We Don't Want No Foreign CEOs

We Don't Want No Foreign CEOs

Despite the success of Carlos Ghosn and other foreign CEOs in Japan in recent years, 99% of companies that I deal with want a Japanese person heading their operation in Japan. This is all very well if the candidate with the right mix of management, leadership, sales, restructuring, and language skills can be found - but this is getting harder to do as heads are being lopped right and left in the current recession.

Why are companies so fixated on having a Japanese CEO? Basically, the general thinking is that a Japanese person has a much better chance of relating fully and intimating with employees and customers. There are the issues of language skills, general understanding of how the Japanese social/business/regulatory systems work, personal networks, getting along with conservative resellers and vendors, and a whole host of other things.

Personally, I think in some small part, the need for a Japanese CEO is the fear by the hirers that their companies won't be seen as "Normal" and thus a non-Japanese CEO may label them as being out of touch, not committed to Japan, or too foreign to do business with. But frankly, if you look at some of the choices that have been made because of this fixation, more damage was done by not hiring the best candidate for the job, regardless of their nationality.

Of course, there are many competent Japanese CEOs working for foreign companies, and sure enough those that are most successful are also the people with the best networks and the will and ability to use them. However, for smaller companies in particular, as well as those just getting started in Japan, finding the right Japanese CEO becomes an order of magnitude more difficult. So usually I encourage the client to consider a foreign CEO - at least to begin with. You get better experience at a more favorable base compensation level (i.e., foreign CEO are usually more willing to take a bigger component of salary as performance-related compensation).

I don't mean for this article to develop into nationality stereo-typing, but I will say that those non-Japanese who have come to Japan under their own steam, have learned the language, have got business and leadership experience, and built their own networks, are ultimately proven pioneers and know how to get results. So what better person could you want to help your company get started here and/or sort out some severe management/performance problems already existing in your firm?

The list of foreigners who have built small operations in Japan into leaders in their fields are ample proof that it can be done. One friend of mine started up the Japan office of a mid-cap computer company in the mid-90's and went on to create a $100MM business here in just 4 years. Another took over a troubled $10MM business and within 3 years had doubled its sales and fixed some nasty internal problems.

Thinking about foreign CEOs in Japan reminds me of what someone once told me about venture business owners in Silicon Valley. I was told that more than 50% of successful entrepreneurs in the Bay area were immigrants who were "hungry and willing to take personal risks". Certainly the foreign CEOs I know in Japan are usually energetic realists, who know how to get results. They are innovators who call upon the lessons they've learned the hard way in Japan. And they usually intimately understand the thought processes of their Japanese colleagues. This is an important ability when you have to take the friction out of the company relationship with the head office - all the while, pushing all the right buttons to get the best performance out of your local staff.

I'm not saying that foreigners make better CEOs - although sometimes they are an easy fit for small start-ups here. However, it is clear that those responsible for hiring CEOs for their company in Japan need to take a closer look at this underutilized group of people.

As always, my contact details are simply:

terrie.lloyd@daijob.com

Looking forward to getting some enquiries...