Are Japanese Companies Too Inflexible When They Hire?
The interview process is a key part of recruitment. CV submission, conversations, testing rounds and formal interviews are par for the course, especially at executive level. After all, a company must be as sure as it can that the candidate is right for them.
But in the Japanese market, David Swan suggests that some companies go far beyond diligence. These companies, he says, are far too inflexible, and miss out on some of the best talent because of it. But is it all cultural rigidity, or is there a more subtle issue at work?
Problem of “fit and culture” in the office
A key element Swan is quick to highlight is the emphasis modern companies place on fit and company culture. In his experience as a recruiter, this was less defined in the past, with many employers seeing it as a benefit, not an essential part of recruitment, especially when it came to milder issues.
But why is it such a problem? Because, Swan explains, the emphasis on fit and culture cuts entire swathes of experienced, high-performing candidates out of the talent pool. One of the best examples, he feels, is the older members of the workforce. There is a wealth of knowledge and insight that remains untapped, but is overlooked because they do not fit with the company’s image of being young and innovative. Swan himself has seen candidates clearly qualified for a position face rejection for this alone, and when he considers why, notes a particular point of discord in modern corporate culture.
“I think, funnily enough, the older generation had stricter lines between work and personal lives. Work was somewhere you came to do your hours, and then you left to go back to your own life,” he says.
“Nowadays, work creeps into your social life: quizzes, nights out and other social activities. If you’re spending more time with your colleagues then you have to, fit and culture are important — but does that expectation have to be the norm?”
Perhaps more importantly, however, is why this is such an issue in the Japanese workplace in particular.
The seishain trap: Why hiring the wrong employee is bad news in Japan
Japan is widely known for its stringent worker rights, and the status of seishain (regular company member) is the pinnacle of that protection. A seishain is incredibly set in their position, with dismissal almost impossible unless the company is facing severe financial hardship, or in cases of gross misconduct. They also receive regular bonuses, allowances and retirement benefits — a great deal for any employee who wants job security.
While there are drawbacks, such as bundled-in overtime, and the expectation of company loyalty, they are generally accepted. But, Swan says, what often isn’t considered is how these protections make companies think about recruitment and hiring.
“The issue with the seishain system is that it’s impossible to let someone go for underperformance or being unsuited to their role,” he explains. “That isn’t to say I want workers to have less rights, but when being a seishain means that employee is yours until they choose to leave, it means companies have to be extremely risk-averse when hiring.”
“When companies have a dispute, it ends up in arbitration at a labor tribunal, which often only favors the employee. When the system is slanted against employers this way, they’re going to have to rely on a workaround.”
The haken system: Potential locked away
That workaround was born in 1985, but deregulation in 1999 and 2004 made it a much more viable solution: the haken, or dispatch, employment system. Instead of being a full-time company employee, a haken employee works for a central dispatching company, who loans them out to other companies for fixed periods of time.
It also is stripped of almost all the strengths of the seishain system. Employees on a haken contract rarely receive bonuses, and promotion opportunities are rare, since they are not employed by the company that they spend their time working for. Job security is also significantly weaker, as the hiring company can cancel their contract with the dispatch company at the end of the fixed period, and the employee has no recourse.
This form of employment is growing more common, with education, technology and even administrative work shifting in recent years. But, as Swan explains, this system creates more harm than good, even for the companies who use it:
“The problem with haken, when it comes to recruitment, is that it limits the talent pool significantly. Some companies refuse to hire former haken employees full time, but they’re missing out on some of the best employees they could ever have.”
“A great example of how unfair this system is comes from how it affects women — many women in administrative positions work haken contracts because that’s the system the industry uses. But then they struggle to move into a more stable role because of the haken bias, and you end up with these incredibly qualified, experienced female candidates jumping from temporary position to temporary position. It’s a complete waste.”
What needs to change
Swan’s opinion on what needs to change comes from his background in recruiting. He recalls a situation where a client, searching for senior positions, complained they could not find any good resumes. But, when going through the provided options, he noticed they were declining them for relatively trivial reasons. So the inflexibility is still there, but the solution he proposes is blunt: remove the reasons for that inflexibility and let employees perform.
“The haken system exists because the seishain system doesn’t allow for companies to deal with employment issues that are realities in employment. Things like employees not performing or lacking key competencies for the role — businesses need a way to deal with that.”
“Haken has its place: for temporary assignments, but the bias it creates in hiring is a major issue. After all, if you’re hiring, shouldn’t you want the best person for the job?”
