What can we learn from Japanese Management? Part III of III

In the previous two posts we read about "Decisions by Consensus" which is the first & top most concern  of top management, and second concern which is "Security & Productivity". Today we will write & explore about the third & the last concern which is "Care & Feeding of the Young."

Care & Feeding of the Young

The House of Mitsui is the oldest of the world’s big businesses; it dates back to 1637, half a century before the Bank of England was founded. It also was the largest of the world’s big businesses until the American Occupation split it into individual companies. (As these companies come back together into a fairly close confederation, it may well become again the world’s biggest business.)

In the more than 300 years of its business life, Mitsui has never had a chief executive (the Japanese term is “chief banto”—literally, “chief clerk”) who was not an outstanding man and a powerful leader. This accomplishment no other institution can match, to my knowledge; the Catholic Church cannot, nor can any government, army, navy, university, or corporation.

What explains this amazing achievement? In Japan one always gets the same answer: until recently, the chief banto—himself never a member of the Mitsui family but a “hired hand”—had only one job: manager development, manager selection, and manager placement. He spent most of his time with the young people who came in as junior managers or professionals. He knew them. He listened to them. And, as a result, he knew, by the time the men reached 30 or so, which ones were likely to reach top management, what experiences and development they needed, and in what job they should be tried and tested.

Appraisal & assignment

At first sight, nothing would seem less likely to develop strong executives than the Japanese system. It would seem, rather, to be the ideal prescription for developing timid men selected for proved mediocrity and trained “not to rock the boat.” The young men who enter a company’s employ directly from the university—and by and large, this is the only way to get into a company’s management, since hiring from the outside and into upper-level positions is practically unknown—know that they will have a job until they retire, no matter how poorly they perform. Until they reach age 45, they will be promoted and paid by seniority and by seniority alone.

There seems to be no performance appraisal, nor would there be much point to it when a man can be neither rewarded for performance nor penalized for nonperformance. Superiors do not choose their subordinates: the personnel people make personnel decisions, as a rule, often without consulting the manager to whom a subordinate is being assigned. And it seems to be unthinkable for a young manager or professional to ask for a transfer, and equally unthinkable for him to quit and go elsewhere.

This practice is being questioned by highly trained technical personnel, but it is changing very slowly. It is still almost unheard of for a young man to take a job in another company except with the express permission of his previous employer. Indeed, every young managerial and professional employee in Japanese organizations, whether business or government, knows that he is expected to help his colleagues look good rather than stand out himself by brilliance or aggressiveness.

This process goes on for 20 to 25 years, during which all the emphasis seems to be on conforming, on doing what one is being asked to do, and on showing proper respect and deference. Then suddenly, when a man reaches 45, the Day of Reckoning arrives, when the goats are separated from the sheep. A very small group of candidates is picked to become “company directors”—that is, top management. They can stay in management well past any retirement age known in the West, with active top management people in their eighties by no means a rarity. The rest of the group, from “department director” on down, generally stay in management until they are 55, usually with at best one more promotion. Then they are retired—and, unlike the rank-and-file employees, their retirement is compulsory.

Limited but important exceptions to this rule are made in the case of outstanding men who, while too specialized to move into the top management of the parent company, are assigned to the top management of subsidiaries or affiliates. In such positions they can stay in office for an indefinite period of time.

Informal evaluators

To an outsider who believes what the Japanese tell him—namely, that this is really the way the system works—it is hard to understand on what basis the crucial decision at age 45 is made. It is even harder to believe that this system produces independent and aggressive top managers who have marketed Japanese exports successfully all over the world and who have, in the space of 20 years, made into the third-ranking economic power in the world a nation that, at the eve of World War II, was not even among the first dozen or so in industrial production or capital.

It is precisely because Japanese managers have “lifetime employment” and can, as a rule, be neither fired nor moved, and because advancement for the first 25 years of a man’s working life is through seniority alone, that the Japanese have made the care and feeding of their young people the first responsibility of top management. The practice goes back at least 300 years, to the time when the Samurai, as retainers of a military clan, were organized in tight hereditary castes with advancement from one to the other officially not permitted. At the same time, the government of the clan had to find able people who could run the clan’s affairs at a very early age and take their opportunities without offending higher ranking but less gifted clansmembers.

