Morgan McKinley Japan Hirin Market Update Nov 2011

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Morgan McKinley | Japan

Hiring Market Update - November 2011

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Hiring Market Update | Japan November 2011

INTRODUCTION

This year has been a difficult one for the people of Japan who have had more to cope with than the usual

business cycles and challenges. The large scale devastation of March’s earthquake and tsunami brought

tragedy and destruction to the lives of many Japanese people. A faltering global economy and turbulent

financial markets have compounded this, further impacting the lives of many professionals over the course

of the year.

It is a testament to the strength of the Japanese spirit and culture however, that despite the widespread

damage and disruption the March 2011 earthquake initially caused to daily business activity, only eight

months on from this disaster business activity levels are relatively healthy in both financial services and

commerce & industry. In Tokyo and further afield, the speed at which the community has managed to

recover is exemplary. Japan and its people have been resilient in an extremely testing business environment

and this is reflected in company performance, filtering through to hiring activity. We have seen a return by

most of those who left Japan in the immediate aftermath of the earthquake. The markets rebounded,

followed by another decline, however current recruitment activity is reasonably buoyant bearing in mind the

events the country has faced this year.

We recently surveyed over 1,050 senior level operational and HR managers working across the financial

services and commercial sectors in Asia Pacific. As part of our ongoing commitment to keep our clients and

candidates up to date with the latest trends in the recruitment sector, we asked them about their hiring plans

for 2012 and the challenges they expect to face in the Japanese market over the coming year.

In this year’s Hiring Market Update, you will find a summary of Morgan McKinley’s findings. To make this

report as interesting and relevant as possible to readers, we have separated the results for financial services

and commerce & industry. We trust that you will find this information useful and we welcome your feedback.

Lionel Kaidatzis | Managing Director | Morgan McKinley Japan

T: +813 5403 7064 | E: [email protected]

mailto:[email protected]



KEY FINDINGS

Financial Services

Global uncertainty is a concern for 60% of respondents working in financial services as they

anticipate it will have an effect on Asia Pacific as a growth market.

43% of employers expect to hire in some areas of their business and reduce headcount in others

over the next 12 months, whilst 35% are still unsure of their recruitment plans for the period.

Of those firms planning to recruit, 85% expect to make replacement hires.

Compared to hiring volumes in the the past 12 months, 60% of those surveyed expect that hiring in

the coming 12 months will be similar.

As with last year, talent retention is the key personnel focus for most hiring managers in Tokyo.

Commerce & Industry

Similar to financial services, our survey found that 52% of respondents believe that global

uncertainty will significantly affect Asia Pacific as a growth market.

Headcount allowance/restrictions were cited by 53% as having the most significant impact on hiring

levels however, 55% expect staff numbers to remain similar to the level over the last 12 months.

The majority of respondents (58%) anticipate that their organisations will be hiring only and not

reducing headcount in the next six months.

The hiring that respondents forecast is expected by 60% to be replacement of those moving on to

new roles.

As was the case last year, talent retention was seen as the main personnel challenge over the next

12 months.



FINANCIAL SERVICES

Market Insight

In Morgan McKinley’s survey of financial services professionals across Tokyo in October 2011, concerns

over the global economy were viewed by a large proportion of respondents (60%) as being a key issue that

could impact growth in Asia Pacific compared to 52% of those working in commercial businesses who were

asked the same question. Prime Minister Yoshihiko Noda recently commented in the lead up to the G20

Summit that Japan is ready to help stabilise the eurozone – reflecting how quickly European debt issues

have rippled across the world with potentially crippling implications for many economies around the world if

not expediently resolved.

The recent slowdown in business activity in Europe is now impacting Asia Pacific markets and is reflected in

employers’ views on hiring over the next 12 months. The top two factors expected to impact recruitment

levels across the financial services sector in Tokyo were identified as headcount allowance/restrictions (63%)

and company or team performance (37%).

Cost cutting measures, as well as internal changes such as growth activity and restructuring, were each

cited by 25% of respondents as being the next most significant factors impacting recruitment activity across

financial institutions in Tokyo. External changes, such as M&A were viewed as having the least potential

impact on hiring, indicating that employers across the banking sector are currently closely focused on

aligning teams internally to drive business performance.

Recruitment Prospects

The majority of respondents feel that there is likely to be a reduction in staff numbers in their organisation

while at the same time there will be additional hiring in some other areas of the business, indicating that the

outlook for hiring is relatively balanced across financial services organisations over the next year, although

growth expectations are low.

Just over a tenth of hiring managers were confident that the next six months would see only hiring taking

place and no decrease in staff numbers in their organisation, however a similar amount (11%) anticipate the

exact opposite – suggesting a lack of visibility in the hiring landscape in the short term. The bulk of hiring is

likely to be for permanent roles according to 90% of those surveyed.



If further hiring is likely to take place over the next 12 months, what do you think is likely to drive it across your organisation?

It can be difficult at this stage to anticipate resource requirements for temporary or contract positions and

this can change significantly throughout the year. Currently, 24% of respondents expect hiring to be

predominantly on a temporary basis.

The largest group of respondents (85%) anticipate that recruitment activity will in the main be replacement

hiring, as might be expected. However, despite uncertainty and some lack of visibility for the coming months,

40% of those surveyed still expect to see additional employees join their companies over the next 12 months

rather than seeing vacated positions not being filled as was more typical at the lowest point of the downturn.

It is unsurprising therefore, that compared to the past 12 months, most respondents working in financial

services said they expected hiring volumes to remain similar over the coming year, while 11% are confident

that recruitment will be on the rise.



In terms of volume, how do you think hiring across your organisation in the next 12 months is likely to compare to the previous 12 months?

