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SECURING THE WORKFORCE Diversity management in X-tech, a Japanese organisation

The case was written by Associate Professor Lisbeth Clausen from the Department of Intercultural Communication and Management at Copenhagen Business School ([email protected]) and Student Assistant Mikkel Kruuse.

This case is intended to be used as a basis for class discussion rather than as an illustration of the effective or ineffective handling of an administrative situation. The name of the company is disguised.

e [email protected] e [email protected] case centre

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This case has been made available as part of the CBS free case collection www.thecasecentre.org/cbsfreecases

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mailto:[email protected]

INTRODUCTION In light of demographic concerns, in 2012, the Japanese government initiated an effort to change the

work environment in order to secure the workforce of the future. Japan is world renowned for its

high-quality “lean” production and management efficiency. However, economic stagnation, the

challenges of an aging population, a record-low birth rate and a poor score in OECD statistics on

female participation in the workforce led the Japanese government to focus on the economic benefits

of diversity in corporate Japan.

In this case, we present the story of Mieko Suzuki, a general manager who worked in a Japanese

subsidiary of an American multinational company active in the information technology industry. As a

working woman, she knew the Japanese organisation first-hand and had successfully navigated the

road to becoming a manager in a male-dominated industry. In 2012, she was approached by the

subsidiary company president, who asked her to become a ‘diversity ambassador’, and to join a new

initiative launched by the executive management group to foster diversity and inclusion in the

workplace. Mieko accepted the offer in the belief that her experiences could help others in similar

situations while also helping the company achieve its goals. However, was it even possible to change

an organisation known for its focus on harmony and group processes, an organisation in which the

norms of Japanese society greatly influenced employment conditions?

NEW FOCUS ON DIVERSITY MANAGEMENT

– WOMENOMICS IN JAPAN After World War II, Japan managed to rebuild its devastated industries to become the third-largest

economy in the world after the US and China. The unprecedented growth, which came to be known

as the ‘post-war economic miracle’, lasted until the early 1990s when the economy was hit by the

collapse of the asset-price bubble (Gordon, 2003). The economy struggled to recover for nearly two

decades, and it was further strained by the 2008 global financial crisis.

To reinvigorate economic growth, the administration, under the leadership of Prime Minister Shinzo

Abe, introduced a number of economic policies in 2012. The policies were collectively known as the

three arrows of ‘Abenomics’ (The Economist, 2014). The first two arrows, which were implemented

during the first few weeks of the government’s term, referred to monetary and fiscal policy,

respectively. The third arrow was a growth strategy in which women were to play a central role in

getting Japan out of economic stagnation and the recession – ‘womenomics’ (The Economist, 2014).

In 2010, the Cabinet approved the Third Basic Plan for Gender Equality (see Exhibit 7). The plan

included the goal of increasing the number of women in leadership positions to 30% by 2020

(Gender Equality Bureau Cabinet Office, 2010).

The female participation rate in the labour force was low compared to that of males. According to the

US investment bank Goldman Sachs (2014), closing the gender employment gap could increase

Japan’s GDP by 13%. Nevertheless, to realize the advantages of an increase in the number of women

in the workforce, Japanese companies would have to restructure their organisations. Traditionally,

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women left the workforce upon marriage in order to handle child rearing and household chores, as

the long working hours associated with lifetime employment and the seniority principle were not

consistent with motherhood (BBC, 2013).

AN AGEING POPULATION Japan is an island chain located in eastern Asia between the northern Pacific Ocean and the Sea of

Japan. It lies east of the Korean peninsula. Japan consists of approximately 377,915 square miles,

which is comparable in size to Germany or Romania (NationMaster, 2013).

