Japan Inc's ritual hiring past sell-by date

TOKYO (Reuters) - Each April, hundreds of new graduates report for work in Japan's corporate world, all on the same day, all dressed in standard business black, and all ready to be molded into staunch company loyalists.

Across the country, companies select and groom new staff under a decades-old formula that puts an emphasis on loyalty, diligence and conformity, not the vision or out-of-box thinking that experts say corporate Japan badly needs to halt its decline.

The current heads of Japan's companies are often criticized for failing to keep pace with fleet-footed foreign rivals, but most are a product of that system and there is nothing to suggest it will change any time soon.

"Companies were assessing your personality and looking whether you would fit," says Erina Seki, 23, one of the students Reuters followed through the annual five-month ritual of dozens of job fairs, workshops and interviews.

"At one insurance firm, I was told that I wouldn't fit because I was too vocal about my opinions," said the fourth-year accounting major from Tokyo's Rikkyo University, who finally landed a job with an outplacement service company.

"I thought companies were looking for perfect matches with the corporate culture."

Unlike in many other parts of the world where the ability to deal with the unexpected or devise new solutions to problems are prized, the top concern for Japanese employers seems to be how well a recruit would blend in and get along with others, the students said.

They recounted being asked same generic questions over and over again in what could be up to a dozen of interviews for a single prospective employer.

The outcome? A culture where even outsiders brought in to shake things up struggle to challenge the status-quo.

The six-year reign of Welsh-born Howard Stringer at the helm of Sony Corp , which ended after a dismal run of losses, and the ouster of another Briton, Michael Woodford, as head of camera and endoscope maker Olympus are cases in point.

Both were replaced by company veterans.

A shortage of strong leaders and risk-takers, which the present recruitment and training system seems unable to produce, is seen as a major cause of the woes of Japanese companies, from its once-famed electronics industry to auto giants.

Toyota Motor , once the world's biggest automaker, has seen its market share slip to General Motors and Volkswagen and has South Korea's Hyundai in its rear-view mirror.

Electronics giants Sony , Panasonic and Sharp , slow to revamp loss-making TV businesses, suffered a combined $20 billion loss in the past fiscal year, hammered by competition from South Korea's Samsung Electronics .

Squeezed by nimbler foreign rivals overseas, Japanese companies also face a shrinking market at home. The population peaked in 2008 at just over 128 million and the government forecasts it will keep falling over coming decades to about 90 million in 2060 when 40 percent of Japanese will be 65 or older.

Almost every major Japanese company participates in the annual mass-hiring ritual that dates back to the country's post-war economic miracle, when skilled workers were in short supply and companies began hiring graduates in bulk, trained them for months and secured their loyalty by guaranteeing a job for life.

That guarantee is no longer there, but the ritual continues.

STAMINA NOT FLAIR

With just over nine jobs awaiting every 10 of the 381,000 students graduating and looking for work this year, and the most coveted with the likes of Toyota or Nomura even more scarce, job-hunting has become fiercely competitive.

Between early December when big companies start advertising entry-level positions and April when they make offers to fourth-year students, each student will typically send up to a hundred or more applications, attend dozens of presentations and endure multiple interviews with 20-30 prospective employers.

"At the peak, I attended 2-3 seminars a day, I almost had no time to attend school," said Yuki Yamamoto, a law graduate from Keio University.

"School was in an exam period in January but irrespective of this, job seminars continued. Some students even gave up taking exams."

The system has also led to a flourishing industry in cram schools.

Chihiro Obata, a senior official at Vein Carry Japan that offers courses to candidates, says the number of such private schools has quadrupled over the past three years in Tokyo to about 80.

Her company charges 105,000 yen (about $1,300) for courses that teaches students how to write CVs and job applications, how to bow and exchange cards and simply look good in interviews. It offers to refund the fee if students do not land a job.

Last year, a Tokyo department store even organized a workshop for students of both sexes on how to use skin lotions to look fresh in interviews.

Under a voluntary pact, the country's leading 840 or so companies grouped in its top business lobby Keidanren, recruit during the same five-month window. Uniform entry salaries, today at around 200,000 yen per month, are also common.

Rehearsed and scripted, the process leaves little room for spontaneity and frustrated students talk of a mad scramble of job fairs held in vast convention halls.

"Skills seem to carry little importance," says Shunsaku Funaki, a 21-year-old politics major from Tokyo Kokushikan University who so far has not found a job.

"Companies want to train and educate students from scratch and that hasn't changed over the years. I want the culture of uniform job-hunting activity to be destroyed and want companies to seek students with variety."

FOLLOWERS OR LEADERS?

Not only the students are fed up. Management experts and recruitment professionals say that if Japanese companies are serious about change, the system that defines their DNA has to change first.

"If you bring somebody in when they just graduate, they practically have no business experience, so how are they going to come up with new ideas?" says Christine Wright, Asia operations director with Hays recruitment firm.

"They would just think the way the company thinks."

Hiring managers however say the old formula has its merits.

"We are able to secure a certain number of students who meet certain criteria relatively easily, and it helps reduce costs of employee education because that is done simultaneously," says Hiroshi Ishihara, recruiting group manager at home electric appliance maker Hitachi .

Takashi Shinohara, human resources manager with office equipment maker Ricoh , says the system allows his company, which hires 200-300 graduates each year, plan and maintain a steady age profile of its workforce.

Although mid-career hiring is on the rise, at most big firms the track to top management still involves joining the company fresh out of school.

Ricoh's Shinohara acknowledges the need for changes but says it is hard to envisage a radical overhaul.

"Companies do hiring and students do the job-hunting simultaneously. This system is entrenched."

Online retailer Rakuten , which uses English as its main language and has been recruiting engineering graduates from China, has modified rather than ditched the system even though it is not part of the Keidanren pact.

Yoshinori Kondo, head of its global talent development office, says it is important for newcomers to stick together, so Rakuten still hires them in batches. But it does so twice a year to accommodate foreign students who graduate in the autumn rather than in spring like their Japanese peers.

Other companies also focus on foreign graduates as a source of new ideas. Hitachi, for example, wants to double the number of graduate positions filled by foreigners to 10 percent.

Hiring Japanese educated overseas is also an option to bring in some diversity. However, the number of Japanese studying abroad has been declining since 2004 as they are reluctant to leave for fear of missing the mass hiring.

Experts also warn that firms that hire foreigners will not succeed in getting diversity and new thinking if they try to squeeze them into the old seniority-based system and pre-determined career path.

For now, signs are that even an exponent of a new, more dynamic Japan, such as Rakuten, is not quite ready to let go.

While its employees are expected to show initiative and "venture spirit," they should do so in the vein of "The 5 Concepts of Success" laid down by company founder and CEO Hiroshi Mikitani, it says.

($1 = 80 Japanese yen)

(Additional Reporting by Chang-Ran Kim and Linda Sieg; Editing by Raju Gopalakrishnan)

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