Andrew + Japan = Awesome

Just to make this absolutely clear, since “Today was my last day of working at Nova” is too complicated for some people. I NO LONGER work for Nova. I quit the day this post was made. I have been paid for the month of August, and don’t expect to be paid for the two weeks I worked in September, if I do it’ll be a nice bonus. Stop posting comments telling me I won’t be paid, I know. 

Today was my last day of working at Nova. The last time I mentioned it I was going to leave at the end of the month, unfortunately Nova made some decisions which made me move my resignation up to today. As of right now I am no longer a Nova employee, and it feels great.

This is probably a good time to mention that when I first got here I was very happy with Nova as a place to work. The company itself may not be the most honorable one out there, but at least they paid on time every month. I was also very lucky with the branch I was placed at, the staff were all friendly, as were my fellow teachers, and with the exception of three or four students, all the students I taught were pleasant and polite. Nova sponsored my visa to get into Japan, and they provided (admittedly overpriced) accomodation which can be difficult to get by yourself when you first arrive in Japan.

Regardless of how nice it was to work for them, the company has revealed itself to be rotten to the core. Shortly after I arrived, Nova got in a lot of trouble with METI (The Ministry of Economy, Trade and Industry) for calculating refunds in an unfair way. Basically at Nova, students pay up front for a large number of lesson points, and based on how many they buy they get a discount. When students requested refunds, there was a dispute as to what rate the used lessons would be charged at, the students (and METI) thought that the used lessons should be charged at the rate they were sold at, but Nova argued that they didn’t use all the lessons so no longer qualified for the discount, and refunded at a lesser rate.

As a result of this dispute, METI imposed sanctions on Novas ability to conduct business. For six months Nova is not allowed to solicit or create contracts for courses longer than one year or 70 hours. This all happened in June this year, and with my naivety as to the way Nova is really run, this didn’t seem like a big deal. If I knew then what I know now, I would have quit in June.

Back in June, I didn’t understand how Nova worked. The business model Nova uses is often described as a “bicycle system”. Because students pay for a large number of lessons up front, as soon as they have paid Nova makes no further money from them, so they get treated as such. They’re basically non paying customers, the customers Nova treats like royalty are the new ones, the ones that they want to sell packages to. To keep covering expenses, Nova needs to sign up a lot of new students every month, and to attract new students they need to spend a ridiculous amount of yen on advertising every month. As part of the METI ruling, Nova had to drop a large portion of its advertising, so since the sanctions came into play, new student signups have dropped to a point where they are merely a fraction of what they were pre ruling.

Of course this method of running a business could never have lasted forever. Looking back at Nova’s financial reports shows a sad picture of a company spending exponentially more yen every year on advertising, and getting fewer new students for the increased amount of yen. It was only a matter of time before the cost of advertising far outweighed the profit from new students, the METI sanctions just sped this up.

Despite the lack of sales, and the METI sanction stopping Nova from operating like they used to, spirits were still pretty high at my branch. We all thought that Nova was too big, it’s the biggest english school in Japan, someone will buy it, and if that doesn’t happen the government will help Nova out. We had many discussions about how Nova couldn’t possibly go out of business. All Nova had to do was last six months with no new sales and then they could go back to their (admittedly dirty) ways of business. It’s a big company, surely they have assets and money stashed away, right?

Wrong. Nova owns nothing. It rents most of the branch premises. It used to own a large block of land in Osaka, which it sold earlier this year in an effort to offset the frighteningly quick growing debt. Aside from that Nova’s only assets are the brand name and the student base. The brand is tarnished and not worth much by anyones standards, and the student base as previously mentioned brings in no money. Nova is literally scraping the bottom of the barrel to meet it’s expenses every month.

Regardless we kept getting paid, so we kept showing up to work. July was the first sign that things might not be so peachy. The instructors all get paid on the 15th of each month, but the Japanese staff get paid on the 27th. On the 27th of July they were all told that their pay was delayed, and their summer bonuses would not be being paid in July. They would have to wait for October to get their bonuses. The Japanese staff generally have lower wages than the instructors, and rely on the bonuses to compensate for the lower wages. In July they were paid only a few days late, and everybody chalked it up to an administrative error.

In August, the instructors were all paid on time, but again the staff were not paid on the 27th. Most staff were paid within a week, but there are rumors that some staff had to wait up to ten days to receive their salary. The problem with the Japanese staff is that they will continue to work if the company promises they will get their salary, they don’t question why they havn’t been paid, they’re one hundred percent loyal to their company.

After the second late payment to staff I realised that nobody was pedalling the bicycle anymore and it was about to fall over, so I started looking for a new job (and thankfully found one). I then submitted my resignation for the end of September, and happilly went to work every day expecting I’d be paid on time as was always the case.

