Japan
This news just in: Bonsai Bank has decided to cut the number of its branches following last week's announcement that Origami Bank had folded. In a related story, a manager at Sushi Bank says something fishy is going on at the board level and workers are nervous that they may get a raw deal.
It may have spawned a thousand jokes, but the unprecedented number of high-profile bankruptcies and restructurings that have occurred in Japan over the last several years have left parts of the workforce with little to laugh about. Long accustomed to the "lifetime employment" ethos that until recently defined employment in Japan, many workers are now finding that company loyalty counts for little when the only way to save an ailing firm is job cuts.
"The 'job for life' mentality is gone," says Simon Childs at CDS Consulting in Tokyo. "There are stories all over the press about the collapse of big companies such as the Sogo Group and Yamaichi Securities plus the restructuring going on at places like Nissan and people are realizing that they don't necessarily have lifetime job security."
But companies in Japan are increasingly finding that the knife can cut both ways - and this is often good news for recruiters. "Mobility amongst executives is much higher than in the past," says Kazumichi Shinamoto at executive search firm Execnet Inc. Whilst he admits that the pool of available talent has been swollen considerably by victims of bankruptcies and staff cutbacks, he believes that "many employees see that loyalty to your employer no longer means guaranteed employment. This has particularly effected more junior employees who have witnessed how senior staff members with many years' service have been treated at some of these companies. Many of these younger guys feel comfortable about moving around."
Hidki Konno at Career Moves agrees: "Many younger employees did not have time to develop strong ties to their company before the economic difficulties of the late 1990s started. Individuals in this age group are generally quite willing to consider a move."
But Gregory Hall at ACCESS Technology, a Tokyo-based company specializing in high-tech recruitment, argues that even before the financial crisis made its mark, industry played as much of a role as attitude when it came to an individual's willingness to move around. "If you look at the average 45 year old Japanese guy working, for example, as a country manager in the high-tech industry, he's unlikely - if he's any good - to have worked at the same company for his entire career," Hall says. "The technology sector isn't like manufacturing where many employees enter a company with the intention of staying there for life."
Similar to many other countries around the region, the IT industry is booming in Japan and the supply of qualified workers just can't keep up with the demand. ﾒThere are people out there but they are really hard to get," says Hall. "The problem is that Japan is at least six months behind the US in terms of emerging new technologies. So when a company is looking for an individual with CRM experience, for example, it can be quite hard to find someone because the technology isn't prevalent in Japan yet and people haven't had the chance to build up experience of using it."
In addition to encouraging greater movement in parts of the Japanese workforce, the explosive growth in IT appears to have blown a crack or two in Japan's incredibly strict immigration policy.
Whilst foreigners entering Japan no longer have to fear for their lives, the nation's historic mistrust of all things foreign has been echoed, until recently, in its modern-day immigration control policies. Japan currently recognizes 27 "statuses of residence" for foreign workers, most of which require individuals to be very highly qualified and experienced. Until fairly recently, most work visas were renewable on a yearly basis, and foreign residents wanting to travel in and out of Japan still have to deal with a troublesome system of reentry permits. Not surprising then that, for a developed nation, Japan has an incredibly small number of foreigners legally working within its borders. According to figures from the Japanese Ministry of Justice website, there were just over 1.5 million registered foreign nationals in Japan in 1999, accounting for only 1.2 percent of the nation's total population, as compared with levels of 5 percent in the US and 9.1 percent in Germany.
But the growing need for employees, particularly in high-tech industries, looks set to change this picture. In March 2000, the Ministry of Justice published a Second Basic Plan for Immigration Control which is widely recognized as laying the groundwork for loosening Japan's immigration control policies. The stated aims of the First Basic Plan for Immigration Control, issued in 1992, were the development of "the promotion of smooth exchanges of personnel" and "measures against illegal foreign workers". While the Second Plan claims that "it would not be realistic to suddenly introduce a large number of foreign [workers]" to Japan, and that "consideration shall be taken so that entry and status of residence of foreign [workers] shall not create problems in our society", it does for the first time refer to the benefits of attracting foreign workers to Japan, particularly to "meet the need for flexible use of manpower in response to changes in industrial structure and corporate behaviour".
Discussions have reportedly covered facilitating the immigration process for foreign workers in the IT and engineering industries, particularly for individuals at low to middle job levels who may have valuable skills, but do not meet the experience requirements under Japan's current immigration rules. The government also reportedly plans to expand the number of "resident status" categories and increase the number of individuals it allows in on internships and company training programmes. According to some commentators, the changes have already begun. "The movement of people in from overseas has expanded dramatically over the last year or so," claims Hall.
