How Recruitment Agencies in Japan Maintains Job Market Dominance Despite the Internet
There is plenty of oddities about getting a job in Japan. For new graduates, the most notable is the mass hiring of new graduates that are not tied to specific positions. A month or two of group training that gets the newbies excited about the company is followed by assignments to different departments that are made without consideration for what the new employees want to do themselves. In the olden days, the first assignment will be followed by new assignments that also align more with the interests of the company's needs at the moment, rather than the employee's desire for a certain career.
Unfortunately, the employee's attempt to make a dramatic career change, in the form of simply quitting the company leads to s/he facing up another oddity of the Japanese labor market. While the idea of applying for jobs online has become as common in Japan as elsewhere, with the same types of job listing sites found all over the globe, unless it is the case elsewhere, many (if not the vast majority) of jobs that are most prominently seen on Japanese job search sites are posted not by the companies looking for employees, but recruitment agencies.
Few business models are as simple and timeless as that of the recruitment agency. By introducing workers to companies that currently need workers, these agencies can extract a fee equivalent to a certain percentage of the worker's salary once the worker is successfully hired from the initial introduction. As the number of workers on profile goes up, successful agencies attract more corporate clients, in turn boosting revenues from more frequent matchings of employees with higher salaries. With little more than personal connections needed to start a recruitment agency, it is no wonder that there have been so many of them around since the beginning of time.
Yet, the development of the Internet, for one thing, was supposed to cut out middlemen like the recruitment agencies. In an age when thousands upon thousands of job postings and job seekers are available to view with a click of a button, it should be much easier to bypass the need for introduction by middlemen who supposedly have a disproportionate amount of information compared to the employers and the potential employees. As the Internet provides easier access to a larger amount of information, recruitment agencies can no longer effectively leverage monopoly on employment information like they used to.
And the incentive for bypassing the recruitment agencies are certainly there, at least for the employers. Employers pay a large chunk of money to recruitment agencies to access a talent pool that they cannot access themselves. But more often than not, recruitment agencies themselves are hamstrung by limited access to different talent pools, forcing companies to coordinate with multiple agencies just to get a good diversity of candidates for open positions. The cost for human resources departments to manage streams of resumes from different recruitment agencies is also time- and money-consuming, especially considering that most candidates will be rejected.
But the supposed efficiencies of the Internet in providing direct access to job seekers have been largely negated in the Japanese case by recruitment agencies that are willing to spend on marketing for job search sites and different types of advertising to grab the attention of the job seekers. In fact, the most prominently displayed jobs in major Japanese job search websites direct applications not to the companies looking for workers, but the recruitment agencies contracted by the agencies to help find candidates. Similarly, billboard ads on the streets and sticker ads on trains make sure job seekers know which major recruitment agencies to turn to when they are thinking about switching jobs.
Essentially, by aggressively pushing for greater visibility of their own work, recruitment agencies are boldly proclaiming their continued relevance in the Internet age. Ironically, the money that companies pay to get the agencies to help them find candidates are partially spent to make sure that the companies have more and more difficulties to get in touch with candidates by themselves, without the support of the agencies. With more investments to push themselves to prominent spots online, recruitment agencies have made the Internet their playground while sidelining the actual employers.
Of course, all companies are looking for the best candidates at the lowest cost and effort. The Internet was supposed to be the tool to cut out the middlemen for hiring. Yet, the Japanese case shows that the middlemen can strike back. But tweaking their marketing models for the Internet age, before their slow-moving corporate clients can come up with strategies to cut them out, recruitment agencies in Japan have adeptly transitioned into a new era despite the loss of monopoly on access to talent pools. The success of the transition shows that a "traditional industry" can still succeed in the cyberspace if it reacts fast enough to accommodate changes.
Unfortunately, the employee's attempt to make a dramatic career change, in the form of simply quitting the company leads to s/he facing up another oddity of the Japanese labor market. While the idea of applying for jobs online has become as common in Japan as elsewhere, with the same types of job listing sites found all over the globe, unless it is the case elsewhere, many (if not the vast majority) of jobs that are most prominently seen on Japanese job search sites are posted not by the companies looking for employees, but recruitment agencies.
Few business models are as simple and timeless as that of the recruitment agency. By introducing workers to companies that currently need workers, these agencies can extract a fee equivalent to a certain percentage of the worker's salary once the worker is successfully hired from the initial introduction. As the number of workers on profile goes up, successful agencies attract more corporate clients, in turn boosting revenues from more frequent matchings of employees with higher salaries. With little more than personal connections needed to start a recruitment agency, it is no wonder that there have been so many of them around since the beginning of time.
Yet, the development of the Internet, for one thing, was supposed to cut out middlemen like the recruitment agencies. In an age when thousands upon thousands of job postings and job seekers are available to view with a click of a button, it should be much easier to bypass the need for introduction by middlemen who supposedly have a disproportionate amount of information compared to the employers and the potential employees. As the Internet provides easier access to a larger amount of information, recruitment agencies can no longer effectively leverage monopoly on employment information like they used to.
And the incentive for bypassing the recruitment agencies are certainly there, at least for the employers. Employers pay a large chunk of money to recruitment agencies to access a talent pool that they cannot access themselves. But more often than not, recruitment agencies themselves are hamstrung by limited access to different talent pools, forcing companies to coordinate with multiple agencies just to get a good diversity of candidates for open positions. The cost for human resources departments to manage streams of resumes from different recruitment agencies is also time- and money-consuming, especially considering that most candidates will be rejected.
But the supposed efficiencies of the Internet in providing direct access to job seekers have been largely negated in the Japanese case by recruitment agencies that are willing to spend on marketing for job search sites and different types of advertising to grab the attention of the job seekers. In fact, the most prominently displayed jobs in major Japanese job search websites direct applications not to the companies looking for workers, but the recruitment agencies contracted by the agencies to help find candidates. Similarly, billboard ads on the streets and sticker ads on trains make sure job seekers know which major recruitment agencies to turn to when they are thinking about switching jobs.
Essentially, by aggressively pushing for greater visibility of their own work, recruitment agencies are boldly proclaiming their continued relevance in the Internet age. Ironically, the money that companies pay to get the agencies to help them find candidates are partially spent to make sure that the companies have more and more difficulties to get in touch with candidates by themselves, without the support of the agencies. With more investments to push themselves to prominent spots online, recruitment agencies have made the Internet their playground while sidelining the actual employers.
Of course, all companies are looking for the best candidates at the lowest cost and effort. The Internet was supposed to be the tool to cut out the middlemen for hiring. Yet, the Japanese case shows that the middlemen can strike back. But tweaking their marketing models for the Internet age, before their slow-moving corporate clients can come up with strategies to cut them out, recruitment agencies in Japan have adeptly transitioned into a new era despite the loss of monopoly on access to talent pools. The success of the transition shows that a "traditional industry" can still succeed in the cyberspace if it reacts fast enough to accommodate changes.
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