Commentary: Mitsubishi And `The Cement Ceiling'

For years, Japan-watchers have warned Japanese companies expanding rapidly into the U.S. to do a better job of absorbing top American executives and giving them real authority. Mitsubishi Motor Manufacturing of America Inc. (MMMA)'s disastrous handling of a sexual-harassment suit by the Equal Employment Opportunity Commission is just the most recent example showing that companies ranging from Daiwa Bank to Sony Corp. haven't yet learned how to do that.

Part of the problem is the deeply engrained "us vs. them" mentality that persists in Japan despite its much ballyhooed internationalization. Ask a Japanese company how many people it employs and it often counts only Japanese nationals. And the vast majority of these companies still insist that all important decisions flow back to Tokyo. Even when Japanese executives with real authority are stationed abroad, the companies are torn between micromanaging from a distance or abandoning everything to their executives offshore.

NO FUTURE. Because foreigners can't crack the system, Japan's multinationals often don't attract top local talent. "The best people don't apply because they know how much control there is from the center," says Kozo Yamamura, an expert on Japanese companies at the University of Washington in Seattle.

The dearth of top American managerial talent partly explains what happened at MMMA. When the EEOC filed its suit, MMMA's Japanese managers relied on American general counsel Gary Shultz to do the right thing by U.S. standards. But he lacked experience in such a high-profile, emotionally explosive issue. Before joining MMMA, his experience was limited to running a two-person law firm in Bloomington, Ill. As one headhunter who looked at his credentials says: "He could be a great lawyer, but there's nothing here to indicate that."

Shultz, who wasn't available to comment, reported to Tsuneo Ohinouye, a 40-year veteran of MMMA with previous assignments in the U.S. But though he is a managing director on the board back home, Ohinouye is an engineer by background and lacked the cultural antennae to respond to a U.S.-style controversy. Ohinouye wasn't available to comment, either.

In a management vacuum, Shultz frightened plant employees by telling them their jobs would be in jeopardy if they broke ranks with the company on the issue. He also helped arrange the demonstration of employee solidarity in front of the EEOC's regional headquarters in Chicago. Instead of making a quiet settlement and shutting down the controversy, the company stoked the fires.

Compounding the crisis, MMMA in Illinois didn't cooperate fully with the California-based sales and marketing subsidiary, Mitsubishi Motors Sales of America Inc. (MMSA), which has a national PR agency at its beck and call and might have headed off the debacle. The two subsidiaries report separately to Tokyo as part of a strict chain of command. It wasn't until the crisis was on the front pages that Tokyo-based Mitsubishi Corp. Chairman Minoru Makihara, who had long experience in the U.S., realized a Mitsubishi company shouldn't challenge the EEOC. "Makihara knows the score," says Yamamoto.

While the Mitsubishi episode is in a class by itself, there's a steady stream of examples of Japan-U.S. cultural mismatching. Squabbles over control of Sony Pictures of America resulted last December in parent company President Nobuyuki Idei deciding to sack U.S. head Mickey P. Schulhof. Daiwa Bank's problem was the flip side of the coin. It lost $1 billion because it put too much trust in one of its own managers in New York.

Japanese companies are suffering from these management problems on a global scale. In booming Southeast Asia, where labor is scarce, Japanese companies have trouble retaining local staff, partly because of a perceived glass ceiling. "There's no glass ceiling," says Denise Meagles, an American who has worked in Japan for 10 years. "There's a cement ceiling. You can see it coming a mile away." Until the Japanese companies straighten out their management tangle, count on plenty more Mitsubishi-style disasters.

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