CNN.com - Corporate culture changes at Fujitsu

Japan's changing corporate culture means Fujitsu employees don't have "jobs for life"

TOKYO, Japan -- Fujitsu will no longer assign retired executives to senior positions at subsidiaries, according to a report.

Sources at the company told the Nihon Keizai Shimbun that the decision was made to give subsidiaries more autonomy.

It will give them the power to appoint their own bosses. It is also a break from Japan's hidebound corporate culture.

The company recorded a net loss of $3.3 billion for last fiscal year, which ended in March, and is finding it difficult to support subsidiaries (full story).

It plans to move circuirt-board production to Vietnam, to save on labor and land (full story).

Out of Fujitsu's nine subsidiaries, eight are headed by former Fujitsu officials.

Japanese corporate culture

It's common practice in Japanese companies for retired executives to take largely ceremonial positions as the head of subsidiaries.

Japan's corporate culture has long been based on the "job for life" concept, though that is changing.

Japan's current recession and a decade of economic torpor has put large corporations under severe strain to cut costs. But layoffs are still rare and most companies downsize staff simply by freezing hiring or offering early retirement.

Japanese companies do now fire employees at times. But some companies are still tied to the job-for-life concept and keep older "salarymen" into retirement.

Japan even has a term for workers who are well past their prime -- the "madogiwazoku", or window watchers. They are effectively unemployed but go in and draw a salary nonetheless.

The name originated because the madogiwazoku, having nothing to do, are assigned desks by the window so that they can while away the hours by looking outside.

Similarly, sending retired executives to head up subsidiaries is seen as a favor to long-serving senior staff and as a way to keep them "employed" for another few years.

The government often posts retired politicians to head up sections of Japan's many state-owned entreprises. Prime Minister Junichiro Koizumi is renewing efforts to scale back his ministries (full story).

Source of many problems

Critics fault such a system for causing inefficiencies for Japan's corporations.

Poor staffing choices can lower the morale of staff at subsidiary companies, particularly if workers see all the top jobs go to staff from the parent company.

Fujitsu sent two retired directors to work as a president and a managing director positions at subsidiaries in June.

But Fujitsu will now cease that practice at the end of the fiscal year, according to the Nikkei's unnamed sources within Fujitsu.

When Fujitsu changes its policy on subsidiary heads, the subsidiaries will be permitted to promote internally to fill senior positions without interference from the parent company, the sources said.

If a subsidiary does not have the right person for the top job, Fujitsu's directive suggests a subsidiary will be able to ask the parent to pick someone from its ranks.