Recruiting. (Special Advertising Section: Executive Search 2003).

AMID A WORSENING ECONOMIC recession, rising unemployment and failed economic reforms, Japan's recruitment and human resources industry is still finding ways to exploit the world's second biggest economy. A continuing downturn in the Japanese labor market has forced HR companies to reevaluate and improve their strategic approach to staffing and executive recruitment. They are now seeking to transcend domestic barriers by integrating more fully in the global marketplace, forging closer associations with foreign firms and an expanding pool of bilingual candidates. As Kevin Gibson, of Robert Walters, a Tokyo-based executive recruitment firm, notes: "There will always be a demand for bilingual Japanese finance, IT and HR professionals in Japan."

Still, adjusting to such a precarious and rapidly changing market will not be easy. Terrie Lloyd of DaiJob's executive recruiting division, Ambition Consulting, is strongly aware of the current pitfalls in the market. "Clients are hiring fewer people, so competition in the market amongst recruiting firms is more severe." The point is reiterated by Richard Bysouth, CEO of CareerCross, an online job board, who says that over the last few years "we have seen some big changes" in the job market in Japan. "The global downturn and the events of 9/11," continues Bysouth, "has meant a drastic cutback in hiring, with many companies basically going on hiring freezes. Even though there is still a big need for people with both English and Japanese language abilities and good skill sets, companies are a lot more concerned in finding exactly the right person and doing it as economically and effectively as possible." Yaeko Yonekura and Mr. Masaru Kidokoro, president and director of WISE recruiting, are similarly wary of a r apidly shifting marketplace. "Due to cost restraints for in-company training, the trend in recruiting services has shifted from temporary/part-time to full-time dispatching of staff. Which means to say, candidates who are experienced are more sought after."

While a recent decline in the domestic manufacturing base coupled with the ongoing bad debt crises has taken the luster out of Japan's finance and IT sectors -- bastions of internationally geared recruitment and HR -- there are signs of an upturn. An Asian Job index Survey released by international headhunting firm TMP Worldwide this February showed that the trepidation over hiring in Japan and throughout the Asian region might be nearing an end. With the majority of employers surveyed in Japan, South Korea and China expecting to increase permanent hiring in the first quarter of this year, the survey concluded that the outlook in these countries was "more optimistic." It said that in Japan, particular improvements in the legal, advertising and healthcare industries would result in an overall increase in permanent hiring. And though signs of an upturn remain ambiguous, a number of recruitment and staffing firms in Japan are eager to capitalize on what remains one of the world's most dynamic labor markets.

LABOR PAINS 

Traditionally, the recruitment industry in Japan has been focused largely on finding staff in the IT, finance and HR sectors for multinational firms and the increasing number of Japanese firms with foreign interests. But many firms are starting to broaden their horizons, as Kevin Gibson of Robert Walters notes. "Our business has changed significantly in the past three years, from one which was set up to bring foreigners into investment banks to one which recruits mostly bilingual Japanese professionals for an expanded range of industries, including real estate, luxury goods, retail, entertainment, insurance, manufacturing and consulting firms."

But having an international focus has been crucial to better fulfilling the demands of a tighter and more demanding executive placement market. "Being part of a 13 Country network that has many global relationships with some the biggest names in the Fortune 500 gives us greater senior level and exclusive access to clients," continues Gibson. "Also, we have a level of brand awareness with a large number of returning Japanese professionals who contact us about roles when they return to Japan. We actively approach Japanese professionals currently working offshore, focusing on Australia, the UK and the US - especially New York City."

The greater demand for bilingual staff in a globalized market has been met with a proliferation of specialized HR firms dealing in multi-lingual and bilingual staff for translation and interpretation services, and more. Creer is one such recently launched recruitment firm, explains spokesperson Sam Luu. "With clients from a wide range of different businesses, including large blue-chip companies, foreign-affiliated firms, and venture enterprises, Creer provide staff with excellent language skills to perform the tasks involved in the import/export business, or to work as interpreters, translators or bilingual secretaries," says Luu. The increased demand for foreign and bilingual staff has forced Creer to diversify from an interpreting and translation agency dispatching temporary staff, to a "special service covering all aspects relating to foreign languages," says Luu. Languages include not only English, but also French, Italian, and Chinese, to name but a few.

The general effects of the recession and labor slump have forced a number of recruitment and HR firms to significantly diversify their services. WISE, for instance, has expanded beyond a traditional HR service to provide translation, business communication and IT services like home page creation and system engineering. Having begun as a translation/interpretation services and DTP/Web design-focused business, WISE moved into recruiting in 1999. In addition to securities and investment companies, think tanks, advertising agencies, printing companies and beauty companies, WISE has turned into a business support service that "outsources experienced operations staff to companies for support in the intrasystem home-page design and creation or maintenance," say Yonekura and Kidokoro.

But amid the call to diversify, the demands for niche recruiting remain. Lloyd of Ambition Consulting says the company specializes in "Business Builders," who are "unique individuals well suited to activate and execute change in organizations needing to fix themselves." Ambition Consulting is thus leveraging off the recession to fulfill demand for individuals at the "senior sales and operations manager level in those industries most affected by the recent economic downturn," says Lloyd. These industries typically include telecommunications, insurance, banking, hospitality retail -- particularly fashion and consumer products, research, advertising, media and manufacturing.

