Shriro Trading Co., Ltd.

I had known Tom Nevins from the early 80’s if not before. We would see each other at the occasional function, but never did much of anything together at Becton Dickinson, a company I had been president of for many years here in Japan. After I left Becton Dickinson after a period in the U.S. to come back to Japan with Shriro Trading, and between 1993 and 1998, Tom tells me TMT’s executive search division succeeded in placing 22 people into Becton Dickinson. I should have used TMT earlier.

Now at Shriro, I had my chance to use TMT, and really needed some help negotiating some new territory unfamiliar to me, and not effectively being handled by our other advisers. In October of 1996 we had carried out a small staff reduction of 5 or 6 people at one of our units. The extra severance package varied between 4 and 8 months. All but one of the people accepted and resigned. One person refused to resign, and although we kept his pay the same, he also refused a transfer to the sales department.

On top of that, this person called in a labor union that would “supposedly” help such an individual. The union’s collective bargaining demand was to get the individual’s old job back, get an apology from the company, or the apology and his full pay until retirement age about a year and a half away. Seems pretty petty and selfish doesn’t it? Welcome to the world of Japanese labor relations.

We felt we were not asking too much of the individual involved. He started to go “on strike” using his unused accumulated paid vacation. On December 20, 1996 about 15 outside people — I suppose people in similar circumstances also using their vacation — demonstrated in our building’s lobby with banners and posters.

The first time I met Tom on this matter was about a month after the demonstration, on January 21, 1997. This was the day the union asked for a third collective bargaining session before the end of that month.

In hindsight, I should have gotten Tom more involved sooner, and didn’t see him again until a month and a half later on March 3, 1997. At that point there had been three demonstrations with banners and loudspeakers in our building, and on the sidewalk outside our building. There also had been collective bargaining sessions, with our lawyers largely handling it. The troubles had gone on for more than four months. A newer position of the union was that this individual afterall could be in sales, but with no targets, i.e. he wouldn’t have to work. Our staff were surprised, shocked, and embarrassed by the whole thing. The individual and his union’s performance and show was winning no sympathy and no support from our other employees. The messages and content publicized to our staff and a steady stream of passing pedestrian traffic, was, of course, incomplete, unfair, and only the part of the story they wanted to tell. Our staff just wished it would all end and go away.

However, these things have a life of their own. We also couldn’t allow ourselves to be blackmailed. Nor could we go along with unreasonable positions. We were also threatened that if this individual and the outsiders did not get their way, the story, and details of our company, would go on a Saturday, March 8, 1997 national network T.V. show.

At this, my second meeting with Tom on March 3, I asked him to go ahead and work things out with the union. Mr. Nevins had already settled several cases with the leader of this union, as he has with many of the active unions in town. In any case, I guess they have a mutual respect for each other and know how to do these things.

Over the next two days, on March 4, and March 5, 1997, Tom had two brief meetings with the head of the union, got the union to cancel additional threatened T.V. coverage that would have publicized the company name, and also worked out a reasonable deal that both sides could live with.

All our problems with the union stopped at that point, just two days after Mr. Nevins was asked to help. The deal was formally countersigned by the union head on March 21, 1997. I guess we can all ask ourselves what makes the difference between using TMT and not using TMT? I, for one, opt for avoiding months of trauma for myself and my staff, as well as wasted professional fees.

Tom says he works fast because he’s on a fixed fee, and everyone is busy. Experience, street smarts, approach, personality, common sense, communication style, must also make the difference.

I tell the above story in detail, because Tom is helping me write this as a testimonial, signed, case study. I think this is the least we, as expat managers, can do for each other, and reading testimonials in Tom’s earlier books taught me, and also helped me get buy-in from my boss for something much bigger that I had to face about two years later.

I met Tom on October 5, 1998 to tell him that we would have to have 10% to 15% of our people leave the company. If possible, I wanted to have a controlled exercise, where we would select the people to leave. I had previously built up Becton Dickinson’s sales from $8,000,000 to $100,000,000. Now I was in a company of about 150 people with sales sliding in a southerly direction. The recession and exchange rate were killing trading companies promoting foreign made brands. A number of similar trading houses were either up for sale or were closing.

