0:00 [Music] hi my name is Jesper Edmond and I'm an associate professor at the Graduate School of Commerce and management here at still to West University I focus on International Management which means that I'm interested in how companies governments and NGOs function in our very dynamic and complex world my most recent research focuses in particular on how Japanese companies are trying to introduce more diversity in their workforce and the implications that this has for both their management practices
0:47 and their sources of competitive advantage in the global economy over the past few years diversity has become a hot topic in Japan in particular Japanese companies have put more and more effort on hiring and promoting both women and foreigners within their ranks at the same time the government has passed laws that also aim to promote more female managers and also is introducing regulations that make it easier for foreigners to come to Japan and work here for local companies indeed as of April 2016 all companies with more than 300 employees must have plans in place that show how they will promote more women to become managers similarly regulations are now in place to encourage foreigners to enter Japan and
1:34 work for Japanese companies while these efforts are still in their infancy they do suggest that the days of the traditional Japanese salaryman are passed so what's driving this recent focus on diversity well one major factor of course is the shrinking and aging Japanese population as the left-hand-side graph shows the Japanese population peaked out in the Year 2015 and has since started to gradually decline as this decline continues companies of course facing a severe labor gap as the right hand side graph shows the number of jobs on offer per university student have skyrocketed over the past few years by focusing on diversity Japanese companies are able to expand beyond their traditional talent pool of Japanese males and thus fill
2:21 this labor gap however the recent emphasis on diversity is also a result of increasing pressures for globalization on Japanese come now this might at first seem strange after all companies like Toyota Sony Nintendo have been on the global markets for decades and indeed it's true most Japanese companies do have international sales and yet at the same time the vast majority of Japanese companies have also viewed their domestic market as the key source of revenues however as that market shrinks due to the declining population Japanese companies are facing more and more pressure to go abroad to new foreign
3:06 markets particularly the rapidly growing emerging markets this pressure for globalizing has only been made more acute by the rise of regional rival companies from South Korea China and Taiwan among others in order for Japanese companies to be truly global and competitive they must have employees with different perspectives and experiences a focus on diversity is of course a central part of that strategy from a macroeconomic perspective an increasing emphasis on workforce diversity will of course have positive benefits both by filling in the labor gap and also by increasing spending as more and more households will have dual incomes the really interesting effect however is how an increasing number of
3:53 women and foreigners will change traditional Japanese management practices Japanese companies have long been famous for their unique management systems lighter employment seniority based pay consensus based decision making and on-the-job training through rotational assignments have all been identified as distinctive traits of the traditional Japanese corporation indeed many scholars have suggested that these organizational practices underpin the competitive advantages that Japanese companies had during the 1960's 70s and 80s things like total quality management just-in-time production and process based innovation we're all seen as key parts of the Japanese corporations practices however researchers have also
4:41 suggested that traditional Japanese management practices may be one reason for why these companies have struggled to maintain the competitiveness during the 1990s in particular many have suggested that organizational practices that puts too much focus on organizational stability incremental innovation and long-term orientation are not well-suited for our very disruptive and fast-moving 21st century economy regardless of whether you view Japanese traditional management practices as something positive or negative there is little doubt that throughout the post-war period Japanese companies operated on systems that were uniquely geared towards a homogenous male workforce with the introduction of diversity in particular women and foreigners those management practices
5:28 are bound to change significantly to give you one example consider the impact that hiring more women may have on Japanese working hours one of the defining traits of the post-war Japanese corporation was the long working hours of its employees as the graph shows Japanese men put considerably more hours into work than their OECD colleagues now in Japan as in many other countries women play a larger role in the family this meant that for working mothers they often had a difficult time maintaining the same number of hours as their male colleagues at work this in terms Irv's as a big hurdle for Japanese women to become managers in corporations in order
6:14 to overcome these obstacles many Japanese companies have reduced their working hours effectively forcing their workers to go home at 8 p.m. or even 6 p.m. and this includes both women and men so why is this important well it means that the same amount of work needs to be done in shorter hours and this in turn means that many of Japanese traditional working practices need to be changed significantly for example decision-making must become faster meetings must become slower less paper must be circulated to make a decision similarly there's less time to put towards relationships and business interactions may be become more contractual and less based on relational ties now these may seem like quite obvious
7:01 practices but in fact they constitute major changes from what we've always considered traditional Japanese ways of working accommodating more women and foreigners may also have an impact on career promotion and advancement Japanese companies have long been famous for seniority based promotion and the closely related lifetime employment system now this worked well in a large and growing homogenous population but it's less well suited for a heterogeneous workforce where people have different needs things like flex time and work from home that are introduced to accommodate working mothers means that space time at the office becomes less good of a basis for promotion instead performance is
7:46 increasingly becoming the standard and the benchmark by which managers are selected what this means of course is that seniority based promotion much like the lifetime employment system may be disappearing from Japanese companies another area of changes of course communication the Japanese language has often served as the primary tool by which employees have been able to share knowledge and communicate with each other and in particular the nuances of the Japanese language have served to bind people together within the organization however with the introduction of foreigners many of whom may not speak Japanese or understand its nuances perfectly a number of corporations have made English their official corporate language many people
8:32 view English as a more direct and straightforward language communicating in this language hence means that decisions are more likely to be based on different viewpoints which then come into direct contact with each other as a result the traditional consensus style decision making when nuances matter may become less important while more direct straightforward discussion styles in English will become the norm the changes to Japanese traditional management practices that have been brought on by this emphasis on diversity these are important changes because they have the potential to alter the very competitive advantages of Japanese companies competitive advantages are basically the organizational capabilities routines and
9:18 processes of an organization its DNA if you will the Japanese companies have long viewed their traditional management practices as a key source of that DNA of their competitive advantage and of course as the DNA changes so too does their competitive advantage so to give you an example there is a lot of research that shows that diverse teams and multicultural teams are perform less well when it comes to incremental process innovation but outperform when it comes to radical innovation now Japanese companies have traditionally focused more on process based incremental innovation so the implication is that this diversity these new teams they may in fact enhanced
10:04 Japanese company's capabilities not only for new product development but indeed for their flexibility and ability to engage in organizational change such organizational flexibility and innovation are crucial elements for any firm that seeks to compete in the global economy so in this way the introduction of diversity and from that new capabilities can actually lead to greater competitive advantage for Japanese companies in the global economy in some the recent focus on diversity is important not just because it has the potential to have positive macroeconomic effects but also perhaps more importantly because it has the potential to change what it means to be typical
10:49 Japanese company and how Japanese firms compete in the global economy of course these changes will not be easy and indeed this is one of the main challenges facing Japanese companies at this very moment as they embrace diversity as they seek to make themselves most more global Japanese companies must ask themselves very important questions who are we what do we want and what does it mean to be a Japanese company these questions were far easier to address at a time when you had a homogeneous workforce and there was a clear identity in a sense of understanding what it meant to be a Japanese company but in a diverse world such answers are not so clear-cut anymore
11:34 indeed we may no longer have the idea of a typical Japanese company many of Japan's most successful firms today are in fact characterized by a typical management practices and organizational structures that are very different from those of a typical traditional Japanese company so in the future what we may have is more heterogeneity in Japan as well we may have some companies that indeed do embrace their diversity and their international aspects and become more globally competitive and then we may have others that put much more emphasis on their traditional Japanese identity and see this as a core competitive advantage whatever happens in whichever way the Japanese companies go there is little doubt that diversity
12:21 in its introduction into Japan will have a lasting impact on Japanese companies the way they do business and their role in the global economy [Music]