Challenges for Managers

The survey also asked hiring managers across

financial services what they felt would be the main

personnel challenges they would be likely to face over

the next 12 months. Talent retention was cited by

56% of respondents as their most pressing issue,

followed by talent attraction – identified as a concern

by 40%.

This is similar to last year’s survey, indicating that the

sector remains competitive to some extent and also

that the focus on improving business performance in

areas where it has declined will be driven by hiring the

very best talent in the market.

The results this year also reflect the impact of the last few months in the banking sector; talent retention and

attraction were the most important factors on the agendas of hiring managers last year, but a higher number

this year confirmed that these two issues would be their top priority.

As a hiring manager, what do you think are the main personnel challenges you will face over the next 12 months?



A number of strategies are likely to be implemented to address the talent retention issue. 40% of those who

specified that this would be their focus plan to use performance management as a way of keeping their best

people on board. Interestingly employee brand engagement will be used by 37% of hiring managers to

encourage employees to remain with their organisations. This could be a sign that employers are seeing

increased interest from professionals in financial institutions based on the reputation of their brand in the

market, with decisions to move taking this into account as well as the specifics of the actual job and the team

they will join.

What, if any, strategies are you planning to put in place to combat talent retention issues?



COMMERCE & INDUSTRY

Market Insight

The majority of survey respondents (52%) working in commercial sectors (including luxury & retail brands,

pharmaceutical & medical device, social media and IT companies) also identified that the state of the global

economy is likely to have a significant impact on Asia Pacific as a growth market. Just over 25% do not see

economic issues having any effect on growth in the region. This viewpoint may be guided by industry and

manufacturing remaining relatively buoyant, with the country’s industrial output only falling in October 2011

for the first time in six months.

Headcount policy and the company or team’s performance were seen as the two factors that would

predominantly impact hiring levels over the next 12 months, with 52% and 41% respectively indicating them

as key. Cost cutting was seen by a quarter of those in financial services as being important, whilst only 5%

of those working across commercial businesses felt this way; a sign of the different operating environments

for the banking and financial sector compared to commercial businesses across Japan in recent months.

What factors do you foresee having an effect on hiring levels within your business/team over the next 6-12 months?



Do you anticipate that your organisation will be reducing headcounts or hiring (or both) in the next six months?

Recruitment Prospects

An encouraging 56% of respondents in commercial

businesses anticipate that employers will be focusing

only on hiring in the next six months, while 23%

indicated there would be headcount reduction at the

same time as hiring taking place in other areas of the

business.

This painted a very different picture from answers given

by financial services professionals and suggests a more

positive outlook from those working in commerce &

industry. In particular only 4% expected to see staff

numbers reduce with no hiring in the next six months.

Nearly a third believe hiring will be fixed-term contracts,

and 95% anticipate permanent hiring in their business. Although three quarters think that recruitment will be

focused on replacements for vacated roles, 60% forsee additional employees being taken on over the

forthcoming 12 months.

Overall it is anticipated by hiring managers that recruitment will be relatively similar over the coming 12

months to what it has been over the last year. Nearly a third (31%) feel that it will increase, compared to

15% who see recruitment activity falling, so despite the complexities of the global economy there is positive

sentiment coming from employers across Japan’s commercial organisations.



Challenges for Managers

When it comes to the priorities for those handling HR issues, the view across commerce & industry in Japan

differed to those working in financial services, with 51% identifying talent attraction as the main personnel

issue they expect to face, followed by talent retention (45%). This was a reversal of the views held in

financial institutions. To combat the issue of staff leaving, increasing training and development opportunities

was seen as the best solution by the largest group of respondents (48%). Performance management was

identified as the next best approach to retaining talent (30%).

What, if any, strategies are you planning to put in place to combat talent retention issues?



CONCLUSION

In recent years, numerous companies have outsourced non-critical functions outside of Japan in order to

lower their cost bases. For the majority of companies these off-shoring processes are now complete. If we

analyse the last three years of our internal data, most of the recruitment that has taken place has been

replacement hires, with headcount added in some high growth industries and functions.

Recruitment within commerce & industry has been reasonably consistent over the past 18 months

(excluding the immediate aftermath of March 2011), although it is fair to say that some sectors have

performed better than others. Demand for professionals has been particularly high from pharmaceutical

companies, as well as some IT and social networking firms.

Financial services recruitment tends to be far more seasonal, with the majority of banks and other financial

institutions undertaking the bulk of their hiring from mid-Q1 to the end of Q3. This year proved to be no

different and although the effects of March’s earthquake resulted in a subdued Q1, it was quickly balanced

by high levels of hiring activity in Q2. More recently, turmoil in global financial markets has restricted

recruitment to replacement hires and business critical growth hires only; a trend that looks set to continue

into early 2012.

Overall, the results and commentary we received whilst conducting this survey were in line with our own

predictions. We expect recruitment within commerce & industry to hold steady over the next 12 months,

however there is less clarity within the finance sector. Similar to 2010, we are likely to experience a muted

Q4 this year, although instead of the threat of a ‘double dip recession’ we now have the ‘eurozone crisis’. It

is a remarkably similar picture to that of 12 months ago.

We hope this research has provided interesting insights into future trends within the professional jobs market

in Japan. To discuss any of the points raised or your recruitment requirements, please contact Morgan

McKinley on +813 5403 7073.

morganmckinley.com

Level 17 Holland Hills Mori Tower

5-11-2 Toranomon Minato-ku

Tokyo 105-0001

Japan

Tel: +813 5403 7073

Morgan McKinley Japan Hirin Market Update Nov 2011

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Transcript of Morgan McKinley Japan Hirin Market Update Nov 2011