With a rapidly aging population and a disturbingly low birth-rate, the war for talent in Japan is becoming even more intense. The employment market in the island nation is increasingly a seller’s market as the young population slowly disappears. The recruitment and retention of good talent has become critical for companies as manpower plays a significant role in staying competitive in today’s business environment.

While the digital age has brought with it fantastical innovations such as AI and automation that can help increase efficiency, soft assets such as innovation and new business models are still highly valued. In fact, people who are capable of developing new ideas and business models are becoming more limited and scarce, thus becoming much more valuable than the comparatively easily obtained hard assets.

From the outside, Japan’s work culture has long been seen as rather inflexible and undesirable. While their efficiency and productivity are undeniable, many employee horror stories, especially those related to overwork, are commonly found in the country. Japanese companies have been trying to address this issue and the perception it gives off, but decades of work culture makes change rather difficult.

The implementation of naitei-shiki (formal orientation) ceremonies organised by businesses for new recruits may seem like a positive team-building initiative at first. The naitei is a tentative job offer in the form of a letter that companies give to prospective graduates whom they have decided to hire. In a sense, it is an unofficial test period in which new recruits can “test the waters” of the company before accepting a formal job offer.

Despite these efforts to secure new hires, the ratio of those who decline job offers after they receive the offer is high (some 60 percent, according to a survey of students) and rising. Companies that saw an increasing portion of their tentative new hires decline their offers this year accounted for more than 30 percent of the total. Even after new hires have formally joined the company, an average of 30 percent of them quit the firms within three years — the ratio has remained at the same level for the past several years.

A survey this year by Persol Research and Consulting Co. shows that the Japanese workforce has the lowest score among 14 Asia-Pacific countries polled for such criteria as the aspirations of those in non-managerial positions to become managers, to be promoted and to become independent and start a business of their own.

The rigid work culture of Japan seemingly involves a strict adherence to rules, respect for seniority, and absolute dedication to work and the company. Decades of such a culture has resulted in a highly disciplined but inflexible workforce. This could explain the relative apathy of young workers and their lack of drive to innovate or disrupt the workforce. They are simply working as usual until they are called upon by their seniors for a promotion rather than taking the initiative to do something new.

As previously mentioned, the practice of naitei, despite instilling the spirit of the “equality and togetherness” of the same class joining the company, it also contributes to an employee’s fear of alienation should they decide to innovate and stand out from the rest.

HR departments at many companies reportedly try to encourage employees to design their own careers. But although they advocate “workforce-driven career design,” the ingrained mentality of “everybody together and equal” will not change easily. Those companies will not be able to develop and retain people who can think on their own and take the initiative.

Japan is showing some signs of improvement however. But at the current rate that the ecosystem is changing, the country has a long way to go before fully adapting to this new paradigm.


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