An article of TOYO KEIZAI ONLINE about an interview with the President of AIMS International, Rolf Heeb, released on January 29, 2013, conducted by Takahiro Ito.

Can’t Japanese win Indians and Chinese?

The decline in Sony and Sharp… Now that the once-believed everlasting legend of Japanese global companies has collapsed, Japanese people’s way of working has to be reviewed. How can Japanese people survive in the global market? Or more fundamentally, what do the Japanese people lack?

President_Rolf_Heeb_Interview_in_Tokyo-150x150Rolf Heeb, the President of a global search firm AIMS International who scouted several hundred of people for the past 35 years, has responded to our questions.

— “What do you think about the presence of Japanese people in the current global market?”

In the global human resource market, the presence of Japanese is fading. Instead, Chinese and Indians are gaining their presence. I believe the reason for it is the fading presence of both Japanese people and Japanese companies in the global market.

Why Japanese cannot win Chinese and Indians

— “What is missing to Japanese compared with other nations?

English language skills are missing to Japanese. That sums it up. Even if one can speak English very well, it is not enough. Multiple skills are required to survive in the local market in overseas countries.

At least, the local language is required in addition to English. Furthermore, positive attitude and flexibility to adjust to other culture and community are required. My honest view is that Japanese people fall behind the Chinese and Indians in all of those elements.

I am from Dusseldorf where a number of Japanese companies have offices. There, I see Japanese people who just stay within the Japanese community and will not step out to associate with other cultures. I believe such an attitude is an index of the mentality of Japanese.

This matters to those Japanese who currently work in the domestic Japan market, too. The advance of Japanese companies into overseas markets will be further accelerating. A person who has been working only in Japan may be suddenly asked “You’ll be responsible for starting up our India branch next month”. Nowadays, such an assignment is possible and quite natural. It will be too late for the individuals to start a preparation after such assignments are given to them.

Then, what do you have to do? First of all, English. In addition, you have to acquire positive attitude and flexibility as I mentioned earlier. With regard to this, Japanese people fall behind to the extent that they have to learn from businesspersons in the rapidly emerging countries such as China and Korea. There are lots of things to learn for Japanese people.

—“What do you think are the strong points of Japanese?”

I would say the strength of Japanese is strong loyalty to the company and high value for the organisation.

—“That may mean that Japanese are strong only in those areas, doesn’t it?”

Maybe yes. Therefore, Japanese companies should make themselves more competitive through development of the people.

War for talent has already begun in the world

—“What preparation should the Japanese companies make now?”

From the viewpoint of talent acquisition and management, there are certain problems in the HR division at Japanese companies.

Traditionally, “personnel division” sounds like a clerical function and does not work closely with the core management of the business units. Therefore, hiring has not been made strategically. But the importance of HR’s role is increasing to the extent that companies should have CHRO in parallel to CEO and COO.

Nevertheless, it is not so easy to make the HR division stronger. The conventional idea of “just hiring” needs to be changed.

HR division needs to have a more strong belief that they have to fill each position with a fully qualified person who can contribute to strengthen the business. In order to do so, you need to know at which place of the world the excellent talents you want are located. There is already a “war for talent” going on in the world.

—“Then, do you think it is not enough for the Japanese companies to rely on the current employment practice inclined to new graduate hires?”

It is a good approach to hire excellent new graduates. However, it is not enough. I do not think companies can hire resources who can contribute immediately just through Japanese new university graduates. It is not probable that the universities are providing enough education. I consider that companies should restrain new graduate hires in Japan and focus more on hiring of local employees at the investing countries.

—“The Japanese companies’ local hiring in the investing countries is slow. Is there any reason for it?”

The management style of Japanese companies is very traditional. The decision making is consensus oriented and too slow in the fast changing business environment. Japanese companies are the opposite from very flexible. Also the organisation is very hierarchical. In a local entity, the compensation and working conditions tend to be lower for local employees compared to Japanese employees at the same position.

Japanese companies’ culture blocks participation of foreigners

—“Do you think Japanese executives at Japanese companies will be replaced by foreign executives in the future?”

It is a difficult question to answer. A change to accept other nationalities into the board members is an advantage. In other cultures, it is common that global companies are managed by an international management team at board level. One of the two CEO’s at Deutsch Bank is an Indian. The CEO of 3M is a Swedish.
At the Western counties, the nationalities of the management team members are not a matter for discussion. I would guess that this will take much longer in Japan than in other countries. Therefore, I don’t see a lot of replacements of Japanese managers in Japan. Carlos Ghosn would be an exception.

—“Is the Japanese presence decreasing?”

From our point of view the Japanese presence is still existing but decreasing. Looking at the difficult situations of Japanese companies such as Sony, Sharp and Panasonic, there seem to be three factors which are making them unable to adapt to the global market. The factors are (1) failing to catch up the innovations, (2) lack of flexibilities, and (3) excessively rigid organisation development.

On the other hand, Chinese companies are flexible and quick in decision making. They already look at Africa and have started large-scale investments. Especially, they are investing in infrastructure developments such as buildings, roads and ports in Nigeria, Angora, Kenya and Ghana.

Japanese companies are still far behind in advancing into these areas. In addition, the existence of Chinese companies is increasing in Europe. Especially in the automotive industry, they are entering into the parts supply business including tier one and tier two, covering from the upper stream and lower stream.

From now on, Japanese have to have a wider scope of vision to compete with Chinese and Indians. I consider Japanese people are still not competitive enough in this respect.

The interview was done during the AIMS International APAC Meeting in Tokyo, which was facilitated utmost successfully for the participating AIMS International Country Managers by Katsusuke Yokota, COO at AIMS International Japan .