ORGANIZATIONAL CULTURE – OFTEN INVALID?
M&A Impact:
Walmart: While the above traits and dynamics underpin work
culture inside US firms, the failures of Walmart in Germany,
Korea, Japan and China, demonstrate how attempts to export
such culture can end in disaster. The US retail powerhouse tried
without success to Americanize its ventures in these countries,
which when combined with lack of cultural understanding, led
to forced withdrawal and losses in each case.
Omnicom & Publicis: The failure of the much-publicized
merger between marketing and communications giants,
Omnicom and Publicis boiled down to cultural differences
between the US and French companies, according to the
Group CEO of Omnicom Group, John Wren. In media reports
he stressed that these cultural differences were corporate,
not national, but with national culture and traditions wielding
significant influence over business practices, distinguishing
the two can be difficult. Announced in July 2013, the proposed
US$35 billion merger collapsed in May the following year.
In stark contrast to my US
experience, I spent five years
in Japan establishing branches of
an American multinational. It did
not take me long to realise that
I had entered a different world.
Do Like the Japanese
In stark contrast to my US experience, I spent five years in Japan
establishing branches of an American multinational. It did not
take me long to realise that I had entered a different world.
The concept of hierarchy is firmly implanted in Japanese society.
If there are 100 persons in a firm, each one will know his number
or rank and will instruct or obey accordingly. If you are number
98, you will take orders from 97 people of higher rank, particularly
from no. 97. In turn, you will advise numbers 99 and 100.
Hierarchy is decided by longevity. If a batch of people joined in
the same year, age will count. If two people are of the same
age, the date of their university degree will decide. There
are strict layers of authority: Shacho (CEO), Bucho (senior
director), Kacho (junior manager), Kakari-cho (section chief).
Leaders of corporations tend to be aloof. They are not involved
in day-to-day operations, and decision-making at Japanese
firms can take months. The collective nature of Japanese
people means that consensus is valued at all levels, though
seniors often exert pressure. Collectivism also impacts
systems of incentives and punishment: rewards must be
conferred on the department not the individual. Meanwhile,
sub-cultures hardly exist and tolerance is high as long as one
follows the rules.
Expectations with regard to new recruits are always high,
as loyalty and work ethic are taken for granted. Questions of
human rights are barely discussed—one's job is one's job.
Periodic appraisals are unpopular and promotion is unrelated
to performance. A brilliant performer aged 25-30 is destined,
whatever his talents, to accept guidance (and orders) from
men in their forties and fifties. During my own sojourn in
80 Emerging Markets Business Summer 2016 • Issue No. 1
Japan, Akio Morita, the then-president of Sony, confided in me
how he dealt with the promotion dilemma:
“I cannot promote young stars officially, neither can I give
them big salaries or impressive job titles. My best advertising
man is 28 years old and has the title of second assistant in
the packaging department. His pay is modest, but he knows
that my door is always open to him and I listen carefully to
all his ideas. I have given him scholarships to spend one year
in the United States and plan another year for him in Britain
and Germany. Of course, he has introductions and a generous
expense account.”
When I asked him what he did with his less talented
fifty‑year‑olds, he answered, “We keep them away from the
real business. Some of them we train to be good golfers. We
call them vice-presidents and they entertain visiting American
vice-presidents for days on end.”
Communication between managers and subordinates in Japanese
companies is polite and indirect in comparison with that in Western
companies. Brainstorming, so popular in other parts of the world,
is almost impossible to achieve in a Japanese company, and
disinclination to challenge superiors can also cause problems
in error detection or willingness to admit defects in production
(Toyota late recalls in 2014). Similarly, whistle blowers in Japan are
unpopular. The Fukushima affair has cast serious doubts over the
code of ethics at higher levels in large corporations.
As these experiences illustrate, the organization of a Japanese
corporation is inherently different from the Anglo-Saxon
model. Japanese firms considering an international M&A
must therefore understand that their business culture is, in all