Fast forward to last Friday, the 14th of September. This month pay day fell on a Saturday, and as per tradition Nova should have paid us on the Friday before the weekend. We all showed up to work a little nervous, and around 5pm a fax came through telling us that “Unfortunately it has not been possible to complete the procedures necessary to ensure payment today. Pay will be in your bank accounts by Tuesday the 18th”. Delaying instructors pay was unprecedented, and for lots of people was the most important sign of Novas demise. After work it became apparent that Nova had actually paid instructors in Osaka and Tokyo, or if you like the instructors who are within striking distance of Nova’s head offices.

After not being paid on Friday I realised that I am probably now working for charity. Even if Nova is still around to pay wages on the 15th of next month, I as a resigned instructor will not be on the list to get paid. Neil who finished up on the 6th of August is yet to receive his final pay from Nova, so I had little to no faith in them paying me next month. Because I generally make it a rule only to work if I’m going to be paid for it, I bought forward my resignation to yesterday, the 17th of September.

On Friday night after work, the Japanese manager of my branch attended an emergency meeting. On Sunday when she was next at work, she pulled each of us aside and gave us a talk about what the current situation at Nova is. She hoped that I would postpone by resignation, and I felt bad for her because it’s not her fault, but I couldn’t work any longer when I knew my chances of getting paid were so low.

She started out by explaining the Japanese management structure of the company. At the top is Nozomu Saruhashi (or more recently Nozom Sahashi, presumably because Saruhashi translates into “Monkey Bridge”). Under him are a number of directors, then there are 15 area managers. Each area manager looks after a number of team leaders, and each team leader looks after a number of branch managers.

Last month two of the area managers sent Saruhashi a letter asking him to step down from the head of the company and to sell Nova to another company (at the time there was an offer on the table that required Saruhashi to resign, he refused to do so), when he rejected their request they both resigned.

Earlier this month four more area managers sent a letter to Saruhashi and the directors requesting that they guarantee Nova will be able to pay wages for instructors and staff, and be able to refund all students who ask for it. The deadline for a response was the 13th of September. They received no response and so also resigned.

If you’ve been counting, that is six out of the fifteen area managers that have resigned in the last two or three months. That’s almost half. One of the area managers to resign was the area manager for my branch, and the team leaders are a little worried. The general feeling is that the Japanese staff are not going to put up with Nova not paying them on time much longer. They are beginning to realise that if they want something done they need to take action. Saruhashi seems oblivious to this.

Luckily the directors are a little more tuned in to what is happening in the branches, and they have issued a request to all Japanese staff. They have said that they are trying to push through last minute deals to save the company, either through a buyout or a government aid package. The deadline they have set for themselves is the 24th of September, if they can’t guarantee that Nova will pay wages by the 24th then all Japanese staff are free to quit if they choose to. My manager told us that if no such guarantee comes through by the 24th, then she would not open my branch on the 25th.

It all sounds great in theory, but I fear that anything the directors can possibly do will be too little too late. Most of the instructors at my branch are looking for new jobs, Nova is already closing schools all over the country, apparently they aren’t paying rent on most of their branches, there are reports that they aren’t paying rent on instructor apartments, they definitely aren’t refunding every student who asks for it, staff have to lie to students telling them that the refunds are coming, please be patient. This is why the staff have had enough, most of them are genuinely nice people who don’t like blatantly lying to customers.

My predicition is that Nova will be in serious trouble come the 24th of this month. If by some miracle they convince the Japanese staff that everything will be fine, and manage to pay them all on the 27th, the 15th of next month will be the end of Nova. I don’t see any way that they can pay all the instructors, and manage to keep enough morale for instructors to keep working. Too many are already leaving, and they can’t get enough over here in time. If Nova manages to survive, it will not be the company it is today.

Edit (25th September): So it seems that this post has been found by the a number of message boards all hungry for information. Here’s an update on the situation.

This post is what I was told at my branch. I have no contact with people at head office or anyone higher up than my branch manager. This is only was was distilled down to me through the system. It can be taken as nothing but rumors. What I do know for sure is that my manager did have a meeting with her boss, and did tell me this the next day. So take from that what you will.

Since posting this (and leaving Nova) I went back to my branch on the 24th of September. Last Friday a fax was sent to all branches from “Sahashi”, that basically said “There’s no need to worry, after next week you will not have to worry about salaries being paid and we will have a schedule for paying student refunds”. According to my branch manager this was what the japanese staff wanted, so they all intend to continue going to work. She was already leaving at the end of the month anyway, and she intends to work right through regardless of if the TI’s get paid today, or if the Japanese staff get paid on the 27th.

They trust an unsigned fax from a company that has shown it has no qualms about lying. This is the “guarantee” they wanted, and they got it. So they backed down.