team found a way of keeping the biannual bonuses and satisfying a Westernstyle incentive program. HR took advantage of the existing vagueness in the contract terms to specify clear performance-related thresholds for sales targets that related directly to biannual bonuses. The new criteria included accelerated bonuses for above-target performance – but not to the extreme of U.S. standards. Performance-related thresholds were applied in other divisions of the company too. The annual wage bill did not go up, but profits did. And unionizing stopped. One key is consultation, something the International Labor Organization also advocates. Sustainable growth also depends on stability, which means keeping the bell curve buoyed in the middle with people competing within margins that are achievable for larger majority, not an elite few. The U.S. approach might be to get the high performers stretching to excel, but the lesson for loyalty is that by recalibrating profit-sharing to increase a broad-based sense of success, people are less inclined to leave and crucial company-specific skills are retained.

Widening the pool of talent means more people are able to participate as ShaKaiJin 社会人, active members of society, through their work and, in turn, as consumers.

Adapting Internal (Re-)Application The recent Western trend of asking employees to reapply internally for jobs (aka internal posting system) addresses the next challenge of retention: It’s not just about keeping people per se, it’s about having the right people in the right roles for the business to be effective. There are two interesting twists to internal reapplication in Japan: First, because of the lifetime employment system, the majority of staff has never put their work experience on paper before; implications of this complexity (resume writing, interview techniques, etc.) are obvious to Japanese but may be easily overlooked by Western members of the team. Second, Japanese staff may not fully appreciate the fact that – unlike job-rotation, another of Japan’s workplace traditions – they are not obliged to accept a position they 32

have applied for if they discover, during the application process, that it does not match their expectations. Valuing people enough to conduct two-way conversations about internal shifts can also make employees more aware of the gap between what they can realistically offer and the needs of the organization. Both rotation and reapplication feed MeiYo 名誉 (honor) which continues to motivate many employees to take the initiative to sign up for courses outside their work hours or commit to intensive independent learning. The personal reward is in the opportunity to develop in a way that best suits them and their life circumstances – whether that be inside their current division, in a different division, or in another company. Another way that Japanese companies traditionally endear loyalty is through generating pride, for example by using the HyouShouSeiDo 表彰制度 system to commend staff by enabling them to report improvements publicly such as a cost reduction, safety achievement, or time efficiency, or to propose a new idea to senior management. Combining HyouShouSeiDo 表彰制度 proposals with competition for a reduced number of positions is another way of adapting Japanese employment traditions to maintain resilience in the face of economic volatility. Offering fixed-term salaries on these revised contracts provides the employee with a safety net – the minimum salary within each income bracket. Yet, unlike the traditional Japanese seniority system where age guarantees increased increments, it is only employees who win in the re-application competition who become entitled to higher pay rates in-bracket or a jump to the next bracket. At its best, internal reapplication rewards people with the chance to design out what they like least about their work, to focus in on ways they feel they can best serve the business, and to personalize their remuneration top-ups from a cafeteria benefits plan. Long-term macroeconomic sustainability and microeconomic dignity are linked. In order to retain company-specific talent there is value in balancing the reward of security with re-calibrated roles and profitsharing options. And for an organization to evolve globally, an ethical shift is needed in the balance of power and autonomy to include wider participation of people both domestically and in other parts of the world. Acknowledgements: B. Burqist, J. Crisp, O. Georlette, J. Kabigting, D. Sasaki, Y. Takada.

Annette Karseras is a coach and trainer who develops leaders and teams at all levels of the organization. Annette has trained with the Coach Training Institute (CTI) and the Society of Organizational Learning’s Systems Perspectives. She also delivers Global Mindset and Communication Intelligence courses at Japan’s top universities. Her master’s degree is from Leicester University, UK.

who we are We are a community of Japanfocused HR professionals worldwide and corporate leaders doing business in Japan.

community 0fficers Jun Kabigting MBA, MS, HRMP Chief Community Officer

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We provide our members a venue to: 1. Share useful HR and management tips and best practices; 2. Participate in virtual and live networking or learning events; and,

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