News Article

Iwata: Nintendo Not Considering Lay-offs To Strengthen Finances

Posted by Tim Latshaw

Believes it would hurt long-term results

The recent economy has seen a trend of doing more with less - increasing individual productivity while trimming one's overall workforce. Nintendo CEO and President Satoru Iwata, however, is not expressing interest in going down this path as a business, believing its short-term gains would have negative long-term effects.

A participant of Nintendo’s 73rd Annual General Meeting of Shareholders asked Iwata whether the company should have carried out corporate restructuring to offset its past two fiscal years of operating losses. Iwata responded saying that more advanced and complicated products have required a larger workforce and higher costs, but to cut people in these departments could hurt the company's overall development:

Regarding why we have not reduced the number of the personnel, it is true that our business has its ups and downs every few years, and of course, our ideal situation is to make a profit even in the low periods, return these profits to investors and maintain a high share price. I believe we should continue working toward this ideal. If we reduce the number of employees for better short-term financial results, however, employee morale will decrease, and I sincerely doubt employees who fear that they may be laid off will be able to develop software titles that could impress people around the world.

According to Iwata, Nintendo should focus on higher efficiency and cutting unnecessary expenditures, but not at the cost of talent or for the short-term appearance of financial gain:

I also know that some employers publicize their restructuring plan to improve their financial performance by letting a number of their employees go, but at Nintendo, employees make valuable contributions in their respective fields, so I believe that laying off a group of employees will not help to strengthen Nintendo’s business in the long run.

Iwata’s employee-centric focus makes sense considering his roots as a programmer, but whether his views will find favor with investors, who have already given him the lowest approval rating of executives at Nintendo, remains to be seen.

What do you think? Will a long-term outlook benefit Nintendo more in the future, or does it need to make moves now to remain corporately competitive? Let us know by leaving a comment.

[via nintendo.co.jp]

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User Comments (41)

wober2

#1

wober2 said:

I wish more large corporations considered company morale as valuable to their products!

cbkummer

#2

cbkummer said:

Mr. Iwata is a very long-term thinker. He doesn't really focus on right now, which is something of a weakness, but he definitely has a broad vision for the future of Nintendo. I think more people need to be like this.

WingedSnagret

#3

WingedSnagret said:

A very smart man that Iwata. If developments are already going slower then anticipated then minimizing the work force would be utterly detrimental, so in the long run he is making the right choice.

smashbrolink

#5

smashbrolink said:

So basically; screw the people who lowered my approval rating, I'm not going to betray my employees to raise myself in their eyes.
Good guy, that Iwata. Not the best businessman in terms of quick profit, SOMETIMES, but most definitely a trustworthy and praise-worthy human being.

DestinyMan

#7

DestinyMan said:

"If we reduce the number of employees for better short-term financial results, however, employee morale will decrease, and I sincerely doubt employees who fear that they may be laid off will be able to develop software titles that could impress people around the world."

Wouldn't you love to work for a boss like him? A large reason why Iwata is such a caring CEO is because he knows he was a developer like his employees too, so he understands them better and can form a good team with them.

MetalKingShield

#8

MetalKingShield said:

I'm very impressed with Iwata over this. Once you start getting rid of staff, companies just don't function properly and find it very hard to recover from. Don't listen to anyone who wants a short-term profit. Without enough staff, before long there won't be a company for anyone to make any money at all from.

taps

#10

taps said:

Good contributions here & I generally agree with the sentiment that he is a good boss from a videogame employee's perspective. I think it makes him unique in the North American game industry.

-KwB-

#11

-KwB- said:

The productivity paradox is what these companies are trying to reach, cut on the people and increase productivity but morale can indeed lower, so Iwata is really focused on personnel and business. I like his strategy !

bouncer0304

#12

bouncer0304 said:

Very good of him. While Nintendo is on a bit of a downer for now, it'll soon be on an winning streak again. Laying staff off right now may save a bit of money but the games would suffer. Nice to see he's also thinking of gamers too.

