Photo/Illutration Fumihiko Nagamatsu, president of Seven-Eleven Japan Co., center, apologizes for the company’s failure to make proper overtime payments to part-time workers at its franchises during a news conference in Tokyo on Dec. 10. (The Asahi Shimbun)

Seven-Eleven Japan Co. does not seem to pay serious attention to the well-being of its franchise stores and their employees despite the vital roles they play in the operations of the convenience store chain.

This is not an unfounded allegation given recent revelations that the company underpaid the wages for tens of thousands of part-time workers at more than 21,000 Seven-Eleven stores across the nation for at least nearly two decades.

Since October 2001, the company had used a flawed formula in calculating wage payments for store staff members on behalf of franchise owners. The problem has affected at least 30,000 people, who are owed a total of 490 million yen ($4.5 million) in unpaid overtime and late payment charges.

The company has promised to start paying the amounts owed to the people, but many could end up being left unpaid since it will be difficult to track down those who have already quit their Seven-Eleven jobs unless they contact the company on their own through a dedicated phone line.

The firm needs to take effective steps to ensure that such people will come forward to claim their dues and confirm their claims in cases where their working data is no longer available.

The company headquarters remained unaware of the problem until the labor ministry’s labor standards inspection office alerted a franchise owner of the calculation error.

Even more surprisingly, this problem may have existed since the company’s founding more than four decades ago.

In 2001, a labor standards inspection office notified a franchise owner of another flaw in the way overtime pay was calculated. The company became aware of the problem but did not publish the fact nor retroactively pay the unpaid amounts.

This is an incredibly insincere response to the matter.

Then Seven-Eleven Japan Chairman Toshifumi Suzuki claims he was “totally unaware” of the problem, which directly affects the compensation of people who are involved in daily store operations.

If Suzuki, the company’s top executive at that time, was actually not informed of this serious issue, the effectiveness and integrity of the firm’s crisis management and compliance systems should be called into serious question.

It is hard not to suspect that the company may have deliberately neglected to deal with the problem since it basically affects part-time workers who may not continue their jobs for long.

The company should do all it can to contact all the officials involved including those who have already left the company and clarify the facts and its responsibility.

At a news conference, Fumihiko Nagamatsu, president of Seven-Eleven Japan, apologized for the lapse and said, “Most importantly, we need to be determined to push through necessary reforms without accepting our past records.”

His words, however, generate a strong sense of deja vu. This year, we have heard many times the company’s top executive talk about his desire to adjust the company to the changing times and review its centralized management.

The convenience store giant’s tendency to avoid facing up to inconvenient problems with its management and culture was signaled also by how the company disregarded calls from franchisees for a review of the long-running problem of long working hours and instead tried to suppress such critical voices about the 24-hour operation rule.

It has also been disclosed that employees at the company’s headquarters ordered “oden” hotpot dish items for stores without informing their owners.

These revelations have cast doubt on whether the company has healthy relationships with its franchise stores, a question that touches the very heart of the convenience store chain business model.

The challenge for Seven-Eleven Japan now is whether it can really commit itself to embarking on radical reform of its management and culture. The firm needs to demonstrate its will to revamp itself through specific and tangible actions that can produce actual results.

--The Asahi Shimbun, Dec. 12