Last week I described very basically portions of the external environment as a 3PL (third-party logistics) in the Japanese logistics industry. Today, before heading home from work, I thought I would touch upon the internal environment of Japanese logistics companies drawing on my experience with my firm and other firms along the way. Although I have had access to quite a few logistics professionals in Tokyo, take my descriptions as an incomplete view and more from the industry mid-section.
Probably the biggest thing that has hit me is how deeply new trends in hiring and job hunting have hit many of the smaller, domestic companies here in Japan. Where at my former employer, Denso (the world's largest automotive parts supplier), there was a great deal of vertical continuity from the bottom tiers of employees to the top in terms of company experience, so far I've been struck by the absence of that in some mid-size logistics companies. In some firms, external hiring heavily outweighs internal promotions to the point that it seems like many important positions are held by guys who have only been "in-house" at the most 1 year. At the same time, I would say most of these external hires come from non-logistics backgrounds--banking, IT, manufacturing, or food services. The banking sector has seen a lot of restructuring, forcing out a lot of "OBs", or Old Boys, who come down into firms like the one I work for, take top spots and basically retire without retiring--termed by one Western logistics professional as Retired in Place (RIP).
Basically, this creates some major organizational issues--mostly bad ones so far. First, there is no vertical continuity in terms of firm-specific expertise. Second, the promotional path for younger workers becomes clouded. Third, development of subordinates is relegated to second fiddle as upper managers attempt to get up to speed themselves. Fourth, outsiders often come in with an air of privelage that hinders the development of middle-managers. Fifth, due to all of the above, vertical communication breaks down creating barriers to both understanding the strategic messages from leadership and the tactical feedback from subordinates. Depending on organization structure, a lack of collaboration between the outsider upper management can create additional horizontal communication barriers. In such a scenario, there is no consistency, or extreme difficulty in creating consistency, in corporate culture, HR management systems, cross-company benchmarking, IT management systems, and other cross-company, cross-functional activities.
Thus, the CEO or President of such an organization will have a hard time moving the organization in tune with a new initiative or strategy because the message becomes handicapped very quickly. This is truly like a perfect storm of organizational distress. Add accellerated growth to the picture, extreme competitive pressures, volatile cost pressures, etc and you have yourself a mult-level challenge that can feel quite daunting.
Fortunately, not many companies face such issues all at once. But for the Japanese logistics industry, there is a great need for experience and developing talent that will create a competitive edge, and turn-style employment systems, with middle-managers and younger workers rotating in and out on a regular basis, will only dissuade employees from becoming "key-people" that will eventually rise to lead the firm into the future.
