Episode #374: Japan Small Businesses Must Pick Up The Dregs Of Sales

Japan is facing a serious shortage of staff in many industries. The job-to-applicant ratio rose to 1.28, the Ministry of Health, Labor and Welfare announced recently. The ratio means there were 128 job openings for every 100 job seekers.The figure has not yet reached the pre-pandemic level of 1.6 in 2019. The hospitality sector in particular, lost a lot of part-time staff during Covid and they haven’t returned in numbers sufficient to match the needs of employers. Hotels are getting back to pre-Covid occupancy rates, but they worry they don’t have enough staff to clean rooms and run the Hotel at the standards they adhere to. In July, the Japan Times noted 75.5% of surveyed hotel operators said they face shortages of regular employees while 78% said they lack part-time and other nonregular workers.

The Immigration Services Agency recently announced the total number of foreigners in Japan has topped 3 million for the first time. The Japanese government has created a new skilled workers No. 2 visa category, just for the construction and shipbuilding industries. The Nikkei Asia in April quoted the Japan International Cooperation Agency estimates that, given Japan’s labor shortage, reaching the government’s economic growth target for 2040 would require nearly quadrupling the number of foreign workers to 6.74 million.
This is a profound change for Japan, which as a society highly values conformity and harmony. No “melting pot” for Japan. Foreigners in large numbers may threaten that harmony, because they don’t appreciate how things work here. The Government is facing that labor shortage head on though and creating more visa availability for foreign labourers to enter Japan and do the jobs locals don’t want to do.

In the white collar world, the language barrier and the weak yen, both guarantee that there won’t be a rush of foreigners coming here to take up jobs. That means that for most multi-national companies, there will continue to be a war for talent for Japanese staff. If you require English as well, the pool of talent available becomes tiny. If you are a large corporation, you will have deep pockets and can offer large base salaries to attract people to join you. If you are a small to medium size business, then the nightmare has already started and will only get worse.

The Council for the Creation of Future Education, chaired by Prime Minister Fumio Kishida, has the goal for Japanese students studying abroad to reach 150,000 students seeking to earn degrees by 2033. The Japanese Trade Union Confederation (Rengō) conducted a survey in 2022 which showed 30% of new employees quit their jobs in the first three years. This more mobile younger group, called the Dai Ni Shinsotsu (second stage fresh graduates) will be attractive to target, especially those with international exposure, better English and a few years of work experience. They will still need extensive training, though.

In the world of sales in Japan, the picture is very grim. If you need English speaking capability, the pool of talent available is very shallow and we are all competing fiercely for a limited resource. In my hiring experience, I have noticed over the last seven years that salespeople are becoming more expensive and certainly very expensive relative to their ability. The vast majority of salespeople everywhere are untrained and they are working it out by trial and error. Japan is just the same. Assuming that someone knows what they are doing after working for a number of years in sales is too optimistic in my experience. Bosses need to accept that they will need to give these salespeople training to get their skills to the levels required. We teach a lot of salespeople here and we notice some common trends. They need particular work on asking questions to fully understand the buyer’s needs rather than just delivering their pitch. Also, they need help on handling pushback from the client on pricing in Japan. The typical response here to drop the price by 20%, when confronted with the buyer’s “your price is too high” statement, isn’t the best choice. They need to be taught how to handle objections properly.
The sales staff supply shortage moves the locus of power to Japanese salespeople. They know they are in strong demand and they can be very picky about who they join. The resume flow is also very brittle and thin. The range of choices is not there and if you get to interview someone, you are thinking this is a good day at work. Like me, if you have been hiring people on and off over many years, the first thing you notice is the quality is going south at a rapid clip.

Facing sub-standard talent, we have to make some serious adjustments. We have to totally rework our on-boarding process and make it much longer, more comprehensive and intensive. We need to really train people hard during the Probation period, so we need a longer period of six months. The quality of people we will meet will likely stay low and more often than not, they are the dregs of this Japan sales life.

We have to get someone, so we will hire the upper echelons of these dregs of the sales world here in Japan. They are going to need serious, professional sales training and considerable constant coaching to get them up to speed. This is going to be resource heavy. The improvement process won’t be fast either, so we have to accept that additional burden on our small businesses. Our old idea that we can just hire them in and then fire them when they don’t perform is well out of date. Current entry funnels are too shallow and so we will have few choices.

Our future Japan sales staffing prospects look bleak, choices are few and we must make legendary compromises. The answer is to invest in training our salespeople in order for us to survive.