JILPT Research Report No.175
The Development of Human Resources Business in the Career-Change Market

• (1) Trends in the Career-Change Market
• (2) The Different Types of HR Business in the Career-Change Market
• (3) Current Status of Human Resources Business in the Career Change Market

(1) Trends in the Career-Change Market

Following the Bankruptcy of Lehman Brothers, the number of people changing jobs dropped substantially—in 2010, it saw an 18.2% decrease in comparison with the peak in 2006 to 2007. This decrease was observed largely in the 15-34 age bracket (the “young age bracket”), while in the 35 and over age bracket there was no decrease even after the Lehman Collapse. As a result of this trend, the proportion of the career-change market occupied by the age 35 and over age bracket, in particular the 35-44 age bracket (the “mid-career age bracket”), has increased in the recession period following the financial crisis, while in the period of economic boom prior to the financial crisis there was an increase in the proportion of the young age bracket in the career-change market.

Looking at the career-change market in terms of employment access route, job vacancy ads (job information) occupies 28.5%, public employment security offices known as “Hello Work” is 26.5%, and personal connections is 24.2%, these accounting for approximately 80% of the total, and among them job information plays a significant role. On the other hand, the share taken by private job placement agencies is small, only at 3.5%.

Also, looking at the employment access route by size of company joined, the larger the size of company, the higher the proportion of the use of job information, while the smaller the size of company, the higher the share of Hello Work introduction, suggesting a mutually complementary relationship between the two (Figure 1). Also by type of industry and occupation entered, there are relatively few overlaps in industry fields between Hello Work and job information. This suggests that within the market there is a certain amount of habitat isolation or differentiation between Hello Work and job information in terms of their fields of focus (however, there is a certain amount of overlapping in terms of occupation).

Figure 1. Ratio of employment access routes by company size

Looking at the employment access route by age, in the age brackets aged 45 and over, while the share of Hello Work introduction do not drop significantly in comparison with other age brackets, there are large decreases in the share of HR business—namely, job vacancy information and private job placement agencies.

Moreover, as it is largely the young age bracket that sees an increase in the number of people changing career in periods of economic boom, it appears that HR business is not yet sufficiently attracting the middle and older age brackets in the career-change market.

List of Major Findings

(2) The Different Types of HR Business in the Career-Change Market

HR business in the career-change market consists of the following main business types: 1) job information businesses including the expanded services providing jobseeker information and agency (mediation) services; and 2) job placement businesses including services providing reemployment support and offering temporary to permanent jobs. In many cases other recruitment support and employment support services are undertakings which complement, accompany, or are associated with these main business types.

The different types of job information services and job placement services outlined in this Research are shown in Figure 2.

Figure 2. The different types of job information services and job placement services

List of Major Findings

(3) Current Status of Human Resources Business in the Career Change Market

1. Human resources business after the outbreak of the financial crisis in 2008
   

   Having faced difficult changes in the business climate following the outbreak of the financial crisis, companies engaged in human resources business are trying to respond to future changes by keeping costs down even in periods of expanding demand. Large and mid-level Tokyo-based human resources companies seek to provide multifunctional and more comprehensive services in order to be able to cope with stagnation in demand. In contrast with large companies with significant shares of the market, mid-level companies etc. target favored sectors in a segmented (specialized or differentiated) market, and large companies are responding to these developments and also pursuing market segmentation.

   At the same time, expansion is also being pursued through new business models such as job information services on a contingent fee basis where commission is payable when positions are successfully filled.

2. The extensive functions of job information services
   

   The typical image of job information services is that they simply gather, sort, and provide information to jobseekers in written forms. However, in order to ensure the sustainability of their businesses, companies providing job information services (hereinafter “job information companies”) now serve more extensive functions including “confirmation of facts and creation of image” to also help jobseekers gain a clearer image of what companies and workplaces recruiting workers are like, with the aim of increasing the potential for advertised job-vacancies to be successfully filled.

   Job information companies also develop secondary functions to “support and coordinate for employers who are recruiting” in establishing the prerequisites for and conditions offered to potential job candidates, and to communicate information on salaries, etc., thus “shaping the current salary rates in the regional labor market.”