According to the 2010 national census, the total population was 128,057,352, of which men and

women accounted for 48.7% and 51.3%, respectively (Statistics Bureau of Japan, 2011). The

population size has been declining since around 2005. A report compiled with the government’s co-

operation in 2012 indicated that the population will decline from 127 million to about 87 million by

2060. Of the latter number, almost 40% are expected to be 65 or older (The Economist, 2014).

In an interview with The Japan Times (2014), Hidenori Sakanaka, head of Japan’s Immigration

Policy Institute, stated that “Global investors have a consistent policy of not investing in a country

with a shrinking working and consumer population”. As a result, Sakanaka expected the gross

domestic product to shrink in line with the decline in population. In order to sustain GDP, he

suggested that either the fertility rates had to increase or immigration would have to be deregulated

radically (The Japan Times, 2014).

EQUAL OPPORTUNITIES FOR MEN AND WOMEN IN JAPAN Japan’s Labour Standard Act of 1947 mandated equal treatment in employment between women and

men with respect to wages. Apart from the legally binding measures, the Act also provided

employers with a number of moral guidelines:

Working conditions shall be those that meet the needs of workers who live lives worthy of

human beings” and “The standards for working conditions fixed by this Act are minimum

standards. Accordingly, parties to labour relationships shall not reduce working conditions

with these standards as an excuse and, instead, should endeavour to raise the working

conditions (Labor Standard Act, 1947).

To address discrimination beyond wage considerations, the Equal Employment Opportunity Law was

enacted in 1986. The aim of this regulation was to prohibit gender discrimination with respect to

recruitment, hiring, promotion, training and job assignments (Edwards, 1988):

The basic principle of this law is that workers [労働者] be enabled to engage in a full

working life without discrimination based on gender, with due respect for the maternity of

female workers.

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If any of the conditions were violated, the employee could force the employer into mediation

(Starich, 2007).

Despite the fact that women had equal opportunities by law, only 49% participated in the labour

force in 2013, compared to 70% of men (The World Bank, 2013). Many women left the workplace

upon marriage to raise children and returned when they became older, which led to a graphical

depiction of participation in the labour force as an M-curve.

In a 2012 report by the Benesse Educational Research & Development Institute, 1 almost 60% of

women surveyed in the Tokyo metro area said that they had given up on returning to work after

childbirth because of a lack of childcare options (Forbes, 2014). According to the Tokyo

Metropolitan Government's own statistics, 20,000 children in the city were awaiting a space in a day-

care centre (BBC, 2013).

X-TECH BACKGROUND AND ORGANISATIONAL CHANGE The Japanese subsidiary in which Mieko worked was established in the mid-1980s. While the US-

based parent company was known globally for its diversity initiatives, the Japanese division was

lagged behind in terms of employing women and foreigners. In 2012, the subsidiary had around

2,000 employees, of which 95% were Japanese. The average age of subsidiary employees was 40

years. The Japanese subsidiary did not report gender breakdown, but X-tech had approximately 70%

male and 30% female employees worldwide. 2 As a general manager, Mieko’s task was to connect her

team of 500 engineers to customers with regards to project contracts and subsequent support.

I’m not an amazing engineer, but I understand their discussions. Sometimes, the engineer’s

language is really difficult or impossible for executives or sales people to understand. I am

really good at translating what engineers are saying into sales language.

In 2012, the subsidiary’s president asked Mieko to join a team with five other people established to

focus on diversity and inclusion in the workplace. The team’s assignment was to improve conditions

in terms of: 1) recruitment, 2) employee development, 3) retention, 4) work-group community and 5)

marketing.

Prior to joining X-tech, Mieko had served as a regional manager for the Japanese subsidiary of

another multinational corporation, Global Business Solutions (GBS). GBS, which was in the tech

industry, was known for its diversity initiatives. It was there that she learned how to promote

diversity:

I am lucky that I was at GBS when it started to promote women inside the company. They

started in the late 1990s, which was early for Japan.

1 Benesse Educational Research & Development Institute is an affiliate of daycare and education-services provider Benesse

Corporation.

2 X-tech granted unlimited access to interviews. However, statistics, strategy and policy papers concerning the firm’s diversity goals

and objectives were not made available.

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Diversity was also important at X-tech, but it only became a top priority after the business was stable:

The business takes a much higher priority. However, we have been successful in that regard –

we won the top subsidiary award, which is given to the subsidiary with the most growth. It is

an internal international award. Now we are very stable, and we are very confident about our

business performance.

