Japan HR: Everything’s Changing

​Having just spent an intensive two week period meeting with just under 100 Japan HR Leaders from our extensive network in Tokyo, my lasting impression is that Japan HR is in a period of unprecedented change. Never before has HR needed to both witness and participate in such a shift in job scope and expectation.

Here are just a few of the newer challenges facing Japan HR Leaders at this time:

1) New HR Delivery Models

Japan HR Leaders are needing to reorganise their HR teams to reflect global changes in HR operating models. In some instances this is happening successfully, and in others it’s causing pain. In one example of the latter, an HR Leader was being forced prematurely into accepting a regional HR shared services structure before the regional team were adequately trained in Japanese labour laws. The result of this was that the Japan HR Leader needed to continue ‘fixing up’ local recruitment, employee relations and compensation issues. In larger multinational companies, there is often the luxury to build an in-country HR shared servicesteam. However in these examples the Japan HR Leader is often not sure about how to plan long-term career paths for their subordinates, and can often be left scratching their head when selecting an adequate future successor. Both of these examples of ‘teething troubles’ are fairly common in Japan, but at least there’s now a growing acceptance among Country HR Leaders that these new HR operating models are here to stay.

2) New HR Reporting Lines

As Japan is increasingly being brought under the auspices of the Asia Pacific region, there are now fewer and fewer companies that treat the market as a separate ‘region’ unto itself. This change has been happening steadily for the last five years, so Japan HR Leaders are learning to function in these more heavily matrixed environments. However some are still finding it hard to ‘find their voice’ in this more complex structure, and are less well equipped in managing up to regional stakeholders than their counterparts in other markets. In one extreme example, a company decided to reorganise their global HR model along global business verticals. While this made sense at the global headquarters, it meant that the JapanCountry HR Manager looking after an office of 150 employees needed to manage 7 separate global Business Unit HR leaders. If they can successfully survive in this role, then this particular Japan HR Head should be able to run a stakeholder management masterclass in the future!

3) Even Fewer Expatriate Assignments

This theme was not felt entirely across the board, but for many organisations it has become increasingly difficult to attract internal assignees to spend time in the Japan business. For some people this is simply because of the (somewhat exaggerated) fear of more earthquakes hitting Japan. And in other cases this is because growth markets such as Chinaare more attractive if you want to be highly visible within most global organisations. Either way, this recent trend is exacerbating an already problematic feature of the Japan labour market, namely in the relative lack of healthy international migration of talent. When compared to the markets of Hong Kong, Singapore and Shanghai, the Tokyo labour market is still too homogenous and does not allow for a natural influx and interchange of ideas, skills and opinions. Very few companies are actively looking into this problem, and there is also a lack of confidence in the Japanese government in coming up with the appropriate creative solutions. The longer-term implications of this are still unclear, but the good news at the moment is that Japan HR Leaders are not particularly worried that this trend will have a short-term negative impact on business.

4) Office Relocations

Many companies have recently moved offices in Japan, and others are in the advanced planning stages of doing so. The market for real estate in Tokyo has dropped significantly in recent times, which has tempted companies to break the leases on their expensive high floor offices and move into newer buildings. Not all companies now view high floors as a status symbol, particularly following to March 2011 earthquake. Many companies are trading in smaller offices in prestigious locations and are co-locating in new offices on the outskirts of Tokyo. And indeed some companies have relocated functions outside of Tokyo altogether, particularly in light of contingency planning recommendations following the same earthquake. Japan HR Leaders are heavily involved in these decisions, even ifthey don’t officially cover General Affairs and Facilities as part of their job responsibilities, since office location and office ambience can play a large part in the attraction and retention of talent in Tokyo.

5) And Finally… New HR Hiring Trends

These are just a few of the challenges facing Japan HR Leaders on a day-to-day basis. In terms of hiring HR talent in Japan, the emphasis nowadays is very much on value creation—because of increased cost pressures being put onto Japan operations (thanks in large part to the stubbornly strong Yen), it’s no longer good enough for an HR team member to be merely adequate, they need to justify their headcount with much more clarity. And HR skills are not the only factor in external hires – multinational companies are looking more at the progressive, ambitious and proactive attitudes of HR hires, even from a junior level. The crunch point in particular is at the Japan Country HR Manager level for companies with a population of between 100 and 200 employees, where the HR Leader needs to be both hands-on with HR operations and yet highly strategic with business stakeholder management. But in all cases, these changes are making it increasingly unlikely for an unassertive and apathetic HR practitioner to have a future HR career in multinational organisations in Japan.