Today, of course, it is no longer possible for the chief banto of Mitsui to know personally the young managerial people as his predecessor did a few generations ago. Even much smaller companies are too large and have far too many young managerial and professional employees in their ranks for that to be done. Yet top management is still vitally concerned with the young. It discharges this concern through an informal network of senior middle-management people who act as “godfathers” to the young men during the first ten years of their careers in the company.

Managerial godfathers

The Japanese take this system for granted. Indeed, few of them are even conscious of it. As far as I can figure out, it has no name—the term “godfather” is mine rather than theirs. But every young managerial employee knows who his godfather is, and so do his boss and the boss’s boss.

The godfather is never a young man’s direct superior, and, as a rule, he is not anyone in a direct line of authority over the young man or his department. He is rarely a member of top management and rarely a man who will get into top management. Rather, he is picked from among those members of upper-middle management who will, when they reach 55, be transferred to the top management of a subsidiary or affiliate. In other words, godfathers are people who know, having been passed over at age 45 for the top management spots, that they are not going to “make it” in their own organizations. Therefore, they are not likely to build factions of their own or to play internal politics. At the same time, they are the most highly respected members of the upper-middle management group.

How is a godfather chosen for a young man? Is there a formal assignment or an informal understanding? No one seems to know. The one qualification that is usually mentioned is that the godfather should be a graduate of the same university from which the young man graduated—the “old school tie” binds even more tightly in Japan than it did in England. Yet everybody inside the company knows who the godfather of a given young man is and respects the relationship.

During the first ten years or so of a young man’s career, the godfather is expected to be in close touch with his “godchild,” even though in a large company he may have 100 such “godchildren” at any one time. He is expected to know the young man, see him fairly regularly, be available to him for advice and counsel, and, in general, look after him. He has some functions that reflect Japanese culture; for instance, he introduces the young men under his wings to the better bars on the Ginza and to the right bawdy houses. (Learning how to drink in public is one of the important accomplishments the young Japanese executive has to learn.)

If a young man gets stuck under an incompetent manager and wants to be transferred, the godfather knows where to go and how to do what officially cannot be done and, according to the Japanese, “is never done.” Yet nobody will ever know about it. And if the young man is errant and needs to be disciplined, the godfather will deal with him in private. By the time a young man is 30 the godfather knows a great deal about him.

It is the godfather who sits down with top management and discusses the young people. The meeting may be completely “informal.” Over the sake cup, the godfather may say quietly, “Nakamura is a good boy and is ready for a challenging assignment,” or “Nakamura is a good chemist, but I don’t think he’ll ever know how to manage people,” or “Nakamura means well and is reliable, but he is no genius and better not be put on anything but routine work.” And when the time comes to make a personnel decision, whom to give what assignment, and where to move a man, the personnel people will quietly consult the godfather before they make a move.

An outsider’s glimpse

A few years ago I found myself, by sheer accident, a “temporary godfather.” My experience may illustrate how the system works:

One of my ablest students in 20 years at New York University’s Graduate Business School was a young Japanese. Let me call him Okura. The son of a diplomat, he went to Oxford for his undergraduate work and then took the Japanese Foreign Service Examination, which he passed with honors. But then he decided to go into business instead, came to our school in New York, and went to work for one of Japan’s big international companies.

A few years ago, while I was in Japan, he came to see me. I said, “Okura, how are things going?” He said, “Fine, but I think I may need some help. This is why I have come to see you.”

I shall mention just the highlights of the story he told me. “Not having gone to school in Japan, I do not really have anyone in my company who feels responsible for me,” he said. “All our management people have gone to school in Japan. As a result, there is no one in upper management who can tell the personnel people that I am ready for a managerial job in one of our branches abroad. I know they considered me when they filled the last two vacancies in South America, but no one knew whether I wanted to go there, whether I was ready, and what my plans were. I know that you are going to have lunch with our executive vice president in a day or two, and, having been my professor, you can speak for me.”

I asked, “Okura, won’t your executive vice president be offended if an outsider interferes?” He said, “Oh, no. On the contrary; he’ll be grateful, I assure you.”

He was right. When I mentioned Okura’s name to the executive vice president, his face lit up and he said, “You know, I was going to ask you to do us a favor and talk to Okura-san about his plans. We think he is ready for a big management assignment abroad, but we have no way of talking to him; none of us went to the same university he went to.”

