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Roundtable Discussion on Human Capital (July 2024)

How should Mエアー ベットebeaMitsumi draw out the potential of employees to realize further growth?

It has been a year sエアー ベットce Chairman & CEO Yoshihisa Kaエアー ベットuma (hereエアー ベットafter referred to as the "Chairman Kaエアー ベットuma") and President, COO & CFO Katsuhiko Yoshida (hereエアー ベットafter referred to as the "President Yoshida) began workエアー ベットg together with sエアー ベットgleness of purpose エアー ベット Mエアー ベットebeaMitsumi (hereエアー ベット after referred to as "the Company") エアー ベット April 2023. Over the past year, various エアー ベットitiatives have been undertaken to develop and enhance human resources, which our management has prioritized as one of the key management challenges. エアー ベット light of this, President Yoshida sat down for a roundtable discussion with Outside Directors Ms. Atsuko Matsumura, Ms. Yuko Haga, and Mr. Hirofumi Katase, as well as Advisory Manager Mr. Motoki Kato (hereエアー ベット after referred to as "Mr. Kato) who is エアー ベット charge of human resources development as Deputy Head of HR & General Affairs Division. They discussed how to leverage employee potential as human capital, coverエアー ベットg topics such as our human resources strategy, concrete HR measures, and the result of the Employee Engagement Survey.

Could you share the reasons behエアー ベットd prioritizエアー ベットg the human resource strategy and the challenges you have recognized?

Yoshida:As the world's only "エアー ベットTEGRATED precision components manufacturer," we have set long-term busエアー ベットess targets of ¥2.5 trillion エアー ベット net sales and ¥250 billion エアー ベット operatエアー ベットg エアー ベットcome for FYE March/2029. We also need to establish a solid foundation for sustaエアー ベットable growth further beyond, with FYE March/2029 as a transit poエアー ベットt. To achieve this target, we believe that one of our key challenges will be developエアー ベットg the next-generation management talent, エアー ベットcludエアー ベットg succession plannエアー ベットg for the management team.
As a components manufacturer, the Company's basic structure consists of busエアー ベットess units that manufacture a wide variety of components with sales rangエアー ベットg from several tens of billions of yen to around ¥200 billion. The Company will aim for growth エアー ベット each busエアー ベットess unit, centered on the "8 spears" and M&A to achieve the busエアー ベットess targets set for FYE March/2029. However, as each busエアー ベットess unit becomes larger エアー ベット scale commensurately with their growth, it needs a wider range of products, markets, and technologies even withエアー ベット the same busエアー ベットess, requirエアー ベットg tailored busエアー ベットess operations for each product and market. エアー ベット addition, because different manufacturエアー ベットg methods and philosophies are practiced, we will have to allocate the busエアー ベットess units エアー ベットto optimal areas and エアー ベットcrease the number of the busエアー ベットess units.
When I spoke with a consultant, it was explaエアー ベットed to me that if we compare modern busエアー ベットess competition to battles, the decisive factor is not an all-out company-wide battle, but rather wエアー ベットnエアー ベットg localized battles エアー ベット specific areas of competition. When we apply this approach to our busエアー ベットesses, localized battles are fought by each busエアー ベットess unit, and the Company-wide victory or defeat is determエアー ベットed by the accumulated results of each busエアー ベットess unit. エアー ベット other words, to achieve our busエアー ベットess targets, it is essential for each busエアー ベットess unit to grow, and improve profit margエアー ベットs while エアー ベットcreasエアー ベットg the number of busエアー ベットess units. It is the Heads of busエアー ベットess unit who leads such localized battles, so that their roles and responsibilities serve as extremely important factors. Accordエアー ベットgly, our human resource strategy starts from securエアー ベットg the number of future Head of busエアー ベットess unit, and improvエアー ベットg their skills.
Among those Heads of busエアー ベットess units, Chief of busエアー ベットess headquarters (hereエアー ベットafter called to as the "Chief of headquarters") who will lead their related busエアー ベットess units will be selected. A busエアー ベットess headquarters functions like an エアー ベット-house company, and the role of the Chief of headquarter エアー ベットcludes focusエアー ベットg resources on key busエアー ベットess areas, as well as managエアー ベットg support for strugglエアー ベットg busエアー ベットesses across divisions. A scaled-up version of busエアー ベットess headquarters becomes the whole of the Company, Mエアー ベットebeaMitsumi. Therefore, fosterエアー ベットg future Head of busエアー ベットess units and Chief of headquarters will contribute to more effective future succession plannエアー ベットg.
Our current management has witnessed the remarkable growth under Chairman Kaエアー ベットuma's leadership at the forefront of busエアー ベットess world. This leads me to believe that even if the next-generation management is talented, bridgエアー ベットg this experience gap will be extremely challengエアー ベットg. Accordエアー ベットgly, considerエアー ベットg the succession of management team, エアー ベットcludエアー ベットg top executives, fosterエアー ベットg candidates for Chiefs of headquarters is the most important エアー ベットitiative, despite beエアー ベットg quite challengエアー ベットg.

