Americans are likely in for a surprise if they expect Toyota President Akio Toyoda to put on a show of authoritative “the-buck-stops-here” clout at Wednesday’s congressional hearing on the automaker’s massive recalls.
In harmony-loving Japan, company heads are rarely management professionals and are picked more to be cheerleaders for the rank-and-file. Toyoda, because of his bloodline as grandson of Toyota Motor Corp.’s founder, was groomed to play that morale-boosting role.
“In a Japanese company, the top man isn’t the one calling the shots. He is looked up to as a symbol, a bit like the Emperor,” says Toyoaki Nishida, a business professor at Chubu University, referring to the Imperial family, which wields no political power. “That’s why Japanese company policies don’t ever change even if presidents change.”
Given such differences in corporate cultures between Japan and the U.S., it wasn’t unusual that Toyoda initially said his U.S. executives were the best people to testify at the House Committee on Oversight and Government Reform on Toyota’s recalls, now reaching 8.5 million vehicles globally for sticky gas pedals, braking glitches and faulty floor mats.
He agreed to go late last week only after getting a formal invitation and as criticism flared, especially in the foreign media, that he should be the one to explain the safety lapses.
In three news conferences this month, Toyoda has stayed true to form as a Japanese president and left the details of the defects and quality measures to another executive. He has focused on sending the message that he is sincere and ready to correct where the esteemed “Toyota Way” of production has gone astray.
Parissa Haghirian, an associate professor of international management at Sophia University in Tokyo, said Japanese firms are group-oriented and generally don’t look to one person to steer them, unlike the West, where executives are hired for ideas and leadership.
Japanese presidents are team leaders who coordinate everyone’s views and care intensely about peer opinion because confrontation must be avoided, she said.
This nation has a special phrase to describe such behind-the-scenes consensus-building, “nemawashi,” which translates as “laying the groundwork.” Neglecting nemawashi is considered a foolish and sure way to walk into failure. Nemawashi is bureaucratic and time-consuming, but once a decision is made everyone is on the same page and action proceeds quickly without infighting.
“There is usually no strong leader who can push radical change within a Japanese firm,” Haghirian said. “In the meetings I have seen, members would rather wait a bit longer, see what happens and then have another meeting instead of taking action right away.”
Japanese managers build their careers by moving up within the company. Job-hopping isn’t as common as in the U.S., and it is unusual for top executives to be recruited from outside the company. That makes for insular management that may be clueless about what’s happening outside their companies, she said.
At Nissan Motor Co., it took a foreigner, Carlos Ghosn, a Brazilian-born Frenchman of Lebanese ancestry who arrived in 1999, to slash jobs, get rid of money-losing units and save the automaker from bankruptcy — a task no Japanese president at the carmaker had dared to tackle.
“A Japanese company president has to seek consensus through patient meetings, gentle and shrewd nemawashi, and all sorts of very subtle backroom dealings and such,” said Roland Kelts, a lecturer at the University of Tokyo. “It’s a much greater, more sophisticated and complex balancing act.”
Toyoda is relatively cosmopolitan — for a Japanese president.
But his lack of English fluency is the norm among even well-educated Japanese, including those hailing from top universities like Keio University, Toyoda’s alma mater.
Admission at such universities call for intensive study, but conversational English isn’t one of the requirements. English courses tend to be pedantic, focusing on grammatical rules, and starting foreign-language lessons in childhood is rare.
Toyoda, who has a business degree from Babson College in Massachusetts, has no problems reading an English statement, but his halting English at news conferences indicates he will struggle to improvise answers when faced with a grilling from lawmakers.
In another telling contrast of corporate cultures, Japanese chief executives are also paid far less than their American counterparts.
At last year’s shareholders meeting, Toyota disclosed the overall tally of ¥1.6 trillion paid to 33 board members — about ¥48 million each. Compensation disclosure regulations aren’t as tight in Japan as in the U.S., and companies aren’t required to break down what each director made.
The average figure for Toyota directors is only slightly higher than the average for Japanese companies calculated by Sanro Research Institute at ¥36 million.
By contrast, Ford Motor Co. Chief Executive Alan Mulally’s compensation in 2008 was valued at $17.7 million, including stock options and other perks.
Stock options are limited in Japan, though presidents do get chauffeur-driven limousines, expense accounts and sometimes private jets.
Toyoda, however, is widely viewed as having more at stake than the average Japanese president. He owns more than 4.5 million shares in Toyota, largely inherited from his family, though that is less than 1 percent of all Toyota shares. Toyota dividends last year were ¥100 a share.
Toyoda has shown another difference: He has apologized to customers for inconvenience and worries, but only bowed in a routine greeting, not in ceremonial apology.
Kabukiesque atonement for Japanese company heads typically comes as a deep bow held for several seconds to show heartfelt remorse for wrongdoing. The president may then announce he is stepping down in symbolic “hara-kiri” to be replaced by another equally symbolic president.
Some Japanese crisis-management experts criticized Toyoda for neglecting protocol by dispensing with the humble bow. What awaits in Congress could be far more testing.
“Unless he goes extremely prepared, American people are going to wonder what he is doing if he approaches this as though he is addressing Japanese people,” said Nishida, the business professor. “He didn’t claw his way to the top. He was just placed on a pedestal. He became president in the most unfortunate of situations in the most unfortunate of times.”