In the previous section about how to recruit your company’s Japanese subsidiary company President (or branch-office’s representative manager), we noted that added to searching for a good bilingual Japanese executive, using a Japanese recruitment agency, hiring agency, employment agency, executive search firm, or other head hunter to recruit foreign executives already doing business in Japan, may well find an excellent candidate. An added bonus is a foreign executive will probably accept the type of aggressively performance-related pay that many Japanese executives often refuse. Let’s now look at how to recruit other Japanese managers and employees, including their salary expectations and how your company can cash-efficiently structure its Japanese employees’ pay.
First, and despite those myths of the Japanese market, it is possible to do ‘more with less’ in Japan. The key is having the right Japanese subsidiary team and, despite the cost of recruitment agency fees in Japan (typically 35% of full first year salary in Tokyo, including any bonuses and other benefits), using a recruitment agency, hiring agency, employment agency, executive search firm, or other head hunter is the fastest way to assemble the team, unless you first hire a good local ‘insider’ subsidiary executive who can bring a team with him or her.
The Japanese market is basically the same as any other market you compete in. In Japan, as elsewhere, the most successful businesses are those that have a highly motivated, intelligent, aggressive, totally committed, and well led team selling and supporting a quality product or service for a company that they closely identify with. The challenge your company has with its Japanese subsidiary is the same it has with its other foreign subsidiaries; how to take a team of people operating in one culture in one part of the world and meld them into a frontline force ready to do whatever it takes for the success of a parent company operating in a very different culture in a very different part of the world, and to do it without breaking the bank?
The first challenge is language. We previously noted that Tokyo has a workforce of about 6,400,000 people. Less than 12% speak English, of whom about 1.5% (11,500) are near-native TOEIC 900+ and about 6% (46,000) are business fluent TOEIC 750 – 900. For smaller companies setting up a 2 – 4 person office in Japan, the best way to cut cross-cultural issues is to avoid hiring staff with TOEIC scores below 900. That is not inexpensive, because many large companies snatch up the TOEIC 900+ candidates, but it is achievable and will pay back in reduced miscommunication. The next level, TOEIC 800+, especially around the 850 level, is more accessible because such candidates don’t have the perceived prestige of the gold TOEIC 900+ certificate. Candidates in this group, especially those who studied abroad, can make excellent employees.
As employees and managers, many Japanese avoid situations where they must make a solo assessment and decision (which possibly explains why there are often twice as many people on the Japanese customer’s side of the table when you go into business meetings in Japan!), but are comfortable making decisions as a group after several review and approval cycles. Westerners tend to feel constrained in such an iterating ‘decide-by-committee’ situation, preferring to make decisions and assessments individually. This difference in attitudes can cause significant cross-cultural conflicts between your company’s head-office staff and those at its Japanese subsidiary. If your company’s Japanese subsidiary President can create a transparent cultural interface between the way Japanese people and customers most comfortably do business and the way your company’s head-office and financial backers (whether angel investors, venture capitalists, or the public markets) demand it does business, your company’s Japanese subsidiary will become the star of its global portfolio.
The third challenge, and the first test of your Japanese company’s cultural interface, is to move your Japanese subsidiary employees to performance-related pay as opposed to Japan’s traditional ‘seniority-based pay’. This is a challenge your company must resolve if it wants to control its Japanese subsidiary costs and, as Bruce C. demands, ‘….scrape value from every penny….’. In my experience, controlling costs is the key, (assuming your company has a good product or service) to assuring success starting and doing business in Japan. If wages are the major part of your company’s domestic Japan business expenses, such as happens in the software industry, then your company must get its subsidiary’s pay costs tied to its revenue; that means having all Japanese subsidiary employees on performance related pay.