Faced with worker shortages and difficulty with identifying and attracting talent, companies are increasingly turning to the underused method of employee referrals to fill their junior ranks.
Companies are looking to explore the well-trodden overseas method of tapping into the social networks of younger employees, built mainly in their college years, in hopes of luring potential staff who are unwilling or unable to follow the country’s regimented, deep-rooted path from academia to employment — an almost completely foreign system in by-the-book Japan.
Amid widespread labor shortages, proponents of the concept dubbed “referral hiring” argue that finding staff this way has many benefits, such as improved candidate quality and better retention levels, as well as allowing firms to slash recruitment costs.
Kurumi Ohinata, 22, who handles human resources services at Will Group, Inc., joined the company in April as a referral hire. In 2016, the company adopted a system where new hires are asked to speak to those still in school and invite them to a briefing session in order to introduce and lure prospective graduates to the company.
While originally wary of participating, Ohinata said she ended up going because she was “interested to learn about the company my senior had chosen.”
After getting a good impression about Will Group, and being coaxed along by an interviewer, she was able to narrow her choice.
Ohinata was referred by 23-year-old Kazuhiko Omae, currently in his second year with the company. She was intrigued when her acquaintance told her he wanted to share some important things he discovered while job-hunting.
“When students find their own thinking aligns with the company’s, they apply in large numbers, and we are hiring quality people as a result,” said a Will Group human resources official.
One benefit is that companies can easily link up with good candidates because their employees can identify and introduce graduates suited to the company and job.
This, in turn, broadens the horizons of graduates who may not have initially considered certain industries, increasing their scope of career choices.
Generally, employees who introduce graduates do not go on to participate in the hiring process.
This allows companies to select candidates without giving any thought to how they were introduced, in contrast to more traditional hiring practices where special treatment is often given to those with familial or other personal connections.
There are various ways candidates can be referred, including invites on social media.
Some companies allow candidates to skip the first interview if they can list the name of a recent hire on their job application. Others are so eager to identify exceptional workers that they are even using the method to poach staff from competitors.
As a reward to encourage staff, some companies offer bonuses to employees who make referrals.
According to research from staffing subsidiary Recruit Career, 14.3 percent of all companies in Japan plan to adopt referral hiring in their 2019 new graduate recruitment campaigns — up 4.8 percent from this year — and more than 30 percent of companies with over 5,000 employees are set to use it next year.
Per industry, an estimated 23.7 percent of service and information sectors, and 16.9 percent of the construction industry, are on track to use referral hiring. There are also many growing companies in the finance and manufacturing industries considering to introduce the system.
But with all the benefits come some drawbacks for both the companies and individuals involved.
For example, the relationship between the referring employee and the recruited colleague may be strained when the latter becomes the subordinate. To prevent such a scenario, thought must be given to the assignment of new staff.
Kazuhiko Takahashi, a Recruit Career employee familiar with referral hiring, says that there are both success stories and instances where companies and recruits have had bad experiences.
The key to a positive outcome, Takahashi says, is ensuring employees naturally advocate for the company — someone who is dissatisfied at work will not cooperate or prove useful in luring new recruits.
Giving advice to students, Takahashi says referral hiring has many merits, such as having the chance to get to talk to an actual employee making the referrals. “If the company you want to join has that route, it is worth seeking out a connection and applying.”