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Japan General Estate to provide management with allowances for eating and drinking sessions with subordinates

March 4, 2008
By Ken Worsley


While we learned yesterday that increased bonuses in January helped push average salaries up 1.0% against a year ago, today we’ve received news of one firm in Japan that is taking a decidedly unique approach in its attempt to promote better communication in the workplace.

Condominium marketer Japan General Estate announced today that it will “attempt to smoothen communication with subordinates” by providing a monthly “Subordinate Allowance” ranging from 100,000 to 300,000 yen per month to members of its management team. Those who oversee 20 or more subordinates will be eligible for the 300,000 yen allowance.

What is the money to be used for? According to the press release, funds may be used for eating, drinking, weddings, funerals and so on. That comes out to 15,000 yen per month for an employee at a division with exactly twenty people. If they stick to the cheap spots, and manage to not drag things off to karaoke until 2am, this could subsidize a weekly drinking party for such a department.

According to its website, Japan General Estate employed 317 people as of the end of September 2007.

Is this a good idea? Many do feel that long nights out drinking with supervisors is not what they’re looking for, while others undoubtedly enjoy the camaraderie (and will enjoy it that much more if it’s free). We’re forced to wonder if this is what management sees as an alternative to pay raises. While it can be very, very difficult to undo wage hikes in Japan, this teate can be snatched away at any time.

Shareholders, of course, should be pushing for just that at the next general meeting. Over the past three full financial years, Japan General Estate has posted slightly declining sales on its consolidated balance sheets, though pretax profit, operating profit and total asset values have been rising, with total assets standing at 202,335 million yen at the end of fiscal 2006.

Nonetheless, the firm has seen its share price erode over the past year, as has much of the real estate industry. On February 2, 2007, Japan General Estate traded at 3,600 yen per share. By the end of the year it was trading around 1,200 yen per share. Yesterday’s closing price? 922 yen per share.

There will be arguments over whether or not this is a good business move, and also over whether or not this is a good social move (I tend to say no on both counts right now, but would like to see more details). However, JGE has a history of trying unorthodox plans, which is certainly welcome. Still, this seems boneheaded, almost suspicious; it’s almost as though someone is trying to make money disappear.

We’ll have to see how this plays out. Will such a ploy succeed in retaining staff during troubled times and attracting top-quality new workers? Has communication at the firm gotten so bad that the only cure is a series of subsidized piss-ups with co-workers?

Or, perhaps the marketing condos business has gotten so bad that the only thing left to do is drink the company funds away…

Filed Under Business, Labor and Wages, Real Estate 

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Comments

8 Responses to “Japan General Estate to provide management with allowances for eating and drinking sessions with subordinates”

  1. Contrarian on March 5th, 2008 7:05 am

    Not to hijack this post, but does anyone really like going to the bar with your department. I usually have to suffer this fate once every 2 months. Drinking with a couple of managing directors (whom I feel are idiots) just feels like more work. Hell, they even talk about work. Last time, I just kept the gin and tonics coming until I could barely walk (or talk), then rode home with a friend.

    I want to drink with my friends, not my managers.

  2. Ken Worsley on March 5th, 2008 10:41 am

    Contrarian, I don’t think that’s hijacking at all. One of the points is that forced drinking with crusty old bosses is one of the things that makes jobs demoralizing for a lot of people here. The forced loyalty to the company above all else is not going to create better work environments.

  3. Pellegrini on March 5th, 2008 2:31 pm

    This could be viewed as a way to keep middle management on board…

    Many managers will be happy to just pocket the money each month and claim it as travel expenses for marriages, funerals and other social obligations. The meals, new neckties and occasional rounds of golf with other managers when heading to and from such appointments add up!

    I agree with you, Ken, when you say that this is a good way to make money disappear.

    As far as I can tell, workers (myself included) already drink and carry on about as much as their spouses and job security will allow.

  4. WG on March 5th, 2008 4:07 pm

    Shareholders ought to be pissed! They could be tossing away over $300,000 a year on drinking parties. How do they measure the ROI? People come in with killer hangovers, but laughing about last night, so they know it must have been great for communication?

    I smell PR stunt. Managers will be pressured to only use half the money given to them, and that will be cut again in six months.

  5. Kreskin on March 6th, 2008 2:56 pm

    Shareholders ought to be pissed!

    Maybe it would fly better if they paid for the shareholders to get pissed as well.

  6. Fonz on March 7th, 2008 4:03 pm

    Where can I apply?

  7. Ken Worsley on March 8th, 2008 2:08 am

    Pellegrini,

    Many managers will be happy to just pocket the money each month and claim it as travel expenses for marriages, funerals and other social obligations.

    Yup…and as we know, neckties for weddings and funerals cost 100 yen. Why is it that the better the title on the business card, the cheaper the necktie?

    Golf definitely adds up as well. As does travel by Shinkansen, hostess clubs (reminds me of my idea to start a “Ghostess Club” that never hires girls (thus saving on cost) but convinces guys to talk to the ghosts of hot chicks (in the expensive places) or the spirits of angry semi-ok chicks (out in Saitama).

    Anyway, I do agree with WG - this is probably a PR stunt and no manager will be allowed to use the full funds.

  8. FMV on March 9th, 2008 11:35 am

    Have to say I agree with others who suggested the firm just did this to get it in the news.

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