TOKYO, April 18 The abrupt departure of Craig
Naylor, an American, as CEO of Nippon Sheet Glass Co Ltd
on Wednesday is the latest sign of just how tough it
can be as a foreign chief of a major Japanese company.
There have not been many over the years - deterred perhaps
by the language, relatively low pay and a corporate culture
steeped in tradition and consensus decision-building.
Welsh-born Howard Stringer had a 6-year run as CEO of Sony
Corp, but was moved aside early after a dismal run of
losses left the electronics giant trailing rivals such as Apple
Inc. Six months ago, another Briton, Michael Woodford,
was sacked as head of camera and medical device maker Olympus
after he blew the lid on dubious financial filings.
Naylor's resignation, however, cites "fundamental
disagreements" over strategy and comes at one of Japan's more
progressive and transparent companies - a $1.3 billion firm that
signalled its global ambitions six years ago by buying British
glass maker Pilkington Plc.
Naylor, who followed another foreigner, Briton Stuart
Chambers, as head of the Japanese firm, was appointed two years
ago after a lengthy global talent search and his arrival was
seen as a sign that Japanese firms were taking steps to fill
their management ranks with more overseas talent needed to keep
pace with increasing global competition.
"There are more and more Japanese companies trying hard to
diversify their boards because to be a truly global company ...
they need to attract good talent," said Tetsuo Ii, president of
Commons Asset Management. "I think the efforts are definitely
there to become more global and diversify at the board level,
but it's possible the company as a whole is not keeping pace
with those changes."
Nicholas Benes, representative director of the Board of
Director Training Institute of Japan, likened the move to bring
in overseas talent to what U.S. companies such as Procter and
Gamble and IBM went through three decades ago. "I
think Japanese companies will figure it out, too. They're going
through the stumbling age, just like P&G and IBM did."
Jamie Allen, secretary general of the Asian Corporate
Governance Association, said Nippon Sheet Glass was unusually
open about why Naylor was quitting. "The fact that the company
has actually been quite honest about why he is leaving, that is
actually quite positive," he said.
Allen also noted that corporate Japan has a more
consensus-driven structure. "I think it would be quite difficult
for an average western CEO to fit into that structure. Plus,
there's the language," he said.
That consensus-building culture means change is often slow.
"This was no doubt a source of frustration to him (Naylor),"
said one executive who has done business with Naylor but who
declined to be identified because of the sensitivity of the
issue. "He struck me as a middle American guy who might be
comfortable running a global company from America as opposed to
running a global company from Japan."
At Olympus, Woodford found out how fragile his position was
at the top when he returned from a business trip, was fired,
thrown out of his company apartment and told to take the bus to
the airport. His failing was to not comprehend that the company
board would support its entrenched chairman over a long-running
$1.7 billion accounting fraud. The company's main lenders are
also its main shareholders, stifling real change at the firm.
"They supported this board and they didn't support me. What
did I do wrong? I reported a fraud but they stuck together like
glue," Woodford told Reuters on Wednesday in Tokyo ahead of an
Olympus shareholders meeting on Friday to pick a new board.
Japanese companies also tend to promote from within, and CEO
pay can be lower than in other developed markets.
Naylor, for example, made 173 million yen ($2 million)
including bonuses in the year to March 2011, according to the
company's financial statements. By comparison, Pierre-Andre de
Chalendar, CEO of French building materials group Saint-Gobain
, was paid over $3 million.
Language, too, can be a barrier. Foreign leaders can
struggle to get their message across and will normally need an
interpreter to listen to their workers.
A Sony executive, who didn't want to be named, said Stringer
was not always sure his staff understood what he wanted and on
occasion was left out of the loop in decision making.
But it's not all gloom for foreigners looking to lead major
Brazilian-born Frenchman Carlos Ghosn still heads Nissan
Motor Co after more than a decade as CEO, and Brian
Prince has been chief at Aozora Bank for three years.
Also, the number two and three executives under Nippon Sheet
Glass' new CEO Keiji Yoshikawa are a German and a Briton.