Living & Working effectively in Japan

Japan – Management system

Building Trust

Building a relationship with your Japanese counterpart, customer or supplier is essential. Despite the unusually rigid vertical structure of business in Japan, with different companies interrelated at all levels, personal contact is important and in order to have trust, you must socialise together over a period of time. It can also help to have a third party introduction to new customers or suppliers.


In Japanese society, the American-style contract is considered too detailed and legal in language. Such agreements suggest a lack of trust. For most Japanese, resorting to litigation means a total loss of harmony – this is reflected in the relatively small numbers of lawyers per capita in Japan. Most contracts in Japan are subject to jijo henko, or a ‘circumstances change’ clause. This is used to amend or negate contractual agreements. They are commonly present in initial contracts and render them not legally binding – beware! Be patient. The Japanese value long-term relationships. Forming a relationship can be a difficult decision in Japan. Japanese companies exist in a network of relationships with other companies – a keiretsu (an industrial grouping of companies with cross-ownership). A decision must be made about the potential impact of the new relationship on existing relationships.

When entering in to negotiations, there are a number of points to bear in mind. For a start, your team should be identical to the biographical list you send before the meeting. Let the Japanese initiate the business discussion; pushing too hard will be met with intransigence. Avoid disruptions and disagreements whenever possible; issues that arise can be dealt with at a lower level often while drinking after dinner. Trying to persuade on lower costs may not work. Maintaining and building market share will typically be more important than short-term profitability. No Japanese team will be ready to make decisions at the meeting; this will happen later.


Decisions are not often made by the highest-ranking executives, but simply under their leadership. In this system, decisions are approved by top management, but made under the leadership of the middle managers, and by all staff members involved in the project. Middle managers are very important sources of information for decisions. Only having relationships with senior management will not be productive.

A profitable decision can be attributed to good management and all employees involved are given good share of the bonus. Due to the decision-making process, failure can be dismissed as the fault of no particular person. Individual worship or blaming is rarely practiced in the Japanese firm. Even when an individual clearly makes a notable accomplishment, he/she is rarely seen boasting and would rather say his/her success was due to support of his/her colleagues and good luck.

There are two stages to the decision-making process: 

  1. Nemawashi: means to dig around the roots of a plant before transplanting. This is the stage of feeling out the group’s reaction to a proposal. It is a form of probing without asking for definite opinions (which could result later in a loss of face).
  2. Ringi: a ringi-sho is a document for circulation. It may go up or down or sideways. Recipients – if they agree – are expected to sign off with their personal seal ( hanko). Increasingly, go/no-go decisions are being made. A plan is developed through the ringi-sho system. A mid-level manager identifies a problem and a solution – a plan of action. The plan is circulated among co-workers. Their opinions and recommendations are incorporated into the plan. It is then sent to middle-level workers in other divisions affected by the plan. They reject, accept or suggest modifications. The plan is then sent to senior managers who will reject, amend or agree. Finally, it is sent to the chief executive who places his seal on the document, or sends the ringi-sho back for revisions or non-action. The plan is sent back to the originator for implementation. The system ensures that plans have the agreement of all concerned, and that last minute surprises are avoided. While developing and approving the plan can take a long time, implementation is fast.

Japanese managers tend to believe that except in times of crisis, it is better to move slowly and be completely prepared. Japanese firms move quickly once a decision has been made. Pushing the Japanese too hard to make a decision or losing your temper will not work. Be patient and let the process work.

Status in Japan often comes with age. Great respect is given to elders as age is seen as a companion of wisdom. Certain powers, however, come with certain roles or social positions. In Japan, it is customary that one never does anything above one’s status or outside of one’s particular societal role. It is impolite to infringe upon anyone else’s duties and cut across hierarchical boundaries. Since the foreigner has no designated place on the hierarchy, they are often excluded from the decision-making process and are not expected to act. Despite the complex process, Japanese firms can be trusted to act very quickly once a decision has been committed to, while Westerners make a decision and then feel their way through its implementation. While some companies have received publicity for having extremely long-term business plans – Matsushita and Softbank – the majority have one and five-year plans. Some companies will have 10 or 20-year plans, but they are largely symbolic, i.e., they function as a means to reassure clients and other stakeholders that they are committed to long-term business relationships. Long-term plans that are vague and aspirational also help avoid any embarrassment that very specific short-term plans might create if they are not met. However, due to recent economic struggles among Japanese corporates, companies increasingly are become more results-oriented.


Given the importance of rice production in the past, and the scarcity of natural resources, Japan has always had a dependence on cooperative labour. Exemplified in the open physical layout of the Japanese workplace, their cultural ideal is to work happily together, rather than work efficiently alone, as it is in the West.

Teamwork provides the basic structure of the keiretsu, or conglomeration of companies. The strong relationship between buyer and seller is ubiquitous throughout the Japanese business world. The key is the extensive sharing of business information. Consensus and teamwork are strengthened by many meetings and discussions on how to achieve goals set by management. Above all else, the Japanese do not want to let their group down. Competition within teams is not expected, although competition is the norm between teams.

Outside a meeting with the foreign team, a Japanese employee is expected to actively discuss the meeting’s affairs and raise criticisms and concerns. Through the consensus-based decision making process of the Japanese firm, all staff members at all affected by the potential consequences of the decision are welcomed to contribute. Managers are expected to meet with the staff and create consensus for a certain policy. The big boss is not the decision maker of the team; he is simply moderator of the group discussion. Competition within a team is not expected. The junior staff member feels no inclination to fight over status, because any differences in status come only from age, not competence. Thus, any argument between a staff member and their boss is usually without political factors, if done successfully. They can argue technical matters without risk of their positions. Competition is the norm between teams.

Leadership Styles

Japanese business leaders are usually generalists who are also skilled in organisational politics. Their primary responsibility is group feeling or morale. The bad leader in Japan is one who negatively impacts the morale of the group (rather than one who simply makes bad decisions). A decision can be changed, but relationships are difficult to repair. Leaders are able to sense, embody and express the ‘feeling’ of their group. Maverick, visionary leaders are rare. It is often difficult to discern who within the Japanese negotiating team is the senior member for the top executive may never actually speak. Japanese team-leaders often let their mid-level staff speak for them to demonstrate the team’s consensus and total commitment.

Managing Relationships

Like all aspects of Japanese culture, there is a formal way in which relationships are managed, from the widely-accepted mentoring system to evaluation and giving feedback. Saving face plays a big part in this, and communication may often be roundabout and indirect to avoid anybody’s loss of face, which makes giving feedback a challenge, particularly if you have something negative to say.

Successful managing of relationships is very important, as one’s ability to get on with others is key to getting results. The right spirit and sense of harmony is more important than the result itself in many cases. Many of the Japanese management practices are, however, very useful and positive, for example, the highly developed mentoring system.