Emblem

#13

Emblem said:

If some games take 2+ years to make, firing people before said products can me made and shipped is just stupid. You tell them Iwata.

Kirk

#14

Kirk said:

Well it's good to hear he's looking at this from the long term point of view rather than a short term slight of hand.

sinalefa

#15

sinalefa said:

God bless this man, really. I wish him the best and I will keep supporting Nintendo the only way I know: buying their games!

Alienfish

#16

Alienfish said:

[applause]

This is why every company should be run by people who were once simple employees themselves. Iwata and Miyamoto, who make most of the decisions in the company, are both developers themselves who started at much lower positions in the company and know the effects of stupid executive decisions.

+100 respect points.

WiiULoveSquid

#17

WiiULoveSquid said:

Well with the increased man hours of HD development getting too much overtime should be more the issue not lay-offs lol

NintendoPro64

#21

NintendoPro64 said:

Why the hell would anyone want Iwata to lay people off? Between making 3DS games, Wii U games, lining the VCs, improving Nintendo Network, and more, they need every hand they can get! :O

DrRandle

#22

DrRandle said:

As somebody who lost a lot of friends to one of these types of 'restructurings,' Good.

rjejr

#26

rjejr said:

Iwata is an old Japanese guy, Japanese companies historically don't do layoffs. Possibly the reason their economy has been stuck in neutral since 1990 but that's the way it's been in Japan.

Here's a baseless at best blog about it, sorry I don't feel like looking further.

http://japanesecultureandlanguage.blogspot.com/2009/01/japanese-companies-and-layoffs.html

Here's a newspaper article from 1987 so the young'uns can feel like historians.

http://news.google.com/newspapers?nid=1350&dat=19870212&id=-hJPAAAAIBAJ&sjid=4AIEAAAAIBAJ&pg=7047,3894785

Paperluigi

#27

Paperluigi said:

Wow, just compare this guy to the EA bosses who act like a bunch of wall street bankers, what a difference.

NMH-TRI

#29

NMH-TRI said:

Iwata:
1. Head of company when the Wii was introduced which flew off of shelves.
2. Took 50% paycut during time when 3DS was struggling
3. Stands against layoffs that would increase near term profits because he has better long term vision

And people on this site have still said he needs to be fired (under different article). smh

Tryken

#31

Tryken said:

This is the kind of stuff that has made me such a Nintendo fanboy. Nintendo has always impressed me with their financial resolve (such as having money put away in case they have a struggling year or... how many could they survive, like 10 years or more?). It's such good business practice.

b23cdq

#33

b23cdq said:

@Tryken #31
They have ten billion dollars in the bank, meaning they could take a yearly loss of 250 million dollars and stay in business for 40 years.

mjhopkins81

#35

mjhopkins81 said:

That's awesome! If only more American companies would follow that lead. Short-term profits are not indicative of long-term success.

SmaMan

#38

SmaMan said:

Hallelujah! Finally, a CEO in this god-forsaken global economy that gets it!

shuis

#40

shuis said:

It is remarkable that after listening to Mark Cern for Playstation give his bio how similar a path Nintendo is going down with the HD jump. Iwata is wise to hold onto his employees. Hopefully, there are some already working to remedy the development time issues such as the way Sony did with x86 processing for PS4. I still want a Sony/Nintendo love child! They have so much they could contribute to one another to build better machines and gaming experiences.

Yoshis_VGM

#41

Yoshis_VGM said:

This is one of the reasons why I love Iwata as a CEO. The way he stares into everyone's displeased faces and puts them down in a very simple, stern (yet kind) way is very inspiring. The way he says he refuses to layoff workers, the way he told off the idiot who reminded him he would resign if the Wii U continued to have sluggish sales by saying, "I don't recall saying I'd resign," the way he imposed a 50% pay-cut ON HIMSELF when the 3DS was struggling so that his staff can keep getting paid the same amount. THIS is what a good leader does. We need more leaders like this, a leader that takes sacrifices and stands in the face of hate and cares about his staff and his gamers. This is what a good leader is.

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