Integrated Report 2020: Stakeholder Dialog

Morikawa: We invited Ms. Atsuko Fukushima, a journalist with extensive coverage of corporations, who also serves as an outside director of companies, to speak on "people."

Fukushima: Nice to meet you. In terms of focusing on people, the importance of "ESG (Environment, Society, Governance)" in addition to business performance is now being emphasized as an indispensable factor for the sustainable growth of a company. Within this context, human resources are becoming increasingly important as capital essential for enhancing corporate value on top of business performance. What do you think of this?

Morikawa: "The company is for people," is the vital of my business management. There is no doubt about this. I believe that the goal of increasing performance and growth is ultimately a means to make people happy, and that performance that does not achieve this goal is meaningless. Even if performance is good, I am not at all satisfied as a manager with the situation where members are exhausted.

Fukushima: Sustainable growth of a company cannot be achieved unless employees can work with vigor and vitality. I believe that human capital is the very cornerstone of management.

Morikawa: In the ESG perspective, firstly, people should enjoy working. It is not sustainable to make the earth scream in that process. People can work actively with goals only if they have an environment to live. In addition, governance maintain and develop E and S conscious businesses and organizations, and I understand this governance as demonstrating leadership. In other words, I think modern managers need to grow over the medium to long term while maintaining a balance between the three elements of ESG.

Fukushima: The world today is in transition and there is a growing debate around the world about whether global capitalism can be maintained to date, whether the gap between have and have not can continue to widen, and whether the pursuit of happiness for workers and sustainability with the global environment rather than that will lead to the well-being of humanity.

Morikawa: There is no single answer for ESG-related initiatives, as each era has its own key issues. This is why we need leadership that strikes a balance while being firmly aware of the current situation.

Fukushima: Exactly. Considering what kind of company is sustainable, even if business performance is good, if workers feel pain, the company will not be able to achieve sustainable growth and shareholders will not benefit. I think there is a need for leaders who can steer the ship with an emphasis on the medium- to long-term perspective.

Fukushima: In terms of human resources, my concern is that employee engagement (attachment to the company and motivation to grow as one with the organization) is very low in Japanese companies. The results of various surveys are overwhelmingly lower than in other countries. Looking at the reasons, many people say that they cannot sympathize with the philosophy and raison d'etre of the company in which they work, and that they cannot feel that they themselves are growing through their work. What do you think about this?

Morikawa: Engagement will increase when the growth of the company and people is integrated. I wanted to create a company like Sony and Honda, which had grown globally out of post-war ventures. It looked like a very fun company to me as a child. For me, Mr. Nagashima and Mr. Oh was Mr. Morita, Mr. Ibuka, and Mr. Honda. What is different between today and that era of rapid growth, to be a little subjective, but I think it is the management's will to achieve sustainable growth. In other words, each individual's willingness to "provide better products" and "contribute more to customers!" is ultimately linked to the growth of the company, and I think that a company with a clear sense of purpose and leadership is attractive to workers as well. However, if you are a management team that express the sense of giving up because the current business environment is an "era of uncertainty," naturally people's motivation won't increase.

Fukushima: I really feel that too. I feel that this Corona disaster has polarized the corporate landscape. It seemed to me that the farther a company was from its philosophy of own existence and its purpose of bringing value to society, the more the distrust hindered its business. Conversely, I felt that companies where each employee understands the philosophy and purpose of the company and cooperates with each other in their work, rather than just taking the philosophy and purpose in words, are relatively proactive and flexible.

Fukushima: Could you tell me about your image of “ideal employee” when sharing your philosophy and purposes?"

Morikawa: If I have to pick one, it will be thoroughly customer-oriented. I use the word customer, but the point is to think about others. Think about what you can do for someone, no matter how small. We want everyone to be sincere about that.

Fukushima: Customers differ by segment, so this consistent stance will lead to support from a diverse range of stakeholders. On the other hand, what do you think about the importance of diversity?

Morikawa: When I participated in this U.S. fund as an outside director, I was struck by the fact that six of the ten board members were female. They were actively speaking out and activating the debate. I see, I thought. Perhaps the reason why I was on this board also includes the concept of "Asian" diversity. I feel that the results have been sufficiently proven in terms of finance through the inclusion of female and minorities in the awareness of the question of how to exceed the limits that have been achieved solely by male and white people?

