ITOCHU Techno : Medium-to Long-Term Strategies for Reinforcing the Business Model (PDF/578KB)

SECTION 3 Medium- to Long-Term Strategies for Reinforcing the Business Model

Human Resources Strategies

Message from the CAO

The growth of autonomous, ambitious, and team-oriented human resources will drive the Company's growth.

Shinichi Hirayama

Managing Executive Officer

CAO

COO, Human Resources Management &

General Affairs Group

• Paramount Importance of Human Resources

In April 2022, the Human Resources Management & General Affairs Group was established as part of an organizational restructuring by the Company, and I was appointed as its COO. I was also assigned the title of CAO. There are a number of tasks that we must address through our human resources strategies. These include the need to recruit and cultivate talented human resources and foster a workplace environment that accommodates diverse and flexible work-styles. I am tackling these tasks from the fresh perspective granted by my new position.

This might go without saying, but human resources are of paramount importance among management capital for the CTC Group, as it is our employees who drive our growth. When I talk about the importance of human resources as management capital, I am not referring merely to the utility of their superior skills and technical capabilities. Rather, I am using a more comprehensive definition that encompasses the role played by our predecessors over CTC's 50-year history.

• Development of People with Ethical Standards Necessary for the IT Industry

As indicated by our slogan of "Challenging Tomorrow's Changes," the CTC Group has an engrained culture of tackling new challenges to resolve the issues faced by society, working together with customers through the use of IT. The synergies between the trust we have earned from customers and the relationships we have formed with partners through this process underpin the Unique Skillset that is a CTC Group strength. A passion for tackling new challenges is an important quality for members of the CTC Group. Our history of ambitious growth has led to the creation of a corporate culture that is accepting toward

failures which occur as a result of tackling new challenges. This is because if we are paralyzed by fear of failure, we cannot move forward. And if we do not envision success, we will fail to see potential new solutions. So long as we engage in business with our customers, however, we cannot just take on risks haphazardly. It is for this reason that the ongoing success of our business will hinge on our ability to continue to capitalize on the capabilities of our colleagues and to develop and hone our own skills. This is something that we can never afford to neglect. Furthermore, when it comes time to exercise our skills, it is

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crucial that we have a strong sense of ethics underpinning what we do as individuals, what we do as a company, and everything else in which we take part. IT offers limitless potential. At the same time, it is a double-edged sword that can cut us if not wielded properly. For this reason, we must renew our awareness about the importance of ethics so long as we are involved in IT.

Our employees should aspire to become individuals who can exercise autonomy in tackling new challenges while adhering to high ethical standards. In terms of how they function within the Company, it is also important for our human resources to be able to engage in effective team- work with colleagues. CTC's history is one of working toward our goals together with employees and with external vendors and partners. When individual employees possess their own skills and can use these to support colleagues, learn from them, and complement them, it has the effect of boosting our performance as an organization. Moreover,

when one can trust and be trusted by colleagues, it contributes to relationships of mutual support, as opposed to competition. This in turn will lead to an environment where people can exercise their personal skills with peace of mind. The CTC Group sees a lot of cross-organizational coordina- tion, and it is not rare to have projects involving information sharing and collaboration with employees from other orga- nizations. The workplace environment and circumstances one faces vary from person to person. Accordingly, an important quality for CTC Group employees is the ability to see these differences as reasons for mutual respect and to extend a helping hand when needed.

Moreover, I believe that creating a workplace environment in which everyone feels comfortable and can tackle new challenges will drive increases in engagement, while helping to foster human resources that can duly contribute to the growth of society and the Company.

• Environment for Releasing of Individual Employees' Capabilities

The pace at which social needs change continues to acceler- ate, and customers' demands are growing increasingly com- plex. Given these trends, if we want to keep growing by fully leveraging the value of CTC's Unique Skillset, we must nurture an environment that releases individual employees' capabilities. CTC seeks to cultivate organizations and cultures that encourage everyone to exercise their talents and tackle challenges in line with their aptitudes, based on the slogan of "One Version UP!" It is therefore vital for the Company to develop training and education systems and provide support for career development. We must also maintain an understanding of the skills and abilities of individual employees as well as their interests and future aspirations. We currently manage information on employees' technical skills and knowledge of customer work processes through our engineer skill inventories. In the future, I hope to provide employees with chances and encouragement to seize opportunities by themselves based on their personal aspirations, which are constantly changing. We are therefore implementing measures including optimally positioning human resources and formulating a human resource portfolio.