More important than the staff reduction element, however, was the need to tighten up and improve our Rules of Employment and benefits mix, create a performance based pay and bonus system, and rationalize and cut back the retirement benefit. Tom and I saw eye to eye on this and worked off the same page. The difference was the degree of confidence that we could pull it all off. All my old friends in town were pretty sure that retirement benefits were sacred and rarely cut back. Tom kept telling me about the many successes he had had over the years.

We took two or three months in late 1998 and early 1999, and set up a task force with our key managers. The extra severance package was a typical TMT recommendation of 4 months pay, 1 to 4 months depending on age (as age effects ability to find next job), and 500,000 Yen in cash. We also gave people an option to get the four months as salary continuance.

Our managers started applying their people to the TMT Salary System. In parallel from February 12, 1999 we had Mr. Nevins assist us at meetings with the trust bank that had been funding our Tax Qualified Pension Plan. After just three or four meetings with them, we had the calculations of the retirement benefit, based on TMT’s new design finished. At first this trust bank talked about the difficulties of negative changes etc. etc. But we kept at it. They ended up being very accommodating. We got the job done.

By way of a June 9th, 1999 document, we had all our staff sign a statement that we would grandfather their old retirement benefit up through the March 31, 1999 calculation due them. We confirmed that since the new TMT Rules of Employment and Retirement Benefit were approved at the Labor Standards Office on April 2, 1999, the new retirement benefit would apply to them from April 1, 1999.

In the meantime we had an all day meeting with all our 150 employees on March 16, 1999 at an off-site facility. As well as myself, my boss out of Hong Kong, three of my Japanese managers, and Tom Nevins made presentations, and handled Q&A. We handed out, and explained the new ROE, salary, appraisal and retirement benefits. Of course, we also gave people heart, as to our strategic plan, vision, and future. Everyone knew the realities of the market we were facing.

People also got the details on their pay effecting them from April 1. Virtually everyone’s pay was reduced by a minimum of 10%. The individuals designated for departure were offered packages, but since everyone got an envelope at the end of the seminar, it wasn’t “openly” exposed who was to leave and for what reasons. (People also had a chance to be around for up to four months, so it wasn’t impossible for a tapped-out individual to play it such as he or she just decided to quit.)

All this special care, consideration, and handling were meticulously explained by Tom over several hours to everyone in the company. Tom’s communications and experience of handling over a hundred rather similar exercises definitely paid off. There were rumors that certain people knew they would be asked to go, and that they were already talking to the union that caused such a ruckus two years earlier.

Mr. Nevins squarely faces issues like that. He actually told everyone in the room that that particular union was the fastest growing, and most aggressive employee protector in Japan. Which was true, according to Tom. He also said he greatly respected its leader. Which also was true. So if anyone could help them, that was where they should go.

Tom went on and asked the employees to pay his respect to the union leader. “He’s always been a man of his word with me.”

Well this time the union leader gave us a break and stayed away. We made about 15 key changes to save some money and tighten up our ability to handle future problems. And the 10% to 15% of the people whose cooperation we requested, did all resign within the deadline that was less than a week away.

As of this writing, the operation in Japan continues to be in business and I am proud of the Japanese managers, several of whom I hired, who are hanging in there and doing a very respectable job.

So I have had two interesting and very different experiences in Japan. I must say that it was more fun building up a company from $8,000,000 to $100,000,000. But I also am proud of the eight years I spent struggling against difficult forces, and fighting hard with my people to resuscitate, extend the life, and energize as best as possible the trading company.

In that process we were able to protect our overseas principals’ accounts as their representatives in Japan. We also tightened the belt a bit, so as to protect as many jobs as possible in today’s rather bleak labor market.

With all my years in Japan, Mr. Nevins nonetheless helped me see things, and guided me and my company to accomplishing things, that most people, especially the professionals in the field, doubt are possible.

I hope that our story and case study will provide insight and guidance to anyone reading this and doing business in Japan. Also if anyone has products and wants a trading company to represent them, I can recommend Shriro Trading. It is also one of the few foreign capitalized trading houses left.

Shriro has high quality staff remaining, and a good solid team of seasoned managers who went through the above exercise step by step with myself and Mr. Nevins.

Gary C. Lynch
Shriro Trading Co., Ltd.
February 2002