Post by Gerlinde Berger

Is a succession wave building in Japan, particularly for German Mittelstand companies? In discussions with German clients, a recurring theme emerges: "Our Managing Director in Japan has been there for a long time, and we don’t really have a successor." This concern is becoming increasingly common. Japan's structural realities make this issue particularly pertinent. The average age of company leaders is now over 60, while leadership turnover remains low. More than half of SMEs still lack a clearly defined successor. For German companies, this is especially significant. Japan is a classic Mittelstand market for Germany, with many subsidiaries being mid-sized, highly specialized, and established for decades. Leadership in these organizations often relies on long-tenured Managing Directors, either German expats or experienced local leaders. While this model has been effective, it creates a dependency on individuals, and succession planning has often not been prioritized. The external market offers limited relief, as finding leadership talent in Japan is challenging, particularly for roles that require bridging Japanese and Western business cultures. Many companies underestimate the narrowness of this talent pool. I observe a structural transition beginning: a growing number of leadership teams in Japan nearing retirement age, coupled with thin succession pipelines. For German Mittelstand companies, this presents a unique situation: strong, well-performing local businesses that are not fully prepared for leadership transitions. Japan has traditionally been a market characterized by stability, but in terms of leadership, stability can easily turn into inertia. Succession in Japan needs to start earlier and be approached more proactively than in many other markets. At #DHR Global, we are increasingly encountering this topic across our German and Tokyo teams, especially in industrial and mid-sized environments where leadership continuity has historically been a strength but is now becoming a challenge. I am curious to hear how others are approaching succession planning in Japan today. #DHR global #Succession planning #Executive Search #Japan