TOKYO -- Benesse Holdings' latest leadership reshuffle is stirring concern that the Japanese educational company may be drifting astray amid a tough recovery battle.
The company said Friday that Tamotsu Adachi, who chairs the Japan buyout advisory team of U.S. private-equity fund Carlyle Group, will take the helm as president Oct. 1. Kenichi Fukuhara will become vice chairman after just three months as president, having replaced Eikoh Harada, who resigned abruptly.
"We can't help but come off as wandering astray," Fukuhara told The Nikkei after a Friday news conference at a Tokyo hotel. But Benesse "needed to strengthen management as soon as possible to quickly rebuild its mainstay Shinkenzemi correspondence course and Berlitz English school operations," he added.
Benesse suffered a 700 million yen ($6.81 million) group operating loss in the April-June quarter, compared with a 600 million yen profit booked a year earlier. This was the company's first quarterly operating loss since it went public. The fallout from the Shinkenzemi customer data leak that came to light in 2014 lingers, with membership still declining.
"We have a great sense of crisis," Adachi said at the news conference. He is an expert in corporate rehabilitation. His career includes posts at trading giant Mitsubishi Corp. and a consulting business, as well as 13 years of service as director of the Carlyle Group's Japanese unit since 2003. The group invested in more than 20 companies under his watch, mainly small and midsize businesses. He facilitated efficiency improvements and overseas expansion at investment targets.
Adachi is skilled at making the most of the existing human resources at invested businesses, a fund staffer said.
Soichiro Fukutake, a member of the company's founding family who holds the post of supreme adviser, is rumored by some to have driven the president's replacement. But Fukuhara denied this view, saying Fukutake had told the management team that the matter was up to them. "The top management shuffle was discussed at the nomination and compensation committee," Fukuhara added.
Yet there is no doubt that Fukutake approved of the new appointment. Adachi has been an outside director to Benesse intermittently for a total of 11 years starting in 2003. He was asked to return to the post shortly after he had left, a Benesse official said, adding that Fukutake must have valued Adachi highly.
Benesse, long managed by the founding family, has not nurtured leaders from within. Fukutake often stresses the need to infuse outside blood, saying "reform steps cannot be undertaken by insiders," according to a company staffer. But even though it tried, Benesse has had misfortune with outsiders. A president who hailed from Sony stepped down due to personal reasons in 2007, while Harada, who had overseen McDonald's Holdings (Japan), could not turn Benesse around.
Rushing to reform the company, Harada did not build rapport with customers and front-line staff, Adachi said. "I will tackle challenges, such as development of new services, from the viewpoint of customers," he said. The company is preparing to announce new directions in October.