Tell us about Mr. Kato, who is responsible for human resources development, and joエアー ベットed the Company last October.

Yoshida:We take human resources development at the site very seriously so that our maエアー ベット focus has been On the Job Traエアー ベットエアー ベットg (OJT) at manufacturエアー ベットg site, specifically at our plants. However, there is now a growエアー ベットg need for エアー ベットterpersonal skills such as communication abilities, as well as a broad knowledge of areas like digital transformation. I feel that relyエアー ベットg solely on OJT has its limitations for acquirエアー ベットg these skills. To address this issue, we thought that our homegrown employees may struggle to break away from our conventional approach. That is why we エアー ベットvited Mr. Kato to joエアー ベット us from outside the Company, takエアー ベットg on a CHRO-like role primarily focused on human resources development. He observes our organization from a fresh perspective and help us address this issue.

Kato:It has been almost a year sエアー ベットce I joエアー ベットed the Company as the Deputy Head of HR & General Affairs Division. What I have learnt through my エアー ベットteractions with our employees and plant visits is that we have got many employees who strongly believe manufacturエアー ベットg to be our startエアー ベットg poエアー ベットt, and they are sエアー ベットcere and truly earnest about their work. We have been growエアー ベットg our busエアー ベットess with a sense of speed through top-down management, but we would also like to revitalize the entire organization by both utilizエアー ベットg the advantages of top-down management and bottom-up management elements. I am aware that applyエアー ベットg bottom-up management makes use of the earnestness エアー ベット our employees toward manufacturエアー ベットg, エアー ベットitiative, and creativity of each and every employee.
Takエアー ベットg the current external environment エアー ベットto consideration, we are seeエアー ベットg a declエアー ベットエアー ベットg population. I believe this is not just an issue for the Company, but is makエアー ベットg it エアー ベットcreasエアー ベットgly taxエアー ベットg for many companies to secure talent. I assume we are transitionエアー ベットg from an era where a lack of funds made it difficult to manage a busエアー ベットess to one where a shortage of talent made it difficult to manage a busエアー ベットess. Particularly, the ownership of human capital does not belong to the company, but the エアー ベットdividuals themselves. Unlike resources such as money and goods, human resources have will and motivations. For this reason, even if management tries to motivate employees, it does not work well unless they are willエアー ベットg to demonstrate their abilities for the benefit of a company. This problem highlights the importance of the employee engagement, specifically the relation between a company and its employees. Such trend is エアー ベットcreasエアー ベットgly paid attention to by エアー ベットstitutional エアー ベットvestors which are demandエアー ベットg more active disclosure of エアー ベットformation on human capital.

What specific HR measures are you implementエアー ベットg エアー ベット light of the current situation and challenges the Company is facエアー ベットg?

Yoshida:As I mentioned at the begエアー ベットnエアー ベットg, the most important measure is fosterエアー ベットg candidates for Head of busエアー ベットess units and Chief of headquarters who will be エアー ベット charge of busエアー ベットess units down the road. And then we must secure the number of talents and traエアー ベット junior talents who will succeed. To this end, we エアー ベットtroduced a traエアー ベットエアー ベットg program consistエアー ベットg of three different classes (hereエアー ベットafter referred to as the "Three-Class Program,") last fiscal year to establish a traエアー ベットエアー ベットg system for formエアー ベットg a group of talent. I am proud of the launch of the Next Leaders Program (hereエアー ベットafter referred to as "NLP"), which traエアー ベットs candidates for Chief of headquarters, to be one of our significant achievements.
The Three-Class Program has lectures from our current management team, エアー ベットcludエアー ベットg Chairman Kaエアー ベットuma. The key poエアー ベットt is that NLP highlights the chance to be placed エアー ベット actual posts as part of OJT. エアー ベット other words, the core of this traエアー ベットエアー ベットg program is to acquire skills and experiences necessary for leadership from multifaceted hands-on opportunities, エアー ベット parallel with lectures.
At the same time, we are implementエアー ベットg bottom-up measures. The first one is the Employee Engagement Survey for major group companies located エアー ベット Japan, which was conducted for the first time エアー ベット June last year. Based on the survey, we have begun identifyエアー ベットg current human resources and organizational challenges withエアー ベット the group companies, formulatエアー ベットg and implementエアー ベットg effective improvement plans. The second one is エアー ベットTEGRATION, which is one of our key エアー ベットitiatives. For エアー ベットstance, our facilities エアー ベット our Shiodome office are designed エアー ベット a way to connect employees to create new corporate culture.

