The Diversity Deficit: How Japanese Corporate Recruitment Has Failed to Move with the Times

Lost in the Crowd

Crowds of young people, somewhat ill-at-ease in their matching black suits, are a common sight at this time of year in the business districts of Tokyo. The height of the spring recruitment season is upon us again, and another batch of young hopefuls is on the hunt for job offers that will see them enter the workforce in April 2013. But in the tough economic climate that has prevailed since the Lehman Brothers collapse and the global financial crisis that followed, as many as 10% of students are failing to land an offer of full-time employment by the time they graduate. With huge numbers of jobseekers applying to the most prestigious firms, employers claim not to discriminate against students on the basis of the university they attended. But the reality is that students from all but a handful of elite institutions are considered surplus to requirements, and rarely get an interview at the top firms.

Japan’s corporations are in the doldrums. Whether they can turn things around depends to a large extent on whether they can successfully recruit sharp, individualistic talent capable of thinking outside the box. But the job-hunting process encourages a herd mentality and tends to strip students of their individuality. The truth is that companies have not changed their values as much as they claim. The conditions for young graduates are tough and getting tougher. The situation is a microcosm of Japanese corporate society as a whole, where diversity has failed to make any substantial headway.

Most Japanese companies still recruit new graduates en masse in April each year. There are exceptions—some companies recruit throughout the year, hiring returnee students who completed their education in countries with a different academic calendar, people changing jobs mid-career, and those who have been on the job market for a year or more since graduation. But such companies are a minority. The basic rule is still that each new cohort of freshly minted graduates joins the workforce in April each year, when new hires are trained from scratch in the rudiments of corporate life. There is no guarantee that this training process will pay much attention to whatever subject a student may have specialized in at university. Once a person graduates and joins a company, his or her training is directed entirely by the needs and convenience of the employer.

This all-or-nothing approach to hiring produces obsessive thinking. Students become convinced that they will never break into corporate society if they miss the boat the first time round. To make matters worse, many students pin their hopes exclusively on the biggest, most prestigious companies. Major trading firms and big banks, in particular, consistently top the rankings of the most popular companies. This is not because they offer outstanding opportunities for growth, or because there is anything especially interesting or unique about the work they do. Students are driven by far more nebulous aspirations: the belief that everyone around them is aiming for the same places, and the reassuring idea that working for a well-known company will bring future stability. That Japan’s major banks should be so popular with young job-seekers is particularly mystifying. Despite their impressive capital reserves, Japan’s banks are laggards in terms of international competitiveness.

Academic Background: Falling at the First Hurdle?

Prestigious companies receive applications from tens of thousands of aspiring students. The convenience of the online application process means students have little to lose: fill in your reason for wanting to apply and a brief academic record, and click to apply. “It can’t hurt to try,” people think—and dash off applications that deluge popular companies by the thousands. Recruiters at these companies do not have the time to read through all these applications in detail and weed out the good from the bad. That would be inefficient. Instead, says a human resources manager at one major company, “The first step is to go through mechanically picking out applications from students at certain colleges.”

A huge gulf exists between the lip service given to “all backgrounds considered” and the reality. This disparity between what young people are told and the reality they encounter when they start applying for jobs is making them increasingly dissatisfied. It is not uncommon for job-hunters to apply to dozens of companies without getting a single interview. This gives rise to suspicions that the selection process is unfair. People start to suffer feelings of rejection and failure. Not only the students themselves but even their parents can be thrown into a state of depression.

The percentage of the population going on to university-level education has increased steadily since the end of World War II. Fifty years ago, less than 10% of the population obtained a degree. This rose to around 30% in the 1990s, and broke the 50% barrier in 2009. We have entered an age in which one in two people is a university graduate. In the past, a small number of elite graduates were able to find jobs at the country’s leading companies. Today, the situation is radically different, as the products of the mass-access university system descend on the most popular firms in droves. But with the Japanese economy having entered a period of low growth, openings at even the country’s biggest firms are few and far between. It should be obvious that for most of today’s graduates, landing a job with one of the most popular companies is just a pipe dream.

Looking Beyond the Elite

The truth is that most of the famous Japanese companies that emerged in the postwar era—Sony, Honda, Kyocera, and so on—started out as small and medium-sized enterprises. Nor is it the case that these companies achieved their success by relying on graduates from the elite universities. Some people even argue (claiming to speak from experience) that a company’s growth rate is inversely proportional to the number of Tōdai (University of Tokyo) graduates among its employees.

Students need to cultivate a new way of thinking about companies. They need to understand that smaller companies may well give them more chances to use their skills. Why not aim to take a promising company and grow it into something bigger? But companies need to change too, and realize that at the moment they are hampering their own potential by only considering applications from graduates of certain schools. Unless we build a corporate society that has room for a greater diversity of values, there is unlikely to be any radical improvement in the employment situation for Japanese young people and the feelings of frustration and confinement it is already causing.