Hard times are indeed upon us. The number of business firms filing for bankruptcy in Japan has shown an increase for the past 33 consecutive months.
When the 2024 figures are finalized, it is anticipated that the number of corporate bankruptcies in Japan will surpass 10,000 for the first time since 2013.
The causes for these failures are, needless to say, multifarious. Some companies were beset by a storm of unanticipated cost increases. Others, by persistent labor shortages.
Even before a company goes down for the count, Spa (March 4) claims that a number of recognizable omens begin to appear.
Ryu Nitta, a veteran business consultant, tells the magazine that three key factors -- "fiscal bottom line" "human resources" and "business environment" -- tend to figure in the degree of danger a company faces.
When Spa surveyed company staff about their anxieties over their employers' future, it was surprised at the large number of responses voicing concerns, dissatisfaction or sense of impending danger. From this, it formulated three levels for rating troubled companies: "amber alert warning," "potential bankruptcy candidate" and "company that might fail at any time."
The first warning sign that not all is well is an emphasis on compliance, which may manifest itself in such ways as the assigning of "overtime-free" days to certain segments of workers; sudden promotions of female employees to managerial positions, due mainly to the external pressures to boost women's participation in the workforce; and calling staff to meetings of questionable necessity on short notice.
A second warning sign is a general collapse of the entire business sector. This type of concern, for example, may be the result of new breakthroughs in artificial intelligence that render the current business model obsolete.
Three business sectors that Spa's panel of experts expect to encounter hard times in the coming decade are electronic games, worker dispatch services and business consulting.
The third warning flag is the stubborn maintaining of the old-fashioned organization system. In particular, a company headed by a single individual, which depends on internal politics to get things done, is set up for a fail.
Spa focused on one of these, a non-listed company with over 1,000 employees.
In such organizations, senior staff members typically have so much authority that no one dare defy them. Errors frequently crop up in the calculation of salaries. And rather than servicing customers, workers are often diverted to in-house tasks.
The fourth flag is sex-related troubles. One symptom of ailing companies, it would seem, is the ubiquity of various forms of sexual harassment.
Spa focused on a troubled company with over 3,500 employees listed in the prime section of the Tokyo stock exchange. To its dismay, it discovered that sexual harassment is tolerated throughout the organization, and that authority over personnel is not delegated to the human resources department, but to department or division heads.
"In many cases job interviews are conducted in a completely laid-back manner," the aforementioned Nitta remarked. " Normally in large companies, the hurdles to joining are high, with candidates undergoing document screening, written tests and multiple interviews. But ailing firms hire people who don't make the grade elsewhere and who lose self confidence, which makes them feel sentimentally indebted to their employer. In other words, the management is supported by the honesty and sincerity of the workers."
"There's no maintenance or cleaning. The toilets are dirty. Meetings and appointments aren't on time," points out business consultant Yukimitsu Kasai. "Such situations, in which even the most basic operations are neglected, are signs of impending collapse.
"Another warning sign is when companies tend to blame other factors (for example, such as 'because market conditions are sluggish'), or otherwise shift the responsibility to others," adds Kasai.
Frequent absences of key personnel from the company may be another ominous sign.
"When the president or head of the accounting department are regularly out of the office, it may be because they're occupied negotiating with banks or business partners," management analyst Tetsuya Abe tells the magazine.
© Japan Today
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