3. The development of business through job information sites
   

   As it is now common particularly for younger people to use the Internet for job-hunting such as looking for work when graduating from university etc., young people are also used to using job information sites to select companies to apply for when looking to change job. This is a key factor behind the rise in the use of job information sites by white-collar workers in urban areas.

   From the perspective of jobseekers, job information sites provide the following kinds of benefits:

   1. Greater convenience, including the services for free, no time restriction and greater possibilities for looking for job opportunities independently
   2. Wider possibilities for applying for jobs by registering as a jobseeker
   3. Opportunities to make use of functions which support independent choices regarding occupations

   Job information sites have been making efforts to ensure that job vacancies are successfully filled by developing systems to support jobseekers which further increase such convenience and raise the potential for jobseekers to apply for job vacancies.

   In order for a job information site to expand its business, ensuring that jobseekers access the website is of the utmost importance. It has become the standard for job information companies to use online advertising methods such as Search Engine Optimization (SEO) and listing advertisements. There is also a growing trend among mid-level job information companies and other companies to seek segmentation in the career change market and pursue business development in a specialist area, in order to ensure that they are able to gain an advantage in a certain area and in turn higher positions in search results.

   Along with the growth in the use of job information sites, the demands that employers seeking employees have toward job information companies are changing. Many job information companies also have a website where jobseekers can register, and such environments allow them to be more involved than they were before in the application processes, etc. of candidates.

   As many employers seeking employees have become aware of the fact that it is possible for recruitment information companies to manage processes such as the status of applications, etc., employers have come to expect concrete measures for raising the potential to fill a vacancy successfully, and it has become the standard in the operation of job information sites to provide various optional functions suited to such needs. This includes the expansion of “recommendation” services, which suggest candidates who are potentially suited to a position and encourage them to apply, and “scouting by email (canvassing with promotional email)” services, which allow recruiting employers to contact registered jobseekers on the basis of their profiles.

   In addition to improving the accuracy of the process of matching jobseekers to positions through the use of their growing store of “big data,” many job information companies have also begun to provide career consulting services to support jobseekers, such as assisting them to make a résumé of their work experience.

   Recently, some job information companies have established websites which allow users to rate and give feedback on companies, with the aim of gaining more registered jobseekers by providing supplementary information on companies.

   While many job information companies have a system which couples the jobseeker information they accumulate as mentioned with employment placement services, another system of providing the information they receive from their registered jobseekers to other job placement companies also appears to be more common.

   Within job information companies the information provided by registered jobseekers is treated as confidential personal information and handled in accordance with the Act on the Protection of Personal Information, and the rules on personal data management established in the relevant company are published on the company’s website.

   On the other hand, the provision of jobseekers’ information to other companies is normally conducted through procedures to acquire the consent of jobseekers on the basis of terms of use on the information website. However, there is no standard consensus within the job information industry regarding the handling of jobseekers’ information after it has been provided to other companies.

4. Print media such as job information magazines and business development in provincial areas

   Many job information companies based in Tokyo have begun to develop their services through job information sites which are combined with jobseeker registration websites. Judging from the rate of Internet use when entering employment—approximately 40% use the Internet for job seeking activity, and just under 20% use job information sites—it is difficult to say that job information sites are the major method used when changing careers.

   There are also many companies developing services using print media such as job information magazines. Print media are still rooted deep in the job information business.

   One reason behind the significant share which continues to be held by print media is that it is a type of media that is easy for employers to comprehend. There are strong calls from employers for the provision of job information in printed format, particularly from companies recruiting in provincial areas and recruiting in industry categories such as the sales industry and service industry.

   One of the most significant merits of job information magazines is that jobseekers are able to look panoramic listings of information on the work opportunities available in a region.

   The fact that jobseekers are able to look over exhaustive information in this way is more effective when jobseekers without highly-developed skills or specialist fields look comprehensively for work in a certain area. In addition, as people choose to take home a job information magazine themselves, such magazines are a means of providing information to people who have a clear intention to change jobs.

   Job information magazines which cost money are now relatively rare in the Tokyo area, but in provincial areas they are still very common. Non-free magazines have gained credibility in regional areas as a medium worth paying money to read. That credibility stems from the comprehensive nature of job-vacancy information that job information companies in provincial areas gather by using their sales capabilities, and the high accuracy in their information they gain by actually observing the workplaces. Moreover, recruiting employers favorably regard jobseekers who apply for jobs having paid money for a job information magazine.

