This week we had the opportunity to sit down with Peter Smith, Partner & Founding member of Key Consulting, to take a look at Japanese hiring trends and his predictions for the future.

 

Q: How are economic trends affecting the current talent market in Japan, and how do you see these evolving over the next 12 months?

A: We are continuing to see a slowdown in hiring across most industries in our key focus areas, and this seems to be most prevalent in sectors that are specifically affected by supply chain issues. There is clearly a sense of concern in the market, with many companies erring on the side of caution in terms of adding new headcount and focusing only on must-have replacement roles. Though we don’t see a dramatic shift away from this coming through the rest of 2023, we are encouraged by two factors:  1) Most companies seemed to be only temporary freezing hiring (rather than outright cancelling the headcount) with the aim of pivoting quickly should market conditions change and 2) The leadership of our clients are still very much interested in discussing potential senior hires for the coming 3-6 months and show a healthy desire to understand the current talent pools available.

 

Q: As Japan further relaxes Covid-19 related restrictions and responds to the economic challenges facing the population, how are your clients reacting to these changes?

A: Though the vast majority of corporations in Japan adapted appropriately upon the onset of COVID (in terms of work from home and new ways of working), it has been a little surprising to see a significant number of companies return to a full work from office system. This has been especially true for traditional Japanese companies and we feel that it has been a missed opportunity to usher in a generational change in how employees are empowered in the workplace.  That said, many forward thinking companies have developed long term hybrid plans (commonly based on an average of 2-3 days a week in the office) that balance the need for face to face communication with the flexibility that employees require.  The work from home vs office debate is still ongoing and this is often a discussion point for CHROs, with many companies continuously reviewing the best approach every 6 months.  We are encouraged by the recent indications that Japanese employers are responding to the increasing costs of living, with reports indicating that more than half of Japanese companies are planning to raise wages this year. In addition to increases in base pay it would be beneficial for companies to take a holistic approach to easing the burden caused by the changes in the cost of living, including non-monetary measures that would be included in company’s health & wellness initiatives.

 

Q: Which industries in Japan do you think will increase their executive search during 2023?
A: We are seeing many large healthcare companies (especially in the Pharma sector) continue to require senior leadership talent to drive their transformational journeys. In addition, we are seeing more requests coming from specific high end technology fields and the manufacturing sector. Though global economic conditions are of course a factor, we feel that the key differentiator is the importance a company places on proactively pipelining senior leadership talent as part of their overall business strategy.

 

Q: How can businesses in Japan best prepare themselves for economic change?
A: The key points are flexibility and embracing the fact that the war for talent will only get more competitive given the variety of pressures facing Japan’s ageing workforce. Organisations need to ensure that their business plans take into account a wider range of risks and that contingency plans are in place at all levels of the business cycle. Companies would be well advised to incorporate the need for flexibility and the ability to respond to fluid and changing circumstances into their company ethos, and ensure that HR teams have the resources to help build this skill set at the employee level.

 

Q: What advice would you give to a company to extract the most value from a recruitment partner, especially during these uncertain economic times?
A: Fundamentally this comes to trust and partnership. Many of our clients still report feeling a sense of frustration at the lack of engagement from their recruitment partners and this can influence their overall perception of the industry.  In our experience, the stronger the partnership the more chance of success and this has led us to having many customer relationships that have lasted 10+ years. It is the recruitment agency’s responsibility to demonstrate the value they offer through their talent networks and search methodology, and it is the responsibility of the client to thoroughly vet the agent’s capabilities via an in depth dialogue and references if necessary. Once a decision has been made to work together, clients are advised to share as much information and transparency as possible including introducing all relevant stakeholders involved in the hiring.  By thinking of the agent as an extension of your company and holding them to the same level of accountability, it gives the greatest chance of success. 

Please reach out to Key Consulting anytime to learn more about our approach!