ニュース & インフォメーション

"Japanese and German Companies Facing Globalization – The Challenges of Internationalization and Recruiting Young Talents"

Dr. Julia Münch, Director, Japanese-German Business Association (DJW)

This article was first published in DJW News 4/2015, but was updated in 2017.

2017-10-10, 11:34

We live in a world in constant motion. Goods, capital and labor are traveling globally at a faster pace than ever and moving in new directions. Mega trends, such as technological progress, demographic change or globalization, define the future by having a far-reaching impact on businesses, economies and industries, societies and individuals. They will most certainly also bring an immense change in human resource management and influence the recruiting strategies of firms in Japan and Germany.

Technological progress is changing the way that people work

Technological progress has made cross-border cooperation easier than ever and has brought a digital revolution: Moving from one place to another has become quick and comparably cheap, communication is fast and almost for free. Connecting via the internet through smart phones, laptops, wireless data connections, virtual platforms or clouds makes working together internationally function with minimal cost. We are even talking about the fourth industrial revolution (“Industry 4.0”), as manufacturing is now in the process of being completely computerized.

Technology is also changing the way people work, and therefore has an impact on the requirement profiles of firms: On the one hand, humans are increasingly being substituted by machines and software, but at the same time, qualified people who understand the new technologies and tools are needed. While some industries still require workers that are time and location bound, it will become more and more common in many sectors for workforces to be virtual, connecting to work anytime, from anywhere, and on any device. More and more employees work at times and places of their own choosing. As virtual cooperation has become easier than ever, transferring businesses or processes to companies being located in nearby countries with the same time zone (nearshoring) has become an option to employ talents that do not even live where the company is based. By 2020, the Generations Y and Z (born between 1980 and 1999) will comprise more than half of the workforce. These individuals, having grown up connected and totally mobile, are named “digital natives”. Their knowledge, attitudes and expectations will have a major impact upon how work will be organized in the future.

The digital revolution challenges firms

Also, the range of recruiting instruments has immensely risen through technological progress: Not that long ago, employers mainly used print media for their recruiting or relied on the support of personnel consultant firms. Today, it is unthinkable to not use the internet as a recruiting tool: job pools, companies’ websites, presence on social media as well as online crowd sourcing and freelance platforms have become common recruiting tools.

This brings opportunities, but also challenges for companies, because the transparency of the internet requires the need to be always present, to immediately react, and to create a positive image through various channels, including not only a company’s web presence, but also online communities like Facebook or other forums. To attract talents by creating a good reputation, through employer branding, has become very important.

For the candidates, technological progress means that they have to be present on the internet, to be mobile and flexible, and to be able to communicate in a “global” language such as English to be an attractive employee for globally acting companies.

Overall workforce is shrinking

The demographic changes in our industrialized countries is easily explained: More and more elderly people (the so called baby-boom generation born in the 1950s after WWII) are about to retire, while less babies are born. Japan and Germany have the lowest birth rates worldwide (ca. 1.5 children born/woman, 2015 est.). It is therefore predictable that the situation is going to intensify even more in the future. It is estimated that in Japan, in 2060, 40% of the inhabitants will be more than 65 years old, and 25% will be even more than 75 years of age. This means that the overall workforce is shrinking and it will be even more difficult to meet the existing demand for labor. The labor market will become dominated from the employees’ side (“employee’s market”), as the unemployment rates have been overall constantly going down during the past 10 years (3.1 % in Japan, 4.6 % in Germany, 2016).

“War for talent”

While the overall labor force is shrinking in numbers, the demand for internationally experienced highly-skilled workers is rising, as jobs become more complex and specialized. This means that there is already a skills shortage, and companies have started to compete against each other for the available talent.

As the power of qualified employees rises, it is natural that they are more willing to change jobs. This trend can be even observed in Japan. It is no longer common to stay with one employer during an individual’s entire career. Some say that lifetime employment might soon be history. Therefore, retention has already become an important strategy for Japanese and German employers.

It also means that it might be necessary to approach new potential target groups such as third country nationals (e.g. immigrants), women or retired individuals to meet workforce requirements.

There is no way not to internationalize

To fulfill their worldwide potential, companies not only serve the domestic market, but act worldwide. This process is called internationalization and has also been enormously accelerating during the past years. Also, the intensity of Japanese-German cooperation has increased. This trend is not so much reflected by the growth of bilateral trade, but by the growing intensity of foreign direct investments (FDI), joint ventures and M&A activity (Mergers and Acquisitions).

The process of internationalization affects several areas of business, e.g., sales, production, marketing, and the human resource management of companies. Obviously, employees with insight knowledge of the regional economies are desired. At the same time, global standards need to be transferred from the mother companies to the affiliates abroad. Therefore, with the increasing internationalization level, the demands are rising. Globally acting companies are seeking”cosmopolitans“ and ”transnational commuters“ with good English knowledge who feel at home in any country. They have to be mobile and flexible with international experience. Globally speaking, the more companies internationalize, the less likely they will seek for expatriates. Requirement profiles will become less nation-bound, but “beyond passport”.

Some success factors for recruiting

To be successful, companies have to adapt to these developments. Below are some success factors for recruiting in a digitalized, globalized world:

  • Make use of the new recruiting opportunities!
  • Consider “new” target groups (such as female workforce, third country nationals, nearshores or side-entrants)!
  • Make retention and personnel development a priority!
  • Make employer branding and a global talent management a priority!

DJW has been supporting companies aiming to be active in Japan or Germany by providing its services and network since 1986. You are also invited to make use of our experiences.

Dr. Julia Münch
Director, Japanese-German Business Association (DJW)
info@djw.de
http://www.djw.de
Dr. Julia Münch
Director, Japanese-German Business Association (DJW)
info@djw.de
http://www.djw.de

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