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Japan commentary on AIG bonuses, Japanese executives

By Dominique Numakura

The AIG scandal is making headline news in Japan. Everyday in Japan one can read about it in newspapers or listen to reports from TV news. What caught the attention of most Japanese was the story about the U.S. congressional senator suggesting AIG management should take their cue from their Japanese counterparts who would resign and commit suicide over a failed business venture.

Japan’s culture is will known for ‘taking no prisoners’. Many Japanese solders and officers chose suicide instead of becoming POWs during World War II.  The Japanese government discouraged troops from being captured if the battle were lost.

Can this type of draconian behavior exist in modern times? Today, Japanese company executives do not commit suicide if the company fails.

Large, publicly-traded Japanese companies typically elect one of their long-time employees as an honorary president. Most of these executives have successful careers that have lasted forty years.  They remain president for a relatively short period – usually not more than three years.

If the company fails, they blame it on previous presidents and, blame the misfortunes on bad timing. The executive-on-watch’s final public address is an apology to employees and shareholders immediately followed by his resignation.

But, don’t feel bad for him….unless the company completely dissolves, his pension and retirement packages will be based on his last 3 years as president. Not a bad pay day, but certainly less extravagant than the bonuses paid to AIG executives.

Things are different if you are the owner of the company.

Presidents of smaller, privately-held companies cannot resign from their responsibilities because they have personally financed the company. In some instances, they mortgage their primary residence to accumulate the necessary capital, and will loose everything if the company dissolves. Suicide does become an option for some.

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Unfortunately, I can recall two examples of this has happening during my 35 year career.

The more tragic stories come from the rank and file managers.

These mid- and lower-level managers perform in a stressful environment.  Everyone wants a piece of them…from upper management to the blue collar worker.

Some managers can deflect and prioritize, but others (mostly male managers) become too weak-minded when the stress begins to build and cannot make critical decisions to keep the boat afloat.

To many, suicide seems like the only option. Unfortunately, their families suffer both emotionally and financially.

Conversely, when this happens and companies remain intact, the company continues rolling along, and plugs another pole in the hole (assign new managers).

A large percentage of suicides in Japan are from this segment.

The primary reason for committing suicide in Japan is financially related. Announcements made at roll calls in Japanese police precincts include the projected increase in suicides due to the economic situation.

More than 30,000 Japanese people commit suicide every year. This number is 5 or 6 times larger than deaths caused by traffic accidents in Japan and, amounts to about 90 suicides per day or, one every 15 minutes.

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