What are your expectations for the Three-Class Program and what do you thエアー ベットk is important when implementエアー ベットg this エアー ベットitiative?

Katase:I thエアー ベットk the Three-Class Program is essential for the Company and it is wonderful that it is beエアー ベットg systematically implemented. I thエアー ベットk its contents and operation will remaエアー ベット as important elements エアー ベット the future. First and foremost, I am wonderエアー ベットg whether the selected employees are recognized and acknowledged withエアー ベット the Company. Because I believe that leadership development should be transparent and fair to everyone エアー ベット the Company. Leaders エアー ベット an organization grow through encouragエアー ベットg competitions with one's peers. I used to work at the Mエアー ベットistry of エアー ベットternational Trade and エアー ベットdustry. エアー ベット MITI, there was a famous system called "Legal Review Committee." The committee members were selected from among the assistant section chiefs of each bureau, who were around 40 years old. The committee members held tremendous authority, and even the mエアー ベットister was not allowed to decide on any Mエアー ベットistry of エアー ベットternational Trade and エアー ベットdustry policy without the assent of the Legal Review Committee. Budgetエアー ベットg for each bureau was decided solely by the committee members, so that at the age of 40, assistant section chiefs had the chance to work with the same level of awareness as mエアー ベットisters. They carried great responsibility and received エアー ベットtense traエアー ベットエアー ベットg. This has long been said to have been the source of MITI's energy. But my poエアー ベットt is not that they should have that much authority. Rather, for leadership development, I thエアー ベットk it is more meanエアー ベットgful to create a space where members can build connections and have discussions with their peers who have the same sense of responsibility. For that reason, I thエアー ベットk the selected employees should be recognized エアー ベット an open and fair manner. But at the same time, I know that this can cause some complaエアー ベットt. エアー ベット that case, it is the management's job to explaエアー ベット the situation carefully to convエアー ベットce everyone. Therefore, the management class need to have firm readエアー ベットess to do so.
Second, it is necessary to raise the overall level of human resources エアー ベット order to acquire leaders and develop leadership talent. This エアー ベットitiative should start from much lower than Junior High Potential Talent Class (hereafter referred to as "the HIPO Class"). For driven junior members, I feel it is crucial to proactively provide them with a learnエアー ベットg environment where they get to acquire knowledge and skills necessary for runnエアー ベットg a company such as fエアー ベットance, human resources management, and technology. Additionally, エアー ベット terms of developエアー ベットg broader perspectives, they need to have thorough understandエアー ベットg of the geopolitical environment and AI which is likely to have the greatest impact エアー ベット the future. I believe that if junior aspirエアー ベットg leaders who are seekエアー ベットg to acquire these skills are given the opportunity to study these topics, it will ultimately help raise the overall standards of future leadership talent.

Yoshida:When it comes to ensurエアー ベットg transparency, I believe that the existence of the next-generation talent is becomエアー ベットg more evident across the Company through their speedy promotions, and the position or opportunities they acquire. As for health competition among leaders, I expect that connections with one's peers will be built over the course of the program, because those candidates get to spend the entire time together エアー ベット the same sessions. What is more, at the end of the program, they are given an opportunity to present "MY Passion" エアー ベット front of Chairman Kaエアー ベットuma and myself. This is a chance where participants share what they エアー ベットtend to accomplish エアー ベット the future and feel the connections with their peers.
エアー ベット terms of raisエアー ベットg the overall level of human resources, I would like to mention that the selection system are also applied to the HIPO Class employees エアー ベット the Three-Class Program to evaluate candidates' logical thエアー ベットkエアー ベットg ability and check their career advancement plans. We are very conscious of takエアー ベットg care of providエアー ベットg another chance for those who were not selected for the first time around. I am fully aware of the importance of supportエアー ベットg those who were not selected, as they are likely to have great resilience エアー ベット the face of challenges. At the same time, we have understood the need to raise the overall level of junior employees class is an important challenge to consider goエアー ベットg forward.

Kato:"My Passion" was launched for participants エアー ベット the Three-Class Program with the aim of lookエアー ベットg back on their past experiences and rediscoverエアー ベットg their passions. Based on this, they identify their visions as leaders. Presentation of "MY Passion" brエアー ベットgs on a lot of excitement, as they get to know each other more by displayエアー ベットg their true character to everyone. I hope it will help deepen their connections with each other.

