Employer Of Choice, Or Employer Of Last Resort

Steve Crane chats with experienced lawyer, Hiroshi Chiba, of Uchisaiwaicho Law Firm. With his speciality in employment law, Chiba-san provides key insight on the subject. From recruiting and managing staff in Japan, through the particularities of Japanese employment law,

The discussion includes:

  • What does the term ‘Job for Life’ mean and is it still relevant?
  • What are the essentials to be aware of when recruiting and hiring local staff?
  • Recruitment, Interviews, Contracts, Trial Periods: how does it work in Japan?
  • What happens if things go wrong, and what to do about it?
  • Is there any flexibility when it comes to Japanese Employment Law?

Talent recruitment in Japan is very challenging and there is only one determinant of hiring success, and that is the question of whether companies position themselves as employers of choice, or by their own actions relegate themselves to the status of employers of last resort.

Leaving aside the question of brand cachet, and assuming they don’t have a global name, like Virgin, Apple or BMW, here’s what the successful market entrants do:

  • They talk to Japan based recruiters and do some homework. They establish what the market norms are for recruitment fees, salaries, social security benefit obligations, and availability of talent in the various professional disciplines.

For example, bilingual secretaries are a lot easier to find than bilingual sales-managers; and bilingual women in the workforce are proportionally more numerous than bilingual men.

You need to get enough information to benchmark costs and build a realistic picture of the average hiring time-line. Commencement of a search to on-boarding usually takes about 3 months, but this is assuming you get all your ducks in a row first.

  • Have a clear set of criteria for what you are looking for, and don’t try to cover two or more positions with one hire. You will only end up diluting the result, and set an impossible task for your recruiters.
  • Be clear from the start about your candidate screening and decision making process and ensure that all those in the decision-chain are engaged and committed to giving timely feedback and decisions.

Time kills all deals and, in a market where hot candidates will get four job offers within six weeks of coming on the market, you can’t afford to keep them waiting for a decision.

Drag it out and you’ll find that the best candidates will be off the market and working for your competitors while you’re still waiting for your senior decision maker to get back to you.

Recruiters will also very quickly lose interest in searching for candidates if they feel that you are not up to speed with the process.

  • Do a first-rate job of pitching your company to prospective hires. With no prior market presence or locally known brand, candidates will be assessing your trustworthiness as a potential employer based on how well you engage with them in the process, and how compelling your business model is.

They will want to know about your product or service, certainly, but also want to know if you have a well thought-out and plausible road map for growth in Japan. They need to be reassured that if they switch to work with you, will you still be around in 2 years’ time.

  • Set up your employee support infrastructure properly. From a candidate’s point of view, the preferred option is that you incorporate in Japan (set up a “K.K.”) rather than simply set up a branch office.

That means you have accountability in Japan. Next, put something in place for payroll and benefits processing. This can easily be outsourced to a local vendor.

Generally local-hires hate being paid in foreign currency from overseas, it exposes them to exchange rate risk, is a pain in the neck when it comes to taxation, and there is no local point of contact who speaks their own language when things go wrong, as they will at some point.

Remember, Japanese candidates are risk-averse and like to feel secure. Take care of their base-line peace of mind issues and they will usually work with great loyalty, diligence and integrity.

  • Show that there is a proper reporting line in place. One of the biggest mistakes new market entrant companies make is to hire a local manager, assume they can work on their own and leave them to it with minimum feedback or supervision.

This approach invariably leads to a feeling of being cast adrift on the part of the employee, and dismay on the part of the employer that the employee doesn’t pick up the ball and run with it.

Thought processes and the approach to problem solving are totally different between Japanese and Westerners. Independent thought and logic based problem solving is neither taught nor widely practiced in Japan.

Japan is the land of groupthink and collaborative decision-making. If your new hire has not worked in a Western company before he or she is very unlikely to be able to function effectively in isolation or to be a “self-starter”.

  • Take account of cultural differences in the interview process, and if possible take advice from an experienced local recruiter or other businessperson.

Highly capable Japanese candidates often fail interviews with overseas interviewers because they came across as not being assertive enough, lacking aggressiveness, not selling themselves and so forth.