   Newspaper advertising and inserts have a merit which is not common to other media, in that they are targeted at newspaper readers and help to unearth potential jobseekers. Moreover, as it is not easy for job information companies to make the initial entry to the market for newspaper advertising and inserts, this itself is a major source of business.

   Opinions are divided on the role that print media such as recruitment magazines will assume in human resources business in the future. On one hand, it is thought that such media will continue to have a firm hold and be in demand due to their convenience and merits unique to print media. On the other, it is suggested that their use will decrease with time. It is conceivable that the difference in these opinions will lead to the difference in the development of human resources business in the future.

   The core business upon which each company chooses to develop its recruitment information services are largely influenced by the strong field of each company, which has been developed based on the circumstances of their business. At the same time, the individual characteristics of the region in which the company is based also play a significant role.

   The development of new services focused on the Internet tends to be delayed in regional areas, but it is in the areas of infrastructure and sales and marketing styles in which there are more significant differences between urban and regional areas.

   Companies which have a share of the job information services in regional areas have a powerful marketing infrastructure which has been built up by their sales employees making direct visits to large numbers of local businesses and business owners in their area. The following cycle has developed over a significant number of years:

   1. The formation of trust through frequent contact with regional businesses
   2. The collection and provision of detailed job information with application and hiring stages in mind
   3. The formation of trust with jobseekers by the provision of all-encompassing information on job opportunities within the region based on actual observations.

   Furthermore, in regional areas the demand to fill positions which require advanced specialist skills and highly-developed professional training occupies a lower proportion in comparison with the Tokyo area. It also appears that in regional areas the distinction between the treatment of standard and non-standard employees is not as clear as in the Tokyo area. Such trends in regional areas make job information magazines which allow for wide-ranging and comprehensive listing of job opportunities within an area function more effectively.

   On the other hand, many companies in Tokyo area are apprehensive about the investment effects of regional expansion and are particularly negative regarding expanding the share of print media, due to the necessity to draw balance with the development of online business which is focused on job information sites.

   Therefore given the unique features of regional labor demand, regional job information companies maintain a high share in the region through their sales style and infrastructure which are more suited to the characteristics of job information magazines.

5. Development of private employment businesses
   

   The trends in private employment businesses differ according to the field in which they provide job placements. While employment agencies in traditional occupations such as domestic helpers, in-store promotional sales staff, and chefs are increasingly closing down, agencies targeting white collar workers (including specialist occupations) are once again on the increase, having decreased after the outbreak of the Lehman collapse.

   It is becoming essential in their business operation for employment agencies focused on white collar workers in the field of business to work with the job information websites and registered job-seeker information that they manage in-house, and to receive the provision of jobseeker information from other companies.

   Given the nature of their services, companies providing job placement services need to invest in labor, such as career consultants. As a result, the per-person costs are set high—for instance, the fee received for successfully placing a candidate in a job can be around 30% of the annual salary of the person hired. However, each company engaged in HR business takes a cautious stance to increasing their personnel and expanding business during periods of tight labor market situation when the number of job-vacancies increases, in anticipation of the subsequent periods in which there will be a decrease in demand. Alongside tie-ups and partnering with job information businesses, employment agencies themselves are introducing methods to increase efficiency by simplifying and lowering the costs of job placement services.

   Some companies are developing services which assist job placement but adopt models which differ from conventional methods, such as “job placement without face-to-face contact” by which the jobseeker and career consultant or other such intermediary go through the placement process without meeting in person, and “light placement assistance services” which are focused on providing support to suburban companies for ensuring that recruitment activities proceed smoothly, as opposed to being directly involved in placing candidates in jobs.