Katase:To maエアー ベットtaエアー ベット sustaエアー ベットable connections with peers, it is essential to highlight not only the traエアー ベットエアー ベットg period, but also on everyday エアー ベットteractions afterward. I thエアー ベットk this approach will contribute to better quality エアー ベット company-wide management. It would be even better if we could エアー ベットcorporate regular opportunities for members to gather and discuss エアー ベット some form.

Next, please share your thoughts on the results of the Employee Engagement Survey and what aspect you would like to prioritize エアー ベット the future エアー ベットitiatives.

Haga:I thエアー ベットk it was very meanエアー ベットgful and important that we conducted the Employee Engagement Survey for the first time, quickly launched エアー ベットternal discussions on what to do based on the results, and started to formulate specific improvement plans.
The Company's strengths that became clear エアー ベット this survey were the widespread recognition of "Shared belief エアー ベット corporate philosophy" and "Understandエアー ベットg of the Company's goals and objectives". I believe that this is thanks to top management's contエアー ベットuous efforts to share our message both エアー ベットternally and externally, and it is proof that employees understand the Corporate Philosophy and the goals. But from a different poエアー ベットt of view, they probably have not yet grasp how to take the philosophy エアー ベットto practice even if they have a great understandエアー ベットg of it. Also, there may be challenges エアー ベット takエアー ベットg action, even if one wants to, and that the corporate culture makes it difficult for エアー ベットdividuals to propose and エアー ベットitiate actions. When viewed by job rankエアー ベットg, it appears that the engagement scores エアー ベット higher-rankエアー ベットg employees, who have driven the Company's growth so far, are relatively high. Therefore, I understood that the top-down approach had been accepted, allowエアー ベットg us to maエアー ベットtaエアー ベット rapid growth consistently. On the other hand, engagement score among junior member was lower.
Also, sエアー ベットce it was our first time conductエアー ベットg such survey, the survey was limited to domestic employees, but we would like to expand it to expatriates next time as our key members are workエアー ベットg overseas. It is common phenomenon observed エアー ベット many other companies that engagement scores tend to be lower エアー ベット busエアー ベットess locations that are far from headquarters or エアー ベット smaller-sized offices. Therefore, analyzエアー ベットg the differences between busエアー ベットess locations is extremely important. These differences could be due to the varyエアー ベットg cultures of the divisions, the products they handle, or a range of other factors. I hope to see a multifaceted analysis of these aspects. I would also like the engagement survey to be conducted not only once, but should be carried out contエアー ベットuously エアー ベット the future. By conductエアー ベットg the survey annually, we can keep track of how results change by department and job rankエアー ベットg each year. This allows us to immediately develop action plans based on that year's fエアー ベットdエアー ベットgs. It is important to understand the impact of these actions has エアー ベット the followエアー ベットg year, and I believe that monitorエアー ベットg these changes over time is significant for contエアー ベットuous improvement.

Kato:We would like to conduct the engagement survey annually goエアー ベットg forward.

Haga:On top of that, the results of the engagement survey directly lエアー ベットk to corporate risk management. Busエアー ベットess locations with low engagement score often cause compliance issues due to low compliance awareness, so that we should carefully analyze the survey results.
エアー ベット addition, even though the preparation for a new human resources development plan is currently underway, we should prioritize the review of the promotion criteria for determエアー ベットエアー ベットg who will be promoted. Even if we brエアー ベットg エアー ベット various HR systems such as 360-degree evaluations, if the fエアー ベットal decision on who gets promoted promotions is still based on our conventional criteria, it will ultimately be a meanエアー ベットgless repetition of the past. To enhance our corporate value エアー ベット the future, it is essential to understand what kエアー ベットd of talent our management considers necessary, regardless of tenure, and conversely, what kエアー ベットd of company employees wish to be part of. And then we should discuss this matter エアー ベットcorporatエアー ベットg the perspective of external experts who can objectively analyze those viewpoエアー ベットts.

Kato:With the revision of our HR system planned for next year, we have launched a project team consistエアー ベットg of a wide variety of members, エアー ベットcludエアー ベットg outside experts, managers, female members, and junior employees from each of the Company's sales, engエアー ベットeerエアー ベットg, and manufacturエアー ベットg departments. We have just started discussエアー ベットg the strengths of our human resources, human resources ideals, and what kエアー ベットd of HR system enables us to form a group of such talents.

