They are not making as many Japanese as they used to. Every year we get these headlines about the new lows in numbers of births in Japan. The demographic trend is obvious to everyone. What is not obvious is how this is going to force a change in the way we lead. Until now, we have all applied the like it or lump philosophy to staff working for us. They were infinitely replaceable – lose one and go get another one. Not anymore.

It is hard to understand, really. The economy is not doing remarkably well. The prospects for future growth are also not looking great, so why is it we are not seeing a parallel step down in business needs which translates into less need for staff? I am not sure and I will let the economists duke that one out, but it is an interesting question to ponder.

We are certainly seeing an uptick in demand for people and a corresponding downturn in their availability. That translates into higher costs, which is only starting to happen now and increased competition for people. This isn’t only related to the hiring, it also covers the retaining bit as well. The recruiters are having a field day with the revenues being generated from us for hiring staff and there isn’t much we can do about that in a staff bull market.

What we can control is the retaining piece of the puzzle. Delegating work to staff is a critical part of that effort. Young people want to advance in their careers and they want to be given responsibility for their work. Delegation serves both purposes well. The issue with delegation is that when done poorly, it can lead to problems.

The biggest failure is selling the delegation to the person receiving it. This sounds simple, but so often this is not done at all or not done very professionally. Usually, the delegation process is a series of orders – do this and do that type of thing. The person on the receiving end already has a job and may be thinking, “wait a minute, I am already busy and why do I need to do your job as well?”. That would be a legitimate and logical conclusion of having your boss dump their work on your desk.

The selling component is making clear the benefit to the person receiving the delegation. There is usually a selection process for internal promotions and the people making the decision want to know the new person can handle the tasks and are not going to blow anything up. If we are changing companies, when we get to the interview stage, they will ask about our experience. We are trying to step up and being able to reference completion of work at a level above where we are now is an advantage. When it is put like this, people can understand how they can leverage these tasks at a future point and make it an advantage to themselves.

The other negative aspect of delegation is boss abandonment. You are handed a bunch of tasks by your superior and that is the last you hear about it until the completion deadline. This is very dangerous because if the person takes the project off on an incorrect tangent and you hit the deadline, then there is little which can be done to salvage the wreckage.

Now there is a balance between the boss interfering and micro-managing the delegated project and keeping an eye on how things are going. The latter is obviously the way to go, but where is the line between them? One good idea is to discuss how they are going to approach the task. Get them to tell us what they think about running this part of the work. We want their ideas because that is where the ownership is located. We still need to monitor progress, though.

Agreeing a regular check in is a good practice. All the boss is looking for is whether the project is on track. There are many ways to the top of the mountain and we have to let the delegated person find that out for themselves, as part of the learning process, rather than being proscriptive about how to get there.

If we get both the sell the delegation part and the shepherding component right, then the delegation will be successful and help us to retain staff. The team member will feel empowered, trusted, and valuable. These are all brilliant and required elements to keep people with us and not straying off to greener pastures. We must deny the siren call of ravenous recruiters trying to lift our people out of our companies. If we don’t start delegating, we will lose staff, find it hard to get new staff and gradually shrink in size. In turn, this will make us less attractive as a work destination, as we become too flat to be able to accommodate ambitious people. It is a cycle which ultimately leads to oblivion.

Alan Mulally has had a very successful career at Ford and Boeing. Over his 45 years as a leader, he developed an approach called “Working Together: Principles, Practices and Management System”. His number one principles is “People first….Love them up”. This type of declaration is simple to make, but not that easy to live when you are facing quarterly reporting of results and the full glare of the stock market. We see so many cases of CEOs firing people, the stock price getting a big boost and that axing of the people turning into many millions of dollars for the CEO personally, as part of their stock-based remuneration package.

Mulally believes that “working together” must be based on a supportive culture propping up the headline. Culture alone won’t do it, though. His system has a governance aspect directing how the leadership team should work together and which maps out how to create value. His review process is central to translating aspirations into realities. The basis of all of this is the philosophy of building a “people first” culture, which is driven by the company structure and the management processes adopted. He insisted that as part of that “people first” idea that “everyone is included”.

He arrived at a formula in three parts, which all operate in lockstep and which generates profitable and or successful growth for all. To get to that end game, Part One is “everybody knows the plan”. When you read this idea, like me, you might be thinking “so what?. Of course, everyone knows the plan because I have told them already – end of conversation”.

When we dig a bit deeper in our thinking, though, we recall that just because we have told people the plan doesn’t mean they accept it, agree with it, or want to execute on it. At the top levels of the company, we come up with the purpose and strategy and then we expect everyone else to deliver what we have envisaged. A Town Hall presentation and a broadcast email may have detailed the plan and we think everyone knows what to do.

