HONG KONG -- Japanese employers should encourage staff not to be subservient and speak up when they see unlawful behavior at work, a crisis management expert said, following recent cases of fraud at some of the country's biggest companies.
Kobe Steel, Subaru and Nissan are just three Japanese industrial names recently embroiled in a series of scandals. Kobe has been accused of falsifying data and Nissan and Subaru have been found to have allowed unauthorized technicians to inspect products for decades.
While Subaru and Nissan quickly recalled their products for re-inspection, the reputational damage is already done. For the longer term, management needs to change work ethics, said Alan Hilburg, president and CEO at Hilburg Associates.
"The inability of speaking truth to power is a serious reality in Asian companies, not just in Japan," the co-author of two New York Times best sellers said. He said the common cause of the three recent Japan Inc. scandals was that employees chose not to report misconduct and instead followed the behavior of their predecessors.
"If there are people making decisions that are inconsistent with company values, it creates commercial vulnerability and exposes the soft underbelly of the company to crisis," Hilburg said.
As one of the world's best-known crisis management experts with more than 30 years of experience, Hilburg said such problems were most commonly found in companies in Asia, followed by Africa, Europe and America.
"Japanese companies are not doing an effective job of crisis forecasting," he said, as many were not willing to face potential failure or prepare for it. "You've got to have the courage and the culture to say: 'Ok, this is not an ideal world. We have to project the worse-case scenario.' It might be very improbable. But if you don't do it, you will pay the penalty," he said.
But simply being able to anticipate crises is far from enough to regain the trust of clients and investors, and actions of these troubled companies are not satisfactory, he said.
In response to market concerns, Nissan recalled nearly 1.2 million vehicles produced in the past three years, and temporally suspended production for the Japanese market until its inspection line has been upgraded. Subaru also said it would recall 225,000 vehicles in Japan and reinspect them at a cost of $44 million. "I think they are picking the wrong entry point, which only addresses 10% of the problem," Hilburg said.
"What caused the crisis was the practice, not the process. It was the underwater part of the iceberg that sank the Titanic. Fixing the process alone can't regain trust," he added.
Hilburg said that management should establish a reward and punishment system that reflects the values of the company. "Employees should be rewarded if they 'see something and say something' rather than losing their jobs," he said. Those who make decisions inconsistent with company values should be fired, so employees know what is expected of them, he added.