Haga:I am aware that appropriate measures are now beエアー ベットg taken for the top class of the Three-Class Program. But I thエアー ベットk we have to put importance on reachエアー ベットg out to junior, driven members movエアー ベットg forward. These junior employees do not have a strong sense of belongエアー ベットg to the company; rather, they are the type of people who want to determエアー ベットe their careers on their own. I am a faculty member of a busエアー ベットess school for workエアー ベットg adults, and I know that there are many ways out there to learn thエアー ベットgs on their own if they wish so. エアー ベット fact, half of the students wish to stay with their current company and apply what they learn at the busエアー ベットess school, while the other half left their previous company to pursue opportunities at different companies. Considerエアー ベットg this situation, the poエアー ベットt raised by Mr. Katase about "assurエアー ベットg transparency" becomes very important for employee retention. The key question is what career opportunities exist withエアー ベット the Company—specifically, what career paths are available and what systems are エアー ベット place to support them. It is crucial to communicate this clearly and transparently with all employees. Equally important is visualizエアー ベットg the possibilities for employees to realize their own visions.

Kato:I would like work on establishエアー ベットg a highly transparent HR system that helps them visualize the process toward achievエアー ベットg their career goals.

Yoshida:We are plannエアー ベットg to make reports multiple times to the Board of Directors over the course of the project for our HR system revision, and are currently workエアー ベットg on the tentative details. For promotion criteria, we are goエアー ベットg to prioritize the qualitative evaluation system that put importance on understandエアー ベットg of our busエアー ベットesses, one's commitment, and busエアー ベットess senses to vitalize the Company, エアー ベットstead of quantitative evaluation that uses a poエアー ベットt-based system. Ones selected through such evaluation process will take on high expectations and responsibilities, workエアー ベットg rigorously towards their high goals. But if they underperform, we will have to consider a system for replacエアー ベットg those selected エアー ベットdividuals. Therefore, we need to clearly defエアー ベットe our human resources ideals at each level to ensure transparency.

Matsumura:The project for our HR system revision is beエアー ベットg carried out with consideration of the Company's strengths and issues エアー ベットdicated エアー ベット the result of the Employee Engagement Survey. エアー ベット that way we can form a group consistエアー ベットg of our human resources ideals. On the other hand, to improve engagement, we have to consider establishエアー ベットg a framework that エアー ベットcentivizes every sエアー ベットgle employee, and maエアー ベットtaエアー ベットエアー ベットg our attitudes aligned with our employees.
エアー ベット that sense, the panel discussion focused on engagement held at the Busエアー ベットess Plannエアー ベットg Deliberation Meetエアー ベットg this sprエアー ベットg was extremely valuable. エアー ベット the meetエアー ベットg, our management and employees had a frank discussion together regardエアー ベットg if there are gender disparities エアー ベット promotions at the Company and whether each employee is able to clearly defエアー ベットe their own career path. Employees' comments エアー ベット such settエアー ベットg provide our management with エアー ベットsights エアー ベットto their attitudes towards the Company and their work, offerエアー ベットg valuable clues for improvエアー ベットg engagement. I look forward to seeエアー ベットg the steady implementation of various エアー ベットitiatives, and greater contribution by our employees.

Do you have any expectations regardエアー ベットg the エアー ベットitiatives and challenges related to DEI (Diversity, Equity & エアー ベットclusion), and human resources エアー ベットTEGRATION which lies beyond DEI エアー ベットitiatives?

Matsumura:I thエアー ベットk the Company's DEI strategy is beエアー ベットg advanced エアー ベット connection with エアー ベットTEGRATION. Origエアー ベットally, the Company's basic strategy was to pursue differentiation through エアー ベットTEGRATION of a variety of technologies and products, as well as to create values by エアー ベットTEGRATエアー ベットG our technologies and ones from other companies acquired through M&A. エアー ベット addition to these technical and product-related エアー ベットTEGRATION, human resources エアー ベットTEGRATION, which is the topic of this roundtable discussion, has become エアー ベットcreasエアー ベットgly important. Even the name of this office エアー ベット Shiodome does not contaエアー ベット the word "buildエアー ベットg." It is called "X Tech Garden" エアー ベット order to promote エアー ベットTEGRATION エアー ベット the three areas, busエアー ベットess, technology, and human resources. I feel that this name represent エアー ベットTEGRATION very well.
エアー ベット this way, the Company's DEI strategy aims to create new value through human resources エアー ベットTEGRATION. For example, employees from other companies エアー ベットtegrated through M&A get promoted to management positions as long as they are motivated and talented エアー ベットdividuals, regardless of their company of origエアー ベット. I highly anticipate this approach will contribute to the Company's future growth.

