"Internal rift" at Japanese Xbox subsidiary over layoffs

A number of layoffs at Microsoft's Japanese Xbox operation are once again making headlines, three months after they were originally revealed, as ex-employees complain of poor treatment during the course of the layoffs.

According to accounts printed in Nikkei Keizai Shimbun, the layoffs (which many sources are incorrectly reporting as news; the layoffs themselves were originally reported widely in March, and it's only the way in which they were handled that is now coming to light) were the cause of a serious rift within the Xbox Japan division, and this remains a bone of contention even now.

The former employees claim that restructuring within the Japanese division led to the introduction of western style managerial practices, which caused a number of resignations. This was followed by a surprise staff meeting for the 200-strong Xbox workforce, where employees were addressed by Microsoft's director of business development, Par Singh.

"The Xbox sales situation has become severe," Singh reportedly told the meeting. "Regrettably, an early retirement program has been instituted. Please return to your desks and check your email for a letter from the Personnel Department. If you receive one, follow the instructions immediately."

Around 34 people out of the division received termination notices; this in itself is still considered a massively serious move in Japan, which has only quite recently done away with the concept of company jobs being for life. To make matters worse, however, the company refused to allow the laid off employees to return to their desks, speak to other employees or visit the bathroom without security staff present.

Although this might not sound like particularly unusual behaviour to western employees, the nature of this downsizing was seen as humiliating by the staff involved and their colleagues, and has caused serious turmoil within the department - a backlash which saw some within the Xbox department writing directly to Microsoft Japan president, Shinichi Ata.

Microsoft has repeatedly been accused of failing to understand the Japanese market when it comes to Xbox, and of attempting to apply western logic to a marketplace which follows a different set of rules. It would now appear that this problem is not merely a promotion and marketing issue; Microsoft's attempts to apply western sensibilities in Japan extend right into its business management practices. Morale can't have been very high in Xbox Japan to begin with, and the picture painted in Nikkei Keizai Shimbun is certainly not one of a happy ship. Steve Ballmer's assurances last week of continuing to aim for Microsoft's long term goals for Xbox in Japan seem even more unlikely than ever.