How Japan Vaccinates Its Ce OsKaren Lowry Miller
The president of Misawa Homes Co., a leading Japanese homebuilder, was thrilled to take his company overseas. Last summer, Chiyoji Misawa inked a deal to build houses on resort property near San Francisco. It was his first project in the U. S., but Misawa didn't expect to stop there: He wanted to advance into Hawaii. But his own executives nixed the idea. "That's that," Misawa shrugs. "I can decide I want to do something, but if I don't have employee support, it won't work."
In Japan, even a chief executive whose company bears his name knows he must balance personal desires against the harmony of the group. And for those presidents who are in the executive suite by the grace of the board of directors, the pressure to make sacrifices and forge a consensus is all the greater. "In America," says Noritake Kobayashi, dean of the business school at Keio University, "the boss is the boss, and he gives orders. Here, that can be very dangerous."
Of course, Japan has its share of mavericks, tyrants, and inflated egos. Founder-run companies and high-tech outfits launched since the war are often piloted by a "one-man shacho"--a president whose word is law. Soichiro Honda, Konosuke Matsushita, and Sony's Akio Morita could be as independent as they pleased. Kyocera Corp.'s Kazuo Inamori and Fanuc Ltd.'s Seiuemon Inaba run personal fiefdoms, even though both companies are publicly traded.
But aside from a few notable exceptions, top executives are immunized by Japanese corporate culture against most symptoms of CEO Disease. "Individually, he is not almighty--not at all," says Shoichi Saba, a former chairman of Toshiba Corp. The perks just don't pile up the way they do in the U. S. No private jets, gyms, or dining rooms, no multimillion-dollar bonuses. But the post usually comes with a car and driver, golf-club membership fees, housing, a hefty retirement package, and business-related entertainment expenses so generous that $30,000 a month for drinks and dinners alone is not unusual. Still, the Japanese CEO's pay is usually just 7 to 10 times higher than those of fresh recruits.
The main factor reining in the boss's ego is the nature of the climb. Power comes gradually--not as a sudden shower of prestige and money. In a typical Japanese company, a class of new graduates enters each April, working its way through prescribed salary levels and a variety of posts according to a preordained schedule. It's rare for a whiz kid to leapfrog to the top and nearly unheard-of for senior management to jump ship. At about age 45, it becomes clear who will reach the upper echelons and who will be farmed out to affiliates. The winners earn a two-year stint on the board of directors in the annual spring reshuffling. The president names his successor, and the board usually rubber-stamps its approval.
The president's job is to draw the master plan and let the rank and file fill in the details. And there's no distraction from the lecture circuit or from tending to links with officials from banks and the government. "That's the chairman's job," says Shinichiro Torii, president of distiller Suntory Ltd.Top officers in Japan are judged by different rules, which keeps them from losing touch with their companies. A new American boss will typically move to stamp his or her personality on the outfit, to the point of slashing payroll or ejecting losing units to impress Wall Street. "It's inconceivable that a Japanese CEO would have to prove his manhood by dramatically dismissing employees," says James Abegglen, president of Asia Advisory Service.
MARKET SANITY. The Japanese CEO is spared Wall Street's pressure for quarterly results and the fickleness of dividend-hungry shareholders. In many cases, thin profit margins are tolerated if a company is snaring prized market share. Mergers and acquisitions are friendly, and long-term investment is applauded.
Instead, the boss must dream up ideas to please employees and customers, his main constituents, as well as suppliers and affiliates. Kenichi Yamamoto, chairman of Mazda Motor Corp., recalls being dragged out of bed by late-night calls from customers when he was president. Nobuhiko Kawamoto, long an exacting boss at Honda's research arm, says of his current post as president: "I had to switch the emphasis from `me' to `you.' "
The price of this system can be mediocrity if a president becomes just another warm body in a row of faceless blue suits. But it does give Japan an edge when it comes to keeping CEOs in touch with reality. Sure, there are some arrogant people running Japanese corporations, just as there are in the U. S. The difference is that their secretaries suffer--but the company rarely does.