Debunking the myths of Contract Hiring in Japan - Employers Edition
In Japan, the culture of ‘lifetime employment’ remains strong. Full-time employment, which is seen as a ‘lifetime financial securement’, has always been the most desirable form of employment for both organisations who are hiring, as well as job seekers. This mindset is gradually evolving with more people who are in search of greater career advancement and better opportunities. Likewise, organisations are also looking for talent with specific skillsets and experience for niche roles.
In the Information Technology (IT) field where new innovations emerge every day, organisations want IT professionals who possess advanced technological skills and have experience in highly-niche fields to work on a short-term, project-by-project basis. At the same time, many job seekers are also looking for alternative work options that provide flexibility.
Why is this so?
- In the post-2020 world of the new normal, more are choosing to work remotely or in more flexible ways that allow them a better work-life balance.
- Companies have lifted the ban on a second job, thus making it possible for many to adopt freelance jobs while still being a full-time employee.
- It is becoming common for organisations to pay for certain skills and expertise, even if it is not a full-time role, allowing freelancers to receive fair compensation for their skills.
- More companies are also switching from membership employment to job-based employment
This is a form of employment in which a person joins a company as an employee of the company, rather than for the purpose of performing within a specific role. The job description and the department to which the employee belongs are not always clear at the time of employment, and job rotations and department transfers are often repeated. The job requirements are comprehensive and vague and depend largely on the company's strategies and human resource plans. It is easy to develop generalist-type personnel as they are required to learn the overall picture of the company and acquire knowledge in various fields. Remuneration is based on a variety of factors such as year, age, and overall company performance, and does not necessarily reflect individual achievements.
This is a form of employment in which the job requirements and description are clearly defined at the time of hire. This type of employment is often seen in foreign companies and mid-career hiring, where the job title is clear, such as "product manager", "sales representative", "iOS engineer", or "security consultant”. In addition, because the work location and scope of the job are pre-determined, it is rare for a person to be transferred to a different department or have their duties changed against their will after joining the company. In many cases, the skills required to perform the job are highly specialised, and there is a high demand for specialist-type personnel. Compensation is also linked to skills and results.
This further explains why contract solutions are becoming a more attractive option for companies that require highly specialized skills. Nonetheless, myths still exist with employers when it comes to hiring contractors and we will be debunking them below.
Myth 1: “Regular employees are more loyal to the company.”
A great value has been placed on loyalty and commitment to the company, even at the expense of one's own personal life for full-timers. However, it’s important to remember that commitment to the company and commitment to the company’s profit are not necessarily the same thing. In fact, temporary workers are likely to be more conscious about profit-making or cost-effectiveness as, in many cases, this is why they are hired. Permanent employees could be more loyal to the company in a sense that they stay for a longer period, but most of them remain stagnant in their development as they find job security in their current company.
However, according to a report released by the Ministry of Internal Affairs and Communications, the number of regular employees changing jobs reached a record high of 3.51 million in 2019, and it is no longer unusual for regular employees to change jobs. In addition, it is becoming very difficult to ask full-time employees to make sacrificial commitments as in the past, as work-life balance is becoming more valuable today. As it is, some companies may not be as generous about their employees taking leave for personal reasons as it means that they have to find a replacement during that period. And it becomes even harder for them to predict if someone would leave the role which would require extra effort from the management team and HR. Outsourcing work to temporary and contractors with a predetermined period have thus been useful in managing the smooth delivery of projects and tasks.
Myth 2: “Full-time employees are more capable and have more knowledge and experience.”
As mentioned earlier, it is true that many people have an unconscious bias that those who cannot work as full-time employees are working as contract workers, i.e., full-time employees are more capable.
However, according to a survey by the Ministry of Internal Affairs and Communications, the top reason why people work in non-regular positions includes “working at a convenient time". In addition, a survey released by the Cabinet Office shared that the percentage of people working as non-permanent employees was due to the lack of full-time jobs which has been declining since 2013, from 27.7% of men and 13.3% of women in 2013 to 22.7% of men and 10.7% of women in 2016.
The availability of knowledge and experience will also vary greatly depending on what the company is looking for in the position. If the role requires someone to be familiar with the company's internal situation and will be responsible for coordinating various departments, a full-time employee may be able to deliver better results. However, if you are looking to borrow the knowledge and skills of a specialist with specific IT skills, you may want to consider a third party who may have previous experience in other industries or similar projects. Borrowing the knowledge and skills of an expert with specific IT skills may benefit you as third-party perspectives from temporary workers or freelancers will give you an added advantage on how other companies have worked on their projects.
Myth 3: “Contract and outsourced workers are less skilled than full-time workers.”
As mentioned above, contract solutions may not be realistic for tasks that require coordination with various departments within the company. However, by bringing the necessary specialised skills into the company in the form of temporary workers or outsourcing, full-time employees can spend more time developing skills such as leadership and management, rather than acquiring those specialised skills.
As job-based employment becomes more mainstream, human resource management will need to consider which duties should be assigned to full-time employees for skill development and which duties should be contracted out to secure skills, and a human resource strategy that puts the right people in the right places will become an important factor in corporate growth.
The market for contract recruiting solutions is expected to grow even more in the near future. If you are a hiring manager who would like to start contract recruiting but is reluctant to do so because of the complicated procedures involved, please feel free to contact us or fill up the form below and we can help you out. It is a simple and cost-efficient process, especially if you partner with an agency. You may also follow us on LinkedIn to get the latest updates about the contracts and freelancer market in Japan and the wider Asia Pacific.
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