HUMAN CAPITAL REPORT 2022

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Strategies

Training

Systems

CorporateCulture

04

Recruiting

STRATEGIESCorporateCulture

Strategies

Systems

Training

HUMAN CAPITAL REPORT 2022 - CHAPTER 1

CHAPTER 1Recruiting

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CHAPTER 1 Strategies
O1 Management Approach
High-Level Linkage of Business andOrganizational Strategies to Accomplish Our Mission

MissionSome take the view that organizations are determined by business strategy,
but we also believe that a business strategy is determined by the organizations
to which it applies. That is why we give equal value to our business andorganizational strategies, and consistently link them in order to achieve ourBusiness
Strategy

Organizational
Strategy

LINK

Maximize Customer Value

Maximize Human Capitalmission.
We have made productivity (human capital ROI) the core management
metric for monitoring the degree of linkage between our business strategy andour organizational strategy.
To carry out both our business strategy and organizational strategy, and thusProductivity
Human Capital ROI

improve productivity, we conduct a variety of measures in four domains:
recruiting, development, systems and corporate culture.
All our organizational strategies are designed and implemented based on

Management Areas of Organizational Strategy

Motivation Engineering, our core technology and the source of our competitive
advantage. We continuously apply Motivation Engineering in our own
organizations with the aim of being a role model for all other companies.

Recruiting

Training

Systems

CorporateCulture

HUMAN CAPITAL REPORT 2022 - CHAPTER 1

Through Motivation Engineering,
we provide opportunities to transform organizations and individuals
and create a more meaningful society.

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CHAPTER 1 Strategies
O2 Core Management Metric: Productivity
Human Capital ROI

41.1％

We emphasize productivity as a metric that shows the degree of optimization%of the linkage between our business strategies and our organizational

50

strategies. In particular, the Link and Motivation Group monitors human capital

return on investment (ROI) as a core management metric.
4541.1%

In 2022, human capital ROI for the Group was 41.1%. Human capital ROI
decreased in 2020, and the operating margin temporarily declined due to the40

COVID-19 pandemic. However, improvement in the operating margin resulted
in a high level of human capital ROI in 2022.

35We consider it important to invest appropriately in human capital in order to33.0%

improve organizational results as a return on that investment. Based on this30stance, we will continue to conduct management that aims to balance
investment and returns.

25

24.2%
20
2020

2021

2022

Note: Human capital ROI = Adjusted operating income ÷ Human capital costs
Human capital costs are calculated as total expenditures including employee salaries andbonuses, statutory internal and external welfare expenses, commuting expenses and otherexecutive compensation.

HUMAN CAPITAL REPORT 2022 - CHAPTER 1

Human Capital ROI in 2022:

Ongoing Pursuit of Productivity from Linking
Our Business and Organizational Strategies

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CHAPTER 1 Strategies
O3 Core Theme of Our Organizational Strategy
Business
Strategy

Maximize Human Capital

Enhancing Both Organizations andHuman Resources to Maximize Human Capital
In implementing our organizational strategy, we aim to maximize humancapital. In the Link and Motivation Group, we believe that ongoing efforts tocreate conditions in which highly skilled employees can work with a high level ofengagement will improve the value of human capital and thus lead to businessgrowth.
That is why the core themes of our organizational strategy are organizational
capabilities and human resource capabilities. We monitor these capabilities
Core Theme of Our Organizational Strategy

using two priority indicators. For organizational capabilities, we use
Engagement Ratings, which are an indicator of employee engagement. For

OrganizationalCapabilities

Engagement Rating (ER)human resource capabilities, we use level-specific role survey scores, which areGroup companies with AAA rating

an indicator of the extent to which individuals are fulfilling the roles required of

10 out of 11
Level-Specific Role Survey Score

Human Resource
Capabilities

Percentage ranked “A” or higher

56.8%

them at their respective levels.
To maximize the value of human capital and improve productivity, we will
maintain our focus on improving both organizational capabilities and humanresource capabilities.

