J-Phoenix Research, Inc. (Abbr. "JPR") believes that "1) Contributing to society (growth) as a challenger" "2) Relationship (connection)with Stakeholders " and "3) Trust (peace of mind)" are important as the 3 elements of management that create corporate value and win the hearts and minds of all stakeholders. We plan to conduct interviews with the managers of listed companies that practice these three principles and publish articles as guidelines for other listed companies. At the second meeting, we interviewed Tsutomu Wano, President and Group CEO of QUICK CO., LTD, which is a recruitment consulting agency that introduces professionals such as nurses and in construction-related field. (Interview: June 4, 2019) ※Hereinafter honorific titles omitted.
Left: Mr. Tsutomu Wano, Managing Director, Chairman and CEO; Right: Mr. Osamu Miyashita, Representative Director, Our Company
MIYASHITA: Chairman Wano, thank you for giving me the opportunity to interview you today. First of all, I would like to ask you about your company’s recent achievements. In the fiscal year ended March 19, you have achieved growth in both sales and profits for the 9th consecutive year. In the current financial year, net sales increased by 14.3% and operating income increased by 17.4% compared with last financl year, which shows stable growing performance. What do you think of the iafactors behind the current strong business results?
Wano: Fortunately, the business environment and our policies fit well, and we achieved this performance. In the business environment, our business benefited from a labor shortage due to a rise in the ratio of job openings to job applicants and a decline in the unemployment rate, which provided a tailwind for Our Company’s operations. In addition, Our Company has continued to develop its business by actively referring and dispatching personnel in professional jobs where there is a severe shortage of talents. I think that is why our business was able to charge at a higher unit price.
MIYASHITA: Yes, you have a strong business environment, but what do you think are the reasons for this steady growth despite many competitors?
Wano: One strategy is to specialize in recruitment consulting for professional jobs and expand in this field. We have been pioneering the market by targeting low-fee but easily
accessible posts that we used to do in job posting magazines, and we are focusing on the improvement of web sites and differentiating through improvement of usage satisfaction, etc. Furthermore, not only in Our Company, but also in the recruitment consulting industry, where "Trust" and "Achievements" are emphasized, we strived to raise worker satisfaction while taking care of new markets. Based on our management philosophy of "Making everyone involved happy", we are conscious of our relationship with companies’ human resources department, employees and all stakeholders.
Miyashita: I see. Increase in both sales and profit can be attributed to QUICK CO., LTD.’s accumulated trust and achievements as the "Human Resources Department of Japan", with its highest priority placed on the happiness of workers. The management philosophy of "Making everyone involved happy" applies perfectly to the concept of GCC (* To be described later), which Our Company emphasizes greatly, and I feel that Your Company is achieving the ideal corporate management and corporate value creation. Could you tell me more about your Company’s corporate philosophy?
Wano: "Making everyone involved happy" has been a long-standing philosophy since the Company’s founding, and I want to make all stakeholders happy, including shareholders, business partners, job seekers, readers of all media, as well as our employees, their families and local communities. We intend to create value by specializing in "people" and "information" among management resources and providing optimal matching, and to contribute to the happiness of people from all over Japan. To this end, we aim to create a strong base that is not affected by economic trends and to provide the best service possible.
Miyashita: I want to know more about the attracting points of your Company. I would like to ask a question in line with corporate value framework called ‘(Happiness Value Added)’ that we consider according to GCC management philosophy. First of all, with regard to “sales growth” equivalent to "G", you said that your company is developing business with the aim of achieving a revenue of 100 billion. What is your outlook for the domestic recruitment consulting business?
Wano: We develop human resource services that specialize in specialized fields such as nurses, but we will continue to expand while incorporating new business areas one by one without changing the policy. As it is a blue ocean, it is difficult to estimate the market size, but I think the potential market is big, so I am continuing to invest upfront.
Miyashita: We can expect stable growth in Japan, but it seems that overseas businesses also contribute to earnings. This seems to be expected to grow further due to recent deregulation. In addition, I believe that the growth of Indeed is contributing to earnings, and further growth by combining your company’s analog and digital strengths can be expected, what do you think?
Wano: First of all, since human resource business relating to specific skills and interns has huge risks, we have yet to decide whether or not to start overseas expansion. Currently, in our overseas business, we provide human resource related services, such as referral, dispatching and personnel and labor consulting to local Japanese companies that have expanded overseas. However, the target of 100 billion yen cannot be achieved by only targeting Japanese. On the other hand, it is said that there are more than 800,000 foreign students from Asia, mainly Chinese, who are currently seeking employment in English speaking countries and Western companies. I believe that it is an opportunity to connect these two, and in order to achieve this, I would like to focus on global human resource services – "cross- border recruitment", including support for changing jobs across borders.
