Shifting the Global Talent Acquisition Model for Hiring Success in Japan

I have been in Japan for 22 years, and 17 of those have been in search and recruitment, with a focus on senior talent for foreign companies looking to succeed in Japan. Without a doubt, the past five years has been the most frustrating for our clients to attract, hire, and retain the best talent when compared to their experience in other Asian markets. So, what can be done to set your company apart and increase your strike rate on closing quality candidates to enable your business to thrive?

Based on multiple reports on the Japan talent market, roughly 80% of Japan’s employers face difficulties in filling vacant positions. This is slightly higher for foreign capital companies that require higher levels of English to work in a more international environment. The reasons for this severe shortage of labor is multi-pronged and rooted in three major demographic problems:

1. The baby boomer generation is retiring at record pace.
2. There are not enough young people and women to make up for these losses in the labor force due to prolonged decline in birth rate over the years coupled with a poorly managed family care system.
3. Japan is experiencing its second longest economic expansion phase since WWII.

Overall, the working population is declining, forcing employers to select from shrinking talent pools making it a battlefield for attracting and retaining key people for organizations. On top of these demographic challenges, technology is also evolving faster than ever, changing the skills needed for jobs and shortening the life cycle of those skills, requiring different approaches and metrics to find the right competencies and capabilities. We expect this technological trend to continue and there is no quick fix to the demographics of Japan. Therefore, barring an economic downturn, Japan may be stuck in a continued battle for talent. Global Talent Acquisition strategies typically are driving a ‘direct-sourcing’ methodology by utilizing on-line tools like LinkedIn to reach out to prospects. The advice below is advisable for this very reason and to be successful a localized approach is much more effective to attract and hire key people.

When it comes to the executive level, the space ChapmanCG is heavily focused on, we noticed that the offered salary packages have been increasing recently, particularly in the life sciences, industrial and technology sectors. Foreign-affiliated companies could attempt to compete with improved salary packages when hiring senior executives, especially if it means securing good English language skills and an international mindset to ensure survival in a more globalizing business environment. However, money is not always the obvious motivator for the Japanese culturally, and this is something that we do advise our partners to take into consideration when they are looking to acquire talent.

It is important to remember a job-change decision is also an emotional decision for anyone in any country. In Japan, a sense of security will also weigh heavily on their decision. Therefore, the general offerings foreign companies use around the world to attract talent may not be enough in Japan. It is important to think about not only higher pay but also (for example), permanent instead of temporary contracts, as well as providing a good work-life-balance. Any company can adapt a salary package for the target market. However, more focused measures need to be considered for a true competitive advantage when hiring in Japan.

Ultimately, as market specialists in Japan, what we find the “candidate experience” to be a game changer in this talent battle. While important around the world, in Japan this experience needs to be adapted to the cultural history of the country. This needs to be delivered via a strategic and effective recruitment process, coupled with a local “employer branding” strategy, to effectively influence people at the critical stages of offer acceptance. Tapping into this sense of security takes planning and investment in the Talent Acquisition process so let’s look at some ways to make this a true local competitive advantage.

Successful tips we often give to hiring managers sitting overseas, or local CEOs and HR Directors locally in Japan, are often around the end-to-end candidate experience and how to make it as lean, meaningful and professional as possible. There are multiple smaller tips we can offer but let us look at the two broadest and longest lasting strategies that companies can easily apply:

Interview Process

Whether working with agencies or making direct hires, companies need to manage a quick and lean process that involves the right decision makers. The dangers of over-involving people can dilute the message, feel disorganized and take too long. Those who are chosen as part of the interviewing process need to engage in a way that is both consistent at selling aspects of the role and company while at the same time effectively evaluating the talents to be hired. Be transparent and forthcoming with critical information about the role, company and culture that they are to be hired into. The local talent acquisition function should also be empowered to drive the process with close systematic interactions with all interviewers to keep things moving along quickly. Speed is key since in Japan the number of quality positions tends to drastically outnumber the available candidates. Therefore, the better a proactive talent acquisition team can educate on the need for a speedy and professional process to all hiring managers, the higher the chances of success.

Employer Branding

Another critical strategy that companies have not fully implemented in Japan is a meaningful “employer branding” campaign. In a small, intimate market like Japan there is an amplified need to highlight positive aspects of a company culture, performance and its mission and image. This amplification, if done well, can be incredibly effective in creating a positive lasting impression needed to attract talent over the long-term. We often advise people outside Japan that Tokyo represents about 80% of the world’s third largest economy, despite it being compacted into the size of 15 golf courses. This density of workforce is the strongest reason to create an image with a strong social media presence, while still ensuring that the hiring process is a professional extension of that message. Every engagement in the hiring process is a chance to influence and sell and if it is done in a clean and unified way the market will come to trust the brand, mission and values of the company.

What Does the Future Hold?

People in our network ask us if things will ever change in Japan or can they expect this frustrating hiring environment to continue for years to come? Time will tell if the imminent threat to the global economy or COVID-19 will have a lasting negative economic impact that many expect it to bring. This would be an unfortunate turn of events but would result in new talent landscape with a revision in recruiting strategies. Until any economic changes start to take effect in Japan, we are continuing to see the recruitment landscape as it was before everything seemed to change.

The tips above are just a start and if you would like to talk about how to position your TA team for success with some Japan market relevant engagement strategies ChapmanCG is here to help.  In the meantime, we simply advise you to have a clear TA strategy that invests in a hiring approach that is right for Japan. Generally, some conventional global TA practices can be ineffective for a number of cultural or Japan specific reasons, so do be careful.

Happy hunting and do stay as safe and healthy throughout this time of uncertainty.