It was an honour to be interviewed by the prestigious ACCJ Journal, published to an audience of CEOs and business leaders. The article Future Ready is a good read. However, they backed away from the real issue at hand (the Japan talent crisis), in favour of a softer tone.
Table of Contents
- Why Are We In A Talent Crisis?
- What Companies Are (Not) Doing About It.
- What Should Companies Do About It?
- How Your Future Could Look…
Japan (especially in technology) is in a severe talent shortage crisis, and ACCJ acknowledge this. “We have a big problem. It’s a serious talent crisis that is going to get much worse”, was the quotation of mine they highlighted. That can sound heavy and scary, but without the substance and detail it also can sound like fear-mongering or hyperbole. The default reaction from business leaders to that message is usually a concerned nod, but forgotten quickly. “HR already knows this”, “everyone is in the same boat”, or “of course recruiters tell us this”.
Why Are We In A Talent Crisis?
Let’s get specific and clear. The Japan Talent Crisis describes a severe shortage of qualified people relative to the human resource expectations and demands of companies. “Severe” talks to the serious nature of this problem. Given typical hiring parameters, there are as many as 13 vacant jobs for every 1 matching candidate with active job applications. That would mean at least 12 disappointed companies left standing there like a cruel musical chairs game.
13 vacant jobs for every 1 matching candidate with active job applications … at least 12 disappointed companies left standing there like a cruel musical chairs game.
“Qualified”, “relative” and “expectations and demands” speak to how the talent shortage is not just a general lack of humans (Japan also lacks humans), but a lack of available talent with the desired skill sets and experience. The types of candidates that companies want simply do not exist in enough quantity to fill the huge demand. Everyone wants a bilingual Japanese tech product manager under 35 years old with excellent communication skills, 5+ years of experience and some exposure to software engineering and overseas culture (plus within a tight budget). The expectations bar is set too high for the majority of available real-life candidates to reach.
The talent crisis is not just a general lack of humans, but a lack of available talent with the desired skill sets and experience… the expectations bar is set too high for the majority of available real-life candidates to reach
Japan is in a spiralling population decline. Japan’s graduate students are not choosing to pick up the skills (e.g. tech and software engineering) that corporate Japan is demanding. The graduate numbers decrease every year. The few people who do have the “in demand” skills are leaving. Some are leaving for bigger paydays in the Silicon Valley, leaving for cultural experiences, or simply retiring altogether. There are no new people developing the skills to replace those leaving. Worse; there aren’t even enough people to whom you could train those skills, even if companies would be willing to hire and train.
More demand, more people leaving, fewer people able to replace them. We are in a critical talent crisis that will keep getting worse.
What Companies Are (Not) Doing About It.
In ACCJ’s article, they talk a lot about the three “usual” ways companies think about this challenge. Moving away from “compensation based on age and seniority”, inclusive & diversity programmes, and offshoring engineering to India.
Dear Reader: none of these things will save you. They’re all easy procrastinations, something your HR can busy themselves with that achieves nothing and costs money. Yes, it can be written nicely into a yearly report with stock photos and line-graphs of “employee satisfaction”, but it won’t help you navigate the coming worsening crisis.
Offer the candidates more money? “Offer the candidates more money” is the laziest advice that a recruitment consultant can give. It isn’t wrong (of course) but it is lazy and not helpful. How much more? Will that not create a salary arms race (see: 2021~22 and the subsequent layoffs)? What if we cannot afford that in our financial plans?
Be Diverse And Inclusive? Being “diverse” and “inclusive” and following the Current Year cultural buzzwords might help you to not seem out of touch, but don’t trick yourself into thinking you’ve solved your talent crisis. Zero impact, and it doesn’t even feature in the top 10 reasons candidates accept or reject an offer.
Offshoring engineering? This has very mixed (mostly negative) reviews in the market, and worsens Japan’s ability to genuinely compete in a digital age – not to mention it is not even “cheap” these days with the currency situation and oversight overhead costs.
What Should Companies Do About It?
Business leaders, start by taking this issue out of HR and TA hands. Broad strokes, but they have been aware of the problem for years and done nothing about it. Tackle this directly under your own influence as your most critically important business issue. The Japan Talent Crisis is here now and getting worse. If you wait even a few years, you will not be competitive, it will be too late, and your business will lose.
I suggest executing a simple 4-step action plan ASAF (can we call it ASAP by saying Pheedback?) now:
- Align: be clear with your senior staff that the talent crisis is a critical and important challenge that needs solving seriously from now (not tomorrow, next quarter, “some day when it gets worse”, etc).
- Strategise: develop a “full stack” talent strategy that includes a skills map (include fusion skills) and development plans, EVP and attraction tactics, agency recruiting investment, onboarding and retention planning, and offboarding/feedback cycles. You’re welcome to commission me to do this for you if you lack high calibre internal resources or time.
- Action: assign powerful and capable people to run your strategy, with incentives for milestones reached and consequences if missed. Give them the decision-making power and resources necessary and sufficient to achieve what you’ve planned.
- Feedback: follow up regularly with your key players to refresh information, realign, restrategise if needed, and react. This is where you make things happen, and make sure you get where you need to be.
How Your Future Could Look…
If you do this now and do this well, in 2030 when the Japan Talent Crisis has doubled in extremity, your company is one of the very few who can survive. Your company has a good image, a healthy hiring pipeline, good retention and development, and healthy external partners fighting for you. You’re able to fill most of your vacancies in a timely manner. Candidates happily accept your fair (but not overpriced) offers.
If status quo continues, by 2030 we forecast that only 1 in every 20 tech job vacancies can get filled. We see the best talent getting sucked into the few outstanding good companies, leaving every other company even more desperate to hire from an ever shrinking pool of uninterested candidates, and ultimately dying.
The Japan Tech Talent Crisis is the biggest and most critically important challenge facing Japanese companies right now. It is time companies started getting serious about it.
