Japan's HRM & IR Information — HRM & IR News [FY2018]

July 18, 2018 [No.52-2018]

Retention management to prevent human resources from leaving

Hiroshi Yamamoto, Ph.D., Professor
School of Business/Graduate School of Business
Aoyama Gakuin University

Part 2: The actual state of and specific retention management policies in Japan (1)

1. The actual state of retention management in Japan
 According to the Ministry of Health, Labour and Welfare's Survey on Employment of Young People (2014), over 70% of establishments were undertaking measures in order to retain young employees, in regard to regular employees. We can see that many companies are practicing some form of retention management. In terms of specific policies, policies regarding “improving communication in the workplace” were the most common, followed by “assigning work that matches the person's skills and capabilities,” “providing detailed explanations and information prior to hiring,” and “implementation of and support for training.” We can see that companies are emphasizing the promotion of workplace communication, giving employees work that they are suited for, providing detailed information prior to hiring, and proactive development of employees' skills. However, the results of this survey do not show an actual increase in retention rates due to introducing these policies.
 What kind of policies are actually useful in increasing employee retention rates? The Japan Institute for Labor Policy and Training asked companies about policies they had implemented with the goal of retaining young people, while at the same time surveying employees on which policies implemented by companies are effective in allowing them to continue working there (2007). Ranking highly were: (1) implementing in-house training, (2) assigning individuals the work that they want to do, (3) creating a workplace atmosphere in which young people feel comfortable communicating, (4) implementing Management by Objectives for young people, and (5) support for self-development. Meanwhile, ranking highly in the employee survey were: (1) raising wages, (2) making it easier to take time off, (3) assigning individuals the work that they want to do, and (4) support for work-life balance. In other words, aside from assigning individuals the work that they want to do, companies and employees put emphasis on different things.
 Increased wages, securing time off, and support for work-life balance—things that employees wished for—are items that have been emphasized, particularly by working people, in surveys in recent years, but they rank low among company policies. The same applies in reverse, as in-house training, something emphasized by companies, was not ranked highly by employees. In-house training is useful in improving both employee skills and productivity. However, it is possible that the message is not resonating with employees. In other words, in order to achieve effective retention management, it is necessary to consider the wishes of employees.
 Next, let us take a look at a specific retention management policies and cases from real companies.
2. Specific retention management policies (1)
(1) Hiring management
 The retention effects of realistic job previews have been examined. This practice is similar to the Ministry of Health, Labour and Welfare's “providing detailed explanations and information prior to hiring” (2014) mentioned above. Giving realistic job previews means companies clearly telling prospective employees what kind of work they will be doing upon being hired by that company. This means telling applicants about the experiences that many people have upon being hired, including the more negative sides. Therefore, applicants who have unrealistically high expectations before entering the company will come to tone down those expectations. This is said to have the effect of curbing the disillusionment that some feel after entering the company (a vaccine effect). Company X, a real HR services company, is as open as possible with information, saying that they make a point to inform applicants of the more difficult aspects, in particular. They have also had mid-career applicants work at the office for half or full days. (One such case resulted in the applicant not entering the company.) They say that these practices resulted in fewer resignations.
 Furthermore, such practices' relationship with careful recruitment has been analyzed. Careful recruitment means determining the human resources that companies need and hiring employees according to a plan. In many cases, this results in difficult recruitments. Company Y, a real salon chain, had a policy to hire large numbers of people, and, as a result, a large number quit. They switched to a policy in which only necessary staff was vetted, hired, and retained, and as a result, the number of resignees was reduced. However, careful recruitment is difficult to actually practice in the current situation of labor shortages, and many companies say that it is not realistic.