Our workplace environment is every bit as important as our people. CTC is thus developing a workplace environment that allows employees to freely choose their

work-style, including workhours and location, in order to provide an environment that is both comfortable and moti- vating. In April 2022, we launched initiatives under the slogan of "Upgrade the CTC Workstyle," which included the introduction of systems that allow employees to engage in side jobs and take extended periods of leave. These systems are part of our efforts to enable employees to exercise autonomy and freely choose the work location and work-style that best suits their individual circumstances and life stage. Furthermore, in 2021 we completed the relocation and integration of the head offices of Group companies. This move is anticipated to lead to increased coordination among Group employees while helping to maximize the capabilities of individual employees.

The basic concept for the human resource strategies of our medium-term management plan is "Developing Personnel Who Create New Value: One Version UP!" This concept encapsulates our goal of providing value to society by having all employees think and act with autonomy while working in teams with their colleagues and unlocking their full potential. We continue our efforts to swiftly and flexibly formulate and enact new initiatives and measures to move closer toward this goal.

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SECTION 3 Medium- to Long-Term Strategies for Reinforcing the Business Model

Human Resources Strategies

Initiatives to Boost Human Capital Value in Pursuit of Higher Corporate Value

We aim to help each employee exercise his or her individual talents

Improvement of Corporate Value through the Human Res

Human		INPUT		ACTION
Capital
	Priority Human Capital	Major Initiatives
		Investment Themes

through a human resources strategy founded on a policy of supporting employees' growth and appetite for challenges.

Basic Approach

It is imperative to have high-quality management capital that can support our business models and strategies in order to exercise the strengths of the CTC Group and achieve ongoing growth. As indicated by the inclusion of "Cultivate human capital to support the future" as part of our materiality, human resources are our most important form of management capital. Without the growth of our employees, there can be no growth for the Company.

As suggested by the "Challenging Tomorrow's Changes" slogan in our corporate philosophy, we implement a human resources strategy that enables each employee to grow auton- omously, as they enjoy the challenge of adapting to changes and work together to reach new heights of achievement with their colleagues.

Basic Concept of Our Human Resources Strategy and Priority Measures

The basic concept for the human resources strategy of CTC's medium-term management plan is "Developing Personnel

constantly who resources human Diverse skillset unique and technologies their hone

Technologies and unique skillset

Basic concept 1 2 3

Diversity, equity, and inclusion (DE&I)

Basic concept 3

Flexible workplace environment

Basic concept 3 4

Engagement

Basic concept 4

Health and well-being

Basic concept 4

Recruitment targeting focus areas and enhanced Group management

Enhancement of measures to support autonomous career development

Establishment of systems to cultivate engineers

Arrangement of open seminars to foster awareness and workplace culture

Cultivation of future female leaders

Expansion of the scope of duties that can be performed by employees with disabilities in cooperation with other Group employees

Encouragement of an ideal choice between in-office work and teleworking

Expansion of work-style options pertaining to time, location, etc.

Implementation of measures based on engagement survey results

Promotion of habitual exercise and lifestyle improvements

Invigoration of workplace communication

Optimization of workhours through efficient and effective work-styles

Basic Concept of the Human Resources Strategy

Who Create New Value: One Version UP!" Based on the two

Human Capital

Create an environment where personnelwith expertise and the ability to create corporate value can gather and grow Improving each person's Unique Skillset

1	Sophistication of our
Unique Skillset

System

Feed employees' appetite for growth through systems that assess and compensatebased on roles and levels of contribution

Pursuing new pinnacles through mutual growth

Meritocracy for diversity

2

­pillars of mutual receptiveness toward diversity and human resource development, we are transforming our human resource management approach from the four perspectives.