   The characteristics and trends in the types of job placement services other than standard registration-based services are as follows:

   1. Scouting: Scouting services are significantly different to standard registration-based placement services in that highly-skilled human resources are sought out as potential jobseekers and candidates. Companies that develop scouting services remain relatively stable amid changes in the economy, but due to the nature of the business their target areas are only limited.
   2. Re-employment support: In periods of recession business demand tends to expand, while in periods of prosperity demand tends to decrease. Large companies engaging in HR business have responded to economic upturns and downturns by shifting human resources between standard registration-based employment placement services and re-employment support services.
   3. Temporary-to-permanent: At present such services are not always being developed to the extent expected given their potential to alleviate mismatch in the career change market. In the future there is potential for development by utilizing this method for fixed-term employees seeking career changes, due to the influence of the revised Labor Contract Act.
6. Trends in matching in the career change market
   

   HR business is expected to see even greater development in the field of career change for women. At the same time, many of the fields which pose challenges for labor policy involve inefficiency also in HR business, and are regarded as difficult fields to approach. Such inefficiency in HR business arises from the fact that there are limited job vacancies from the companies which are the source of their income, and even if there are job-vacancies, there is a low rate of matching (namely, hiring/employment). In such inefficient fields, it is necessary to pursue business development with even greater consideration for limiting costs.

   Two types of matching policies can be seen in the career change market: the policy focused on matching jobseekers to the jobs that “they are currently capable of doing,” based on their specialist fields, professional experience, and the skills and training they have acquired (hereinafter “specifications”), and policy which focusses on matching jobseekers to roles that “they could be capable of fulfilling in the future,” based on their potential adaptability to occupations, as opposed to their current specifications.

   In technical, specialist, and certain administrative fields, candidates have become required to fulfill more rigorous specifications related to the relevant occupation since the outbreak of the financial crisis (Lehman Collapse). On the other hand, across the career change market as a whole, the emphasis placed on specifications is not significant and in many cases job-seeking and recruitment are conducted on the basis of the candidate’s potential to adapt in the future. Moreover, the proportion of importance placed on specifications is lower in regional areas than in the Tokyo area.

   Occupational fields which put emphasis on specifications include medical professions, technical professions, and a number of fields which require specialist knowledge or skills.

   In medical fields, occupations such as pharmacists or nurses have expanded their share significantly in career change market, in the decade or so, particularly because job information and jobseeker information websites became utilized largely. However, personal relationships still play a large role in finding positions in the medical field, and career change through methods such as personal connections continues to have a significant influence.

   At present the market is a seller’s market—namely, the demand for workers exceeds the supply of workers—and jobseekers tend to have the flexibility to choose where they wish to work and their conditions. There is therefore great potential to bring greater vitality to career change and re-employment in this field by enhancing placement services that consider significantly the wishes of jobseekers.

   Moreover, demand for specifications remains high when it comes to technicians in the field of engineering, such as IT and web technicians. There is also a rising demand for people with specifications in specialist occupations in the field of finance, a field in which demand for new recruits slumped following the Lehman Collapse.

   Specifications also tend to be demanded in certain white collar professions such as “back-office” occupations in administrative fields, including accounting, finance, and legal affairs.

   In sales and marketing occupations and administrative occupations which do not require specialist skills, there is a greater tendency for demand for attributes related to a candidate’s character, such as whether or not they fit the industry or corporate culture, or the fundamental working style upon which they pursue their work, and the companies that people changing job enter tend to be across a range of occupation. These job-vacancies and recruitments focused on potential are largely for the younger age bracket.

   At the same time, even now, in spite of higher labor demand, there is little progress in relaxing the specifications demanded by employers.

   Age factors have a particularly significant effect on the difficulty to fulfill the specification requirements in such job vacancies. There is in fact an invisible wall created by the upper age limits employers set when recruiting, but the upper age limits themselves are gradually being raised along with the aging of the labor force as a whole. However, as the age of job candidates gets higher, they will be recruited for higher level of positions, and will be required of stricter specifications. Also, they will be expected to be immediately effective in their roles and produce greater results within a short period. As there are a limited number of people who are able to fulfill such demanding specifications, companies will hire candidates from younger age brackets who have high potential, even if they do not fulfill the specifications sufficiently at the moment. In addition, the older people get the more difficult it becomes to switch to a different type of industry when changing jobs, even within the same occupation, which makes it more difficult for people in their late forties or older to find employment opportunities.

   Although severer specifications are required of job seekers as they become older, it is generally the case that people do not identify and utilize their strengths while they are working. This is a significant factor behind the difficulties for mid-to-older age people to switch to a job where they can make use of their professional experience that they have accumulated throughout their prior professional careers.

List of Major Findings