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Graphics from Global Gender Gap Report 2015

In December, the government of Prime Minister Shinzo Abe abandoned its widely touted ambition to have women in 30 percent of the nation’s managerial positions by 2020.

Given the excitement generated in 2014 by Kathy Matsui of Goldman Sachs Japan when she wrote one of the seminal works on women’s empowerment—“Womenomics 4.0: Time to Walk the Talk”—one might well wonder what has happened to the verve it once created.

Has Japan developed cold feet on Womenomics? The government’s U-turn would suggest so. It now has a goal of an “ambitious” 7 percent target for women in ministerial leadership roles by 2021. The target for private companies is 15 percent (up from the current 9.2 percent).

Further, the World Economic Forum’s Global Gender Gap Report 2015—which ranks countries “according to how well they are leveraging their female talent pool based on economic, educational, health-based and political indicators”—ranks Japan as 101 out of 145 world economies.

By contrast, Iceland was first, France 15th, the United Kingdom 18th, and the United States 28th.

What both the report and the government’s revisions point to are challenges facing the government and private sector in Japan—as also in many other countries—when it comes to realizing workplace diversity. But with those challenges come opportunities that some in the private and public sectors are seizing.

WOMEN RETURNERS

A motivating factor behind Matsui’s paper was Japan’s changing demographics. “With Japan’s population set to shrink by 30 percent and the elderly population expected to reach 40 percent by 2060, Japan has much to gain by boosting female employment,” she wrote in May 2014.

An increasing number of women who have been out of work for several years, often due to childrearing, are now seeking a return to the workplace. For such women, some of whom have not been working for five, 10, or even 20 years, the road back to the world of work can seem rocky, if not a dead end.

The ANA InterContinental Tokyo has set up a program precisely aimed at these women returners. With the 2020 Olympic and Paralympic Games looming, demand is growing in Tokyo’s hospitality industry, particularly for staff who speak English, and who possess cross-cultural awareness and a degree of life experience.

In a pilot project that began nearly one year ago, five Japanese women in their 50s, all of whom had been out of work for a number of years while childrearing, were successfully recruited into the company.

“It was a bit of an unknown territory,” says Markus Platzer, area general manager, in speaking of the project. “Both sides didn’t know what to expect. Our colleagues didn’t know if the new people’s expectations of the hospitality industry would be different from, or the same as, theirs.”

Overall, the project has been a tremendous success, Platzer adds. Bold leadership, risk taking, and out-of-the-box thinking were the characteristics needed for this trailblazing project, says Cynthia Usui, senior sales manager at the hotel. Usui herself returned to work after 17 years of childrearing.

Still, Platzer and Usui admit the initiative has not been all smooth sailing. “I have to stress that it was not an easy decision to make this happen. From the very beginning, we faced some reluctance to this project, and not everyone was immediately on board,” Usui points out. Platzer agrees.

Platzer and Usui credit the hotel’s culture, which has had diversity as a core feature for generations, for some of the pilot project’s success. But corporate culture alone has not been enough to ensure success.

Structure, patience, and hard work are needed to convince all stakeholders this is the right path, Platzer says. And ultimately, the project has to make business sense: “We gain highly motivated employees, and the women receive a salary like everyone else,” Platzer adds.

BREAKING THE SPELL

Makiko Fukui is impressed by ANA InterContinental Tokyo’s project. “It is very encouraging that a private company is trying to do this program,” she tells The Journal.

Fukui is president of Harmony Residence Inc., a niche recruitment company catering to managerial-level women and single mothers.

Born in Japan, Fukui lived in the United States from the age of three to eight. When she returned for elementary school in Japan, she was given an assignment, and one of the questions was, “What do you want to be when you grow up?” Her reply: a mother—like her own mother—and a doctor.

To the young girl’s surprise, most of her Japanese relatives countered: “Makiko, in Japan, this is impossible. You have to choose one or the other.”

“I lost motivation to study,” Fukui says. “I found no meaning in going to college.”

Fast forward to 2007 when Fukui, now a mother herself, came face to face with her daughter’s homework assignment—which harked back to her own elementary school experience, including the question about future aspirations.

“She wrote the same kind of answer as I had written,” Fukui says. “And when I read that, my heart broke, because I knew she would face the same kind of challenges, again and again, as I did,” she explains.

Determined not to let the same fate befall her daughter, Fukui decided to change the status quo, and founded Harmony Residence. She believes the women she helps, particularly single moms, are role models for the next generation.

