In business as in life, it sometimes pays to be a laggard. Laggards can leapfrog leaders by tapping the latest technologies. This is exactly the position in which Japan finds itself, with regards to the productivity and the well-being of its workers, especially office staff. The starting point, helpfully, is really bad. Japan ranks 20th out of 35 OECD countries for per-hour labor productivity.
For the nonmanufacturing sector, which includes the bulk of office workers, the gap is particularly wide. A 2016 study by the Japan Productivity Center demonstrates a substantial discrepancy of per-hour labor productivity between U.S. and Japan especially in the nonmanufacturing sector. For example in financial services, Japan scores 48 for the period 2010-2012, compared with the U.S. on 100.
Moreover, Japanese employees work notoriously long hours. Total hours per worker have fallen from 2,000-plus hours a year before the early 1990s to 1,713 hours in 2016. But this is largely due to the expansion of non-regular staff with shorter hours, predominantly women, from 20% of the total workforce in 1990 to 37% in 2017. Regular workers saw their hours hardly changed at 2,025 in 2015. Average workers still take only half their 20-day annual holiday entitlement.
Overwork coupled with low productivity is a well-documented challenge in Japan. The threat of karoshi, death by overwork, is real. The problem grows more acute as the working population dwindles though aging. Meanwhile, the rigid long-hours culture deters more women from joining the workforce, cutting off one key way of relieving the pressure.
Low office productivity has two root causes. First, the dogged diligence of Japanese workers means that the white-collar workload is snowballing in a fast-changing world. Secondly, the current system is built on the social conditions of before 1990 when men worked 12 hours daily realizing the economic miracle while their wives dutifully took care of everything at home. They created male-dominated structures which now handle extra work by squeezing more out of current systems, instead of restructuring. Managers, brought up in the ancient regime, resist change.
But with labor shortages reaching critical levels, it is time for a shake out to accommodate new workers, notably women, working parents and foreigners.
Fortunately, the answer is at hand in the form of technology. Declining prices and the advent of cloud computing makes advanced technology accessible to all, including small-and-medium enterprises (SMEs).
There is plenty of low-hanging fruit. By automating formulaic tasks we can cut the human workload. While Japanese manufacturers have long been trailblazers automating the factory floor, they have been far slower in their offices. Asked in a 2016 Randstad Workmonitor survey whether technology had a major impact on their jobs, only 60% of Japanese said yes, the lowest figure in 34 countries. The global average was 81%.
People are perhaps hindered by the spirit of omotenashi -- the widespread Japanese orientation toward face-to-face customer care. But this is no excuse. For example, those financial companies which introduced technology early find that far from eclipsing omotenashi, automation can enhance it by giving staff more time for client contact.
Moreover, technology frees employees from being chained to office. This clearly allows people to work at home and so broadens the labor pool, especially to parents caring for children -- overwhelmingly women. A 2017 Boston Consulting Group study found flexible working hours and locations come high on Japanese women's wish list. Online working, cloud computing and video conferencing all make this easier.
But there is a possibly an even bigger gain from office technology -- in breaking down the male-centered white-collar hierarchies. If people work at home, they are no longer bound into the culture of always arriving early and staying until the bitter end -- the "everyone is the last one out" attitude.
If people are not interacting face to face, notably at seemingly endless meetings, office relations will become more open and democratic. Granted, the boss remains the boss. And "cliques" will never completely go away. But this bias toward the familiar is an enemy to diversity. Not just women suffer but foreign workers, who are modest in numbers but increasingly common in Japan.
Technology can help. With the clever use of online pipeline visualization, for example, an entire sales team can access leads easily without having to gather for a manager-led meeting. Business chat applications such as Slack can give all team members a voice irrespective of rank.
In addition, technology dramatically accelerates corporate decision-making.
Navigating a business case through layers of management is extremely time-consuming. Many blue-chip companies insist on using very formal written language for official emails. Learning these conventions is a pain for new hires, especially non-Japanese.
A few companies I know have already grasped the future. For example, a large internet company uses a secure SNS platform for most communications, including investment decisions and recruitment. The language is informal and the conversations fast.
The entrenched male pyramids will not fall overnight. But they will crumble. Democratizing and accelerating decision-making will foster speed, efficiency, and innovation.
The barrier to change is more psychological than real. Top managers fear their sense of control is at stake. But their faith in the traditional structures may be misplaced. A global study by EY on trust in the workplace finds that employees declaring "a great deal of trust in their employer" is surprisingly low in Japan at 21%, compared with an average of 46% in eight countries surveyed.
Can laggard Japan make the leap? I think so. Labor shortages in an aging population are pushing for the inclusion of more diverse sets of workers, including stay-at-home mothers, the last great untapped resource. It is a scandal that Japan still ranks 114th, between Guinea and Ethiopia, on the World Economic Forum`s 2017 Global Gender Gap Index.
Coincidentally, in family-owned SMEs, postwar founders are now handing over to children. I find these new owners are often less risk-averse than their contemporaries working in big companies. They could lead the way.
The old corporate regime is no longer fit for purpose. Technology can rejuvenate the Japanese office and finally close that embarrassing white-collar productivity gap.
Nobuko Kobayashi is a partner with EY-Parthenon, a strategic consulting group within E&Y Transaction Advisory Services. Based in Tokyo, she specializes in the consumer sector with a special focus on multinational corporations operating in Japan.