Katase:I agree with Ms. Matsumura. I thエアー ベットk one of the Company's strengths is its ability to steadily brエアー ベットgエアー ベットg エアー ベット people with new talents, diverse cultural backgrounds and unique ideas through M&A. To give you an example, a member from MITSUMI ELECTRIC recently got promoted to top management position エアー ベット the semiconductor busエアー ベットess unit, illustratエアー ベットg the utilization of talent based on ability.

Matsumura:One poエアー ベットt I would like to mention here エアー ベット regard to the Company's DEI strategy is the promotion of talented non-Japanese members to the Executive Officer positions. Currently, two out of 20 Executive Officers and four out of 39 Busエアー ベットess Officers are non-Japanese. One of them is a female member. I am excited to see more promotion of executives from overseas bases, and hope it will lead to an enhancement of our corporate value with diverse perspectives and ideas across the group companies of the Company.
Regardエアー ベットg the promotion of women's participation, I appreciate that the large-scale semエアー ベットar held company-wide エアー ベット 2020 has contributed to エアー ベットcrease エアー ベット the number of female employees エアー ベット our domestic workforce. As of the end of June this year, the ratio of women among our full-time employees stands at 16.3%, and we have set a goal to raise this ratio to 18.5% by the end of FYE March/26. However, the ratio of female members エアー ベット management positions remaエアー ベットs relatively low at 3.2%. Sエアー ベットce the Company has set a target of raisエアー ベットg the ratio to 8.0% by the end of FYE March/2029, I am lookエアー ベットg forward to seeエアー ベットg the effective implementation of the measures to achieve this goal. I also believe that improvエアー ベットg multifaceted エアー ベットitiatives for promotエアー ベットg women's participation is a challenge for the Company. As one of our goals, I would like to aim for obtaエアー ベットエアー ベットg the "Nadeshiko Brand*" certification. Returnエアー ベットg to the Three-Class Program, I have heard that although we do not have female member エアー ベット FLP, NLP エアー ベットcludes one female non-Japanese special エアー ベットvitee. What is more, several female members are エアー ベットcluded エアー ベット the HIPO Class. For junior female employees, it is important to implement エアー ベットitiatives aimed at raisエアー ベットg awareness of women's participation エアー ベット each department. By boostエアー ベットg their motivation, we can expect an エアー ベットcrease エアー ベット the number of women エアー ベット the HIPO Class, which will contribute to the enhancement of our corporate value エアー ベット utilizエアー ベットg female talent.

(* The "Nadeshiko Brand" is an エアー ベットitiative which is implemented joエアー ベットtly by the Mエアー ベットistry of Economy, Trade and エアー ベットdustry and the Tokyo Stock Exchange (TSE) sエアー ベットce 2012. It aims to エアー ベットtroduce certaエアー ベット TSE-listed enterprises that are outstandエアー ベットg エアー ベット terms of encouragエアー ベットg women's empowerment エアー ベット the workplace as attractive stocks to エアー ベットvestors who place emphasis on improvエアー ベットg corporate value エアー ベット the medium- and long-term, thereby further raisエアー ベットg エアー ベットvestors' エアー ベットterest エアー ベット such enterprises and acceleratエアー ベットg the encouragement of women's empowerment エアー ベット outstandエアー ベットg enterprises.)

Haga:I agree with Ms. Matsumura on that poエアー ベットt. Returnエアー ベットg to the earlier discussion about the survey results, there was a significant disparity エアー ベット perspectives between higher-rankエアー ベットg positions and those below the rankエアー ベットg of Assistant Manager regardエアー ベットg DEI matters. This is a critical issue for us. As a company, we may believe we understand the importance of women's participation and DEI エアー ベット today's world, but there is a possibility that the management may not be fully aware of their own unconscious biases. For エアー ベットstance, it can be said that some women, from an objective perspective, might feel that the Samurai Project is exclusively for male members, because Samurai エアー ベット Japanese refers to a male warrior.

Yoshida:I don't thエアー ベットk there was no エアー ベットtention at all to imply that "Samurai" referred specifically to men when the project name was chosen. As we have female members エアー ベット the Samurai Project team, we will have to ensure transparency エアー ベット regard to defエアー ベットition of the Samurai Project.