In the West, all of the above are prized attributes whereas in Japan it is not normal to be aggressive, assertive or self-aggrandising in an interview situation. On the contrary, it would be considered pushy, insincere or shallow behaviour.

It is far more in keeping with the Japanese character to undersell and over deliver. This means that interviewers should try to focus more on discussing actual results, achievements, strategies for the future, amount of preparation done for the interview, or in other words objective criteria, rather than subjective criteria which are always laden with cultural bias.

  • If you’re conducting interviews over the phone, keep in mind that communicating in a foreign language by phone is incredibly challenging, because all of the information-laden non-verbal communication is removed from the equation.

The difficulty exponentially increases when the interviewer has a strong regional accent, or uses a lot of idiomatic expressions. Most bilingual Japanese are educated in American English, not British English, and may struggle at first to understand the latter.

Please don’t fail a candidate for poor English skills, when in reality they might be struggling with your version of English, or with your accent. If they are a strong candidate skills-wise but fail to impress in a phone interview, you will often find they perform far better in person, when aided by non-verbal cues and the opportunity to confirm what you are saying face to face.

What Not to Do When Hiring in Japan

Below is a list of some of the things that you should avoid doing if you want to hire good talent in Japan.

All too often companies entering the market for the first time try to skimp on hiring costs and on salary, take short cuts with infrastructure and compliance, cover too many functions with each head-count, then pat themselves on the back when they hire a 55-year-old guy with a heap of experience and a sparkling resume for half of his apparent market worth.

If this is you, congratulations, you just became an employer of last resort for a burnt-out salary-man.

This sounds harsh, but what seems too good to be true usually is. Take the following advice and you can substantially limit your risk:

  • Avoid “generalists” from Japanese companies, especially those with twenty years’ experience in the same company, who have just become available for hire. If you’re looking at someone like this, they need to have a very convincing reason for leaving and an even more convincing reason for wanting to join your company.

The reason for leaving their previous job is critical. If in any doubt, always ask directly whether they left or were pushed. To ask such a question might seem rude, but it is good risk management.

  • Look for people with experience in start-ups or small companies who are able to do things for themselves.

You don’t want someone who has spent the last ten years rubber-stamping documents with a staff of fifty people doing all the hands-on work, you need someone with recent experience in the field.

  • If you’re evaluating sales people, find out if they are “Route Sales” or “New Business Development Sales” people.

In Japan sales jobs are generally divided into these two types. Route sales people are essentially order takers (or account managers). They can manage an existing portfolio, but can’t develop new business. If someone says they have business development skills, then ask about their methodology, targets, KPIs, connections, results vs.-targets, etc.

  • Don’t get too locked into wanting to hire a native Japanese. If you can find a really bilingual foreigner with significant market experience in Japan and long-term plans to stay the you have struck gold.

Language skills are extremely important, but nothing trumps entrepreneurial drive and problem solving skills. Strong Japanese language ability is a secondary business skill, not a primary one. It will make a good entrepreneur better, but it will never compensate for poor business acumen or lack of drive, ambition and ability to take risks.

  • Don’t try to low-ball too much with salary and benefits. New companies are frequently surprised to find out that a person with the same skill-set as someone making a £50K annual salary in the UK will cost £70K in Japan.

It’s important to know that the bilingual ability comes at a price, and generally carries a premium of 20% to 30% above the salary of a comparable Japanese-only speaker.

When comparing with the British person on £50K, you are probably comparing with someone who only speaks one language.

  • Finally, unless you have very deep pockets, don’t overestimate the number of hires you will be able to make in your first year.

If you’ve taken on board all of the above information you will have realised by now that hiring people is tough and competitive in Japan.

If you expect to build a team of 20 superstars in your first 12 months you will probably get to 10 by the 11th month.

If you’re looking to go big and hire hundreds, then you will need to plan well ahead and really listen to local advice.

Most small businesses start with way more space than they really need and get locked in to long lease contracts with high exit penalties. Much better to start small and flexible then ramp up when you grow.

From the archive:

View our podcast on ‘How to Find the Right Candidate in Japan’ featuring Kevin Holdaway of Gplus Media

Our podcast on recruitment in Japan with Kevin Holdaway from Gplus Media. Listen on Apple Podcasts

Last updated January 2024: Steve Crane OBE