How to recruit Japanese employees
The 120 or more crypto-currency exchanges trying to recruit experienced bilingual Japanese representative directors and compliance officers in Tokyo in 2018, learned the hard way the challenges described in this page. Crypto-currency exchange recruitment was a gold-rush industry, with each crypto-currency exchange needing to employ a bilingual representative director and bilingual compliance officer to comply with Japan’s Payment Services Act. Accordingly, Tokyo’s hundreds of bilingual recruitment agencies, hiring agencies, Tokyo employment agencies, Japanese executive search firms, and head hunters of all sizes, all charging success fees of 35% (sometimes more) of each placed candidate’s full first year salary (including his or her bonuses and any other benefits), rushed in with often false promises, placing candidates of questionable quality.
Many of those bilingual Tokyo recruitment agencies, hiring agencies, Tokyo employment agencies, Japanese executive search firms, and head hunters also demand a retainer regardless of success. A 35% success fee added to a retainer is a significant amount of money attracting many dubious players into the business, so to protect employers and candidates, Japan’s Employment Security Law mandates that all Japanese recruitment agencies, hiring agencies, Tokyo employment agencies, bilingual executive search firms, and head hunters must hold a current government Fee-Charging Employment Placement Business license. Venture Japan’s license is no. 13-YU-304819 (and we charge success fees as low as 17.5% with no retainers). Some Japanese recruiters, especially retired Japanese executives seeking to leverage their network to supplement their pension, don’t have a license because they don’t satisfy the license requirements. They operate illegally. Other recruiters receive a legitimate license, later close their Tokyo office (a recruiter must have a physical office to satisfy the license requirements) and run their recruiting business from Singapore, Hong Kong or elsewhere overseas. They also operate illegally. Use an unlicensed recruiter and your company can face serious penalties if the hired employee doesn’t perform and your company fires him or her, at which time the employee will benefit from a stronger legal position when a Court rules that an unlicensed recruiter probably misrepresented the job at the introduction stage.
So, lesson 1 of recruiting in Japan is ensuring your Japanese company only deals with properly licensed recruitment agencies. But it doesn’t end there; when you first meet your company’s chosen Tokyo recruitment agency, hiring agency, employment agency, Tokyo executive search firm, or other head hunter, the executive search consultant you talk with will very likely tell you about the 20,000+ bilingual executive resumes in his or her internal database. At this point you might want to consider the following:
- Despite all Japanese learning English as a second language at high-school, the government estimates only about 11.75% of Japanese can communicate in English (where ‘communicate’ means the entire spectrum from daily minimum conversation through to near-native). This generally agrees with Japan’s lackluster ranking, recently 40th out of 48, among countries where English is a second language.
- TOEIC (Test of English for International Communication) is the grading standard most often used for English in Japan’s commercial world.
- TOEIC 900 – 990, means the person can communicate effectively in any situation (at 950 or higher this might equate to conversation such as “Hey, Chris! I’m finalizing the sales forecast now. You’ll have them this evening. These figures will blow you and the team away in tomorrow’s call!”).
- TOEIC 780 – 890, means the person can satisfy most work requirements with language that is often, but not always, acceptable and effective (at less than 850, this might equate to conversation such as “Chris-san, I finish the sales forecast today. Maybe it is good for you in tomorrow’s call.”).
- TOEIC 600 – 770, means the person can satisfy most social demands and limited work requirements (at below 700, this might equate to conversation such as “Good morning Chris-san. I do sales numbers and finish for tomorrow’s call.”).
- Based on my experience:
- For Japanese employees, managers, and executives who must communicate daily with your company’s head-office people, set a minimum TOEIC score of 850.
- For Japanese employees, managers, and executives who communicate infrequently with your company’s head-office people, set a minimum TOEIC score of 750.
- For Japanese employees, managers, and executives who need to interpret for your company’s head-office people at business meetings, demand a minimum TOEIC score of 900 (940+ is preferable).
- It’s difficult to estimate the number of people who score TOEIC 900 and above, because TOEIC doesn’t publish exact figures, but the best estimate based on analysis of various statistics TOEIC publishes, is less than 1.5% of all Japanese who take the TOEIC test.
- Tokyo’s total workforce is about 6,400,000 people.
- So that’s a pool of about 1.5% of 11.75% of 6,400,000 = 11,300 people.
- Of those 11,300 near-native English speakers, if we apply a general corporate hierarchy approximation probably 5% at most, or about 560 people, are good senior managers or executives.
About 6% of TOEIC students score 750 – 900, so the pool of such Japanese employees in Tokyo is much larger at around 45,100 people. If we assume again that 5% of those people are also good senior managers or executives, we can add 2,250 to our hypothetical pool of candidates. So, there are probably around 2,800 Japanese bilingual managers and executives in Tokyo . Lesson 2 of recruiting in Japan? Question your licensed recruitment agency’s claim to have 10,000, 20,000, 30,000…….bilingual executive resumes. It’s very doubtful if any of Tokyo’s recruitment agencies, hiring agencies, employment agencies, executive search firms, or head hunters, have managed to convince half of Tokyo’s TOEIC 750+ bilingual employees to handover their resumes; in fact I doubt if any have more than a few thousand active resumes of good Japanese bilingual employees in their internal database (Venture Japan manages about 5,000 such resumes in its internal database). It’s also unlikely that any of those recruitment agencies, hiring agencies, employment agencies, executive search firms, and other head hunters have active contact with more than a handful of good Japanese bilingual executives.
Two last thoughts about the bilingual Japanese executives numbers game:
- In these days of professional social media, when many bilingual Japanese executives, managers, and employees are probably among the 1,350,000+ Japanese who have LinkedIn accounts (and if not, they probably have little interest in changing jobs), just how much value does a massive, probably outdated, internal resume database have?
- Just how real are the resumes in such a large database? By this I am not implying that the resumes are fake, but it’s likely many of the people in such a database might be retired or happily employed with no interest to change employer.
Before we move on to how your Japanese company can hire its first key position, there is one more depressing (sorry!) statistic to consider: there are around 3,200 foreign company subsidiaries in Tokyo, each of which needs a bilingual executive. Lesson 3 of recruiting in Japan? Don’t believe any recruitment agency that promises to deliver a great candidate to you within a week. If your company was one of those 120 crypto-currency exchanges trying to recruit experienced bilingual Japanese representative directors and compliance officers in Tokyo in 2018, you doubtless already understand all of the above.
Now we understand the challenge, let’s look at how to recruit your company’s Japanese office’s lead executive, the person who will decide how fast you succeed in Japan; the Japanese company President representative director.