Like the women in the ANA InterContinental Tokyo project, Fukui also struggled to re-enter the workforce in Japan, especially after stints living abroad due to her husband’s job. Trailing spouses, who are usually women, often cannot secure jobs as regular employees in Japanese companies after coming home. Other Japan residents face the same challenge when changing careers or returning to the workplace from childrearing, she adds.

DIVERSITY PAYS

When Harry Hill examined Shop Japan’s upper management in 2006, he realized they were all men, while almost 65 percent of the infomercial brand’s customers were women. Hill is president and CEO of Oak Lawn Marketing, which operates Shop Japan.

“For us it was basically, how do we grow and how do we get good people? If we just had the same way of doing business as many other established companies in Japan, then they would always be the first-choice employer.” To stand out from the competition, Shop Japan decided to embrace diversity.

Productivity, transparency, and trust have become signature traits of the company, Hill says. Shop Japan staff have options for how, where, and how long they work.

“People can choose the hours that they work between 7am and 10pm,” Hill explains. “If they finish their work, they can leave at 3pm or 4pm.” Shop Japan staff can also work from home.

“The key to diversity is not to treat everyone the same. The key to diversity is to create an environment where different people can succeed,” Hill adds.

A woman who has to pick up her children from school and therefore leave the office at 4pm or 5pm—but who is willing to contribute 60 percent of her time, talent, and effort to her employer—should be able to find a place in the company, Hill explains.

“And, why should we try to fit everybody into the same hole, rather than just saying, ‘Let’s give people options, and manage their performance and not their time, while giving them clear goals?’ [If we can do that], all of a sudden we find that mothers stay in the workplace.”

Since 2006, Shop Japan has not had a mother go on maternity leave and not come back to work, even if some returning women came back into different roles.

In addition to implementing a transparent performance-based compensation system, with bonuses tied to company and individual performance, Shop Japan is committed to providing “purpose, opportunity, and challenge for employees.” The results speak for themselves.

“I compared productivity in the first part of the year in 2006 versus 2015, and we went from sales of ¥48 million per person in 2006 to ¥75 million in 2015, and from 200 employees to 500,” Hill says. As for overtime, that has decreased significantly.

“We also went from 40 percent women to 50 percent women employees,” Hill adds. Further, 28 percent of managers are now women. In 2006, the figure was about 3.4 percent.

As with Fukui, Hill believes Japan’s diversity challenges can be overcome by enabling women role models, in his case by hiring and placing them in the managerial pipeline. He expects that in 10 years, more than 50 percent of managers at Shop Japan will be women.

BY THE NUMBERS

While ANA InterContinental Tokyo, Shop Japan, and Harmony Residence are setting good examples, one is nevertheless left wondering whether businesses as a whole are taking the diversity challenge seriously. At least in the finance sector, the answer is yes, says Japan Representative for Bloomberg L.P. Kunihiro Ishibashi.

Among investors in general, Ishibashi says there is an increasing desire for data on environmental, social, and governance (ESG) measurements within a target company, which Bloomberg provides.

Such investors rely on ESG matrices, which measure risks and opportunities—including the level of diversity within a company—available across a range of potential investments. They examine this data when deciding which companies to invest in for their portfolios.

Indeed, ESG analytical tools, the hallmark of the Bloomberg brand, have asset and fund managers looking to the company to provide insight for their next bet. The number of companies using ESG data increased 76 percent year on year in 2014, according to one Bloomberg impact report published the same year.

“At this moment, it is not enough to provide just the price [of assets]. Fund managers need a lot of data and analytical tools so they can provide [information] to their clients,” Ishibashi says.

He points to data showing that companies with high women’s participation have better performing stock than those where women’s participation is low.

Bloomberg analyzed stock performance data (from 2010 to 2015) of companies with high participation of women at board and managerial levels. It compared the results with the Tokyo Price Index of companies listed in the first section of the Tokyo Stock Exchange (TSE).

While the TSE first section companies showed a 90 percent cumulative return in their stock market performance, they were outpaced nearly 50 percent by companies with a diverse managerial and boardroom culture.

Ishibashi highlights that until very recently, the finance industry did not take ESG metrics seriously. “But now, everyone is focused on [ESG programs and measures]. When we have an event on ESG, a lot of people sign up and attend. They want to know what is going on.”

Bloomberg has been able to compile large data sets on companies—some 10,000 of them globally—and their ESG profiles, according to Ishibashi. He explains that over 700 ESG indicators are used to gauge most of the companies in the first section of the TSE, and include such elements as the ratio of female managers and directors.

Japan still has a long way to go before reaching the level of diversity attained in other Organisation for Economic Co-operation and Development member countries. Yet there are definite signs that the country is not sitting still on the road to gender equity.