01 Mar 2012
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Speak English, Please!

A Japanese company’s enforced language strategy
by Kim Girard

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In March 2010, CEO Hiroshi Mikitani (MBA 1993) stood in front of his employees at online retail giant Rakuten’s Tokyo headquarters and made a stunning announcement: all 7,100 of them would have two years to become proficient in English, or risk demotion.

“I was simply astonished,” said one engineer interviewed after the announcement. “Many Rakuten employees are allergic to English.”

At Rakuten, an online shopping mall that does not sell to consumers but instead partners with merchants, just 10 percent of the workers spoke English at the time. Mikitani’s move was radical and divisive. He even coined a term for the conversion: “Englishnization.”

“This issue is explosive,” says HBS assistant professor Tsedal Neeley, who tracks the company’s journey in her case “Language and Globalization: ‘Englishnization’ at Rakuten.”

“Students have strong reactions to this. On the one hand, some insist that this is a poison pill that must be swallowed—there’s no choice,” comments Neeley. “Others say, ‘This is impossible, the CEO is crazy. How can you do that?’ ” For her part, Neeley argues that today, CEOs of global companies will have no alternative but to confront the language issue as they extend their global reach.

“If they don’t have a language strategy, they’ll regret it,” she says. “One of the most powerful ways to compete globally is to make your company an English-speaking company. This takes years to achieve.”

Mikitani expected that the initial global English-only conversion would be difficult. “This is going to be a long-term effort for us,” he states in the case. “Starting this month, my own speech will simply be in English.”

All Rakuten workers were required to take a two-hour 200-question test to assess their reading and listening comprehension of business English, and to continue to take the test until they pass. A second phase involved bringing in lecturers to discuss how to study English and manage learning the language. The last phase was encouraging workers to use English in meetings.

One problem was that Rakuten offered little initial training or support to workers, who were expected to pay for their own English classes and learn the language during off-hours.

Neeley, who drafted some best practices that the company began to implement in July 2011, says Rakuten moved quickly to make substantial changes, including paying for language classes.

While workers in their 40s and older often resist language mandates more than 20-somethings, Neeley says the older workers at Rakuten also shared advantages: they frequently had more education and more money to pay for additional private or small-group classes. “Education is correlated with stronger language education,” she says. While it’s challenging for workers to start from scratch, it is “absolutely doable,” she adds.

In related research, Neeley, who speaks five languages, interviewed workers at a $25 billion Paris-based high-tech company about its two-year-old English-only language mandate. (She uses the pseudonym Frenchco for the company in the case.) She found that all employees whose native language was not English experienced a status loss under the mandate, regardless of their level of English fluency.

“There is a universal experience of status diminution when people compare their native language to this new language,” Neeley remarks. “So no matter how fluent some people are in English, they believe they’ll never be as sophisticated, influential, or articulate as they are in their native language.”

There’s much that companies can do to reassure and help employees with this transition, she adds. First, it’s crucial for CEOs and management to be firm that nonnative speakers don’t have a problem. All employees have to be invested in working and speaking together, Neeley says.

Managers also should be aware that workers often underestimate their language capabilities. In many cases, testing and offering benchmarks can help calm anxieties, as could limiting meetings for low-confidence English speakers until their language skills improve.

Future research, Neeley says, could include exploring the role of language as the fulcrum by which companies transform themselves from domestic to global players.

—Kim Girard is a freelance writer for HBS Working Knowledge.

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