Leading from the Living Room with Katsuyoshi Sugita, Head of HR, Microsoft Japan

Thank you very much. Before I start, I have to say Microsoft is not perfect, and I'm not a best practice example. I just want to share my experience. I'm a kind of hybrid - Japanese company background and international experience. My HR foundation was developed at my first employer, a Japanese manufacturing company. Then I moved to international companies and got international assignments and project leadership opportunities. My first supervisor - he was a very tough guy - gave me the approach of fact-based and business-based HR. At that time, we didn't have terms like 'business partner' or 'data-driven HR,' but he already had those concepts. Generally, I'm more interested in real business contribution than creating cool recruiting programs or development workshops. After moving to international companies, the combination of 360-degree feedback and executive coaching helped me a lot. I made many mistakes, received tough feedback, and worked with executive coaches on my leadership development for the past 12 years. I also have many mentees locally and internationally, and after this crisis, I've been connecting more with all of them.

I'll be open and honest. One time I received very tough feedback from some of my peers. They said: 'Kass seems to be very business-driven and result-driven, delivers results quickly - that's great, but I don't like working with him. Sometimes I feel he's trying to manipulate me.' I really didn't have such intention, so I was surprised and disappointed. I was really discouraged. At that time, I started working with an executive coach who helped me and also provided painful feedback, suggestions, and challenges. I made a lot of leadership changes. Still every day I'm trying to be better, but that was the toughest feedback for me.

Thank you. I want to go back to the same guy - my first supervisor. He always told me: 'Prepare for the worst,' from day one. He also provided strong instruction on fact-based decision-making - it is really everything. When I face any crisis or difficulties, I don't panic. I always feel I need to collect more information and facts, then make scenarios between the best case and worst case. Especially thinking about the worst case is really important. When I sense that I can manage even in the worst case, then I can relax, I can sleep well. Actually now I'm working very hard but I can sleep very, very well. I feel I'm controlling the situation. Even though things can go worse, I feel I can manage together with my peers, supervisors, and team members. By the way, an interesting thing - he didn't give me the first part: 'Hope for the best.' I would like to be more balanced between the two - hope for the best and prepare for the worst.

Well, the worst case in this situation - at least in Japan we have a very good healthcare system, so things will not go worse in terms of health. But people's panic reactions can create another panic - that's the worst case. Without collecting correct data, people can start taking actions that create more negative and chaotic reactions. Those things are the worst case for me - the situation becomes uncontrollable. So the most important part is how to make things controllable: collect all the information quickly, get practices from other companies and organizations. Microsoft Global already provided instructions and brokered information, but local data is also important. Sometimes people hesitate to share things, but when we have difficulties, we should share more than before - how we're doing, what the pain points are, everything. Then we can find better practices and know-how.

Actually quite similar to the previous question. The most difficult part is people being afraid of COVID appropriately. Some people are too scared, and some don't recognize the risk. In Japan, people tend to react too much or don't understand the risk accurately. Some people, even senior ones at Microsoft, wanted to take drastic actions such as closing offices almost immediately after we got the news. That reaction was too much in my opinion. When we start such reactions, people can take further actions that cascade. The key is how to understand the facts objectively and make the best decisions with others quickly. Sometimes I have to be a bit tough and say no to others. Communication is really, really the key. People here tend to think about the other side too much, and then we don't have clear communication. Clear communication itself is the key in this crisis.

We did it last year, and after some external communication, many people came to us with tons of questions wanting to understand what happened and what the key was. The starting point was the coming Tokyo Olympic Games - it was later postponed, but last year we didn't expect that. The Tokyo governor and Japanese government requested companies to reduce commuting volume. We wanted to do it ourselves - how to reduce commuting to the office. Also, Microsoft is a top runner in work style innovation in Japan, and we wanted to challenge something big and new. The country president wanted to make it happen. Honestly, at the beginning we received lots of objections, but gradually we made the decision locally, then I got approval from headquarters. The objective was not just enjoying one extra vacation day - it was how to keep or increase productivity with less time. Our employees reacted negatively at first, saying it was impossible - they had tons of things to do, they were busy, they needed five days. We announced in April and asked all team members to start thinking about how to be well-prepared. Then in August, everything went well - no significant issues. About 98% of employees experienced very packed four days but also more relaxed three-day weekends. Our approach was to increase productivity, measured with numbers. We tracked individual work styles. For example, 60-minute meetings became 30 minutes because we had to finish many meetings. Meeting participants decreased - one representative per team instead of multiple people attending together. Customer visiting time didn't change - we need to prioritize customer time. Sales numbers went up significantly. Then in September, something interesting happened: many people came back saying they couldn't work five days a week anymore - the complete opposite of their initial reaction. My policy is: it's up to you. We don't control your time; we expect you to deliver outcomes as promised. How you do it is up to you. My personal opinion is that after providing an extra vacation day, the more interesting experiment would be having everyone work from home every day, as they did in August. Maybe this summer we can challenge something like five-day work-from-home while maintaining or increasing productivity. I don't find any significant issues with the four-day work week, and after this COVID crisis, I really want to see big changes in work style - not just for Microsoft but more broadly.

