05/4/2012 | Lay Offs in Japan
QUESTION:
Due to financial hardship, my company is looking to downsize staffing in Japan. Are there cultural differences we should be aware of in regards to lay-offs?
REPLY:
Employees in Japan view jobs as a lifelong commitment on the part of the company, and there is a cultural stigma associated with losing a job. Thus, Japanese companies take a much more paternalistic approach toward their employees compared to their foreign counterparts. Domestic companies in Japan look to exhaust all other restructuring efforts before making the corporate decision to lay off workers. Courses of action that domestic firms may resort to before downsizing include reducing executive compensation, expiring fixed-term contracts, transferring employees overseas, freezing hiring practices, and soliciting voluntary retirement. In an effort to address these cultural differences, foreign companies should make sure their HR practices are sensitive to the local culture and in line with Japanese labor laws.