Magazine article Workforce Management

Bad Management, Japanese Style

Magazine article Workforce Management

Bad Management, Japanese Style

Article excerpt

Big pay cuts versus parachutes At Mitsubishi, disgraced executives are allowed to try, try again

SOMETHING IS VERY WRONG, say critics of American corporate governance, when failed CEOs like AOL TimeWarner's Gerald Levin and Tyco's Dennis Koslowski manage to deny responsibility or escape the dire consequences of their actions. At first glance, the practice in Japan, where top managers frequently apologize to employees and shareholders, vote themselves massive pay cuts and try to clean up their own mess, seems an attractive alternative. Alas, at second and third glance, the custom looks increasingly dysfunctional.

At Mitsubishi Motors, a series of marketing mistakes and scandals involving concealed product defects and skipped automotive recalls has led the company to the brink of bankruptcy. In May, Mitsubishi's chairman, Yoichiro Okazaki, expressed abject contrition and took full responsibility for the fiasco. He slashed his and his fellow senior executives' salaries 50 percent and announced a draconian cost-cutting program. "This will be a very painful effort for all of us, but I believe it is necessary," Okazaki said.

Not exactly, says Edward Lincoln, an economist who has lived and worked extensively in Japan. "I'm sure that once in a while, the apologetic people who stay in place solve the problem, but in my experience more often than not it's not the case. …

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