Staffing and internet firm Recruit Holdings Co., one of Japan’s biggest and most laid-back companies, was well positioned for the work-from-home shift and transition to a post-COVID-19 future, said Chief Executive Officer Hisayuki Idekoba.
The “ground-up type of culture” at Japan’s fifth-biggest company, where employees are judged on their ability to deliver results rather than time spent in the office or sitting in meetings, was an asset during the pandemic, according to Idekoba, 46, who became the youngest CEO in the Nikkei 225 Index when he took over in April.
“We’re relatively flexible and we were OK to have changes all the time,” Idekoba said in a recent interview at Recruit’s Tokyo headquarters. “This office, probably we have 10% or less employees here.”
The bulk of Recruit’s business is matching people with jobs; it owns Indeed.com, the world’s biggest employment portal, as well as Glassdoor, the salary and employer-review website. Recruit is also arguably Japan’s biggest web company, with top portals for real estate, restaurant bookings, travel and used cars. Recruit, with about 47,000 employees, had sales of ¥2.3 trillion ($21 billion) in the latest fiscal year through March.
The pandemic also made it clear that the process of matching people to jobs is “totally broken,” Idekoba said.
“We know the fact that billions and billions of people are applying for jobs, and 90%, 95% of people are not hearing back anything from employers,” Idekoba said. Employers have no incentive to contact failed applicants once they fill their positions, he said. “That’s why we’re working on solving these problems.”
While Idekoba’s predecessor Masumi Minegishi, now Recruit’s chairman, spoke about the equal importance of Recruit’s two main businesses — consumer portals and human resources — the new CEO is more focused on the jobs and staffing units, which in the latest year made up about 70% of revenue.
Recruit’s decentralized model, with decision-making pushed into each different business, also proved to be a bit of a hindrance as COVID-19 restrictions took hold.
“We didn’t have a strong chain of command,” Idekoba said, but added that this also allowed for more flexibility in an “emergency situation.”
“Deko,” as he’s known to colleagues, is known for wearing eyeglasses with unusual designs and an almost casual management style. He started out in the consumer-focused side of Recruit, seeking out users for its hotel-booking site and developing a reservation system for Hot Pepper, its restaurant and beauty salon portal.
Almost a decade ago, Idekoba pushed for Recruit’s acquisition of U.S. startup Indeed for a reported $1 billion. He moved to Austin, Texas, to run the portal, which now has 250 million unique monthly users.
The success of the acquisitions and growth in users has helped boost Recruit’s stock by more than fivefold since the company went public seven years ago, giving it a market value of ¥9.5 trillion.
“I don’t know if the current share price is good or bad; what I do know is the market, the HR market, is big,” Idekoba said. “Our mission, vision is to simplify hiring, so to do it we’re going to keep investing into our technology and also M&A.”
While most Japanese companies have struggled to add value to their overseas acquisitions and investments — forays abroad by the Nippon Telegraph & Telephone Corp. group have resulted in billions of dollars in losses — Recruit’s track record is more solid. Indeed’s user base jumped threefold under Idekoba’s watch.
Even so, Recruit’s dealmaking has slowed in recent years. The company went public in 2014 in part to amass cash and issue public stock that could be used for major acquisitions. But the biggest deal since then was Glassdoor three years ago. Still, there’s plenty of money on the books; Recruit had ¥501 billion in cash and equivalents at the end of March.
Smaller acquisitions more now likely given that Recruit already has Indeed and Glassdoor, Idekoba said. “These are relatively bigger platforms. Bolt-on type acquisitions would be easier of course. But if there’s a huge opportunity, I’m going to do it.”
The other major area of investment will be in technology, he said. Boosting the ability of Recruit’s consumer and jobs portals to share more data is a key goal.
“What I am thinking is how I can reorganize, redesign everything with more of a technology-based, platform-based business,” Idekoba said. “I’m thinking about the depth and breadth of data. This person is checking this job for 20 minutes and rejected. When we think about the data from each job seeker, I believe we have bigger data than anybody else.”
Recruit is one of Japan’s most infamous companies. Its founder was at the center of a corporate scandal that brought down a prime minister. Saddled with debt and the exit of founder Hiromasa Ezoe, Recruit found itself majority-owned by retailer Daiei. Minegishi and other employees took charge and rehabilitated the company, turning it into one of Japan top-valued companies with an unusual business model and culture.
In fact, Recruit may need to adopt more centralized decision-making, especially when it comes to ensuring better corporate governance, Idekoba said.
He may be drawing a lesson from Ezoe and one of his heroes from history, Toshimichi Okubo, a former samurai from the 19th century who was instrumental in toppling the shogunate government and restoring imperial rule. Okubo laid the groundwork for modern Japan and pushed for modernization, although he was also a controversial figure who was considered a de facto dictator.
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