President Mikawa Eiji’s “restructuring without dismissals” (1993)

Between the pledge and the substance

The heart of this decision is that, while holding up the pledge that “jobs will be protected,” the company rearranged its people and its costs by every means short of dismissal. A second personnel department devoted to secondments, the spinning-off of indirect functions, headcount compressed by zero-based thinking, cost reduction led by younger employees — every method Mikawa used remade where people worked and what they did without pushing anyone outside the company. In that tightrope walk, which held paternalism and ferocious internal competition together at once, one can read a concentrated form of the question of how far a Japanese company can carry structural reform under lifetime employment.

The balance did not last. The dismissal-free restructuring of the 1990s achieved a 35% cost reduction, but as market swings continued Yokogawa in 2003 took the step of revising the employment pledge itself. To hold the pledge and drive reform through it, or to rewrite the pledge — Mikawa’s course is one example of how far a company can stand its ground between the promise to protect jobs and the requirement to stay competitive.