I think ours is a case of what to do and what not to do. It is also a case that points out the possible limitations and problems of leaving an operation in the hands of local Japanese management, believing that they must be better able to handle Japanese human resource issues effectively. It also points to the possibilities and contributions that thoughtful foreign expat executives can make. I suppose in every country there is a tendency toward thinking at least subconsciously “if it wasn’t invented here, or comes from forces outside myself, it is not a good idea, and I will not support it.”

In any case, a few months before I came to Japan to be responsible for our primary construction and mining business, the company carried out a voluntary, across the board, KIBOTAISHOKU staff reduction in early February 1996. This approach had been strongly opposed by Tom Nevins and a number of our regional and home office executives supporting him. However, it squeaked through mainly because the Japanese President argued that if he wasn’t supported with his methods, he wouldn’t be able to carry on and run Japan. He had come in from the outside less than two years earlier. He did have good English.

The offer of the extra severance package ranged between 19 and 27 months for anyone over 49 years of age. Guess what happened? It was over-subscribed by many people we needed, including our top sales people. It was under-subscribed, and did not help to get out any of our worst deadwood, and less effective people. Some of them had always looked toward the union to protect them.

Sales dropped and morale suffered. Things had already been difficult, and so incentivizing stronger managers, sales people, and staff to quit was simply bad business, and made little sense to those remaining in the company. A couple of the top people had to be hired back on contracts. Within a few months a decision was reached to have TMT help us with a morale boosting seminar held at TMT. Our new Asian regional management used it as a chance to introduce themselves and reassure the employees that there still was a future for the operation in Japan. The Japanese President and the personnel manager he had brought on board also used this opportunity to gracefully accept responsibility and depart.

One of the first questions asked by some employees was “will the people who took February’s rich extra severance package, and were rehired (out of necessity) give us (the company) back all that windfall severance money they made?” Employees were rightfully disgruntled and angry — so much for the KIBOTAISHOKU/voluntary retirement severance plan method that some companies, attorneys and consultants still believe they are “legally” obliged to follow. (There are, of course, also companies in the states who apply such voluntary programs. Their competitors also benefit greatly!)

I arrived in Japan on September 5, 1996, and had my first meeting with Tom Nevins on October 18, 1996. We had been puttering along, but it became clear by late 1997 that we would have to do another staff reduction. On February 10, 1998 we targeted about 25 staff and managers out of a workforce of about 100. A proportional percentage of these designated people were members of the union. The list also happened to include some of the traditionally rather confrontational and antagonistic union officers. This list resulted from an analysis of individual performance and needed job functions. Whether or not someone was a member of the union, of course had nothing to do with the selection of people asked to resign.

All but three people resigned, by the signing deadline 7 days away on February 17, 1998. This is especially impressive because instead of the 19 to 27 month package, the severance package we offered was only 6 months salary equivalent, a 10% premium on normal retirement, 0 to 4 months salary depending on age, and the buy-off of unpaid leave.

This and the months before and after it were an interesting learning and growing experience for me. I realized that to get optimal results I had to be involved, learn the issues, the process. Tom was a compass needle, and helped me see, that unlike in the past, collective bargaining “negotiations” with the union could even become interesting, and extremely results driven and time effective. It’s not the union’s agenda, it’s my agenda that drives things. Meetings scheduled for one hour end at 6:45. Union positions and decibel level become very tame, when we leave the room if they are not.

There was a Labor Relations Commission (LRC) proceeding, because due to performance reasons some of the union leadership had been asked to leave with the staff reduction. A union leader remaining also claimed we were “not bargaining in good faith” (read: stopped playing the game by the union rules). However, with Tom’s guidance and “simultaneous interpreting” (with spin) skills, we got through the LRC hearing unencumbered after two or three hearings over less than 2 weeks.

I work for another company in Japan now. It’s nice to feel you are ready for just about anything. The fact is, however, the experience you get by making a difference, and making things happen, will see you through, and serve you well in any country you are sent to.

Paul Slocum
(former) General Manager
North East Asia
Construction & Mining Group
June 2001