I want to say we had a great change management plan, but the reality is not that. We really just made the decision. Senior leaders were really excited and wanted to test this approach. With that commitment and passion, we made the decision, and it was non-negotiable: 'Do it.' Then people started thinking about how to prepare.

That's a good question. First of all, I think with this COVID...

Yes, we can. Perfect. By the way, I think this is also our new normal - sometimes kids and dogs or cats can disturb us, but that's the way it is. Anyway, back to your question. I really believe we haven't fundamentally changed our work style. Just some advanced companies are more aggressive at this point, but the group of those companies is very small. There are plenty of companies with huge opportunities to make improvements in work style innovation and remote work. Sorry, I probably missed your point - could you repeat it?

I'm sure if we don't take clear actions now, people will go back to the old normal. Remote work is still not yet in practice in many companies - people are just forced to stay at home. We really need to change corporate culture and HR policies and practices much more; otherwise nothing will be sustainable. Right now in many companies, productivity has clearly gone down.

Another great question. Microsoft is not perfect either, but I want to share some experience. About diversity and inclusion - I'm a big fan and have made many changes. At the beginning of my time, some senior leaders came to me asking: 'Where is the special headcount to hire females? Where is the special headcount to assign female managers?' Of course there was no such headcount - and this was just two, three, four years ago, not ten years ago. Those leaders are no longer at Microsoft Japan. Leadership mindset change is really needed. In Japan especially, leadership mindset and behavior change is so important because Japanese culture is much more hierarchical. I have a very strong personal belief: if we really want to change something, we need to measure it continuously. My approach is to set targets and track monthly. In Japan, we don't do enough tracking - we talk a lot conceptually, and that leads to nothing changing. Sometimes people say setting targets or tracking isn't an inclusive approach. Theoretically, I agree. But if we don't take this approach, nothing will happen. I'm always pushing business leaders. Microsoft has a very data-driven culture, and I send one-page reports to business leaders, especially on work style, with my strong recommendations. That's what I wanted to say.

Good question. I usually don't want to say Microsoft is special, but at this point I have to say Microsoft is special - and this is one reason I joined. The company has great technologies for tracking and making HR more data-driven. I have everything I need. I don't have to spend time collecting numbers - I just go to the system and get all the data very quickly, visually, to present to business leaders. When I have one-on-ones with the country president, I always prepare data and numbers. I believe that with concrete numbers, business leaders are much more interested in our discussions, topics, and priorities. If we just provide conceptual topics or personal development issues, people lose interest quickly. Numbers and facts are really important. Microsoft is a bit special, but I think in the future many companies will have similar data-driven platforms, and it will transform HR people's everyday life and help business leaders make quicker decisions.

Let me share some experience and numbers. We also achieved a 2% increase in diverse population in Japan, so in total over the past four years we increased the diverse population by 8% - roughly 2% per year. Now we're really focusing on how to increase senior-level female leaders. Originally our focus was total population, but that's not enough. We need much more diverse population in our decision-making meetings. Otherwise, decisions are made only by men, and I sometimes hear comments like 'The lady seems great, but the promotion is a bit too early' or 'This isn't the right timing.' What are you talking about? When we have more female leaders in decision-making meetings, things will be totally different. Having more diverse senior leaders is really important for better decision-making. I also want to touch on one point: diversity and inclusion is not the goal - it's a process for the organization to become better, more capable, and more creative. D&I is one of Microsoft's five culture attributes. We believe a diverse and inclusive organization will be more capable and competent. In the tech industry, creativity and innovation are keys to success. So D&I is our business strategy. My message to other organizations: think about what is really needed for you to be successful. If the answer is D&I, it can be your business strategy. Why you need to do it is really important. The same applies to work style innovation and remote work. Many times I see companies automatically starting initiatives without asking 'why,' and those initiatives won't continue.

