[Special Feature: Rethinking Japan's "Work Style"] Rikako Onishi: Organizations That Utilize Professional Talent, and Talent That Can Become Professionals

2023/02/07

After graduating from the Keio University Faculty of Economics, I joined the Long-Term Credit Bank of Japan (now Shinsei Bank). Established after the war for the purpose of providing long-term funds to industry, the bank was known by the abbreviation "Chogin" and was a presence that supported post-war economic growth, but its role was changing along with shifts in the stock market and the financial industry. Both management and staff were making desperate efforts to transform themselves, but they were unable to fully change. However, during the industry transformation that occurred in the financial sector 25 years ago, the moment the shareholders changed and new people came in, the organization changed significantly. At the time, as a 27-year-old struggling to play a part in organizational reform within the planning section of the headquarters, I realized that "an organization is its people. When people change, the organization changes." This sparked my interest in the human resources business, and it has been 20 years since I left the bank to start my own company.

Kotora Co., Ltd., which I manage, is a company that handles professional talent business. In addition to our founding business of recruitment for professionals, we provide human capital consulting, including HRDX (Digital Transformation of HR), information disclosure of human capital, and the education and dispatch of HR business partners. We are a company that operates with the philosophy of contributing to the improvement of organizational productivity and the added value of people.

The recruitment service, which is our founding business, is one of the means taken by business leaders who are considering the development of their business and looking to hire talent from the outside. Business leaders who lead businesses and organizations consider reinforcement measures to develop the organization. This might be M&A, changes in systems, talent development, or talent recruitment. And even when taking the approach of talent recruitment among several reinforcement measures, there are several methods such as strengthening new graduate recruitment or mid-career recruitment. Even within mid-career recruitment, the mindset and execution methods differ greatly between hiring inexperienced individuals and hiring professionals in their field.

When hiring inexperienced individuals, including new graduates, you can attract them by talking about the overall appeal of the organization—for example, the company's mission, vision, values, and welfare benefits including education systems. However, in the case of professional talent, you cannot hire them with that alone. To hire professional talent through mid-career recruitment, you must first verbalize the mission and content of the work you want them to do, define the persona and skill requirements necessary for it, determine the compensation for that work, and then begin recruiting. Once the necessary persona is defined, you must list and contact people doing that work, assess their abilities through interviews, and explain to them how wonderful the things you are trying to achieve are, what the job entails, and how the compensation is appropriate.

This is the very essence of the "job-based" personnel system that has been a hot topic recently. Therefore, when trying to conduct professional recruitment, it inevitably becomes essential to introduce a "job-based" personnel system.

Because mid-career recruitment of professional talent is predicated on a job-based personnel system, it did not become a mainstream recruitment method for large Japanese companies, which are predicated on a "membership-based" personnel system centered on "generalists." Instead, there were many cases where talent from large companies, who had been treated as generalists, changed jobs to edgy small and medium-sized enterprises to increase their expertise. However, in recent years, mid-career recruitment by large companies has become active. In fact, while the number of mid-career hires at small companies (fewer than 100 employees) halved (57% to 32%) compared to 20 years ago, it nearly tripled (13% to 36%) at large companies with 1,000 or more employees*1. Correspondingly, the recruitment market has grown from a scale of 80 billion yen to over 500 billion yen over these 20 years*2.

The recruitment market is expanding in this way, and the major reason is that the number of jobs providing new value is increasing along with the sophistication and acceleration of business and the diversification of customer needs. Originally, if large companies had the stamina and human resource power, jobs providing new value could be born and raised within the large company, but in reality, this is not always the case. This is because large organizations generally experience systemic fatigue over time.

As an organization grows, work where means and ends are confused increases, and the amount of work aligned with the original purpose decreases. Furthermore, it becomes a siloed organization, making it impossible to achieve overall optimization, and both overall profitability and individual productivity decline. Along with this, the lifespan of the organization shortens, and as a result, anxiety about the lifetime employment system increases. Talent confident in their own work judges that the benefits of taking on challenges outside are higher and leaves. As a result, a decline in the quality of talent occurs, entering a negative cycle where even more excellent talent flows out.

The reason an organization enters such a negative cycle is that evolution stops due to a bias that unconditionally affirms what has been done and justifies the status quo without change. External talent plays the role of waking the organization up from this bias. By adding new stimulation from the outside, the organization can strongly recognize things that should be improved and perspectives that should be changed. Furthermore, to acquire the values necessary for new learning, they can unlearn conventional values. As the organization's metacognitive ability increases in this way, a self-cleansing effect is obtained, and it enters a new cycle of growth. This is exactly the same as how Yukichi Fukuzawa contributed to modernization by bringing in observations from foreign countries and enlightening the public.

