Origins of Headhunting
Headhunting is a recruitment method in which companies do not disclose job information to the general public, but have specialists called headhunters search for candidates.
How did headhunting come about and how was it introduced to Japan in the first place?
I started East West Consulting in 1987 as the first executive search firm in Japan, at a time when lifetime employment and seniority systems were the norm and it was illegal to “scout” for people from other companies.
This article provides an overview of the origins of headhunting and how it came into Japan, together with the historical background.
Origins of Headhunting
The Great Depression began in New York in 1929.
Many companies went bankrupt.
McKinsey, which had started as an up-and-coming consulting firm, and major auditing firms such as PWC and KPMG acted as trustees to handle the bankrupt companies.
The company went bankrupt due to a stock market crash, but McKinsey noticed that there were talented people in the company and began introducing them to companies that needed them.
Later, in 1951, Ward Howell became independent from McKinsey’s executive search division and established the “Executive Search” firm, which became a pioneer in the field of executive search.
In 1951, Ward Howell was spun off from McKinsey’s executive search division, giving birth to a genuine headhunting firm that would become a pioneer in the field of executive search.
Then in 1953, Heidrick & Struggle became independent from Booz Allen Hamilton, and in the late 1960s, Korn/Ferry became independent from the auditing firm KPMG.
In this way, executive search (commonly known as headhunting) has been entrusted with important tasks in the development and restructuring of companies, and has existed as a key element of management.
In Japan, before the enactment of the Temporary Staffing Law in 1986, the human resource business did not exist, and human resources were introduced as part of consulting services.
In the mid-1980s, when foreign companies began to enter the Japanese market, search firms in Europe and the U.S. began headhunting for personnel who could develop business in Japan in response to requests from these companies.
However, it was not easy for the limited number of Western search firms to meet the demand of foreign companies.
East West Consulting and other Japanese headhunting firms were established in response.
This is when the deregulation of 1987 started the human resource business.
By 1990, the number of recruiting firms, which included not only executives but also general personnel, had swelled to about 400.
However, with the bursting of the stock market and real estate bubble in Japan, the market suddenly cooled and the number of recruiting firms dropped to 200, half of what it had been in the early 1990s.
Many foreign companies continued to enter the market in the 1990s, and the number of recruitment agencies increased again.