HR Management Consulting for Japanese Business Abroad

Identifying optimal HR management models for Japanese offshore subsidiaries is critical for successful expansion. Our HR consulting services can deepen your foreign colleges’ understanding of Japanese work culture while simultaneously harmonizing traditional Japanese practices with cultural norms abroad.
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How do overseas business cultures differ from Japanese culture?

Japanese companies are accustomed to traditional HR management models, where each batch of new graduates are recruited for the purposes of long-term employment. This recruitment model cannot always be replicated overseas, where values of individual independence and freedom in career development are more prominent. To attract talent and ensure that offshore offices remain staffed, HR management models need to be adapted for different work cultures overseas.

Uniqueness of japanese HR management practice

Japan    Outside of Japan

Japan

Batch recruitment of fresh graduates

  • Potential based recruitment
  • Provide common training program

   Outside of Japan

Position-based recruitment

  • Capability based recruitment
  • Provide learning opportunities

Japan

Life-time employment mindset

  • Focus on internal career
  • Reward based on seniority/ tenure

   Outside of Japan

Employment agreement upon free will

  • Focus on external market value
  • Reward based on position/ job

Japan

Value on learning & sharing as a team

  • Responsibility & accountability not clearly defined
  • Tacit knowledge belongs to specific person in the team

   Outside of Japan

Value on independency & collaboration

  • Responsibility & accountability clearly defined and agreed
  • Explicit knowledge to be exchanged through communication

Three guidelines for HR management in Japanese companies

Most Japanese companies have seen success with long-term employment models. However, the business landscape overseas is a lot more heterogeneous. Some companies may favor loyalty while others are accustomed to regular turnovers. This introduces new challenges when developing talent for Japanese subsidiaries. 

 

That said, optimizing HR management strategies of overseas Japanese subsidiaries does not have to be an insurmountable task. The following three points outline key areas that HR teams of Japanese companies may focus on when overseas:

1. Aligning Japanese practices and business culture with strategy objectives

Generally speaking, the HR management’s main objective is to accelerate business growth via organizational and employee development. Organizational structure and employee development plans will vary greatly between companies. Expanding a business globally will require Japanese companies to weigh organizational and human resource issues on a case by case basis that takes into account both present and future needs.

5 stages of business expansion from Japan to overseas

1. Export from Japan 2. Local operation (Production, Sales etc.) 3. Cross-boarder business management 4. Global/Regional Integration 5. Transnational management

1. Export from Japan

Key features

  • Partnership with local partners
  • Driven from Japan
  • No local HR team

2. Local operation (Production, Sales etc.)

Key features

  • Functional local unit
  • Driven mainly by Japanese expats
  • Operational HR

3. Cross-boarder business management

Key features

  • Business Unit
  • Driven by both Japanese and non-Japanese
  • Multi-functional HR

4. Global/Regional Integration

Key features

  • Global/regional network
  • Driven mainly by non-Japanese
  • Strategic HR

5. Transnational management

Key features

  • Global conglomerate
  • No concerns on nationality
  • Leading edge HR

1. Export from Japan

Business issue

Market expansion

2. Local operation (Production, Sales etc.)

Business issue

Localization

3. Cross-boarder business management

Business issue

Value maximization & cost optimization

4. Global/Regional Integration

Business issue

Organization change under shared value

5. Transnational management

Business issue

Business portfolio management

1. Export from Japan

Required Organization

Collaboration with local partner

2. Local operation (Production, Sales etc.)

Required Organization

Cross-functional collaboration

3. Cross-boarder business management

Required Organization

Value chain optimization

4. Global/Regional Integration

Required Organization

Global/regional governance

5. Transnational management

Required Organization

Reinventing operation model

1. Export from Japan

Required Talent

Bilingual staff

2. Local operation (Production, Sales etc.)

Required Talent

Capable local staff

3. Cross-boarder business management

Required Talent

Experienced manager/ specialist

4. Global/Regional Integration

Required Talent

Visionary leader

5. Transnational management

Required Talent

Affluent leadership pipeline

2. Focusing on key issues in HR management

Two core metrics guide decision making in HR management: Business growth and management resource optimization. Evaluating business according to these metrics will vary depending on each business’ developmental phase. To execute HR management effectively even under resource constraints, key issues must be correctly defined from the outset to so that the appropriate course of action can be identified.