It is often said that Japan's growth rate has declined over the past 30 years, and its global presence has diminished even when looking at the market capitalization of companies. Originally, it was necessary to carry out organizational reform at an early stage when signs of a slowdown in growth appeared, but labor market mobility did not easily occur. As a result, the low productivity of Japan's white-collar and service industries is among the lowest in developed countries.

A major reason why mobility did not increase is systemic fatigue related to labor laws. In fact, Japanese labor laws assume workers engaged in manufacturing processes in the manufacturing industry, and it is difficult to say that they correspond to the working environment of white-collar workers. Furthermore, the fact that the system assumes workers have overwhelmingly less power in the relationship between employers and workers also shows a divergence from reality in an environment of labor shortages. In this way, laws and systems have not kept pace with changes in industrial structure and the labor market. New frameworks such as white-collar exemptions are being tried through trial and error, but because the vast majority of judicial precedents regarding labor are disadvantageous to companies, the corporate side fears reputation risk and remains hesitant to carry out organizational metabolism.

At first glance, the Japanese labor system appears to protect workers, but because there is no mobility, people who have aptitudes in other places are tied to the same place. Furthermore, because people receiving high compensation for their labor continue to stay, it is impossible to appropriately distribute rewards to those with high levels of contribution, leading to overall stagnation.

While it is true that there are major issues with the legal system, I feel that without using that as an excuse, both labor and management need to understand that increasing healthy mobility is a benefit for both sides and will lead to the revitalization of Japan as a whole, and they must unite to quickly create precedents for a new framework.

I feel that Japanese organizations are finally beginning to circulate toward a more prosperous society by hiring professional talent to increase organizational competitiveness and wages.

Globally, human capital management is now considered to increase corporate value, and starting this year, information disclosure of human capital is scheduled to begin in earnest in Japan, centered on listed companies. By quantitatively disclosing information about the ideal state and the actual state and communicating it externally, companies will become serious about closing that gap. The trend of both companies and people doing their best toward improving human capital is irreversible.

On the other hand, a gap will likely emerge between organizations that can use this trend of human capital improvement to ride an upward current and those that cannot, and between people who can increase their own value and those who cannot.

Based on 20 years of experience, I will list the characteristics of organizations that can successfully utilize professional talent and people who can become professional talent. I hope you will use this as a checklist and aim to become a better organization and talent with higher added value.

● Quantitative Visualization: The current position of human capital management is quantitatively visualized, and goals include quantitative ones in addition to qualitative ones.

● Career Path: They understand that mid-career professionals do not think they will work just because they are paid, but also believe a career path is necessary.

● Speed: They understand that professional talent believes taking a long time to produce results leads to a decline in market value, and they provide support to produce results with a sense of speed.

● Transfers: They understand that while professional talent is willing to follow organizational decisions, they believe agreement is necessary for transfers.

● Transparency: They understand that attributes that do not exceed 30% are a minority and that it is difficult for their opinions to be reflected, and they take measures accordingly.

● Compensation: They understand that professional talent wants to receive fair consideration.

● External Equity: They strive to collect information on the compensation levels of others to ensure external equity, or ensure they can explain it.

● Manualization: They understand that if work is dependent on specific individuals and handed down orally, it takes a long time for handovers and external talent cannot start work immediately, so they put things into writing and manuals.

● Values: They understand that prioritizing "invisible values" can lead to rejecting talent from the outside, and they are tolerant of and try to include different values.

● Results: They do not work by the hour but place results at the center of their work.

● Emphasis on Output: They understand that output is important in professional work.

● Understanding the Source of Salary: They recognize that salary is generated from the revenue resulting from them creating value and receiving money from customers.

● Unlearning: They understand that discarding past habits leads to learning new things.

● Multiple Domains: They adapt to the times by gaining expertise in multiple domains without sticking to a single professional area.

● Metacognition: They recognize their own level within the whole.

● Breaking Limits: They do not place a cap on their own abilities based on attributes (gender, age, educational background, etc.).

Among the challenges in these organizational management cycles, talent management based on the visualization of individual experience and the skills and abilities (competencies) that support it is particularly important and highly difficult.

In the future, Kotora intends to launch a Human Capital Management Study Group to create good examples of HR technology and HR business partners that support this talent management, and contribute to the creation of a society with further improved productivity and added value.