The next step was to become recognised as a company that cared about diversity, and the subsidiary

president expected to see clear results from the initiative – an increased proportion of female

employees, a higher number of female managers and a greater percentage of women in higher

management. He also wanted the culture to become more inclusive in general, such that every person

with a unique style was respected and accepted, and every employee could demonstrate his or her

capabilities to the fullest.

WORK-LIFE BALANCE In response to the challenge posed by the president, Mieko looked to her own team to identify any

obstacles to creating an inclusive work place. Her team sold software solutions to a wide variety of

customers, from global companies to public institutions and private users. For large contracts,

engineers would go to the site to work with the customer, and much of the work related to subsequent

support. Engineers took customers’ calls every day, listened to their troubles and attempted to

identify customer trends.

The system served as a great source of information on ways to improve the products and create more

value for the customer. However, Mieko considered the possibility that there might be drawbacks:

There are few [female] managers and female employees because this is a client-facing

organisation that tends to be characterised by long working hours.

Mieko herself worked around 50 hours per week, usually going into the office at 9:00 a.m. and

almost always leaving around 7:30 p.m. In addition, she would have late-night conference calls with

her colleagues in the US every other week. On the weekends, she would wrap up her week’s work

and prepare for the coming week:

I do not have time to go through my mail on weekdays. I have unread emails, so I need to

clean up my mailbox on either Saturday or Sunday. Therefore, I work three to four hours to

clean up the mailbox and get ready for the next week.

For many Japanese employees, long working hours were part of the corporate culture. However,

during her years as a manager, Mieko had noticed a change in attitude among the younger

employees:

Japanese companies want their employees to stay as long as they can. The company is like a

family, so they have to share as much time as possible. We used to believe that staying was a

sign of loyalty, but that attitude is changing. The younger people think that the work hours

are too long and that their productivity per hour is more important than staying.

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The corporate work culture was highly demanding on the individual. Some women were unable to

stay at work until 10:00 p.m. or even midnight. Mieko would have to consider how this affected the

advancement of women. She wanted women to say: “Wow, this is a place I really want to work!”.

However, at the time, she knew that was unlikely.

WOMEN AND LEADERSHIP In her meetings with clients, Mieko rarely met other women:

I meet [women] as the first-line manager, but never in executive meetings. They are so few.

She had grown accustomed to being in the minority, but she wondered why she was the only woman

at meetings. What set her apart from other women? Around 20 years previously, at the age of 43, she

had decided to become a professional leader. She defined a leader as the person who achieves the

required business result or performance using the given team and resources – regardless of other

factors in the organisation:

I heard an interesting person’s presentation and decided that I wanted to be a professional

leader. Then I started studying communication, negotiation, marketing and so on. I also

attended leadership training.

The training, which was external, had lasted for two years and included courses in consulting,

coaching and counselling. Furthermore, Mieko was educated in performance and self-expression,

including such aspects as verbal and non-verbal communication, gesture, posture, and tone of voice.

Mieko did not believe that leadership abilities were gender related. Rather, the outcomes depended

on personal style and accomplishments. However, in order to figure out why more women did not

become managers, Mieko and her team developed an internal questionnaire, from which they

concluded that there was not enough information available to employees about advancement. Some

women indicated that they wanted to become managers, but they did not believe that they were

competent enough. Others explained that their superiors never asked them to become managers.

Finally, some women said that they wanted to become managers but not in the current company,

which they felt was too demanding:

The female employee does not have access to the knowledge that there are assistance or

training courses available. They simply do not know.

IMMIGRATION AND OTHER DIVERSITY ISSUES Despite calls to ease immigration laws, the Japanese government had been reluctant to discuss

immigration policy (Fortune, 2013). Mieko knew that female employment was not the only area in

need of improvement, but she explained it as a question of priorities:

The reason is that [gender issues] are the most problematic area. They are the top priority

because we are so far behind in terms of numbers, ratios and so forth. So, that is the first

priority. At the same time, if the company or the organisation is a good place for women to

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work, that will also create good conditions for retirement help for both women and men who

need elderly care. So this is just an entry point.

