Combating the issue of rapidly ageing population and the growing talent deficit faced by markets across the globe, Japan’s Daiwa Securities Group has come up with a unique strategy to retain talented professionals in sales by abolishing the mandatory retirement practice followed.
In 2013, the big Japanese brokerage introduced a program to re-employ retired salespeople until the age of 70 by effectively raising the retirement age by five years. However, since the shortage for experienced people in sales continues, the company has decided to scrap off the practice of mandatory retirement for sales people altogether – quite an extraordinary move for a Japanese major.
As per the new system, the re-employed sales professionals can work on full-time basis – five days a week, and will be paid the same as offered to other employees on a salary basis. They will further be eligible for bonus based on performance.
Contractually, these re-employed salespeople will be treated as special fixed-term employees. Their contracts will be renewed every year. They will further receive annual physical and complete medical checkups. In principle, the re-employed can continue to work for the company as long as they wish.
The oldest sales person working at Daiwa from the Kobe branch office will soon be celebrating his 68th birthday in July. He is expected to be the first employee to continue working beyond the age of 70. However, this decision to abolish the retirement practice could backfire with increase in personnel costs over the medium and long-term.
The reason why Daiwa Securities is taking up this bet and risking financial stability of the company is to accomplish two main goals. The first being to strengthen its sales system with veterans on board leading the division and training the junior workforce to perform better. Secondly, to motivate the middle-aged and senior workers.
See: Is 70 Soon Becoming the New Retirement Age?
Considering the fact on the backdrop with Daiwa receiving huge number of customer queries from elderly customers about asset management and inheritance issues, the company believes this move will help win customer trust by addressing their queries promptly with appropriate solutions, especially when employees of the same generation are providing them with solutions after careful understanding of their needs. This improved trust built will reflect on company’s improved business performance.
The driving force behind this move is Seiji Nakata, who became president and CEO of Daiwa Securities Group less than three months ago, Nikkei Asia reports. On assuming the key leadership role Nakata has launched several reform measures including a sweeping overhaul of the sales system.
Daiwa Securities Group, which has so far been engaged in face-to-face sales, will come under pressure to overhaul its business model amid changes rippling through the securities industry. With the advent of artificial intelligence-based financial advisory services taking the industry by storm, only time will tell if Nakata’s visionary ways of creating change will promote business growth and increase profitable revenues.
Also read: Singapore Secures its Ageing Workforce by Making Changes to the Retirement and Re-employment Act
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