Not only does the market have fewer applicants than other markets, but there are fewer high quality recruiters when compared to more mature talent acquisition markets.
Japan is the world’s most difficult market to recruit talent in. Everyone should know this by now and the knowledge makes it easy to justify the exceptionally high costs of talent acquisition here. Take any major company from any industry, and I will comfortably place a bet that an embarrassing majority of the talent acquisition spend is sucked up by the Japan team. I will win much more than I lose!
It is my belief that there are really two reasons for the high talent acquisition costs in Japan. I have looked at the candidate side in other posts and seminars exploring why it is so hard to find candidates, so here I want to explore the recruiter side of the equation. In short I think there are major inefficiencies in the Japan recruitment market that need to be addressed if we are evolve as an industry.
If we look at mature recruitment markets like the US or Europe we can quickly identify some major differences with Japan. In mature markets you see large in-house recruitment teams being able to access a great deal more public data on candidates and prospects. At the same time, given the competitive nature of their market and positioning of contingency agencies as these markets evolved, many in-house talent acquisition folks are highly skilled professionals in both the sourcing and selling aspects of their job.
Looking beyond the candidate sourcing problem in Japan it is the lack of high quality recruiters that is the real issue for most global companies. While it is easy to blame our industry as a whole for this the reality is that it is part of a larger market maturity issue.
Of course there are a lot of great recruiters operating in-house and working in agencies in Japan – don’t misunderstand me here. Naturally like anyone at the top of their game we have to respect these folks, both foreign and Japanese. The problem is that the drop off from the top tier to the next level is enormous and unless the next layer down adjusts quickly and learns to provide real value to their clients or stakeholders their futures in the industry may be bleak.
In more mature markets this weeding out already happened many years ago and you see a relatively commoditized contingency market with much lower fees than Japan. More recently, all around the world technology is enabling direct sourcing to take precedence over highly expensive agencies, and of course more and more companies are investing in their own in-house teams to cut out the agents. Google, Salesforce, Microsoft, Amazon, Tesla, Oracle, and many other top tier brands have both the money and brand power to attract and hire high quality recruiters en mass, pay them very well and have them source candidates directly. For everyone else however, this is a mere pipe dream.
Unlike the aforementioned brands, most companies struggle to attract top tier recruiters capable of direct sourcing and they lack the budget to enable the people they have. Agency recruiters who have never excelled at direct sourcing – for whatever reasons – naturally go on to maintain the status quo of relying on external agencies if they go in-house. Agency dependence remains high and costs soar.
The same is true for recruiters who may have never worked in agencies but joined a recruiting team that lacked a direct sourcing capability or intent. On-the-job training is by far the main model for all of us and these recruiters hardly stand a chance if their mentors are “status quo” recruiters. It is only natural that they find themselves reliant on using external agencies for help.
Finally, even if the recruiter may want to source candidates directly there are many challenges in front of them. Internal reporting and stakeholder management impose time constraints, and if they open the gates to agencies this is exacerbated through the flood of off spec profiles sent their way, the flood of communication with pushy agency recruiters and back-and-forth interview coordination once things really kick off. The typical in-house recruiter in Japan simply has very little time to focus on direct sourcing.
All of this leads to unacceptably high agency costs becoming the “accepted” norm. There appear to be few other options.