Rotation fatigue in Japanese companies

An American is hired to work for a Japanese bank in the project finance area.  He has an M.B.A. from a top business school, and had previously worked in the project finance area for several years at an American bank.  He is assigned to work under a Japanese manager who had recently come from Japan. 

He is surprised to find that his superior had never done any project finance work before.  In fact, the superior’s post prior to coming to the U.S. had been in foreign exchange. 

So he sets about patiently teaching his boss all about project finance.  After they work together for three years, the boss has learned a lot about project finance.  But then, the boss is called back to Japan, and another Japanese employee is sent from Japan to take his place.  The new boss doesn’t know anything about project finance.

Why was the new boss assigned to the position?  Because this was part of the standard employee rotation, determined by the personnel department at the head office.  The philosophy of the personnel department is to build a cadre of generalists by rotating them through different locations and positions.  The belief is that a capable person can learn what is necessary to do their job.

The American employee is extremely frustrated.  Why didn’t the company promote him to the manager’s position rather than bringing in someone who didn’t know anything about the work they were doing?  In many such situations, the head office doesn’t consider the possibility of putting a local hire in the post.  It just automatically does what it has always done, send an expatriate.  Also, the personnel managers at the head office had never met the American employee.  They didn’t know what he was like, didn’t know anything about his background, qualification, or skills.  They had no idea that he would have liked to fill the manager’s position.

The American employee faced the prospect of training another manager all over again.  He says to himself, “What’s the point?  In a few years they’ll just send another green manager who I’ll need to train, and who I’ll need to prove myself to.”  In other words, he is experiencing what I call “rotation fatigue.” In a few months he takes a job with another company, and the bank loses one of its better employees.

This story shows the contrast between the specialist-oriented career paths prevalent in the U.S. and the generalist-oriented career paths that are common in Japan, and how they can clash.  It also illustrates how the Japan-oriented personnel rotation system can overlook the potential of local employees.

Many Japanese multinational companies have recently been working to strengthen their global human resource management practices, which can work to address these kinds of issues.  For example, a global talent management database can help people at the personnel department at headquarters be better aware of the skills and experience of locally-hired employees.  Many firms are also beginning to rethink the automatic rotation of expatriates, and more systematically consider whether expatriate positions can be taken over by local hires.  These kinds of efforts can help Japanese firms avoid some of these rotation-related issues in their overseas operations.