Fukushima: It's great that you were able to experience this for yourself.

Morikawa: I felt that I was doing my best while absorbing various things, such as polishing my own thoughts through dialog there. Diversity can be extremely effective in improving the quality of dialogue. I was convinced of the importance of diversity by looking at a higher level of discussion that overcame not only gender but also age and racial differences.

Fukushima: I have been covering a variety of companies. Nowadays, every top management says diversity is important and promotes the active participation of female. However, the degree of seriousness varies from company to company and is often not accompanied by implementation. Whether or not diversity can be promoted is extremely important whether top executives truly understand the importance of diversity.

Morikawa: In Japan, people tend to question only the gender ratio, but it is important to take a broader view of diversity and invigorate dialog.

Fukushima: I agree. Nevertheless, there is no doubt that active participation by female is an important point in Japan at the moment. I believe that the first step in this era is to close the gender gap in various fields, and after that, the time will come when true individual and personal diversity, not attributes, will be required. I have been given opportunities to speak in various places, but I honestly feel uncomfortable when I am told, "Please make use of the viewpoint of female to express your valuable opinions."

Morikawa: If you were a male, you wouldn't be told like that. Female are different from each other, too.

Fukushima: That's right. We are in an era of complexity and uncertainty, and the global crisis, such as Corona, is likely to occur anytime in the future. What we need in a discussion forum is not people with similar viewpoints and backgrounds talking to each other, but a diverse group of people with various viewpoints and experiences arguing and debating with each other. Management decisions made in this way are more accurate, which is a plus in terms of risk aversion.

Morikawa: In terms of diversity, generations in their 30s and 40s have quite different opinions from us. Regardless of gender, the worldview has clearly evolved. I think there is a realistic sense of direction that diversity will be promoted by generational change.

Fukushima: If such a generation plays a central role, I think there is no doubt that the gender gap will decrease. The people of the Millennium and Generation Z have a strong desire to solve various issues in society and to help themselves in society. I believe that these people will change the company as well. Conversely, we are entering an age in which companies that fail to come up with a philosophy or raison d'etre that will empathize with such people will no longer be able to recruit outstanding young people. There are many younger employees in Avant Group as well, so I think that a variety of changes are being made.

Morikawa: This is a very important point of view. In order for a company to be a perpetual growth institution, I believe it is necessary to continue to maintain management with a certain level of youth. How to utilize the assets we have accumulated since the past and how to make use of them for future society will be left behind in the changing times unless we constantly update them while advancing generational changes. With this in mind, I intend to make the company that accelerates delegation of authority.

Fukushima: Creating discussions between generations with different values is an important factor in promoting diversity management.

Morikawa: I've been talking about a lot of great things, but at the end I'm worried about one thing (laughs). Actually, even in Avant Group, there are few female managers, and while we have foreign directors, there are no female.
The balance is by no means good.

Fukushima: I think you need a strong push. At this forum, where I acted as coordinator on the topic of "The Current Situation and Challenges of Female Corporate Officer," all four female panelists were the first corporate officers of the major listed companies on the First Section of the Tokyo Stock Exchange. When I first asked, "How did you react when your boss told you to assume the role of the company's first female corporate officer" and they all said they declined it. They are all so talented, but "No, I don't deserve it, I can't do it!" they said. So, the boss pushed their back, saying, "You say so, but you can do it!" and they agreed in anxiety.
And when I asked, "What do you feel like now?", they said, "I'm really glad I took it!" "The landscape looked quite different before and after becoming corporate officer. I find it more rewarding to be responsible for one team and deliver results than when I was doing it as an employee--" Everyone says it was really good that they pushed their back. So, I would like you to push the back of people you think "this is the person!" more and more, regardless of gender. Of course, female themselves also need to change their mindset.

Morikawa: There you have it! No matter what gender you are.

Fukushima: I believe that everyone should be able to demonstrate their abilities and experience growth through their work, which will lead to happiness, and this will also realize the growth of the company.

Morikawa: At the end of the day, what is required of leaders who promote diversity is whether or not they can gain a good understanding of others and push someone who believes "you are the one!"

Fukushima: It makes it worthwhile for me to talk to you.

Morikawa: I feel like I have been given a very effective acupoint for the Group's future. Thank you.