President Dale Carnegie Tokyo, Japan, Master Trainer, best-selling author, his latest book is "How To Stop Wasting Money On Training."
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Japan is facing a serious shortage of staff in many industries. The job-to-applicant ratio rose to 1.28 in 2022, according to the Ministry of Health, Labour and Welfare, meaning there were 128 job openings for every 100 job seekers. However, this figure has not yet reached the pre-pandemic level of 1.6 in 2019.
The hospitality sector in particular lost a lot of part-time staff during COVID, and they haven’t returned in numbers sufficient to match the needs of employers. Hotels are getting back to pre-Covid occupancy rates, but hotel operators worry they don’t have enough staff to clean rooms and run the hotel at the standards they adhere to. The Japan Times has noted that "75.5% of surveyed hotel operators said they face shortages of regular employees while 78% said they lack part-time and other nonregular workers."
The Immigration Services Agency recently announced the total number of foreigners in Japan had topped 3 million for the first time. But given the labor shortage, sources like the Japan International Cooperation Agency estimate that "reaching the government's economic growth target for 2040 would require [increasing] the number of foreign workers to 6.74 million." The Japanese government has recently expanded the availability of No. 2 visas (subscription required), making long-term residency available to more foreign workers in fields like agriculture, manufacturing and hospitality. This is a profound change for Japan.
What Japan's Labor Shortage Means For The White-Collar World
In the white-collar world, however, the language barrier and the weak yen both guarantee that there won’t be a rush of foreigners coming to Japan to take jobs. That means that for most multinational companies, there will continue to be a war for Japanese talent.
If you are a large corporation with deep pockets, you can offer large base salaries to attract people to join you. But if you are a small to medium-sized business, then things are tough. If you need English-speaking capability, the pool of talent available becomes even shallower and we are all competing fiercely for a limited resource.
The sales staff supply shortage moves the locus of power to Japanese salespeople. They know they are in strong demand, and they can be very picky about who they work with. The résumé flow is also very brittle and thin. As someone who's been hiring people for many years, I can tell you we simply don't have the range of choices we once had.
In particular, I have noticed over the last seven years that salespeople are becoming more expensive, especially relative to their ability. The vast majority of salespeople everywhere are untrained, figuring things out by trial and error. It's the same in Japan. Assuming that someone knows what they are doing after working for a number of years in sales is too optimistic, in my experience. Bosses need to accept that they will need to train salespeople to get their skills to the levels required.
New Training Requirements
I and my team teach a lot of salespeople here in Japan, and we notice some common trends. For one thing, salespeople here need particular work on asking questions to fully understand the buyer’s needs rather than just delivering their pitch.
They also need help with handling pushback from the client on pricing. A typical response here is to drop the price by 20% when confronted with the buyer’s "your price is too high" statement; this isn’t the best choice. Salespeople need to be taught how to handle objections properly.
Those of us who supervise hiring and training will have to make some serious adjustments. We will have to totally rework our onboarding process and make it much more comprehensive and intensive. I recommend making probation periods longer, such as six months instead of three. In addition to the initial training, new hires will probably need considerable, consistent coaching to really get them up to speed. And don't think you can hire someone and let them go if they don't perform up to your standards; current entry funnels are too shallow.
This improvement process is going to be slow and resource-heavy, so we have to accept that additional burden on our small businesses.
Final Thoughts
There's one glimmer of hope: The Council for the Creation of Future Education, chaired by Prime Minister Fumio Kishida, has set a goal for the number of Japanese students studying abroad to reach 500,000 by 2033. The Japanese Trade Union Confederation (Rengō) conducted a survey in 2022 which showed that nearly 30% of new employees two to five years into full employment quit their jobs in the first three years. This group of mobile young employees, called the Dai Ni Shinsotsu ("second-stage fresh graduates"), will be attractive to target, especially those who have studied abroad, giving them international exposure and better English skills. However, they will still need extensive training.
Our future Japan sales staffing prospects look bleak; choices are few, and we must make legendary compromises. The answer is to invest in training our salespeople in order for us to survive.
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