Mieko was well aware of issues in other areas. She believed that, after gender, the next step would be

a focus on foreigners and people with various sexual orientations. There were also some ethnic

issues, such as the Burakumin, Ainu and Ryukyu 3 , but these were relatively minor. Notably, however,

both sexual orientation and minority-related issues were viewed as taboo in Japan:

Women are really the entry point. If we fix this issue, other issues will be halfway resolved. If

people think in a different way, they will accept broader styles, preferences and thinking. I

hope that kind of society is coming soon.

DIVERSITY FROM THE PERSPECTIVE OF INTERNATIONAL EMPLOYEES

IN THE ORGANISATION According to one of Mieko’s co-workers, Pascal, a 40-year old western European male, diversity was

a vast, ‘diverse’ discussion. He had previously served as a regional manager for Europe, the Balkan

countries and North Africa in corporate X-tech.

We are all diverse because human beings are different. Even if you take two white males, they

are diverse by nature.

According to this colleague, the perception of diversity depended on how one ‘set the bar’. He

strongly believed that if you were genuine, open, honest and respectful of people, then diversity

would become a way of life. To do so, one needed to accept people for whom they are, what they do

and how they work. This colleague would listen to people, and he paid attention to who they were

and helped them in their roles. Diversity was neither a problem nor a topic. Rather, it was his way of

embracing people. This colleague viewed diversity as the most important ingredient for peace. It was

about how one brought people in and ensured that every kind of person with any kind of background

felt cared for, listened to and welcomed. He spent much of his time making sure that people felt

welcome in his team:

I want people to feel that they work in a harmonious environment where it is okay to speak

up. It is okay to deliver the best of yourself because you feel supported. Harmony makes the

diversity topic a non-topic.

However, to his Japanese co-workers, harmony also meant that putting the group first. This view

made them more self-critical. The Japanese subsidiary posted performance equal to or better than that

of the Chinese and Korean subsidiaries, but it had consistently lower ratings in self-evaluations:

For [the Japanese], the number one criterion is how hard you have worked. That is number

one. This means that if you felt that you did not contribute enough in terms of hours, you

3 Discrimination of the indigenous ethnic minorities of dates back several hundred years and to some extent still persists today. For a

more detailed explanation see David L. Howell – Ethnicity and Culture in Contemporary Japan (1996).

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would devaluate yourself. The second criterion is the quality of your work. The Japanese

provide the highest quality ever seen, and they are ready to pay for it.

Another international co-worker, Sa’id, (37), who was originally from India, had previously worked

in diverse workplaces in the US and Europe. He found Japan to be a male-dominated society in

which women were slowly ‘moving up’. However, by his standard, Japan was behind the US and

Europe. Women who wanted to build a career had the challenge of managing the home, kids,

cooking and working. Diversity, as a concept, was even used in relation to work styles and ways of

thinking. The Japanese were educated as “us being a single cohesive chain”, and anyone who was

different was excluded. In this employee’s view, the acceptance of different mindsets had to start in

early education, but the Japanese education system did not accept differences. In the corporate world,

discussions about diversity mainly concerned the hiring of women, and this employee did not

encounter discussions about sexuality in either Japan or in Asia in general. He suggested that the

company’s official rhetoric was that “it had to be diverse. It had to be global”. In his view, Asia had a

long way to go to embrace the concept. However, Japan did not discriminate against certain groups

of people in the same way he had experienced as an Asian working in the US:

If someone is different, the Japanese do not take action to change that person. In the US,

there are triggers of discrimination. If you are not like ‘everyone else’ in the US, they will try

to change you. There are so many problems there concerning race and what should be the

standard.

Most Japanese he had encountered were refreshingly honest about the fact that he was an

international employee, making comments such as:

Foreigners… they are too big. They will break my house! As he explained: Most Japanese

expect you to behave in a Japanese way. However, they do not discriminate if you do not.

