Reference no: EM132190452

It’s not always easy to do business globally, as executives at Japanese brokerage firm Nomura Holdings Inc. are discovering. Nomura acquired Lehman’s international operations in late 2008 after Lehman’s parent company sought Chapter 11 bankruptcy protection, an action that added about 8,000 non-Japanese workers. For Nomura, the time seemed right to strengthen its global expansion strategy. However, since the acquisition, cultural and business differences between the two organiza- tions have been a major stumbling block. Although blending two diverse cultures requires intentional efforts when different organizations merge or are acquired, it’s particularly challenging when key assets in the cross-border acquisition are the people employed by the organization being acquired.

Workplace tensions arose over executive compensation, how quickly decisions were made, and how women were treated. For instance, during Nomura’s initial training ses- sion for new hires, the men and women were separated. The women—many of whom had earned prestigious degrees from the likes of Harvard—were taught how to wear their hair, serve tea, and choose their clothing according to the season. The company’s dress code was strictly interpreted for women, also. Women from Lehman were told to remove highlights from their hair, to wear sleeves no shorter than mid-bicep, and to avoid brightly colored clothing. Several women were sent home from the trading floor for dressing “inappropriately.” One said, “I was sent home for wearing a short-sleeve dress, even though I was wearing a jacket.” A Nomura spokesperson said, “The dress code is displayed on the company’s intranet and is intended to ensure that clients and colleagues don’t feel uncomfortable.”

Lehman bankers also said they found the process for get- ting approval on deals was “slower and more difficult than it was at Lehman.” Also, at Lehman, clients were categorized, in large part, by the fees they paid. At Nomura, more emphasis was placed on other factors, such as the length of the relationship. The bankers at Nomura said that “their new colleagues were too willing to dump loyal clients for a quick profit.”

In its defense, Nomura has tried to blend the two cultures. In offices in Europe and in Asia outside of Japan, there’s a mix of nationalities. Also, the company has promoted a handful of non-Japanese employees to high-ranking positions. “To reduce the Tokyo-centric nature of the company, Hiromi Yamaji, head of global investment banking, moved to London, and Naoki Matsuba, global head of equities, moved to New York.” Until March 2010, Nomura’s executive committee was all Japanese men. However, in an attempt to make the company more globally oriented, an ex- Lehman executive and foreigner, Jasjit “Jesse” Bhattal, a native of India, was promoted to the committee. Nomura’s deputy president and chief operating officer, Takumi Shibata, said, “When your business is global, management needs to be global.” Two years later, unable to garner support from Tokyo for an overhaul of the global wholesale-banking operations, however, Bhattal recently resigned as Nomura’s highest-ranking foreign executive.

What do you think the resignation of Jesse Bhattal says about the international “strategy” of the company?