Making the most of human capital

Human resources and management consulting services are in big demand these days in the global corporate environment. One of the leading companies in the industry is Aon Hewitt, a group company of Aon which has a 75-year-history of providing talent, retirement and health solutions, outsourcing services, risk management, insurance and reinsurance brokerage.

Headquartered in London, Aon Hewitt operates over 120 offices in 90 countries, with 30,000 employees, focusing on retirement consulting and administration, compensation design and talent management, and leadership training, including its Best Employers Program, which it conducted in Japan for the first time this year. The Best Employers Journey is an ongoing service designed to improve employee engagement, leadership effectiveness, employer brand and culture to drive high performance. This year’s Best Employers awardees were FedEx and The Ritz-Carlton Tokyo.

Overseeing Aon Hewitt’s operations in Japan is Steven Kusumi. Born and raised in Okinawa, Kusumi went to college at the University of Pennsylvania and graduate school at Harvard, majoring in chemistry and East Asian studies. After spending seven years at McLagan Partners (also a member of the Aon group), a leading executive compensation consulting and benchmarking firm focused on the financial services industry, Kusumi took up his current position in November 2012.

Japan Today catches up with Kusumi at the Aon Hewitt offices in Tokyo’s Chiyoda Ward to learn more.

What are the main services you provide in Japan?

We provide human capital consulting in the areas of employee engagement, performance management, reward program design, talent assessment and development, and pension design.

Our strength lies in our established history and global footprint. With more than 120 offices in 90 countries worldwide, our experience and know-how in each of those local markets allow us to anticipate how changes in one sector or region impact another, and that is invaluable insight to companies expanding their business across borders and regions. Whether it’s Japanese corporations here expanding overseas or global players entering Japan, we’re able to offer the best local counsel at the highest global standards, to minimize risk for companies.

How’s business?

2014 was a good year for us due to mergers and acquisitions. When a foreign firm buys a company in Japan, they need to integrate human capital-related policies and practices, including organizational design, workforce plans, compensation policies, and pension plans. All this having to be done within a limited timeframe is usually quite challenging as there are so many parties involved. Financial risk, market volatility and regulatory differences in each country must be taken into account in order to optimize results for both the firms and their employees. We’re recognized as a global leader in these areas and if needed, can bring in consultants from all over the world to help clients in every aspect of project management.

How do you market the company in Japan?

Much of the business we get comes from word of mouth through clients we have served in Japan. We have a large global network and do get quite a few referrals from multinationals as well. Some of our compensation-related businesses are heavy repeat businesses.

Do cultural factors come into play in your consulting?

Not so much, although we do need to adjust for some differences in regulations and market practices across locations. We find that increasingly, clients are more interested in adapting and adopting global best practices. We try not to get too caught up in the “Japan is different” trap.

What is the Best Employers Program?

Best Employers is a program we have been conducting in Asia since 2011. In 2014/15, we launched it in Japan for the first time. Being recognized as an Aon Hewitt Best Employer means that the organization inspires strong commitment and superior performance from its people, it drives business results through effective people practices; and it manages its business in ways that build long-term success and sustainability. Participating organizations gain access to Aon Hewitt’s latest market research insights, along with the best and most innovative people practices of Best Employers.

This is a timely and crucial topic in the sense that many firms now are very concerned about the well-being of their staff and are trying to figure out how to retain the best talent and keep them engaged in their job. This in turn has a direct impact on their financial performance. Companies conduct a lot of internal studies, which is fine, but what differentiates us is that we are a third party. We can collect data from many different sources and our clients can benchmark their results vis-à-vis other firms and against the market. Our strength is that our methodological approach is one that allows clients to see the link between employee engagement and actual business performance.

How does it work?

We collect and analyze three data points. The first is an online, anonymous employee survey to measure the level of their engagement. We look at three basic elements – “say, stay and strive.” Would you say good things about your firm? Do you plan to stay over the long term? Does the firm make you want to go that extra mile to do a good job? Obviously, there are many more questions grouped under these three elements.

The answers are calculated to come up with an engagement score. Most firms want to know the engagement scores, even if they are low and at times may even point to a problem with leadership. We don’t just throw you the data, though; we’ll tell you why you got that score and we can begin to think about some action plans that can help you improve the results.

The second data point is a questionnaire that we ask the HR department to fill out, which includes very detailed questions about what kind of people practices are in place and how they correlate to the business strategy of the firm. Thirdly, we will interview the CEO about his/her vision for the future of the company and how much alignment exists between the CEO’s views on human capital and the actual practices.

We get those three data points from all the participants and we have an external judging panel decide which companies make it to the list of Best Employers. We operate in Japan as well as in 11 other countries in Asia Pacific.

What companies are eligible to take part?

They must have at least 50 employees and have been operational in Japan for three years. Both foreign multinational firms and Japan-headquartered firms have participated.

How do you think human resource management has changed in Japanese companies?

Japan has gone through quite a bit of change since the bubble burst. Lifetime employment fell away and a lot of people felt let down by the values they believed in all those years. Some felt a bit lost in regard to expectations that they had about their employer. Then we saw the influx of many Western concepts, such as “pay for performance” that a number of Japanese firms decided to implement. But that sort of change is not something that can be realized overnight. So, there was a gap between the expectations of the employer and employee. One of the reasons behind the difficulties that have often arisen is a lack of proper communication – where you see employers hoping that employees will understand the changing market situation and be prepared to accept change on blind faith. That doesn’t work. It is critical that firms put more effort into communication to build/rebuild a trust relationship with employees.

What is your management style?

We have about 30 colleagues here, mainly consultants. I have established teams with clear areas of expertise and entrust the business to those teams. They keep me fully informed on what is going on, and this then allows me to connect different groups with different capabilities. From my vantage point, I can see that our firm will always have the expertise within its global network, so we can easily form a global team as necessary to complement the Japan team and service the full array of our clients’ needs here in Japan.

What is the most satisfying part of your job?

When clients come back to us and say they are really glad they worked with us.

How do you like to relax?

My wife and I like kabuki and go quite often.

© Japan Today