Japan Inc opens door to more women directors, but managers remain rare

by Feb 5, 2024Featured Article, News

Mitsuko Tottori’s appointment as Japan Airlines’ next president makes her something of a rarity in Japan – a female head of a well known company.

While Japanese firms have rapidly lifted the number of female board members in recent years, most are outside directors. Change from within is slower in coming.

Under pressure from the Japanese government, the Tokyo Stock Exchange (TSE) and foreign investors, firms have been scrambling to improve diversity, including on their boards, bringing in external directors who are often lawyers, academics and accountants.

But the diversity push isn’t as broad as it could be, critics and governance experts say. Some 30% of women directors sit on multiple boards, double the percentage of men, according to a study of all TSE-listed firms by governance consultancy ProNed.

This reflects Japan’s difficulty in promoting from the inside – both board members and company executives – after years of neglecting to cultivate a pipeline of potential women managers, they say.

Traditionally, many Japanese companies had rigid hiring systems classifying employees as either “career track” or “non-career track” – with the non-career workers often the women who did administrative work.

“It’s very difficult to convince people of the value of diversity when they haven’t seen it in action,” Keiko Tashiro, a director and vice president of Daiwa Securities, told Reuters in Davos earlier this month. Since 2005, Daiwa has had measures in place to train new generations of female leaders.

Tashiro is one of the most senior women in Japanese finance, where, like many industries, the top echelons remain overwhelmingly male.

Women account for only 13.4% of directors and executive officers at the 1,836 firms listed on the TSE’s “prime” market, and of these a mere 13% are internal hires.

“Many companies say they don’t want to promote unqualified females too quickly,” says Yuko Yasuda, a director at governance consulting firm Board Advisors Japan. “It may be an excuse.”

There are signs of change. Yasuda says more than half of inquiries for board posts are for women and clients are increasingly looking for direct management experience.

Finding women with experience, however, is challenging. Up to now, many Japanese women haven’t even entertained the prospect of becoming managers.

“Imposter syndrome is especially strong in Japan,” said a spokesperson for HR services provider Recruit Holdings.

The owner of platforms such as job listing website Indeed and company review website Glassdoor, Recruit has made changing this mindset central to its initiatives supporting women’s careers.

“We encourage people to further their careers by having various experiences early on,” the spokesperson said.

To extend opportunities for management training to a wider pool of candidates, Recruit’s domestic subsidiary has created a checklist of core competencies necessary to perform each first-line management position.

It says this helps undo unconscious biases that in the past would privilege “macho” qualities, such as the capacity to work at all hours, and has raised the number of female candidates for each position by a factor of 1.7 and that of men by 1.4.

But initatives such as these take years to filter through to the top, leaving ambitious Japanese women with few role models to inspire and guide them.

Tottori told a JAL press conference earlier this month that she hoped her appointment would encourage women who are struggling with their careers or big life events.

Notwithstanding Tottori, the current crop of female leaders often come from privileged backgrounds or have made immense sacrifices to succeed at work, said Etsuko Tsugihara, founder and CEO of public relations firm Sunny Side Up Group and one of only around 14 women heading a “prime” listed Japanese firm according to a Kyodo and Teikoku Databank study as of January 2023. The company has since moved to the “standard” market.

“When I went to the hospital to give birth, I came straight from the office. Then I was back at work two weeks later,” Tsugihara recalled. “It put off other women from doing the same.”

Now the employee welfare program at Tsugihara’s firm encourages work-life balance for both female and male staff and supports long-term life planning by subsidizing blood screenings, fertility-related hormonal tests and even egg freezing.

“To be a role model you have to have a healthier, richer life,” Tsugihara said.

© Thomson Reuters 2024.