Stages of Growth and Recruitment

    In the bilingual recruitment industry in Japan, agencies will go through many stages of growth, and at each phase I believe the hiring strategy and compensation schemes needs to reflect the stages the company finds themselves in if they are to achieve success.

    Let’s look at some of the main growth stages for a recruitment agency in Japan and how these should impact the hiring and compensation approach.

    Stage 1

    The first step is primarily about getting a business off the ground, building a customer base, and generating operating revenue from which further growth is possible.  The agency will need to employ anywhere between 2-10 recruiters and these recruiters will need to be able to make an impact, be productive and impact revenue levels.  Therefore, the agency will need to entice some experienced recruiters to join and so the next question is how to do that with a limited customer base, systems, and brand.

    I would suggest the best initial approach would be a flexible and creative approach when it comes to compensation schemes.  The agency will need to be creative and pay above market rate in total comp, again how this is structured can be worked out case by case, but creative and flexible are the watch words.  No matter how fantastic the agency thinks they are, along with their ideas and potential; the hard cold reality is that experienced recruiters will not even look at them unless they can offer them something above what they are earning currently.

    The advice at this stage is for the agency to be loose, flexible, and creative in the packages that they put together as the hires that they manage to secure at this point will the very foundation of their future business outlook.

    Stage 2

    The next stage for the agency is all about growing and building more teams and industry focus, building a management layer and scaling headcount and revenue levels.  Back-office systems, processes, training, branding, marketing, and career path structures should all becoming more mature, and the business should be approaching 30-50 fee earners.  At this point hiring focus changes from mainly experienced hires to a mix of junior non-experienced and experienced as the training systems develop and the agency looks to develop people from scratch and imbue them with their culture and processes.  It’s now sensible to bring in a more structured compensation level system into play for juniors and non-experienced hires and for their promotion criteria, but the agency should also keep the flexible and creative approach to hiring experienced fee earners or people managers and leaders.

    If the agency tries to employ a very structured stiff approach to compensation schemes for all experienced hires as well as juniors, then they will definitely miss out on some of the best talent on the market. Remember that compared to the big brands and shops out there, smaller agencies need to offer something that can entice someone of a high caliber to join and whilst money is not the only factor that contributes to a move it is usually in the top one!  Of course, this can be applied case-by-case as experienced recruiters bring different levels of experience and success, so prudence is essential.

    Stage 3

    Next step is moving up a scale to be one of the larger agencies in the Japan bilingual market.  The headcount should now be around 80-150 recruiters, will have multiple specialisms, a good management layer, good operations, processes and best practices and a growing and impressive brand.  This is the stage where a large proportion of the agencies new hires are juniors that automatically go onto a standard compensation scheme, with clear and transparent pay bands and for the most part that structure is maintained.  This more structured approach can now be applied confidently as the agency’s brand and reputation mean that it’s significantly easier to attract and retain people.

    Experienced hires at this stage would only be considered for strategic growth initiatives, leadership roles or to backfill into a struggling part of the business.  Offers for experienced hires should for the most part fall into the standard comp schemes even for experienced hires and there should rarely be a need to break this structured unless there are special cases.  Still the suggestion would be to retain flexibility, but that should be decided only at the senior leadership level.

    The market sees too many businesses applying too much structure and rigor around hiring renumeration levels too early when they are still effectively at stage 1 or 2 of their development, which results in growth targets not being achieved.

    The clear advice here is to retain your flexibility and creativity around compensation offers and don’t believe your brand, size and reputation is bigger than it is otherwise it will take you longer to get there.

    Remember good markets wait for no-one and they don’t last forever and to take advantage of them agencies need to scale, with quality people and quickly.