TIMING – DIVERSITY AS A BUSINESS CASE X-tech was powerful in terms of talent, hiring and processing. Within a decade, the company had

expended a significant amount of effort to acquire talent, with a focus on people from India and

China. X-tech had struggled in the previous 10-15 years to become a leader in innovation. There was

room for improvement and the people-related direction seemed to be right. If X-tech could integrate

and sustain these values, it could become a better, more successful company. Diversity strategies and

implementation were to be a major part of this movement:

The biggest challenge for us is really how smart we are going to be when we define what can

and cannot be done. Simplifying globalisation and diversity can also have negative

consequences for our business. Oversimplification could become backtracking if we do not

make the right decisions. Both are long processes.

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FUTURE CHALLENGES – PROMOTING DIVERSITY MANAGEMENT Diversity management with a focus on women was becoming increasingly important in Japan. The

government was pushing for more women in leadership positions. In the private sector, it was

becoming a battle for talent. Mieko knew that it would be a challenge to overcome the traditional

gender roles that were so deeply ingrained in Japanese society. Would it even be possible? Was there

going to be resistance to change in the organization? What tools would she need to complete the

task?

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82 .

P ur

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76 H

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EXHIBIT 1

LABOUR FORCE PARTICIPATION BY AGE GROUP 4

EXHIBIT 2

POPULATION AND POPULATION GROWTH RATE: 1920-2010 5

4 Gender Equality Bureau Cabinet Office, 2000.

5 Statistics Bureau of Japan, 2011.

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32 84

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nc od

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EXHIBIT 3

PERCENTAGE OF POPULATION AGED 65 YEARS OLD AND OVER: 1950-2010 6

EXHIBIT 4

RATIO OF FEMALE TO MALE ENROLMENT IN TERTIARY EDUCATION 78

Japan 90

United States 139

Sweden 155

Korea 75

6 Statistics Bureau of Japan, 2011.

7 The World Bank, 2012.

8 The World Bank, 2012.

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32 84

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China 113

Russia 126

South Africa 137

OECD average 123.3

EXHIBIT 5

MOTHER’S MEAN AGE AT FIRST CHILD 9

1970 1995 2000 2005

Japan 25.6 27.5 28.0 29.1

Australia 23.2 26.8 .. 28.0

Denmark 23.8 27.4 27.7 28.4

Germany 24.0 27.5 28.2 28.1

Greece 25.0 26.6 27.5 28.5

Korean .. .. .. 29.1

Sweden 25.9 27.2 27.9 28.7

Switzerland 25.3 28.1 28.7 29.5

United Kingdom .. 28.3 29.1 29.8

United States 24.1 24.5 24.9 25.1

OECD-16 24.0 26.2 26.8 27.7

9 OECD, 2009.

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EXHIBIT 6

LIFE EXPECTANCY JAPAN Male 81.13 years

Female 87.99 years

EXHIBIT 7

THIRD BASIC PLAN FOR GENDER EQUALITY – NUMERICAL TARGETS 10

Proportion of women for each item Currently Target (Deadline)

Politics Election candidates of

members of the House

of Representatives

16.7%

(2009)

30%

(2020)

Election candidates of

members of the House

of Councillors

22.9%

(2010)

30%

(2020)

National

government

National public

employees through the

recruitment examination

25.8%

(fiscal 2012)

Approximately 30%

(end of fiscal 2015)

Managers (positions

equivalent to or higher

than the director of the

division and the office

in central

government ministries)

2.5%

(fiscal 2010; as of

January 2011)

Approximately 5%

(end of fiscal 2015)

Members of national

advisory councils and

committees

33.2%

(2011)

40% - 60%

(2020)

Local

government

Local public employees

through recruitment

examinations (advanced

level examination) for

prefectural governments

23.8%

(2010)

Approximately 30%

(end of fiscal 2015)

10 Gender Equality Bureau Cabinet Office, 2010.

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Managers in prefectural

governments (positions

equivalent to or higher

than the director of a

prefectural government

office)

6.4%

(2011)

Approximately 10%

(end of fiscal 2015)

Members of prefectural

government advisory

councils and committees

28.8%

(2011)

30%

(2015)

