Book review of Sony Layoff
Introduction
Layoffs are booming at American tech companies. Information is summarized in layoffs.fyi. Twitter, in particular, reports that more than half of its employees have left through layoffs or voluntary resignations.
Some people often argue that the reason why Japanese salaries do not increase is because of too many restrictions on layoffs compared to the U.S., but according to the OECD survey, the U.S. requirement is off the median, and the data shows that the U.S. low restriction is extremely unique in the world.
https://www.dir.co.jp/report/research/economics/europe/20140318_008337.pdf
Therefore, it is not the case that the same thing will suddenly happen in Japanese companies, but I found a book "Kirisute SONY (SONY layoff)" which summarizes the case of restructuring at Sony. I've read it for my personal interest.
Book summary
The table of contents is as follows
- Chapter 1: Sony's Transformation 2006-2007
- Chapter 2 Turning Point 1946-2006
- Chapter 3: The pride of engineers 2008-2009
- Chapter 4 Volunteering for Restructuring 2012-2013
- Chapter 5 Undoable and Irreversible 2012
- Chapter 6 Hitokiri SONY 2012-2014
- Chapter 7: Suffering without end 1954-2014
- End Chapter ex-SONY Struggling
The book itself is from 2015.
Chapter 1 is an introduction to Sony's internal systems and surrounding environment. Chapters 2, 3, and 5 are about company history and past restructuring. Chapters 4 and 7 are about the restructuring room. Chapter 6 is about the person in charge of restructuring.
Sony's Retirement System
The report describes several measures taken within Sony in response to changes in the business structure.
- Second career support site within the intranet
Case studies of Sony alumni
- Sony University
Executive Candidate Training Institute
- Career Design Office
Commonly known as the restructuring room. You can either apply for resignation and get support from a job change agency at the company's expense, or you can take a training course if you can't decide.
As a measure, I have the impression that they are solemnly doing standard things. Either consolidate low performers in one department and train them to take openings in other departments of company, or give them early retirement benefits to help them change jobs.
Statistical Comparison
The Sony Group has 108,900 employees at the end of March 2022. It depends on the time, but it seems that the number of reduction is around 3,000 to 1,000,000 persons/year. 80,000 persons in 20 years, I guess. That is quite a lot.
I thought it was difficult for Japanese companies to cut people compared to American companies, but they are restructuring quite a bit. Since Sony's average annual salary is very high, they had to take the same measures like US company. Perhaps there is less flexibility in terms of internal role change when there are changes in the competence environment.
On the other hand, it seems that there are about 100~300 people who join the Career Design Office every year. That is less than I expected. It seems that the average person gives up and only about 5% of the layoff people hesitated to make a decision.
Sony has multiple businesses. Its business is portfolio. However, still, it seems to be difficult to be in long success in the manufacturer business.
Recent dismissal cases and precedents
In a related matter, I have also looked into cases and judicial precedents regarding dismissals.
Japanese restrictions on dismissal are strong. For example, even an employee whose employment term is limited in the contract can be invalidated. DMM had a dispute about that in 2019. In many cases, it is illegal to stop hiring a contract employee.
On the other hand, there are some recent cases where layoff is somewhat justified in job-type employment. The conditions are strict, though.
The employee appealed against the dismissal due to the disappearance of his post was judged to be valid. The court evaluated the company's efforts to avoid dismissal by offering five internal job openings after the dissmiss of the department.
- United Airlines Supreme Court Termination valid.
The High Court evaluated that the company took all possible avoidance measures to mitigate the disadvantage of dismissal, such as offering reassignments that kept the annual salary and adding severance pay for early retirement, while the job title was limited in the contract.
Impression
One of the things I dislike about layoffs in Japan is that employment in Japan is limited to new graduates. If you are laid off, your job opportunities are limited. If you can be hired by another company with the same salary based on your past experience, you will be less likely to dislike layoff.
I recently learned that Washington State in the US will require companies with 15 or more employees to disclose their salary range when recruiting since 2023/01. Microsoft is included.
Come to think of it, Japanese job postings often do not disclose salary ranges, or only a rough range that includes new graduates to senior role. They plainly say it depends on experience. The reason why salaries do not go up and there are not enough room for hiring may be due to the lack of transparency when moving to another company.
Loosening the restrictions on layoffs is a proportionally painstaking revision, and Japan is not extremely bad compared to the rest of the world. In fact, I feel that it would be healthier as a society if Japan, like Washington State, made it mandatory for evaluation systems and salary ranges to be made public in job posting.