HUMAN CAPITAL REPORT 2022 - CHAPTER 1

Maximize Customer Value

LINKOrganizationalStrategy

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CHAPTER 1 Strategies
O4 Priority Indicator for Organizational Capabilities
Group companies with AAA rating

10 out of 11

Engagement Survey Results

A High Level of Employee Engagement
Increases the Effectiveness of Business Strategies

2020(Feb.)
102021(Feb.)
112022(Feb.)
92023(Feb.)
10Less than 67

AA3111Less than 61

Aーーーー

which ranks companies based on their employee engagement results. Currently,

Less than 58

BBBー11ー

10 out of 11 Group companies have the top AAA rating, and we believe thisLess than 55

BBーーーーhigh level of employee engagement is a competitive advantage of the Link andLess than 52

Bーーーー

Less than 48

CCCーーーーLess than 45

CCーーーーIn addition, the Group positions “philosophy” as a priority factor in increasing

Less than 42Cーーーー

employee engagement. This is because philosophy is correlated with theLess than 39DDDーーーーDDーーーー

engagement score, and we want to create an organization that is united by aLess than 33

To increase our organizational capabilities, we focus on improving employee
engagement. As the priority indicator, we monitor our Engagement Rating,

Motivation Group.

corporate philosophy as well as our management philosophy in order tocontinue providing value over the long term. The most recent results are shown

Positioning of Priority Factor “Philosophy” by Company

on the left, and some issues remain.

5 companies

INK BLOT

IDLE LINE

3 companies

1companies

Organizational
climatePhilosophyand strategies

Humanresources

Business
content

Facilities andenvironment

Work content

Systems andbenefits

Toward theboss

2 companies

Companyfoundation

Toward theworkplace

INTERLINK(Strength)
Satisfaction

ICE BLOCK(Weakness)

Toward the company

Expectation
Provision of
information

Decisionmaking

Collection of
information

SupportExternal
adaptation

Transformation
activities

InternacohesivenessSuccession

Note: Engagement factors cover 16 areas.

We will continue to promote various organizational measures for further
improvement

HUMAN CAPITAL REPORT 2022 - CHAPTER 167 or higher

Engagement Rating(Companies)
AAAEngagement ScoreHUMAN CAPITAL REPORT 2022

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CHAPTER 1 Strategies
O5 Priority Indicator for Human Resource Capabilities
Level-Specific Role Survey Results
2021
Number of eligible respondents

Development of the Stance Expected at Each Level
Increases the Effectiveness of Business Strategies

2022

1,386

1,137

713

646

51.4%

56.8%

Number of eligible respondents

159

146

Rank A to AAA

111

110

In the Link and Motivation Group, we believe that “stance” should be given

Percentage of total

69.8%

75.3%

the highest priority in development among the basic skills required of working

Managers and above

Level-Specific Role Surveys

Upper management

Plato Survey

Management

Lincoln Survey

Leaders

Einstein Survey

Mid-level employees

Columbus Survey

Junior employees

Darwin Survey

Senior employees

KOSI Surveyrole survey scores.

adults. Stance refers to an employee’s attitude and sense of his or her role inFramework of Requirements
for Human Resources

an organization. Without a good stance, no matter how many other skills
employees acquire, they will be unable to develop the awareness to deploy
High

Technical Skills

Literacy

Portable Skills

Stanceon level-specific role survey scores, which measure the degree of developmentof an employee’s stance.

The results for 2022 are shown in the table on the left. The percentage ofpeople with a rank of “A” or higher increased compared with the previous year
both for all employees and for those in managerial positions. We therefore
believe that the human resource capabilities of the Link and Motivation Groupare improving.
By further increasing the percentage of people with a rank of “A” or higher
going forward, we will increase the human resource capabilities of thePotential
Low
Motivation

those skills, so acquiring more skills will not lead to results. We therefore focus
Possibility of Subsequent Acquisition

We organized the skills required of working people
into our Framework of Requirements for HumanResources.
Level-specific role surveys measure the degree ofagreement between the expectations and satisfactionof those who work with the survey subject with regard
to that employee’s “stance,” which we consider to be
the most important element in the Framework ofRequirements for Human Resources.
Since the expectations for an employee’s stancediffer by level, we conduct a survey for each level.
Results are divided into 11 levels, the same as in theengagement survey, and we calculate the percentageof survey subjects with a rank of “A” or higher.

To increase human resource capabilities, we focus on improving level-specificorganization, promote our business strategy and improve productivity.

HUMAN CAPITAL REPORT 2022 - CHAPTER 1

Rank A to AAA
Percentage of total

All employees