CareerCross Japan's Richard Bysouth similarly describes his firm's attempt to address a gap in the recruitment market in Japan. "Having worked as a recruiter in Japan for many years, I had firsthand experience of how few resources there were available for both direct hiring companies and recruiters to try and find skilled and experienced staff who had fluency in both English and Japanese. The options available were expensive, unwieldy and most of all, not well-targeted. With the rapid increase in popularity of the Internet at that time and the success of other online job boards overseas, creating a web-based recruiting medium that focused on the needs of the Japanese bilingual job market seemed an obvious answer." By staying very focused" on the bilingual job market -- the CareerCross site is fully bilingual -- Bysouth says CareerCross have been not only been able to stay successful, but have been able to ride out the "dot bomb" phenomenon. "Since we started CareerCross we have grown into one of biggest, if n ot the biggest, of the online job boards for bilinguals in Japan, which is quite an achievement in this subdued market."

Elsewhere, A.C.E. International, a Tokyo-based executive recruitment and HR firm, deals with a broad cross section of clients and companies. Krishna Mahalingam, managing director of A.C.E., describes a client base ranging from small startup companies to Fortune 500 firms. But while A.C.E deals primarily with major international law firms, technology firms and financial entities, including insurance companies, Mahalingam says they have, like many other firms, been forced to further broaden their focus. "We have diversified our services from being exclusively focused on the financial sector to covering a much broader spectrum of industries. With our extended presence in Japan and our cultivated client base, we have a strong foothold and will continue to expand our client relationships and coverage to best deal with the current climate," he says.

Though both specialization and diversification have become important means to ride out the recruitment industry slump, experience in, and dedication to, the Japanese marketplace remain central ingredients to the ongoing success of a number of HR and recruitment firms. Markus Leach of JCI Consulting, for instance, argues that "longevity is a key to success in the recruiting industry," adding that he and his partner, Tim Ondo, have been recruiting in Japan for over 10 years. "Dedication and time put in has a direct correlation to success in any business, but particularly the recruiting business. I regularly place candidates I first met seven or eight years ago," he says.

In this vein, Tim Ondo of JCI believes that "size does matter," and argues that "an optimally sized executive search company" will consist of around seven to eight recruiters. "Any fewer than that," he says, "and you can't maximize the opportunities for either the client or the candidate. And any more than that leads to internal competition among recruiters that results in unethical practices. Our team operates as a close group who all trust one another and put the benefit of the clients and candidates they handle to the fore."

Mark Saft, representative director of Ingenium recruitment, agrees that "long-term relationships with our clients and candidates alike" is central to Ingenium's ongoing success. He relates this principle to what he calls a "vertical market focus." Ingenium maintains six separate practice groups: Financial Services, Technology, Consumer/Advertising, Professional Services, Life Sciences and Industrial. Each of these groups has between three and five recruiters who "specialize and who are intimately familiar with their respective industries and competitive landscapes," says Saft.

FUTURE TENSE 

So what then is the future for Japan's recruitment industry as the country's economy continues to chart a perilous, uncertain course? Kevin Gibson remains optimistic. "Executive recruitment will grow in Japan as long as the economy proceeds with restructuring. If Japanese firms become more open to Western business practices such as active mid-career hiring, the potential for the recruitment industry in Japan is limitless." Yonekura and Kidokoro of WISE agree that as the economic situation in Japan worsens, "the responsibilities and services of the recruiting industry will become more significant." But they also argue that "recruitment companies cannot simply rely on the standard dispatching services offered, but instead must actively produce new strategies which can further satisfy the needs and demands of clients."

For Lloyd of Ambition Consulting, recruiting is no longer just a periodic activity but has become instead a vital part of the overall solution of returning a company to an acceptable level of profitability. "It is time to offer clients what they need rather than what they can get. To do this, you really have to know and understand clients better, put your consultants in the client's shoes and do a lot of the thinking and innovation for the client. Basically, business development has become much more strategic, and only those recruiters with overall business experience can provide good strategies." Tim Ondo of JCI agrees that an improved, more specifically tailored service is the key. "To make a placement now requires a much higher level of dedication to both the client and the candidate, and this is one of the good results of the market downturn. Headhunting in Japan had a very bad reputation some years ago and it was somewhat justified. However, to thrive nowadays you've got to be highly professional and tim ely."

Many, including Bysouth of CareerCross, believe that the recruitment market in Japan is indeed beginning to mature and evolve. "Many of the big name, global recruitment companies have established a localized presence in Japan," he says, "while the shake out among the smaller, homegrown ones has meant that those left over are generally very focused on a particular area or industry." He does not see a return to the days of big expat salaries and almost constant hiring, but believes there will always be a need for good, experienced professionals who have ability in both languages.

Meanwhile, Mahalingam of A.C.E. remains cautious. "I think a lot of the weaker firms will be forced to withdraw, primarily because they have no strategy to cope with such a long-running economic downturn and are pessimistic about the future of the Japanese economy. I personally believe that there may be a dramatic upturn in the economy, but waiting for it to happen will prove fatal to anyone not on guard."

Ultimately, all agree that a stronger tie-up with global industry will ensure the success of the recruitment industry in Japan. Todd Miller, managing director of Ingenium, is accordingly hopeful. "While Japan continues to remain in an economic slump, it is at the same time becoming more open and integrated with the global economy, and thus we are seeing increased foreign investment in Japan." Still, the future, as ever, remains uncertain, and a combination of quality service and improved strategic imperatives will be crucial to the longevity of the HR and recruitment business in Japan.