Sony Japan “Adopted the American Style Management”

Japan`s representative large corporation, Sony (President Ideo Nobuyuki), has announced on 28th that they will adopt the American style business management structure, which heightens the clarity by dividing the functions of management and supervision.

Sony will abolish the existing supervision system starting this June and will make clear distinction between the executives who are exclusively responsible for the management and the directors who will be in charge of the supervising. Also, Sony plans to strengthen the supervising function as well.

To achieve this, Sony plans to establish three committees within the directors: * Nomination Committee to nominate directors * Compensation Committee to decide on the directors` salaries * Audit Committee to practice the auditing duties. These three committees will nominate more than half of the directors from outside of the company to strengthen the outside supervision ability. And then, the management responsibility will be given to the executives nominated by these selected directors. It is observed that the directors will be about 10 to 20 people from both outside and inside of the company.

The majority of Japanese companies have been receiving comments that the presidents who are the heads of the executives seize both powers of management and supervision that they`ve been making the directors power nominal thus have been carrying on the business unclearly.

The transformation of Sony is because of the internationally enlarging distrust on the businesses due to the accounting irregularity incident of Enron in the United States. It has been pointed out last year that Sony`s accounting handling is unclear to some extent compare to the American standard. Therefore, it is Sony`s will to secure the clarity by strictly distinguishing the functions of management and supervision even better than the American companies.

As Japan enforces the revised business law which will allow the adoption of the American style business management structure from this April, many other large corporations, such as Hitachi Production Center, Toshiba, Orix, Seiyu, etc. are also looking at adopting the policy of distinguishing management and supervision.

Young-Ee Lee yes202@donga.com