• JAPAN IN FOCUS

Can unwholesome corporate culture of Mitsubishi Electric be reformed?

Mitsubishi Electric Corp. has established a new management structure following serial revelations of scandals. The company marked the 100th anniversary of its foundation this year. The management’s determination to eliminate the rot that has damaged the organization is being put to the test.

Mitsubishi Electric has announced that Senior Vice President Kei Uruma has been promoted to the post of president, replacing Takeshi Sugiyama, who had expressed his intention to resign to take responsibility for fraudulent inspections of equipment for train cars.

At a press conference, Uruma said emphatically, “We’re facing a critical moment.” In addition to appointing a new executive in charge of quality control, the new president indicated that the company would recruit outside personnel as executive officers, most of whom had been appointed internally up to now.

However, there is no concrete path to drastic reform in sight.

Before he became president, Uruma had been in the No. 2 position under Sugiyama. Although this was an expected and well-deserved promotion within the company, it is questionable whether it is possible to deal with the crisis with the latest personnel change.

Mitsubishi Electric has conducted fraudulent inspections for more than 30 years on air-conditioning equipment for train cars manufactured at its Nagasaki Works factory. The impact has been felt overseas as Mitsubishi Electric’s air-conditioners have reportedly been used in about 2,600 subway cars in New York.

Uruma was responsible for infrastructure projects, including in the railway sector, from fiscal 2017 to 2019. The nominating committee, which selected the president, cited extensive familiarity with the workplace as a requirement for the post. However, Uruma failed to detect irregularities on the frontline, despite it falling within his responsibilities as an executive.

Mitsubishi Electric has no choice but to steadily produce results to meet the heavy challenge of fundamentally changing the closed corporate culture. The company also needs to make early efforts to utilize external human resources, among other measures.

Since 2018, Mitsubishi Electric and its subsidiaries have been involved in a number of scandals at their production sites. Since fiscal 2016, the company has conducted internal inspections as many as three times, in a period when improper inspections were found to have been conducted at other major manufacturers, including those in the automobile industry. However, the latest irregularities were shrugged off.

An investigation panel of outside lawyers and other experts is examining all employees in all business sectors to see if there are other irregularities. The company said that it will not punish employees who report themselves to the panel over irregularities.

All employees should take this as the last chance for the company to regain public trust and cooperate fully with the investigation.

At Mitsubishi Electric, suicides of employees due to overwork and power harassment have come to light, in addition to fraudulent inspections. It has been pointed out that the cause of many scandals is a corporate culture in which it is difficult to speak out because of a strict hierarchical structure.

The fact that the company is involved in a wide variety of businesses, from air-conditioners to satellites, and that each division has a high degree of independence is said to be hindering openness among employees at the company. A review of the organizational structure will be an issue for consideration.

— The original Japanese article appeared in The Yomiuri Shimbun on July 31, 2021.