Executive Interview -- Adam Salzer

By Chris Betros

Surviving in the new economic world order

Adam Salzer, Executive chairman, Salzer Consulting

Amid the ongoing economic crisis, many companies are being forced to restructure themselves. Some do it well, while others flounder. Specialists are often called in to help. One of those specialists is Salzer Consulting, a Hong Kong-based company with offices in Tokyo, Beijing, Shanghai, Singapore and Sydney. Salzer specializes in human capital consulting and project management, as well as executive search services, though right now, the bulk of the company’s work is in helping clients achieve harmonious downsizing.

The company was established by Adam Salzer, an Australian with extensive experience in management consultancy and turning around firms in such industries as telecommunications, IT and investment banking. Born and raised in Kenya, Salzer migrated to Australia when he was 16. He began his working career on a graduate employment program with Ford in Australia, then resigned halfway through to try his hand at being a theater director.

Always on the lookout for a new challenge, Salzer started a management consultancy firm in the early ‘90s before setting up Salzer Consulting in 1996. The Tokyo office was opened in 1999. Salzer’s success rate has made him an in-demand speaker on the international conference circuit, and he is on the road almost every week.

JAPAN INC: What are your methods for turning companies around?
ADAM SALZER: First, we do a scoping study and find out what’s going on and work out whether we can fix it or not. Then we design the process and conditions for success. We plan for six to eight weeks, then have one day where everything gets implemented. After that, we stay around for another six to eight weeks. It’s a paradigm shift we take the companies through.

Sometimes, the client will have to let some employees go, even senior ones. Unless that is understood, we’re not going to start, otherwise we’d spend the whole time fighting them. There have been times where we have told the CEO they have to change their style or move on. We have a 100 percent success rate because we don’t start unless we know we are going to succeed.

JI: Can you give us an example of a project?
AS: In Japan, we are working with a consumer goods company. It used to be a joint venture between two Japanese companies and a Western company. It had never performed, always at a loss. Eventually, the Western company bought out the two partners and the Japanese staff really didn’t click with the Western staff—oil and water. In total, there were about 400 people. A new managing director came in and selected us to run alongside him. Only a few senior managers were let go and it has become a phenomenal success.

JI: How so?
AS: Because it was harmonious downsizing. That’s the key for us. Early on, we ask a client: Do you care about your employees? If not, we can’t really work with them. Yes, you’ve got to be tough in business but you have to look after people. When you decide to downsize, you are touching whole families. We take them through a process as if we were a family and help employees to see that it is not just about cutting costs.

JI: How do you respond to an employee who asks “Why me?”
AS: You have to explain what is happening to us as a whole. These are the implications, and we can’t stop it. You tell people up front that some will have to go and you will look after them. The whole process must be transparent. As the consultant, it is our job to look at what is required in the future and assess people to see if they are the right persons for the new model.

We are teaching clients how this downturn can be the best possible thing for them. They can create a business that will be sensational by using this period of restructuring to make a company fit for the new world.

[The spate of recent mass layoffs in Japan] is bad downsizing because they are just chopping for dollars alone. Such layoffs have a very long-term impact on the company.”

JI: What do you think about all the mass layoffs going on in Japan and other countries by big firms?
AS: It is bad downsizing because they are just chopping for dollars alone. Such layoffs have a very long-term impact on the company. The people who stay see that management doesn’t care. Their Japanese clients resent them for behaving in that fashion. The head office is not in Japan, and decisions are being made outside Japan and being imposed. The local HR people are not usually very empowered. They tend to be servants and have to take all the flak.

JI: Are there any preventive measures companies can do before things get too bad?
AS: You have to rethink your business model. For example, do you need to have three factories? Could you have one and outsource two? That way, as demand goes up and down, you are not opening and closing factories the whole time.

JI: How bad is the situation going to get?
AS: It will get a lot worse in Japan. It is no longer just a financial sector collapse—we know what shape the finance industry is in now. What I see is an extremely deep, long business recession because domestic demand has disappeared. We are working with clients where demand for their products and services has dropped from 25-80 percent. They have to reinvent themselves. For big companies, that is very hard. Mid-sized companies can do it quicker.

Japanese companies have always been slow to adapt. Even though there have been a lot of layoffs, I still think they are too slow. They are still protecting their middle managers. You go to a company that has gone from 2,000 to 1,000 people and you find they haven’t done anything with their middle managers. It is a culture of inefficiency. There is a lot of pain still to go.

JI: What about other countries?
AS: I think the United States will come out of it sooner than Japan because they are taking their medicine, restructuring and doing what they have to do. Korea takes its medicine very quickly. It goes down hard and comes up quickly. China is going to come out slower.

JI: How hard is it to predict trends?
AS: We are in a privileged position of talking to some of the best business brains in Asia all the time. You get an insight into a lot of different industries and know where they are going. That is our springboard. Then it is a matter of looking at the implications.

JI: What sort of person makes a good consultant?
AS: You must be highly intelligent because clients are buying your brain. We need people who are confident, disciplined and have a low ego. A sense of humor helps under pressure. It’s not to do with money; it’s not to do with anything other than having a very genuine interest in helping people.

JI: How are other areas of your company doing?
AS: Our business goes through cycles. In a boom time, executive search becomes important, and there are a lot of mergers and acquisitions. In the down time, it is downsizing—how to reshape companies in a harmonious Asian fashion. Now we are seeing the first phase of the next stage of M&A starting again because competitors are merging.

JI: How do you market yourselves?
AS: We do a lot of lectures on thought leadership. Sometimes, we contact clients directly if we hear they are taking over a company. We get a lot of repeat work from large companies in different countries.

JI: Who are your typical clients?
AS: We tend to work with Japanese companies in other countries: Japan to China, Japan to Korea and with Western companies coming into Japan. We’re best in the cross-cultural area.

JI: Which industries are doing well in the recession?
AS: Health services, affordable luxuries, such as shampoo, and low-cost food chains will do well. The pain is in the industries that really have to do heavy restructuring, such as the automotive, construction, manufacturing and financial sectors.

JI: Some people see these changes as a sort of revolution. What do you think?
AS: The world is not going to stop. There are two cycles. One is globalization. We have hit the peak, and we are going back very rapidly to nationalism. I see it extremely strongly in China and America. Job protection will become a political phenomenon and will depress world trade. The other cycle is the removal of debt financing. Now you can’t buy if you don’t have the money. The good side of all this is that hopefully people will realize that their value is not having a bigger house and car. Let’s learn to be satisfied with what we’ve got. All advertising does is make people unhappy with what they’ve got.

But I do think there will be a rise in political instability. We’ve seen it in Thailand and Cambodia. There will be trade confrontations between countries such as China and America because the man on the street thinks globalization is bad. They want their jobs here, not offshore. JI

Chris Betros is the editor of Japan Today.
This article originally appeared online on www.japantoday.com.