Episode #550: Loyalty Is Now Tenuous In Business In Japan

Japan has had a very low degree of mobility in employment. Large companies hired staff straight out of school or university and expected they would spend their entire working life with their employer. That has worked for a very long time, but we have hit an inflection point where this is less something we can expect. Mid-career hires were frowned upon. If you bolted from your employer, you had almost zero chance of joining a competitor. You entered a dark forest and had to find your way through the brambles and undergrowth to meet out a living on the lower rungs of a netherworld of small firms willing to take you on.

In 1997, the venerable Yamaichi Securities blew up and a lot of competent, hard working finance industry people suddenly found themselves in the street without a job. Other firms in the same sector employed them, because they were skilled and this was the first tear in the fabric of the stigma of the mid-career hire. The Lehman Shock on September 15, 2008 added another slash to lifetime employment in Japan, as many people lost their jobs. The 2011 earthquake, tsunami and triple nuclear power plant explosions disrupted many industries, throwing people out of work. Covid did a similar job on particular industries like tourism and hospitality as borders closed.

The downturn in population has meant there is a strong demand for workers with a growing limitation on the supply side. This throws up options for staff which were not there before and it impacts the loyalty factor of the worker-employer construct. Thirty percent of young people in their third and fourth years of employ, after having been trained by the company who hired them, jump out and go somewhere else. No loyalty and no qualms about leaving their employer.

A client of mine sent me a note the other day about doing some training and as an aside, he mentioned that one of his key people involved in that decision, who had been with him for 14 years, was suddenly leaving. This is very disheartening because you lose the experience, their contacts and the continuity with their colleagues and clients. That takes a long time to re-stitch together.

Sometimes it is the stupidity of our own construction. An organisation I used to work for had a new leader appear. He was not the usual standard of experience or capability for that complex work and decided to fire one of the staff who had been with the organisation for decades. He had no conception of the network he was letting walk out the door. Twenty-plus years of deep relationships with buyers in his industry was just vaporised. It is not something obvious you can notice, like a chair has gone missing in the office, but the loss to the business is still there and manifests itself later when you least need it.

What can we do about this? Sadly, not much. We do our best to align the direction and values of the organisation with the staff’s interests. It won’t always be a perfect fit. Also, their interests change. They now have aging parents, get married, have children, start to think about retirement, etc. Covid has crushed many companies and those pressures can speed up changes, which lead to staff leaving. When things are rolling, there is less taste to leave because the rewards are coming thick and fast. When things have been tough and you are crawling out of the hole together, the rewards are all in the future.

Two of Dale Carnegie’s stress management principles come in handy here. One is to cooperate with the inevitable and the other is to expect ingratitude. It is inevitable that in a strong demand economy for staff, we will see people moving more and more than in the past. The old mid-career hire stigmas have become less potent and the era of the “free-agent” employee is upon us. We have to face the reality and not pine for the good old days of a desk groaning under the weight of resumes of people seeking employ. I should have photographed that phenomenon, because I will never see it’s like again in my working life.

The ingratitude aspect of no loyalty is also a bitter pill to swallow. We do our absolute best to be fair with our people and give them as much as we can of the rewards, but they still up and leave us. The departure event is one struggle, but our reaction is the bigger struggle. If we get caught up in expectations which are too high or unrealistic for a changing market, then we are setting ourselves up for depression and stress.

If we believe we have been fair, but it hasn’t been enough, then we should get over it and go find a replacement, no matter how fraught, expensive and difficult that may be. We also had better get used to it, because this has already become our reality from now on.