The mass evacuation of Tokyo by ex-pats in the days following the March 11 earthquake, tsunami and ensuing nuclear crisis is an event familiar to everybody. It is now becoming clear that a second, more considered, exodus is, and will be, taking place over the coming months. The category most affected is employees with families, which broadly speaking translates into mid to senior level management and includes those with the most sought after skills and experience.
One country manager of a medium sized securities company, a married man with children, confidentially relayed to us his wife’s thinking: “unless there is some clear and tangible financial advantage, what is the purpose of remaining in Japan for the next several years? Why take the risk?”
Is such thinking rational and measured or just a short term emotional reaction to the shock of experiencing the March 11 earthquake and its aftermath?
Tokyo is a large market with a highly educated workforce. Why should the departure of a relatively small number of foreigners matter?
International financial companies are able to run viable businesses in Japan if they have something different to offer from the well entrenched Japanese institutions in terms of products, services and expertise. If they become totally domestic in terms of their staffing they will lose their ability to compete with domestic firms and their solid corporate and institutional client base.
Mike Kealy, owner of XPS Tokyo, a specialist expat moving company, has not been so busy for several years. He reports cases where families are moving to Singapore in advance whilst the breadwinner moves into a modest single room Tokyo apartment “until he can find a job in Singapore and follow on”.
Considerations and implications for foreign financial firms in Japan from a human capital standpoint:
- Attitude and treatment of existing staff: firms must be sympathetic and considerate towards the predicament faced by their highly skilled and most valuable employees. People need to feel they can speak openly of their concerns without the fear of adverse consequences. If not, unnecessary surprise resignations will ensue.
- Succession planning: more than ever before attention must be paid to the identification of key personnel risk. Potential successors, whether current employees or outside candidates, need to be identified.
- Replacement of losses: not all skilled expatriates wish to leave Japan. In addition to the many individuals who remain committed to living in Japan, there is a significant population of highly skilled individuals outside of Japan. Executive recruiters with a strong historical knowledge of the Japanese market combined with a genuinely global reach will become a valuable resource.
- Risk management: although a rather sensitive topic, the issue of who is best placed to truly determine and assess worst case scenarios needs to be considered. This is a role which will require long serving individuals with a long term commitment to Japan.