[Special Feature: Rethinking Japan's "Way of Working"] Rikako Onishi: Organizations that Leverage Professional Talent, and Talent that Can Become Professionals

After graduating from the Keio University Faculty of Economics, I joined the Long-Term Credit Bank of Japan (now SBI Shinsei Bank). Established after the war with the purpose of providing long-term funds to industry, the bank was known by the abbreviation "Chogin" and was an entity that supported post-war economic growth; however, 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 change completely. However, during the industry transformation that occurred in the financial sector 25 years ago, the moment the shareholders changed and new people entered, the organization changed significantly. At that time, as a 27-year-old struggling to play a part in organizational reform within the headquarters' planning section, 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 individuals.

The recruitment service, our founding business, is one of the methods business leaders take when they consider hiring talent from the outside to develop their business. 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. Even when taking the approach of talent recruitment among several reinforcement measures, there are various 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 speaking 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 job you want them to do, define the persona and skill requirements necessary for it, determine the compensation for that job, 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 exactly 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 assumes a job-based personnel system, it did not become the mainstream recruitment method for large Japanese companies, which assume a "membership-based" personnel system centered on "generalist tracks." 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 (SMEs) to increase their specialization. In recent years, however, mid-career recruitment by large companies has become active. In fact, while the number of mid-career hires 20 years ago halved at small companies (fewer than 100 employees) from 57% to 32%, it nearly tripled at large companies with 1,000 or more employees from 13% to 36% (*1). Correspondingly, the recruitment market has grown from a scale of 80 billion yen to over 500 billion yen in the last 20 years (*2).

The job market is expanding in this way, and the major reason is that the number of jobs providing new value is increasing due to the sophistication and acceleration of business and the diversification of customer needs. Originally, if large companies had the stamina and human resource strength, jobs providing new value could be born and raised within them, but in reality, this is not always the case. This is because large organizations generally suffer from institutional 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 total optimization, and both overall profitability and individual productivity decline. Along with this, the lifespan of the organization shortens, and as a result, anxiety regarding the lifetime employment system increases. Talent confident in their own work judges that the benefits of taking on challenges outside are higher and leaves. Consequently, 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 growth cycle. 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 corporate market capitalization. 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 mobility did not increase is institutional 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 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 in labor disputes 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 different places are tied to the same spot. Furthermore, because people receiving high compensation for their labor stay as they are, 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 rather than using that as an excuse, both labor and management need to understand that increasing healthy mobility is a benefit for both sides and, by extension, will lead to the revitalization of Japan as a whole. We must unite and urgently create precedents for a new framework.

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

Globally, human capital management is now considered to enhance 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 current reality 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 to aim for 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; they 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.

● Openness: They understand that attributes that do not exceed 30% are minorities 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 compensation.

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

● Manualization: They understand that if work is dependent on specific individuals and passed down orally, it takes a long time for handovers, preventing external talent from starting work immediately; therefore, they document and manualize work.

● Values: They understand that overemphasizing "invisible values" can lead to the rejection of external talent, and they strive to be tolerant of and inclusive toward 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 the value they create and the money received from customers.

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

● Multiple Domains: They adapt to the times by gaining expertise in multiple domains rather than sticking to a single professional area.

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

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

Among the challenges in this cycle of organizational management, the ones that are particularly important and highly difficult are talent management based on the visualization of individual experience and the skills and competencies that support it.

At KOTORA, we intend to launch a Human Capital Management Study Group to create good examples of HR technology and HR business partners that support this talent management, contributing to the creation of a society with further improved productivity and added value.