One of the perspectives is sophistication of Unique Skillset. We view the specialized skills of our employees as a wellspring of value, and we therefore strive to create an environment where personnel with expertise and the ability to create corporate value can gather and grow. Offering a meritocracy for diversity is another of the perspectives. This perspective

Mutual Receptiveness toward Diversity +

Human Resource Development

shapes our efforts to feed employees' appetite for growth

4	Backing
	bold efforts

Challenging Spirits

Support employees who are eager to tackle challengesin new areas and businesses Encouraging employees to take their first step forward

Emphasizing the individual 3 and autonomy

Work Style

Create an atmosphere in which each employee is autonomous and can use flexible work-stylesto achieve job satisfaction in their own way

Encouraging everyone to enjoy their work in their own way

through systems that assess and compensate based on roles and levels of contribution, regardless of age.

CTC recognizes that higher corporate value is created when diverse individuals, including those outside of the CTC Group, can fully exercise their talents. From the perspective of emphasizing the individual and autonomy, we seek to encourage employees to exercise autonomy in finding their own ideal

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ources Strategy

OUTPUT

Achievements of Initiatives in Fiscal 2021

Ratio of new graduate hires	50:50
to mid-career hires:
Ratio of employees undergoing	100%
career consulting:
Number of employees newly registering	More than 1,000
for Company elective training programs:
Ratio of individuals hired out of university	40:60
and hired mid-career among management:
Number of female employees in	84
management positions (as of June 1, 2022):
Ratio of employees with disabilities	2.4%
(as of June 1, 2022):
Annual average rate of employees	Less than 20%
commuting to offices:
Ratio of employees stating in engagement	76%
surveys that they feel motivated at work:

For more information on human resource initiatives, please refer to Human Resources Strategy: Detailed Report.

https://www.ctc-g.co.jp/en/company/ir/library/annual/index.html

OUTCOME

	Mission
	Leveraging IT's
Creation of	potential
innovation	to change future
	for the
	Global Good.

• Ratio of employees stating in engagement surveys that decisions and actions are founded on corporate ethics
• Ratio of employees stating in engagement surveys that coworkers are cooperative
• Ratio of employees stating in engagement surveys that they trust their supervisors
• Ratio of employees who engage in regular exercise:
• Ratio of employees who are hesitant to broach difficult subjects:
• Average monthly overtime:
• Average annual leave uptake rate:

85% 77% 74%

+2% (vs. FY2020)

-7% (vs. FY2020)

13 Hours

64%

	Creating value
	for customers
Improvement	and
of productivity	Creating value for
	wealthier society

work-style and motivation. Meanwhile, in backing bold efforts, we are rolling out measures to support employees who are eager to tackle challenges in new areas and businesses.

Analyze and Examination of the Relationship between Human Capital Investment and Corporate Value

Through priority measures in line with the basic concept for our human resources strategy, we are focused on boosting the value created by human capital, specifically the creation of innovation and the improvement of productivity.

For this reason, we have defined five priority investment themes aimed at heightening the value of human capital: technologies and unique skillset; diversity, equity, and inclusion (DE&I); flexible workplace environment; engagement; and health and well-being.

We also embarked on a new initiative to elucidate the relationship between human capital investment and corporate value through analyses of data on operating environment and human capital. These analyses revealed that DE&I and health and well-being are both areas that contribute to increased corporate value. Accordingly, these areas will be targets of ongoing investment. We will aim to enhance human resource management through DX in order to use a greater variety of data to guide human resource measures and gauge the benefits versus amounts of investment in human capital (the return on investment in human capital), so that we can verify and expand the benefits of these investments. We will also seek to track and control potential risks through coordination among the respective divisions.

Through its efforts, CTC is committed to creating value for customers and creating wealth for society and to fulfilling its mission of "Leveraging IT's potential to change future for the Global Good."

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SECTION 3 Medium- to Long-Term Strategies for Reinforcing the Business Model

Human Resources Strategies

Highlights of Human Capital Initiatives in Fiscal 2021

Creation of Innovation

Initiatives to fuel the ongoing creation of innovation were advanced based on the themes of technologies and unique skillset; diversity, equity & inclusion (DE&I); and flexible workplace environment. Fostering advanced human resources was defined as a priority target for these initiatives.

