Episode #255: Recruiting Staff In Business In Japan

Demographics are accentuating a talent shortage in Japan. The supply of young people has halved over the last twenty years and is on track to halve again between now and 2060. The number of young Japanese studying overseas peaked pre-Lehman Shock in the low 80,000s a year. It dropped down to low 50,000s and has crawled back up to around 60,000 going overseas to study each year.

The flavor of their overseas experience has also changed. Many more are going for short stays, so their level of English isn't as good and their cultural immersion isn't as deep. This is a function of cost and also the greater concerns for personal safety in a world where terrorists roam major cities, killing innocents without warning.

This trend to go abroad less and for shorter periods is ironic because the minds of the corporate titans in Japan are now more focused globally. Their companies need young Japanese staff who can handle the world beyond the seas surrounding Japan. They know that they have to acquire businesses and expand in markets offshore to survive the consumer population decline. They have to head outward.

Matrix organisations have Japanese staff here leading foreign staff scattered around the world. The opposite is true too. Japanese staff here are reporting to foreign bosses located overseas. This is new. In the old days it was a simple model of the Japanese expat disappearing for five year to be forgotten by everyone and then HR wondering what to do with them, now they are back and pushing them into some nondescript job.

The levels of English being produced by the educational system in Japan is underwhelming. You really have to wonder how long this is going to take to be fixed? The system is failing young people and making sure they hate having to learn English, instead of helping them gain a facility with the language. The Government is introducing English earlier into the system, now starting in elementary school and they are bringing in more foreign native speakers to work in the schools. This is all good, but the benefits of this won’t be seen until we have all retired from business and are on the links playing golf everyday.

This is a crazy world where English capability is needed right now at the precise point that the young are opting to stay in Japan and not study overseas. It is hard to argue with their logic, the food is seriously excellent here, there are no guns, no terrorists and no major drug problem. Everything is pretty comfortable here. I like it and so do all the youth of this country. Why put yourself under the pressure of dealing with foreigners with your poor English? Better to stay here in Nippon and relax.

The recruiting companies are having a field day, charging 35% plus to locate new staff for you. If you are a mega corporation then this is probably a fleabite. If you are a small–medium operation this looms large. For example, a $100,000 a year position will cost you $35,000 to place. That number will get your attention every time. When you include the social insurance and other costs associated with employing staff you add another 15% to that first year cost, which will total not $100,000 but $150,000. There are job boards, and there are recruiter/job board combinations, but regardless, none of this is cheap.

In Japan young people are encouraged by their families to join very large corporates. This seems a safe and stable selection process. Getting them to quit their current job and come and work for us runs into opposition from their parents and even the spouse’s parents as well. If you are a major brand it might be acceptable. If you are a small medium sized company they have never heard of, it seems risky. Foreign corporates might be angels, but in Japan everyone prefers the devil they know instead.

So to encourage people to join us we must accentuate our flexibility. Not requiring people to work overtime or stay until 11.00pm at night is well regarded. We can be more flexible than the big Japanese corporations.

Usually, there will be a base and bonus arrangement. In the West the bonuses are performance based. The bonuses in Japan are paid in summer and winter and are more a delayed salary payment than a true bonus.

Western companies can pay for performance though and this is a good differentiator. In Japanese companies everyone gets paid the same and move up through the ranks together, regardless of individual performance. It is more revolving around when you entered the company, how old you are, what rank you hold, etc. It is very formulistic and everyone moves up together in lockstep. So to get people to come on board you need to pay people more to compensate the risk of joining you. And English speakers, the declining resource, come at an additional premium.

One group which may become more important will be the Dai Ni Shin Sotsu group. These are young people in their mid to late twenties who want to change their companies. The percentage is running in the low thirties at the moment but it has been in the mid forties in the recent past.

They have spent around 4 years with the company, have been trained by them and then they walk out the door. They are hard and expensive to replace. So we really need to work diligently at keeping the new recruits inside the company. This is the skill of the leader and if they don’t have the skills, then you will see your good people walk out the door. This means your middle managers are going to be critical to the equation, when it comes to retaining the people you have spent some much time and treasure recruiting.

Engaged employees are self-motivated. The self-motivated are inspired. Inspired staff grow your business but are you inspiring them? We teach leaders and organisations how to inspire their people. Want to know how we do that? Contact me at greg.story@dalecarnegie.com

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About The Author

Dr. Greg Story: President, Dale Carnegie Training Japan

Author of Japan Sales Mastery, the Amazon #1 Bestseller on selling in Japan and the first book on the subject in the last thirty years.

In the course of his career Dr. Greg Story has moved from the academic world, to consulting, investments, trade representation, international diplomacy, retail banking and people development. Growing up in Brisbane, Australia he never imagined he would have a Ph.D. in Japanese decision-making and become a 30 year veteran of Japan.

A committed lifelong learner, through his published articles in the American, British and European Chamber journals, his videos and podcasts “THE Leadership Japan Series”, "THE Sales Japan series", THE Presentations Japan Series", he is a thought leader in the four critical areas for business people: leadership, communication, sales and presentations. Dr. Story is a popular keynote speaker, executive coach and trainer.

Since 1971, he has been a disciple of traditional Shitoryu Karate and is currently a 6th Dan. Bunbu Ryodo (文武両道-both pen & sword) is his mantra and he applies martial art philosophies and strategies to business.