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Engagement Should Be Fourth Arrow in Japan’s Economic Plan

Understanding what drives Japan’s most underutilized assets

Published: Tuesday, December 3, 2013 - 18:44

Only seven percent of Japan’s working population is engaged at work, one of the lowest engagement rates in the world. That translates to only one in 14 employees entering their workplace each day feeling motivated, enthusiastic, and committed to adding value and innovation to their jobs. This is a concern for leaders in Japan as they search for growth among reports showing a gross domestic product (GDP) down by 50 percent.

Perhaps the concept of engaged employees should enter the dialogue of Japan’s economic policies (dubbed “Abenomics” after Japanese Prime Minister Shinzo Abe)  and be added as the fourth arrow in the leader’s proposed “three arrows” program to boost Japan’s economy. The three arrows are: fiscal stimulus, monetary expansion, and structural reform.

In the past, Japanese businesses have relied heavily on the domestic market to produce profit and growth, but with a declining population (the International Monetary Fund forecasts Japan’s population will shrink by around 30% by 2055) and overseas competitors making inroads into the local market, Japan’s businesses have lost ground. For many Japanese businesses, globalization is the only hope for growth.

As Japan’s government leaders strategize about fiscal policies aimed at promoting innovation, enterprise, and business overseas, they must leverage the talents and energy of Japan’s workforce to achieve a sustainable future. Japan’s leaders would be wise to enact the following strategies:

1. Enhance Japan’s workplace well-being. The Financial Times reported that the number of Japanese workers afflicted with mood disorders, including depression, has more than doubled (from 433,000 in 1996 to more than 1 million in 2008), and 84 percent of Japan’s businesses say mental health problems affect their business performance negatively.

Japan’s business leaders must make employee well-being an organizational strategy and hold managers accountable for results just as they would for other organizational outcomes. Gallup studies have shown that employers who invest in programs designed to improve employees’ overall well-being and boost their engagement gain a distinct competitive advantage. For example, in East Asia, engaged employees are half as likely as actively disengaged employees to experience stress.

2. Learn from the best—not just Japan’s best. Tadashi Yanai, CEO of Fast Retailing, told the management consulting firm, McKinsey & Co., that Japanese businesses, “should be willing to learn from companies in [developing] countries if they are better than us. But we lack the willingness to learn because we have been so successful before. That holds true for managers and employees alike.”

Toyota and Fast Retailing certainly are two of the best-run and most-admired companies in the world. But as Japan’s businesses look to globalize, it is essential to learn how the best companies around the globe engage their workforces to boost growth and innovation.

3. Understand what truly engages women in the workplace. Abe plans to boost female employment (a move that some analysts claim could add 15 percent to Japan’s GDP) through initiatives such as opening 250,000 daycare facilities across the country. However, leaders in Japan must look beyond physical facilities and understand the hearts and minds of Japan’s female workforce. Organizations in Japan should conduct research regularly to discover the engagement factors that drive what Goldman Sachs’ economist Kathy Matsui called Japan’s “most underutilized asset”: its women.

Japan is truly at a crossroads. Once considered one of the most influential and defining economies of the last century, policymakers now express concern over Japan’s future. Japan’s Economy Minister Akira Amari insists a “good cycle has begun”—but a good cycle can only continue if leaders across Japan make a conscious effort to engage workers of all ages, and at all levels, for the good of Japan’s present and future economy.

To learn what your company can do to improve employee engagement and performance, read the State of the Global Workplace report.

Article by Larry Emond, first published Nov. 19, 2013, in The Gallup Blog.

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Gallup has studied human nature and behavior for more than 70 years. Gallup’s reputation for delivering relevant, timely, and visionary research on what people around the world think and feel is the cornerstone of the organization. Gallup employs many of the world’s leading scientists in management, economics, psychology, and sociology; and their consultants assist leaders in identifying and monitoring behavioral economic indicators worldwide. Gallup consultants help organizations boost organic growth by increasing customer engagement and maximizing employee productivity through measurement tools, coursework, and strategic advisory services. Gallup’s 2,000 professionals deliver services at client organizations, through the web, and in 40 offices around the world.