Divisions that oversee human resources played a central role in spearheading measures to develop human resources based on shared skills and Companywide themes. Concurrently, business groups designed and implemented their own human resource development programs matched to the needs of their respective business strategies. One specific measure in fiscal 2021 was the introduction of a new Companywide elective training program, as part of our efforts to promote systematized development of DX and other engineers. We are also in the process of formulating new merit-based human resource systems to drive growth. These systems are scheduled for implementation in fiscal 2023. Furthermore, CTC continues to operate its "Dojo" online community as a venue for sharing knowledge and techniques across division lines.

Steps are also being taken to enhance our job rotation systems with an emphasis on self-driven effort. Specifically, we introduced a cross-organizational rotation platform and an internal application system. A system that is being continued is the option for employees to receive internal career consulting should they choose it. In addition, the Company arranged open seminars as a new initiative to foster a workplace environment and culture that is conducive to the contributions of diverse human resources and to raise awareness in this regard.

Another new undertaking was the launch of initiatives under the slogan of "Upgrade the CTC Workstyle" in fiscal 2022. These initiatives targeted the expansion of work-style options and included measures to prevent relocations or situations in which people might have to live separately from their families. The initiatives also introduced systems that allow employees to engage

in side jobs outside of the Company or take extended periods of leave (sabbatical leave), and provisions to extend the amount of time spent in the area of business trips to allow employees to enjoy some personal time during trips (bleisure).

Improvement of Productivity

Engagement and other surveys are conducted to measure employee awareness, verify the results of measures, improve measures, and gather feedback for use in management. The top items receiving affirmative responses in the fiscal 2021 survey were the same as those in the survey from the previous year, specifically those indicating that decisions and actions were founded on corporate ethics in engagement surveys, which received an affirmative response from 85% of respondents; that coworkers were cooperative in engagement surveys, which received an affirmative response from 77% of respondents; and that employees trusted their supervisors in engagement surveys, which received an affirmative response from 74% of respon- dents. Based on these results, strengthening management capabilities and bolstering engagement to close the gap between top management and employees have been positioned as priori- ties. Measures are being advanced to address these priorities while the related conditions are tracked through pulse surveys.

CTC is also practicing well-being management to promote the well-being of all of its employees. On this front, measures are being advanced based on the result of awareness surveys to respond to changes in work-styles and lifestyles arising from the COVID-19 pandemic. In fiscal 2021, we offered employees advice on how to exercise and otherwise improve their lifestyles at home, and this resulted in an increase in the ratio of employees engaged in habitual exercise. We have also seen positive changes in indicators for monitoring the benefits of measures to invigorate workplace communication amid changing work-styles. Moreover, we set up spaces in which employees could receive COVID-19 vaccinations at the head office. Employees who wish to receive vaccinations at other locations can count the time

Employee Numbers and Operating Income per Employee
(People)										(¥ million)
10,000								9,050	9,291	6.0
							8,808
							5.4
				8,100	8,175	8,359
		7,857	7,993
8,000	7,717
			4.7	4.8
						4.3
					4.0
6,000		3.7		3.8
	3.5
								3.0
	3.1
4,000	562	588	592	613	639	661	707	767		824
2,000	3,339	3,307	3,326	3,345	3,478	3,611	3,569	3,684		3,773
0										0.0
	2013	2014	2015	2016	2017	2018	2019	2020	2021	(FY)

Number of employees (consolidated)  Number of male employees (non-consolidated)  Number of female employees (non-consolidated)  Operating income per employee (consolidated)

Human resource initiatives have been positioned as a core measure for strengthening management foundations since the period of the medium-term management plan covering fiscal 2013 and 2014. Over the years, the Company has continued to bolster its human resource initiatives. In fiscal 2014, work-style reforms were undertaken as part of efforts to develop a workplace environment that promotes flexible and diverse work-styles in conjunction with work-style reforms. In fiscal 2015, human resource systems were reformed in conjunction with the implementation of measures to offer employees multiple career paths, and we began promoting autonomous, self-driven career development along with diversity, equity, and inclusion. As a result of such efforts, operating income per employee has shown a steady increase each year since fiscal 2016.

63 ITOCHU Techno-Solutions Corporation Integrated Report 2022