Japan, striving to avoid another lost decade, is facing the toughest employment market for employers — the market for top talent. And it is looking for the solution abroad. “We have to import many intelligent people from abroad” said Tokyo Gov. Yoichi Masuzoe at a press conference recently. “We badly need young talented persons.”
The trouble is that top talent is scarce by definition–there aren’t that many talented people to circle the globe; and the situation is expected to get worse,according to Claudio Fernandez-Araoz. In “21st Century Talent Spotting,” published in the June 2014 Harvard Business Review, Fernandez-Araoz cites three factors that are expected to make top talent scarcer in the near future — globalization, demographics, and pipelines.
“Globalization compels companies to reach beyond their home markets and to compete for the people who can help them do so,’’ writes Fernandez-Araoz. But globalization has been going on for quite some time, and has given rise to new multinational corporations from China, Korea, Brazil, and other emerging economies that all compete for global talent. Why should Chinese and Korean talent head to Tokyo when it is in high demand at home?
That’s why Tokyo will have hard time attracting new talent, even if they can get rid of red tape. Compounding the problem of globalization and demographics is the lack of pipelines—the development of senior talent ready to succeed those who retire. “In many companies, particularly those based in developed markets, I’ve found that half of senior leaders will be eligible for retirement within the next two years, and half of them don’t have a successor ready to take over,” adds Fernandez-Araoz.
And then there’s simple demographics. “The impact of demographics on hiring pools is also undeniable,” continues Fernandez-Araoz. “ The sweet spot for rising senior executives is the 35-to-44-year-old age bracket, but the percentage of people in that range is shrinking dramatically.” This is most evident in Japan, which suffers from chronic population decline.
The bottom line: In the middle of double-digit unemployment rates in many parts of the world, there is a brewing global shortage for talent in Japan that is expected to get worse. Are companies there ready for it?
Originally published on www.forbes.com