I think there are some key points. One is technology - before, those technologies were super expensive. Before joining Microsoft, I wanted to be more data-driven and fact-based, but I couldn't because we didn't have such expensive HR technology. Now it's more accessible and user-friendly. The other point is really interesting. At Microsoft, we have great technology, so I naively expected all my team members would start using data-driven approaches with their business leaders. But nothing happened. Then one team member came to me and asked: 'Can you spend an hour with me and show how to use data in front of business leaders?' So I demonstrated what I did - I used thesis statements, proposed things, made comparisons between countries like the UK and Canada, and proposed where our business difficulty might come from. I showed this in front of all my team members. Then they understood this is how you propose things using data. I actually underestimated this point - I automatically believed they could do it, but they didn't have the know-how. Knowing how is very important.

That's also a big question for us. One thing I'm happy about at Microsoft is many people already started initiatives by themselves - thinking about other people, customers, and society, wanting to do something to help. People feel they're allowed to take those actions without asking supervisors. The foundation is already here - making mistakes is fine, and learning from challenges is critical. I want to share some practices: digital coffee time, digital lunch, digital dinner, digital drinks - probably not digital karaoke yet - digital workouts, and digital learning sessions for working parents. These share remote work practices internally and with customers. Some people even approached local government and consulting firms to discuss how to make remote work more real and sustainable in Japan. I'm happy to see all those positive actions in my colleagues. Everything came from experiences before COVID - people already knew Microsoft's culture allows them to act with trust and do something good for society and customers. Without that trust, people won't take innovative actions.

That's good, and it's still a big topic for us. Every day we're discussing how to keep people's motivation up. Two things are really important right now: clarity and energy. Clarity means people really need to understand what's important now, what the priority is, and what they have to deliver. When we were together in person, people could discuss and check each other continuously, so clarity was less critical. Now we have limited check-in time - maybe 30 minutes a week for catch-up. Other than that, we have to trust team members. So providing clarity from leaders is very important. The other point is energy - digital coffee time, digital beer time, digital walks. Providing fun time is important to keep people energized. Before starting any meetings, we really need to do check-ins: 'How are you doing? What's on your mind? What's the problem?' We need to show much more empathy. Right now, providing clarity and providing energy - those two things are the key to running the business and the organization. Without clarity and without energy, any organization can be in trouble quickly under this COVID situation.

That's an interesting question. Microsoft Japan is basically a sales and marketing organization, so sales and marketing people automatically felt Monday is important - it's the key day for sales. That meant almost automatically it went to Friday off, giving three consecutive days. When we announced this, we forgot about the engineering team. They came to us wanting Monday off instead. There's a reason: our Monday is the US team's Sunday, so they wouldn't receive many emails or phone calls from the US side on that day. So we provided flexibility - almost all teams took Friday off, and only the engineering team took Monday. That was a big learning for me: I need to be more fact-based and check with all members much more carefully.

No pay cut.

It's not about money for them. Working time is so precious. They also want to keep the same status quo - continuing what they're used to doing. That's also one reason, I guess.

Can I respond to the second question first? I've received this same question so many times - not just at Microsoft, everywhere. Senior leaders always say: 'I asked my female employees, but they don't say they want to be managers. They always say it's not the right timing.' But I don't believe this. I think when senior male leaders ask male employees, they ask: 'Do you want to be manager?' But to female employees they add: 'Do you really want to be a manager now?' Everyone is smart enough to sense what type of answer is expected by supervisors. It's very easy to respond: 'Yes, but not now, maybe in the future.' So I think we really need to encourage our female employees to show their career aspirations much more clearly and openly. Yesterday we finished a one-day female leadership development session with a very senior executive from another company who made an impactful presentation. Using those great examples, we can encourage our female employees - it's not a dream, it's something real. You can learn from this person who is not super special. We need to show role models and examples so female employees can be more confident. The first question is about convincing leaders about D&I - I think you've probably already answered that with the data-driven approach.

Thank you very much. Bye all, thank you.