Transforming Japanese Business by Unknown

Author:Unknown
Language: eng
Format: epub
ISBN: 9789811503276
Publisher: Springer Singapore

6 A Technology-Driven Centralization Strategy

In order to impose more uniform control over loan origination and collections, GECF planned to close all the branches and centralize these processes into one location in Tokyo. Central Tokyo (where the Kanda Branch was located) would be too expensive, so the company proposed to open a call center in the western suburbs. Rents would be cheaper, and they could recruit people from the neighborhood to do the support tasks which were predominately done by women in the branch offices. They could also recruit part-time workers, which would reduce labor costs and allow for more flexibility. The job instability in the mid-1990s Japan resulted in an added worker effect whereby many Japanese housewives began to seek part-time or full-time employment to share risk in response to their husbands losing their jobs, a process that has been documented by Kohara (2010).

GECF also knew that in order to be successful they would need to retain as much knowledge of the existing processes as possible, so they tried to convince as many people as they could into moving to the new facility. Anyone who couldn’t or didn’t want to move would receive a severance payment and be let go. Ultimately the centralization and closing of the branch offices reduced headcount by 20 people (nearly 10% of the total workforce at the time of the acquisition).

The key to making this happen would be technology. Digitalization and workflow technology would be used to control the flow of loan applications. Automatic credit scoring algorithms would drive the decision-making on loans. This was the most controversial part of the GECF reengineering proposal, because it stripped the branch managers and loan officers of all decision-making authority except for a minimal number of “gray” cases – instances where the score was too close to call and a person had to manually review the file and decide. A special server would retrieve the credit bureau information for an individual loan application, store it in a file, and score the application based on these details. This threatened to put all the loan officer jobs in jeopardy or almost as bad and force them to settle for less skilled jobs and/or less pay.

GECF would also use technology to centralize and automate many of the collection tasks. Call center technology combined with consistent data on delinquent customers would be used together to prioritize calls, assign customers to operators, and automate dialing. Uniform call scripts would ensure that all calls were handled the same way. Branch managers saw this as less of a threat since in the previous model they only managed delinquencies for the first 3 months before handing them over to a central team. Also in this case, technology was being used to make an existing job more efficient by deconstructing the delivery of the service, not eliminate it altogether. Here, there would still be a need for people but they would be assisted by the technology. Latham and Humberd (2018) contrast how workers cope with technologies that disrupt their jobs versus ones that deconstruct them.

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