Where we fall down is in the follow-up to make sure the message actually got through. We are all business minimalists, shaving time off activities wherever we can, because we are super busy, all the time. We need to double check that what we think people know is fully understood and they are beavering away on it as we expect.

Part Two requires that everyone knows the status of the plan. Often, though, access to sensitive information in companies can be restricted. Not everyone may see the real numbers and the full picture. My predecessor never showed the Profit and Loss numbers to the team. When I took over, I decided to make the financial situation totally transparent. The only protected numbers are salary and commission information relating to individuals. If they wish to share that information amongst themselves, then that is their choice.

Part Three is everyone knows the areas that require special attention. Business is lumpy. Some parts of the business are flying and other parts are limping along. Again, sharing such sensitive information may be restricted. We need to keep referring back to what we stated was the purpose and strategy for the enterprise and keep measuring how well we are delivering against what we have set out for ourselves.

If things are going well, we feel motivated to do more. If things are not going well, we are motivated to try harder to turn things around. When things are not going well, this situation begs the question about how much open knowledge of the pain should be shared. There is the fear for the leader that if the full extent of the problem is made known, the more capable people, who always have options, will exercise them and leave. This is a tricky balance, and there are no clear parameters for leaders to follow. I would suggest that the leader share enough to galvanise the team to action without scaring the daylights out of everyone and people start abandoning ship.

Mulally’s viewpoint is based on many years of hard-won experience. It is straightforward in its formulation. The daily execution against the plan, though, is another question. This is the role of the leader, to take ideas and turn them into living breathing systems which can maximise the potential of the people in the firm.

I was having lunch with an expat client who has been here about a year and a half. We were talking about people not performing. In passing conversation, I happened to mention that incompetence is not an acceptable reason, as far as the Japanese courts are concerned, to fire someone. Japanese judges believe that it is our fault, because we have people in the wrong job and we should fix that problem, rather than fire them. That was a total revelation for this client.

Nevertheless, we still have to deal with underperformance. Here are some guidelines for doing that.

1. Research

Do we have all the necessary information in front of us, before we raise the issue with the person we feel is not matching expectations? Sometimes, we are the problem. We haven’t been clear enough about the KPIs or our expectations, and they are not aware that they are falling short. We have to find objective measures which we can reference to underline the gap between their current and expected performance.

2. Begin with rapport

Our people are never 100% perfect nor 100% imperfect. There are bound to be some areas where their performance is acceptable. In Japan, the workforce is very serious about their job and they do their best. We should start the conversation on a positive note recognising what they are doing well.

3. Reference the Performance Deviation

We take the personality out of the equation at this point. We are “paying the ball, not the man”. We are not saying that they are a bad person, but that their performance is not matching our needs. In some instances, this “not matching expectations” will be news to the staff member. The reason for that is we have never flagged it before, even though we have long thought it. We didn’t bring it up until now in previous performance reviews and it can be a surprise.

We need to get their view on this issue. There may be factors we are not aware of, which are preventing or impeding their ability to do the job we want them to do. This is a “moment of truth” where if the lack of performance is measurable and a legitimate issue, we will see if they are going to take responsibility for their lack of performance. Does that happen, or do they want to argue the point and make excuses, blaming everyone else for the state of affairs?

4. If they take the fork in the road of resistance, then we need to deal with it. We have to restate the problem and the consequences for continued underperformance, which is code for: “we will fire you if you don’t get your act together”.

5. Continued denial, resistance and obfuscation is pointless, but that doesn’t stop people from doing it. Fortunately, in Japan, there is such a high demand for staff that the old hysteria and bias toward mid-career hires has completely vanished. They know and we know, they can easily get another job. This also dampens the court’s antagonism to us removing people who are not performing.

6. Hopefully, they will decide to “fly straight” going forward and recover from this. Naturally, having to confront your own removal from the business is very demoralising and impacts people’s confidence to do the work. If their heart is in the right place and they have the will to succeed, then we need to work on restoring their confidence that they can do it.

7. Reassurance must be backed up with support. This may mean individual coaching and/or being sent off to get the additional training to give them the skills they need to succeed.

8. Retention of people is now at peak need in Japan. The population decline is creating staff shortages in many industries and a Darwinian struggle amongst companies to recruit enough people to run their businesses. We want the staff member to stay with us and overcome this gap in their performance. This requires advanced people and communication skills on the part of the boss and our efforts must be ongoing. A “one shot and we are done” approach won’t work and we need to make the time for these conversations.

There is no doubt that dealing with poor performance will become an even more important tool in the boss toolkit. By definition, with less people to choose from, we will be voting to take ”anyone” rather than being left short staffed. Companies which can learn how to play in this new world of work will find a way through and others will fall by the wayside of either diminishing prospects or outright failure. Frankly, the prospects don’t look good for any of us in business, so buckle up for a bumpy ride.