Private sector Section manager or

higher in private

companies

6.2%

(2010)

Approximately 10%

(2015)

Education and

research

Managerial positions in

primary and secondary

educational

organizations (assistant

principal or higher)

14.8%

(2011)

30%

(2020)

University professors

(presidents, vice

presidents, professors,

associate professors, and

lecturers)

17.8%

(2011)

30%

(2020)

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32 84

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76 H

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EXHIBIT 8

FOREIGN NATIONALS IN JAPAN, 2011 11

EXHIBIT 9

BENCHMARKING AGAINST JAPANESE CORPORATIONS The links below lead to the responsibility pages of some major Japanese corporations. These specific

examples of diversity initiatives may be used for benchmarking.

These initiatives are occasionally updated and modified. Therefore, changes in the content and

availability of the links are possible. Students may wish to look up other Japanese corporations as

well, such as Shiseido, GE Japan and Rakuten.

TOYOTA:

http://www.toyota-global.com/sustainability/report/sr/12/pdf/sr12_p50_p56.pdf

TOSHIBA:

https://www.toshiba.co.jp/csr/en/performance/labor/work.htm

SONY:

http://www.sony.net/SonyInfo/csr_report/issues/report/2010/pdf/CSR_Report2010_08.pdf

11 Ministry of Justice, 2011.

33%

26%

10%

16%

China 674,879

Korea 545,401

Brazil 210,032

Philiphines 209,376

Peru 52,843

US 49,815

Others 336,162

Total 2,078,508 (1.63% of total pop.)

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https://mail.cbs.dk/owa/redir.aspx?SURL=Zwc7jhjYZRAFm1SbCPAo4c6NIyGYFXMkQfmW2YFlO3BIqShHToHSCGgAdAB0AHAAOgAvAC8AdwB3AHcALgB0AG8AeQBvAHQAYQAtAGcAbABvAGIAYQBsAC4AYwBvAG0ALwBzAHUAcwB0AGEAaQBuAGEAYgBpAGwAaQB0AHkALwByAGUAcABvAHIAdAAvAHMAcgAvADEAMgAvAHAAZABmAC8AcwByADEAMgBfAHAANQAwAF8AcAA1ADYALgBwAGQAZgA.&URL=http%3a%2f%2fwww.toyota-global.com%2fsustainability%2freport%2fsr%2f12%2fpdf%2fsr12_p50_p56.pdf

https://mail.cbs.dk/owa/redir.aspx?SURL=wx4lExbMYY_86zrczgIbxOY6VixT2QwCuAX3sOFBVTxIqShHToHSCGgAdAB0AHAAcwA6AC8ALwB3AHcAdwAuAHQAbwBzAGgAaQBiAGEALgBjAG8ALgBqAHAALwBjAHMAcgAvAGUAbgAvAHAAZQByAGYAbwByAG0AYQBuAGMAZQAvAGwAYQBiAG8AcgAvAHcAbwByAGsALgBoAHQAbQA.&URL=https%3a%2f%2fwww.toshiba.co.jp%2fcsr%2fen%2fperformance%2flabor%2fwork.htm

https://mail.cbs.dk/owa/redir.aspx?SURL=Cg1b7NpHRHWAEjuLiJp6JVslKDt8Ylz-2cB2n8l7ZDpIqShHToHSCGgAdAB0AHAAOgAvAC8AdwB3AHcALgBzAG8AbgB5AC4AbgBlAHQALwBTAG8AbgB5AEkAbgBmAG8ALwBjAHMAcgBfAHIAZQBwAG8AcgB0AC8AaQBzAHMAdQBlAHMALwByAGUAcABvAHIAdAAvADIAMAAxADAALwBwAGQAZgAvAEMAUwBSAF8AUgBlAHAAbwByAHQAMgAwADEAMABfADAAOAAuAHAAZABmAA..&URL=http%3a%2f%2fwww.sony.net%2fSonyInfo%2fcsr_report%2fissues%2freport%2f2010%2fpdf%2fCSR_Report2010_08.pdf

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1 1-

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01 8.

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32 84

82 .

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32 84