Japan's headhunters wait for boon

August 25, 1993|By John E. Woodruff | John E. Woodruff,Tokyo Bureau

TOKYO -- It always gets darkest just before the dawn.

Among Japan's beleaguered few hundred executive headhunters, the belief is growing that the trick now is to survive the darkness until a dawn that many say will be unprecedented.

"The lifetime-employment system has been inching toward extinction for 20 years, and this recession is pushing it past the point of no return," says Isamu Yamada, president of International Search and Search Corp. and a 30-year headhunter.

"Now that Japanese companies are forcing professionals and managers to confront the reality that lifetime employment is dead, our business is going to grow by surges," he said.

But growth will belong only to the already-shrinking number of headhunting firms that survive the recession.

"Two years ago, we were located two floors higher with twice the space," Mr. Yamada said, gesturing around his firm's now-Spartan quarters.

"Downsizing is the only way to survive these times -- the number

of job placements by headhunters in Japan has shrunk by half compared with 1989 or 1990."

The number of headhunting firms, which grew by dozens a month in some stretches of the 1980s, also has shrunk, from about 450 to about 400, and will shrink further, he said.

"The headhunting business in Japan never was as big as the number of firms suggested," he explained. "Most of those 450 are one-man operations working out of the owner's residence. Many of them will go under before things get better, and many others will join bigger offices."

In Japan's lifetime-employment economy, executive headhunting never was much of a business until the 1980s, when foreign firms flooded into Tokyo to seek a piece of the "bubble economy."

Thousands of foreign managers turned to Tokyo's small cadre of headhunters for help in luring Japanese out of the security of big-company jobs.

That business all but dried up as the global recession of the past three years forced hundreds of foreign companies to slash their Japan operations.

But now the same recession is pressing even the best-run Japanese companies into last-resort steps such as closing factories, laying off workers and hounding middle managers into "voluntary" early retirement.

"The same companies that created the lifetime-employment system are now being forced to dismantle it," said Masaru Eshima, president of Tokyo Executive Search Corp., this city's affiliate of the U.S.-based Ward Howell global headhunting network.

"The greatest immediate impact, of course, is on the people who lose their jobs," he said. "But the greater long-term impact on the lifetime-employment system will be through the younger manager, someone who has maybe 10 years at the company and who now sees his own mentor getting the dreaded tap on the shoulder.

"Company loyalty was always weaker in that younger generation, and now these people see older people's loyalty being rewarded with brutality."

When those younger people begin to look around, places like Mr. Yamada's ISS and Mr. Eshima's TESCO say they intend to be ready with management job offers from midsized and smaller Japanese companies.

"The entire Japanese management system has geared itself to the education mama who wants to get her son into a top university so he can get a job with a big-name corporation," Mr. Yamada said. "That has always made it hard for midsized and small companies to attract quality management."

For those companies, the fading of the lifetime-job system spells a chance to attract well-trained mid-career managers, he said.

"The big companies will have to go on hiring top graduates and providing their own training programs, because that's the only management-training system Japan has," Mr. Eshima said. "But after this recession, managers who discover in their 40s that they're no longer getting rapid promotions will get the message and start to look around before it's too late."

Mr. Yamada said, "If you really want to help a company grow, then at about age 40 you should head straight for a medium-sized firm. They can't afford management-training programs, so they constantly need new infusions of the skills the bigger companies teach."

For Japanese headhunting firms, changes such as those would force radical restructuring, especially in marketing methods.

Up to now, their juiciest years have been the ones when they served foreign companies seeking to recruit Japanese managers and professionals.

That emphasis is still visible in everything from their slick English brochures to the unusually high foreign-language skills of their staffs.

Mr. Yamada and Mr. Eshima aren't suggesting that they intend to turn away any foreign clients. But both say the emphasis is steadily changing toward helping smaller and midsize Japanese firms choose among the slowly growing number of midcareer prospects who are already beginning to look for ways out of bigger companies.

"For the first time, there is a prospect that Japan will have an executive-search business that mainly serves its own market, the way similar firms do in Europe and the States," Mr. Eshima said.

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