By Sandra Sugawara
Washington Post Foreign Service
Tuesday, February 9, 1999; Page E01

TOKYO—The ominous warnings are everywhere -- in Japanese magazines, best-selling books and popular television shows: The American boss is coming and your life will never be the same!

Consider Sara Stanton, Japan's fictional vision of an American boss -- aggressive, impersonal and obsessed with profits. "Performance is everything," Stanton declares in a prime-time television melodrama.

The plot: a U.S. firm acquires a Japanese bank. Despite years of loyal service, the Japanese employees receive an ultimatum from Stanton: Bring in new business or risk being fired.

Real American bosses presumably would deliver the message with more finesse. Nevertheless, as ailing Japanese financial companies sell out to American ones and corporate pillars such as Nissan Motors Co. seek foreign investors, these messages are seeping into the once-insulated Japanese workplace.

The defining theme of the Japanese economic system -- protecting jobs -- is being undercut by global economic forces. Overnight, Japanese employees have been catapulted from a secure world of lifetime jobs and guaranteed raises to a potentially scary, yet for some workers exhilarating, world of mega-bonuses, faster advancements and abrupt firings.

Japanese companies, financially drained after years of sacrificing profits to protect employees, are experimenting with similar changes. But Japanese bosses, conditioned for years to think of employees as family and friends, are trying to phase in employment changes gradually. In contrast, American firms swooping in to take over distressed firms often have no such patience or inclination.

Consider the deal between Citigroup and Nikko Securities Co., Japan's third-largest brokerage, billed at first as a marriage of two mighty brokerage firms, as East meets West. But it soon became clear that the real purpose of Citigroup's $1.6 billion investment was to buy Nikko's corporate client list and its star performers. Teetering near financial collapse, Nikko had no choice.

About 400 of Nikko's 8,000 employees made the cut, moving over to the nearby modern, plush offices of Salomon Smith Barney Inc., which is owned by Citigroup. Left behind at the still-struggling Nikko are those involved in selling stocks to individuals and others that Citigroup thought were unlikely to generate new corporate business.

"When news of the deal hit us, we became despondent, not being able to cope with the shock," said one Nikko employee. He was not asked to join the new company, Nikko Salomon Smith Barney, and suspects it's partly because his English is weak. Indeed, a source close to Citigroup said that in jobs where employees need to brief foreign clients, English language skills are important.

At Toho Mutual Life Insurance Co., English skills are less critical. Most insurance sales are to Japanese families. So when U.S.-based General Electric Capital Corp. rescued the company last year, Japanese employees hoped their jobs would become more secure. The investment would give the firm a fresh start and perhaps allow employees to gradually rebuild the company.

But the more aggressive GE Capital culture prefers quick to gradual. And GE Capital's urge to move fast was helped by a clever deal it struck, giving it the ability to fire without having to take the blame. GE Capital basically bought Toho's operations, but not its financial problems. Under the agreement, 1,973 Toho Life employees were "loaned" to a new company, GE Capital Edison Insurance. The contract had a clause allowing GE Capital to cancel the employee contracts and send them back to Toho.

Much to the shock of employees, GE Capital did that to about 180 employees just months after taking over. Japanese employees had assumed they would have more time to prove themselves, according to sources. Since the hollowed-out Toho Life had no jobs to offer them, they were given early retirement payments and sent packing.

"Toho people are upset. They think if it were a Japanese company, this would not have happened to them," said Issei Daichi, who has written extensively on the insurance industry.

Merrill Lynch & Co. has tried to attack the cultural issues head on, spending three months training about 2,000 new employees from the failed Yamaichi Securities on "the Merrill Lynch way." But it's not clear whether Merrill Lynch's efforts to transform Japanese stock salesmen into American-style investment advisers will work. Merrill Lynch acknowledges it is losing more money on its Japanese retail sales effort than expected. A Merrill Lynch executive told reporters last fall that the initial projections were "too aggressive."