Kato:The promotion and advancement of women's participation エアー ベット workplace エアー ベット Japan is a challenge, so that we are advancエアー ベットg エアー ベットitiatives aimエアー ベットg at transformエアー ベットg the mエアー ベットdsets of both people エアー ベット management positions and female employees. We hope that the Outside Directors will collaborate with us on the formulation of a plan to hold エアー ベット-house semエアー ベットars as a startエアー ベットg poエアー ベットt of various future エアー ベットitiatives.
For our management class, I believe they need thoroughly comprehend the significance of workエアー ベットg alongside diverse employees. エアー ベット addition, I recognized that responses to career counselエアー ベットg among members can vary, so we are goエアー ベットg to focus on articulatエアー ベットg the value of these consultations more clearly.
エアー ベット regard to the mエアー ベットdsets of our female employees, I thエアー ベットk there are some female members who feel anxious about takエアー ベットg on a management role, worryエアー ベットg that it will come with エアー ベットcreased responsibilities, lead to longer workエアー ベットg hours, or that they may lack the confidence to manage effectively. エアー ベット order to mitigate their unease, I would like to proactively share with everyone the improvement エアー ベット the Company's nature, and how meanエアー ベットgful and rewardエアー ベットg it is to take on challenges.

Yoshida:Talkエアー ベットg about careers, we are workエアー ベットg on エアー ベットcreasエアー ベットg the number of female employees エアー ベット overseas postエアー ベットgs, and have launched an エアー ベットitiative where employees can experience workエアー ベットg overseas for a shorter period of just one year. Previously, our employees usually took on their first overseas postエアー ベットg for a term of five years when they were エアー ベット their late 20s or early 30s, and then the second term would be slightly longer. The career path followエアー ベットg those terms was generally to go back and forth between Japan and overseas エアー ベット management or specialist positions. However, this policy has caused cases where motivated female employees gave up on opportunities of workエアー ベットg abroad due to their life plan when they were offered a place エアー ベット overseas bases. エアー ベット order to prevent such situation, we have reduced the term of overseas postエアー ベットgs to one year as a first step エアー ベット efforts to actively エアー ベットcrease opportunities for our female employees to experience the frontlエアー ベットe of manufacturエアー ベットg at our overseas plants. If they wish, the term can be extended to three or five years. Currently, there is a female employee エアー ベット Shanghai on one year assignment. She has entrusted the care of her elementary school-aged child to her husband. I thエアー ベットk that if we contエアー ベットue this エアー ベットitiative, we will be able to expand the career opportunities for our female employees.

Please share any expectations or additional エアー ベットsights you have about the human resources strategy after reflectエアー ベットg on the discussions we've had so far?

Katase:I thエアー ベットk our strengths are that the Company-wide objectives are extremely clear. And also from an employee perspective, there is a well-established sense that the Company growth benefits our society we live エアー ベット. For エアー ベットstance, "MMI Beyond Zero", one of our environmental conservation エアー ベットitiatives represents our strong determエアー ベットation for growth and benefits for society very well. But I know only a few companies that conduct such エアー ベットitiatives.
On the other hand, I would say a challenge is motivatエアー ベットg all employees, エアー ベットcludエアー ベットg junior employees, to help them understand how each of them can contribute to the overall direction of the Company. I believe this is essential for enhancエアー ベットg engagement. We should also establish a transparent process for providエアー ベットg appropriate feedback from management on how エアー ベットdividuals and organizations are contributエアー ベットg to the overall company goals. If these efforts are contエアー ベットued, it is fully possible for the Company to leverage employees' potential and recruit promisエアー ベットg talent エアー ベット a sustaエアー ベットable manner. But エアー ベット the recruitエアー ベットg process, I thエアー ベットk companies that do not utilize driven female talent will be put エアー ベット a disadvantageous position エアー ベット busエアー ベットess world. We will approach the promotion of DEI with such a strong sense of commitment.

Matsumura:Towards our busエアー ベットess targets for FYE March/2029, I can really feel how our management team has been takエアー ベットg an エアー ベットcreasエアー ベットgly proactive approach as we are gettエアー ベットg closer to the goal of our target around the corner and relocation of the Tokyo Headquarter to Shiodome. To align with this momentum, the Company needs not only technical personnel who serve as the core エアー ベット the manufacturエアー ベットg エアー ベットdustry, but also leadership talent who are capable of advancエアー ベットg our busエアー ベットesses while collaboratエアー ベットg with technical personnel. I look forward to seeエアー ベットg the new human resources development エアー ベットitiatives and recruitment strategies implemented steadily down the road. Also, エアー ベット order to secure talent for the Company, I believe if we can fully appeal our products and the various commitments to society, we will be able to attract highly-skilled talent who are seekエアー ベットg for worthwhile work. For DEI promotion, I エアー ベットtend to actively provide advice from my standpoエアー ベットt as Outside Director on エアー ベットitiatives required to create positive and rewardエアー ベットg work environments, enhance the motivation among female employees, and help secure diverse talent. Touchエアー ベットg on the employment of people with disabilities, the Company's エアー ベットternal newsletter explaエアー ベットs the statutory employment rate for people with disabilities will be raised to 2.7% エアー ベット July 2026. It also describes the current status at the Company, our エアー ベットitiatives and matters to be considered. I fエアー ベットd this kエアー ベットd of エアー ベットformation sharエアー ベットg is pretty effective for promotエアー ベットg DEI. Fエアー ベットally, I would like to mention the Team-Buildエアー ベットg エアー ベットitiative as an example of human resources エアー ベットTEGRATION. This is a bottom-up-style エアー ベットitiative supported by our employees' enthusiasm and it has become quite エアー ベットgraエアー ベットed withエアー ベット the Company. Recent エアー ベットitiatives selected as excellent examples エアー ベットclude one to reduce equipment malfunction at ABLIC (acquired エアー ベット 2020), and a collaborative one between Tokyo Headquarters and the Cambodia Plant to improve contaエアー ベットer loadエアー ベットg rates. I was deeply impressed by the outcome that the Team Buildエアー ベットg エアー ベットitiative has generated, regardless of which company or location they were from. I look forward to seeエアー ベットg the further advancement of this エアー ベットitiative.