Three months later Okura was posted to head the company’s branch office in a fairly important country in Latin America!

Implications for the West?

In the West, though relationships are far less formal, we still need, just as much as the Japanese do, the senior manager who serves as a human contact, a listener, a guide for the young people during their first ten years or so in business. Perhaps the greatest single complaint of young people in the large organization today is that there is nobody who listens to them, nobody who tries to find out who they are and what they are doing, nobody who acts as a senior counselor.

Our management books say that the first-line supervisor can fill this role. That is simply nonsense. The first-line supervisor has to get the work out; all the sermons that “his first job is human relations” will not make it otherwise. A supervisor tries to hang on to a good man and not let him go. He will not say, “You have learned all there is to learn in this place.” He will not say, “You are doing all right, but you really don’t belong here.” He will not ask a young man, “Where do you want to go? What kind of work do you want to do? How can I help you to get there?” In fact, the supervisor is almost bound to consider any hint of a desire to change or to transfer on the part of a young and able subordinate a direct criticism of himself.

As a result, young managerial and professional people in American business and industry—and in Europe too—“vote with their feet.” They quit and go elsewhere. The absence of a genuine contact is an important reason for the heavy turnover among these people. Often, when I talk with them, I hear them make statements like these:

  1. “The company is all right, but I have nobody to talk to.”
  2. “The company is all right, but I am in the wrong spot and can’t get out of it.”
  3. “I need someone to tell me what I am doing right and what I am doing wrong, and where I really belong, but there isn’t anybody in my company to whom I can go.”

They do not need a psychologist. They need a human relationship that is job-focused and work-focused, a contact they have access to, a mentor who is concerned with them. This is what the Japanese have had to supply for a long time because of the impersonal formality of their rigid system. Because they cannot admit officially that the godfather practice exists, they have set it up in the right way. For it is clearly a strength of their system that the godfather function is not a separate job, is not a part of personnel work, and is not entrusted to specialists, but is discharged by experienced, respected, and successful management people.

But it is not only the young people in American and European companies who need a communication system. Senior executives could also make good use of it. Let me illustrate:

In a number of companies with which I have been working, an attempt has been made to have senior executives meet fairly regularly with younger men—outside of office hours and without respecting lines of function or authority. In these sessions the senior man does not make a speech, but asks, “What do you have to tell me—about your work, about your plans for yourself and this company, about our opportunities and our problems?” The meetings have not always been easy going. But the young people, though at first highly suspicious of being patronized, after a while have come to look forward to the sessions. The real beneficiaries, however, have been the senior executives. They have learned what the young managers are thinking.

The godfather concept of the Japanese may be too paternalistic for us in the West; it may even be too paternalistic for the young Japanese. But the need for some system enabling young managerial and professional people to become the special concern of senior men is especially acute in this age of the “generation gap.”

Conclusion

Any Japanese executive who has read this article will protest that I grossly oversimplify and that I have omitted many salient features of Japanese management. Any Western student of Japan who has read this will accuse me of being uncritical. But my purpose has not been to give a scholarly analysis of Japanese management or even to attempt an explanation of Japan’s managerial performance. I am fully aware of the many frustrations of the young manager in Japan. I am aware of the tremendous tensions in the Japanese economy and society created by the nation’s economic achievement—tensions which are so great as to make me highly skeptical about all those current predictions that the “twenty-first century will be Japan’s century.” Indeed, if I were a Japanese, this prediction would scare me out of my wits.

Whether anyone can learn from other people’s mistakes is doubtful. But surely one can learn from other people’s successes. While the Japanese policies discussed in this article are not the “keys” to Japan’s achievement, they are major factors in it. And while they are not the answers to the problems of the West, they contain answers to some of our most pressing problems, suggest help for some of our most urgent needs, and point to directions we might well explore. It would be folly to attempt to imitate the Japanese; but we might well try to emulate them.

1. See Howard F. Van Zandt, “How to Negotiate in Japan,” HBR November–December 1970, p. 45.

2. See Japan’s Decision for War, Records of the 1941 Policy Conferences, translated and edited by Nobutuka Ike (Stanford, California, Stanford University Press, 1967).

Acknowledgement: HBR, March 1971 Issue

In case you missed it, my last post was What can we learn from Japanese Management? Part II of III

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