But despite intensive training, many Japanese remain culturally uncomfortable with American ways. For instance, American branch managers might be inspired by being empowered with new authority, but their counterparts in Japan are sometimes disheartened by the change. "Branch managers are now responsible for profits. That means they are also responsible for firing staff. They don't feel comfortable doing that," said one former Yamaichi manager who now works for Merrill Lynch.

In addition, Merrill Lynch was counting on an American-style investment adviser approach to give it a trustworthy image in an industry tainted by unsavory practices here. One well-known abuse in Japan is "churning" -- in which sales people persuade naive investors to buy and sell a lot of securities so the sales people can boost their commissions. Merrill Lynch promised that there would be no churning. Instead, its sales people were instructed to try to get an overall picture of customers' finances, ascertain their needs and then suggest investments.

Something got lost in the translation, however. Japanese customers have complained that Merrill Lynch sales people are too nosy, asking questions about their other investments instead of just telling them what stocks to buy. A Merrill Lynch spokesman said that salespeople never force customers to give information but that "the more we know about a customer, the better advice we can give."

This year, say analysts, will be pivotal for the Merrill Lynch retail experiment in Japan, which continues to lose substantial sums of money. Indeed, this year may be a defining period for many of these cross-cultural experiments.

If the new Nikko people don't bring in big business for Citigroup, "it's going to be bloody. Nikko could have been allowed to lose money year after year, but Citigroup is not going to put up with that," said a Citigroup analyst. "There is no job security in this place. They flip people out in a second if they don't perform, Japanese or foreigners."

Such a philosophy can be shocking in a culture where layoffs are so taboo that when they occur, bosses are expected to resign to take responsibility. The waiting room of Takashi Sumioka, a psychiatrist who specializes in work-related problems, gets more crowded each month, especially with Japanese who work for foreign companies. They feel isolated, stressed out and surprised at the severity of the evaluation process, Sumioka said.

Traits highly valued at Japanese firms, such as the ability to contribute to workplace harmony, often count for little in evaluations at foreign firms. Prestigious credentials, such as a diploma from Tokyo University, may open untold business opportunities at a Japanese company. But foreign firms often brush those credentials aside in favor of people with demonstrable knowledge and skills.

"Many of these elite cannot even get an interview at a foreign firm because they lack an expertise," said Shiro Kinoshita, an executive at Heads Japan, an employment consulting group. "For instance, in the financial area, the applicants often do not have a sufficient level of technical expertise. The gap between Japanese and foreign firms is overwhelming."

Not always, though. And for the professionals who have bucked the trend, the new world may be liberating. "Personally, I think it's a great opportunity, a great chance," said Noriyuki Matsushima, 42, who has been a top-rated automobile-industry analyst for Nikko for years.

Despite his weak English skills ("I'm going to start English lessons soon," he said), the intense, personable Matsushima was offered a job by Salomon Smith Barney, and was even allowed to bring his three assistants with him to the joint venture. It helped that Salomon Smith Barney's auto-industry analyst had just left, but more important is Matsushima's deep knowledge of the industry.

Matsushima left the secure environment of Nikko, despite the fact he is now operating without a job safety net. But he doesn't seem uneasy about the possibility that he could be fired at any time. "I just have to stay the top-rated analyst," he replied calmly, expressing far more emotion when the subject turned to investment opportunities evolving from the massive restructuring of the auto industry.

Even many non-stars seem to accept that the workplace climate must change. "Our company has been in the red, so we understand the old system could not last," said a trader who is remaining at Nikko.

Shin Ushijima, an attorney and the author of the best-selling novel "Shareholder's Lawsuit," in which an unscrupulous American company uses a shareholder's lawsuit to take control of a Japanese firm, said his next novel explores these issues and poses the question: Will the upheaval make Japanese people feel comfortable? Happier?

"I have a tentative answer, and that is: Do we have any choice?" said Ushijima. He pauses, and then continues: "No. At first, people will feel confusion. That is the nature of human beings. . . . But then they will adjust. . . . They will realize it is inevitable."

Special correspondent Akiko Kashiwagi contributed to this report.