Priority focus for HR management at each stage of business development

Business development stage
Starting Expanding Enhancing Shrinking

Starting

Typical business issues

  • Prior investment
  • Market cultivation
  • Process standardization

Expanding

Typical business issues

  • Continuous investment
  • Driving growth
  • Swift decision making

Enhancing

Typical business issues

  • Optimum investment
  • Customer retention
  • Localization & Governance

Shrinking

Typical business issues

  • Minimum investment
  • Selective targeting
  • Efficient business management

Starting

Initiative to Grow

  • Core talent recruitment
  • Initial training
  • On the job training
  • Support from HQ
  • Employee Value Proposition

Expanding

Initiative to Grow

  • Mass hiring
  • Training structure
  • Leadership development
  • Workforce planning
  • HR capability development

Enhancing

Initiative to Grow

  • Skill-based pay
  • Lateral rotation
  • Decentralized authority
  • Career management
  • Specialized HR function

Shrinking

Initiative to Grow

  • Contract-based capability sourcing
  • Multi-skilling
  • Centralized authority
  • Redesign HR function
  • Employee engagement

Starting

Initiative to Optimize

  • Flexible role setting
  • Compensation benchmarking
  • Organization performance bonus
  • Labor cost control

Expanding

Initiative to Optimize

  • Productivity control
  • Job-based grade structure
  • Performance management
  • Individual performance bonus

Enhancing

Initiative to Optimize

  • Reduce number of expats
  • KPI structure redesign
  • Segmented compensation management
  • Productivity control

Shrinking

Initiative to Optimize

  • Organization restructuring
  • Headcount optimization
  • Labor cost optimization
  • Work sharing

3. In-depth understanding on cultural diversity

Incentives for recruiting, developing, and retaining talent can vary greatly between countries, regions, or even individuals. Having a proper understanding of each country's culture and social norms will provide solid grounding for introducing performance assessment and rewards criteria.

Finding common ground between different work cultures

In-depth understanding on cultural diversity In-depth understanding on cultural diversity

Common factors

  • Hierarchy
  • Respect for the region
  • Pragmatist
  • Fun priority
  • Polite expression
  • Followership
  • Disciplined
  • Strict punctuality
  • Humility
  • Respect for seniors
  • Generosity
  • Emotional sensitivity

HR solutions for effective workplace practices in Japanese companies

The following six steps outline how HR management can identify critical issues and formulate solutions accordingly. Rather than adopting these steps wholesale, our HR consultants will help you find a unique solution that incorporates Japanese work culture and practices to cohesive office environments.

The six step approach to enhancing HR management 
1. Visualize current state
  • Executive/employee interview
  • Employee engagement survey
  • Diagnosis on policy and practice
  • Job analysis
  • Talent assessment
  • Cultural audit
2. Define future goal
  • HR philosophy / vision 
  • Desired organization / talent
  • Employee Value Proposition
  • HR strategy
  • Multi-year roadmap
  • Action planning
3. Develop required policy
  • Organization structure
  • Workforce planning
  • Accountability setting
  • Reward and benefit policy
  • HR function design
  • HR technology
4. Develop capability
  • Recruitment / development
  • Career management
  • Leadership development
  • Succession planning
  • HR capability development
  • External partnership
5. Manage the change
  • Executive workshop
  • KPI structure design
  • Performance management
  • Cultural alignment workshop
  • Effective communication
  • Corporate governance 
6. Foster as culture
  • Knowledge management
  • Work style change
  • Mission / Vision / Value
  • Grooming next generation
  • Diversity & Inclusion
  • Employer branding

The right tools for Japanese companies expanding overseas

Receive unique solutions for overseas subsidiaries of Japanese companies. With strong bilingual support and an in-depth understanding of HR practices in multinational Japanese companies, Mercer Asia Japanese Business Advisory team will help your organization transition overseas smoothly using Mercer’s proprietary global methodologies.

  • Organization and HR strategy design

    Develop mid-term organization and HR strategy complete with specific actionables based on comprehensive diagnosis from Mercer JBA consultants.

  • Rewards policy and process design

    Design a rewards program that brings employee satisfaction while meeting business needs based on market benchmarks and policy design principles provided by Mercer JBA consultants.

  • Talent management policy and practice design

    Develop comprehensive talent management policies such as recruitment, development, internal mobility, and retirement by drawing links between organizational structure and workforce planning.

  • Organizational design and capability development

    Mercer JBA consultants will help bring clarity to the future roles of HR functions as well as plan for long-term organizational structures by developing HR processes based on customized analysis.

  • Designing employee health and benefit policies

    Identifying employee health risk and understanding how it ties in with business resilience is crucial to designing attractive benefits program that are also cost-effective. Mercer JBA consultants can help you identify the right external partners that provide you and your employees with the best coverage.

  • Designing retirement benefit policies

    Take care of your employees’ financial wellness long after retirement with the right external partners that Mercer JBA consultants can find. We will help you develop pension plans and deliver models that line up with market benchmarks.

Shaping how you should think about transformation

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