Miyashita: Up until now, Japanese people living in foreign countries and local Japanese companies were the main targets, but companies and people will become more global from
now on. To be sure, Chinese students are numerous and excellent. I think that such people can also be brought in if the jobs in Japan are attractive. However, there are many global human resource companies, how will you differentiate your company from others?
Wanno: Global talent companies basically aim for high commissions in the form of headhunting. For example, I think it's close to a scout for talents in financial industry and for high-skilled engineers. Therefore, there are not many companies that are expanding crossborder in terms of numbers. In addition, because the human resource industry has become a regulated industry in China, there is no such expansion movement as it is treated carefully. In conclusion, we believe that global cross-border recruitment business is very promising in the future. In order to target the needs of a wide area of the world, a website is essential, and we intend to construct it and expand across the world.
Miyashita: Well, I see. Next, I would like to ask about “ROIC (return on invested capital)” which is equivalent to “Connection” in the GCC concept. The characteristic of your company is the extensive care for the target personnel and recruiting companies, but in what ways do you provide these solutions?
Wano: We provide one-stop solutions for recruiting. We support customers in all areas related to human resources, from recruitment advertisements, human resource and labor consulting to in-house training. However, I think that this is a great advantage not only for the client company but also for job seekers. We also build a network of human resource fields and build trust by providing information to personnel in charge of corporate human resource departments.
Miyashita: By promoting “networking of human resources” in the context of “Japan's human resources department,” you are strengthening ties. With such a measure, your company's ROIC (return on invested capital) is a spectacular 52.9%. This is the top level among listed companies in Japan. Also, as a future direction, the Indeed business can be expected to improve the profitability, is that the case?
Wano: The growth in Indeed is great. 80% of sales in Indeed are attributed to Indeed as commissions, and only the remaining 20% are sales goes to our company, so our revenues as an agent are not that large. However, as more information is shown and more job seekers click on the information posted, the higher our operational revenues will grow, and we intend to increase profits by strengthening this service.
Miyashita: I also believe that "Programmatic Advertising" will be a driver for expanding profit margins in the future. Among them, eole Inc. , the company which our company wrote a report on the other day, is also aiming at the market top with programmatic advertising. Did you know the company called eole Inc.? (* The report of eole Inc.  is here.) https://j-phoenix.com/wpcontent/uploads/2019/05/2334_eole_midtermVision_20190517.pdf.pdf
Wano: No, I didn't know that, but it sounds like a very interesting company. I felt it has an affinity with our company.
Miyashita: I believe that employees of recruitment agencies should have its employees working actively in the first place. I think your Company is doing well in this regard. In short, employees feel that helping others is a pleasant thing to do. I think that because the people who work here are happy, this job is worth doing and customers are enjoying using your services. What do you think?
Wano: I think that's right. I think it is manifested in our company through the phrase "Low turnover rate". After all, it is a feature that the basis of the way of thinking is thoroughly taught. As Mr. Miyashita said, supporting people's lives is very rewarding which is a pleasure that cannot be exchanged by money. However, the salary cannot be too low, so I carefully consider the balance as well.
MIYASHITA: Thank you for describing the various initiatives in detail. I would like to summarize some of the QUICK CO., LTD.’s actions you have taught me so far. The three theoretical factors of corporate value are: sales growth, profitability on invested capital, and control of business risk, which, in difficult words, control of the cost of capital. However, this is generally not quite touching, so JPR organizes it into more exciting concepts. It's a concept called "Excitement of Growth- Growing through social contribution as a challenger"; "Excitement of Connection- Enhancement of profitability and asset efficiency by bonding of all stakeholders"; "Excitement of Confidence- Enhancement of reliability and security". At Our Company, we have adopted the acronym- ‘GCC’ Management®*. If this can be put into practice, the five desires of human beings advocated by Maslow’s psychology theory can be satisfied, and happiness and improvement of corporate value can be achieved simultaneously. Your Company’s corporate management and value creation initiatives can be summarized neatly in this way. (That's all for the interview.)
JPR tried to evaluate corporate value based on interview articles. Under the conservative assumption of achieving sales of ¥50 billion in 10 years, we theoretically estimated shareholder value of ¥74.2 billion using "excess profit method" which estimates shareholder value based on 3 factors of corporate value. This is more than double the current market value.