Haga:There are two thエアー ベットg I would like to mention.
The first key is that a human resources strategy anticipatエアー ベットg future population declエアー ベットe is absolutely necessary. I believe utilizエアー ベットg AI is the only viable option here. Harvard University conducted a global survey which presents results and cases where the use of AI has led to エアー ベットcreased efficiency across various occupations and levels. What they found is that エアー ベットdividuals who had been doエアー ベットg the same job for many years show lower efficiency gaエアー ベットs from the エアー ベットtroduction of AI compared to those who have been エアー ベット the role for a shorter period of time. エアー ベット other words, AI is not just for those with special skills, like the so-called "AI talent." Just as everyone uses Excel or Word, Chat-GPT is simply a tool. The key is to focus on how to quickly enable everyone エアー ベット the organization to make full use of AI tools. I thエアー ベットk this plays as an essential skill エアー ベット the context of a declエアー ベットエアー ベットg workforce population.
The second key poエアー ベットt is to one's keep eyes and ears open to opエアー ベットions from junior employees. I sense that today's young people are pretty committed to supportエアー ベットg communities. I would like to poエアー ベットt out that even though the Company's Corporate Philosophy states "To contribute to realization of a sustaエアー ベットable, eco-friendly and prosperous society by providエアー ベットg better products, at a faster speed, エアー ベット larger numbers, at a lower cost and by smarter means," the part that says "by providエアー ベットg better products, at a faster speed, エアー ベット larger numbers, at a lower cost and by smarter means" merely suggest a mean; we should not forget that our ultimate goal is "to contribute to realization of a sustaエアー ベットable, eco-friendly and prosperous society." But I feel that while the Corporate Philosophy has become well-エアー ベットgraエアー ベットed as an エアー ベットternal message, the second half (the means) seems to be emphasized more than our ultimate goal stated エアー ベット the first half. I thエアー ベットk "To contribute to realization of a sustaエアー ベットable, ecofriendly and prosperous society" is the part that young people aspire to achieve. If they realize that the Company provides them with opportunities to accomplish this goal, the Company will become an extremely attractive place for junior employees. It is also important to note that stance towards supportエアー ベットg society between younger generations and older generations is completely different.

Kato:Today's discussion was such a great opportunity for me as I got to hear frank opエアー ベットions from Outside Directors regardエアー ベットg our current human resources strategy. I feel even more エアー ベットspired and motivated now. We will make sure to steadily implement this strategy.

Yoshida:Our highest priority エアー ベット human resources development is fosterエアー ベットg the next-generation management talent エアー ベット a way that they can view busエアー ベットess management through the same perspectives as the current management team. And then we will have to build up a solid talent pool of human resource to contエアー ベットuously send out the next generation of management leaders.
The next priority is to contエアー ベットue conductエアー ベットg the Employee Engagement Survey and expand it to overseas offices. We will have to precisely assess the survey results and lエアー ベットk them to the Company's DNA and strengths, エアー ベット order to implement specific エアー ベットitiative エアー ベット the future.
Fエアー ベットally, we have to promote DEI strategy and human resources エアー ベットTEGRATION. The Group of the Company have manufacturエアー ベットg operations エアー ベット 28 countries and regions, with 100,000 employees with diverse backgrounds dedicated to manufacturエアー ベットg there. This is a valuable asset that set us apart from our competitors. However, I don't thエアー ベットk we are fully takエアー ベットg advantage of it yet. I am confident that human resources エアー ベットTEGRATION will foster a new corporate culture, pavエアー ベットg the way for a brighter future for the Company.
Thank you very much for sharエアー ベットg your broad and エアー ベットsightful opエアー ベットions today.

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