In arguing its case for the greater opening up to foreign labour, the Keidanren, or Japan Federation of Economic Organizations, in June 2000 put forward a strong argument that, in addition to their ability to add value to Japanese businesses and help build new industries, overseas workers will also become increasingly important in driving future economic growth in Japan. The nation's population is rapidly aging - about a third of the population will be over 60 years old by 2025.
But it's not just the market for foreign workers that's opening up - growing numbers of overseas companies and investors are also finding their way into Japan and this too is helping drive the need for skilled employees. "There has been tremendous growth in the IT sector with a lot of subsidiaries of US and European firms, as well as start-ups and pre-IPO companies establishing themselves in Japan," says Childs. "Then there are all the venture capitalists and enabler companies who are not only looking for staff for themselves but for their portfolio companies as well." Hall concurs: "A lot of companies are coming into Japan at the moment and leveraging the good dollar to yen exchange rate. Areas such as B2B, e-commerce and software are all booming."
One positive effect of the sharp expansion in IT-related industries is that it is opening up areas of business that have been traditionally more difficult for women in Japan to penetrate. "Around 40 percent of our candidates are female," says Childs. "Women in Japan have always done particularly well in areas such as advertising, PR and marketing." Childs concedes that it maybe more difficult to place women into sales roles at many firms as the sales process in Japan is still quite conservative, heavily based on commission and "can entail very long hours and a lot of entertainment, which may make it difficult for many women". But he is optimistic that the development of new technology industries in Japan may help break down some of the remaining barriers: "E-commerce has opened up a number of new 'hybrid' or 'crossover' job opportunities that mix the marketing and sales functions in a high-tech setting and we are seeing increasing numbers of women getting involved in these types of ventures."
"These days most companies in Japan - local or foreign - would prefer to have Japanese nationals in their senior positions," says Shimamoto. "They usually have a better understanding of the local market and ways of doing business. And, even here, it usually costs more to employ a foreign national at the senior level." But for foreign firms, recruiting these executives isn't always easy. It would appear that, despite the recent changes, Japan's working population hasn't lost all its traditional and unique features.
Most people now understand that it's often a good thing to change jobs and experience working with several different employees, says Hall, but an ongoing problem is getting them to leave their old employer once they've decided to accept a new job.
"In many countries a recruitment or search firm's job finishes once an employment agreement with the client company is signed. But we actually have to spend time with many Japanese candidates after they've signed in order to convince them to leave their old firm," Hall explains. "In Japan it's not uncommon for an employee that wants to leave to ask his manager for permission to quit. Often the boss will not want the employee to go and will say 'no, you can't leave yet, we still need you'. The candidate will then call us up and say 'sorry, I can't start on the agreed date'. It's frustrating for foreign companies. They don't understand behaviour like this because it just doesn't happen elsewhere."
In fact, many of the problems that foreign companies in Japan have when recruiting staff stem from not understanding what influences or drives Japanese workers.
Concerns with social hierarchy continue to play an important role in a candidate's decision-making process. "Family and friends often have a far bigger influence on a Japanese candidate than they would on one from the US or Europe," says CDS's Childs. He goes on to relate the story of a Japanese manager who was working at a very famous Japanese firm and was offered a job at a foreign company in Japan. The pay and prospects at the new company were very good and the candidate liked the offer he was made. But at the last minute, he backed out. "His wife felt that if he left his current employer it would damage their child's chance of getting into this one particularly good kindergarten," he explains. "There is a certain 'brag' factor attached to working at many of the top Japanese firms."
Another difficulty is that foreign companies are often not aware of how Japanese employees will perceive business practices that are well established in other parts of the world. A recent survey of around 6,000 Japanese professionals by ACCESS Technology revealed that many of them simply didn't understand the value of incentives such as stock options. Offering stock options to employees in Japan has been possible since the revision of the Commercial Code in June 1997, but the growth in both utilization and understanding of such benefits has been slow. "Two or three years ago when we were placing candidates we literally had to get a newspaper, show them the stock price and explain what how stock options worked," says Hall. Things have improved a little since then, but most commentators agree that many Japanese employees would rather have higher basic pay. "Even if a candidate understands the concept [of stock options], he will often view them as a 'bonus', something that is a plus but that shouldn't form a major part of his basic compensation package," adds Hall.
And despite the turmoil of recent years, many Japanese staff still feel safer at a Japanese company. Recruiters in Japan say that Japanese employees continue view foreign companies as having a "hire-and-fire" corporate mentality. Konno points to more practical factors that may also play a role in an individual's decision to remain in a Japanese workplace. "There are fewer difficulties with miscommunication because the culture and language barriers don't exist."
Still, Childs has witnessed a growth in the movement of employees from Japanese firms to foreign companies in the last several years. "There are now a lot of joint ventures in Japan and these offer good opportunities for staff coming from the Japanese side of the partnership to get a taste of life in a foreign company or of a more Western business style," he says."If they like it, this can often encourage them to move on to a foreign company."
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