Japan’s productivity challenge may not be a lack of talent. The opportunity is to turn employee capability, better ways of working, and AI into greater customer and market value.
Japan’s hourly labor productivity in 2024 was $60.1 on a purchasing-power-parity basis, ranking 28th among the 38 OECD countries.
Does this mean Japanese people are less capable?
I don’t think so.
This question became one of the starting points for HLS (Human Leadership System) Journal.
For foreign executives and managers working in Japan, the issue is not simply productivity. It is also a Talent Development question:
How can we turn the capabilities of people in Japan into greater organizational and market value?
From working harder to creating more value
When I began my career, working long hours was often seen as evidence of commitment in Japan.
If the work was not finished, people stayed late. If a manager made an urgent request, employees tried to deliver. If a colleague needed help, people stepped in.
Behind these behaviors are strengths that remain valuable today: responsibility, commitment, professionalism, and cooperation.
The problem begins when those strengths compensate for weaknesses in the way work is organized and managed.
Consider a highly capable employee.
Important assignments go to that person because:
“She always gets it done.”
She works harder, delivers the result, and earns even greater trust.
Then more work goes to her.
The individual may be highly capable, but the organization becomes increasingly dependent on one person.
A similar problem appears in decision-making.
An employee closest to the customer recognizes a problem but cannot act without approval.
The issue moves from employee to manager, from manager to department head, and perhaps across several functions.
The employee had the capability to identify the problem. But the way work was organized prevented that capability from quickly becoming action.
This suggests that productivity is not only about individual capability.
It is also about how people work.
3 employee behaviors worth examining
If Talent Development is to contribute to productivity and Market Development, we need to look beyond training programs and examine everyday Employee Behavior.
Three behaviors are particularly important.
First, employees need to think and judge rather than simply wait for instructions.
That means understanding the purpose of the work, gathering relevant information, considering alternatives, and making appropriate decisions within their responsibility.
Second, employees need to connect their knowledge with the knowledge of others.
A successful salesperson may possess valuable customer knowledge. An engineer may understand a technical problem. A frontline employee may notice a change in customer behavior before management does.
The organizational value comes when that knowledge is shared, challenged, and connected.
Third, employees need to learn from action.
Make a judgment.
Act.
Observe what happens.
Reflect.
Then change the next action.
Talent Development should help people develop these behaviors through their everyday work—not only in the classroom.
AI changes how employees work
Now AI adds a new dimension.
Employees can use AI to search for information, analyze data, summarize documents, generate ideas, compare alternatives, and support decision-making.
This can save time.
But saving time is only the beginning.
The more important Talent Development question is:
How does AI change Employee Behavior?
Imagine an employee who previously asked a specialist to analyze customer data.
With AI, that employee may be able to explore the data directly.
The employee can ask a question, examine the Evidence, test another possibility, discuss the findings with colleagues, make a judgment, and act.
AI may therefore change not only the speed of work, but also who can gather information, who can analyze it, and who can participate in decisions.
There is also a risk.
If employees simply ask AI for an answer and accept the output without questioning it, work may become faster without judgment becoming better.
So the challenge is not simply:
“How do we teach employees to use AI?”
A more important question is:
“How do we connect AI with the human behaviors that create better decisions and greater value?”
Learning from highly productive companies
This question is now becoming an important direction for HLS Global Case Research.
We will examine highly productive and high-performing companies around the world—not simply to study their management systems, but to understand how their employees actually work.
How do employees identify problems?
How do they gather information?
How do they question assumptions?
How do they work with people who see things differently?
Who makes decisions?
How quickly do they act?
How do they learn from results?
And increasingly:
Where are employees using AI?
What did they do before AI?
What changed after AI was introduced?
What does AI do, and what does the employee still decide?
What impact can we see on speed, quality, decision-making, customer value, and productivity?
We do not intend to copy another company’s way of working directly into Japanese organizations.
Companies, industries, and cultures are different.
Instead, we want to identify Employee Behaviors that appear repeatedly across highly productive organizations—and understand what enables those behaviors.
Talent Development can become Market Development
This brings us back to the original question.
Is Japan’s productivity low because Japanese people lack capability?
I don’t believe so.
Japan has no shortage of responsible, knowledgeable, committed people.
The opportunity is to connect those capabilities more effectively with the way work is done.
Think.
Question.
Connect.
Judge.
Act.
Learn.
And increasingly, use AI to strengthen those human behaviors rather than replace them.
That creates a connection worth exploring:
Talent Development → Better Employee Behavior → Better Decisions → Customer Value → Market Development.
Helping make the productivity of Japanese people the best in the world.
That is where HLS Journal began.
We will continue exploring this question by examining how employees in some of the world’s most productive companies actually work—and how AI is beginning to change their work.
Akira Chida
SmartWorks
HLS Global Case Research