Messages from Monthly Keidanren, September 2001

The Age of Human Resources

Toshio Morikawa
Vice Chairmen of the Board of Councillors, Keidanren
Advisor, Sumitomo Mitsui Banking Corporation

For quite some time, we have been hearing that the Japanese economy and Japanese society are stagnating. Of the many factors behind this stagnation, the one that has particularly concerned me lately is a problem in human resources.

Japan has shifted much of its production to other Asian countries, and like other developed countries, it is undergoing a transition where new value created takes the form of intangible items such as knowledge, rather than physical property. In such an environment, talented human resources are increasingly essential for competitiveness, both for companies and for the country as a whole. As "the war for talent" intensifies, raising new talent or bringing in talent is an issue of utmost priority.

Three key steps need to be taken. The first is to develop an open employment system and implement merit pay, to enhance hiring and bring out people's full potential. Although the recruitment of mid-career workers and the adoption of the merit system are both on the rise, I am afraid to say that compared to the United States, the Japanese employment system remains closed and inflexible. While there is no shortage of talent in Japan, it is easy for talent to get buried somewhere in a closed employment system.

The second point is for the country, individual companies and universities to become more attractive places for people. For instance, many factors can make the critical difference in whether a company is a place where someone wants to work: the vision and philosophy of management, its growth potential, innovativeness and reputation. When a company that offers these things attracts good personnel, the organization then becomes even more appealing, setting off a virtuous circle in which the presence of talent creates new talent. The same applies to universities and other entities, not to mention the entire country.

The final issue is to take on problems in education and training of human resources. As for education, according to one survey, compared to the United States and China, Japanese children tend to have "introverted interests," meaning that the scope of their aspirations does not include things beyond themselves. They also are inclined to be more passive. This is hardly reassuring news, considering we are in an era that demands the creation of new knowledge, leadership for change and global communication skills. It is time that we seriously reassess our education system.


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