Enhancing the Value of Human Capital (Message from the Vice President)

The “Truly inspired” Management Philosophy and our Vision for 2030 and 2050 are our compass as we promote business structure reforms. We have been implementing various initiatives believing that the most important first step is sharing the Philosophy and Vision with employees, ensuring they are aligned with the Philosophy and Vision, and then enabling each one of them to work with autonomy and a sense of ownership.
We hold semi-annual townhall meetings as a forum for direct dialogue between the President and other senior leaders and employees. Many employees participate in these meetings and engage in lively discussions. These forums are used to explain the Management Philosophy and Vision, whenever the opportunity arises. As a result of these initiatives, the degree of awareness of the Management Philosophy has reached 99.3%, while resonance has reached 78%.
However, we are facing issues with embodying the Management Philosophy and challenge toward change beyond the organization, which are highlighted in the elements of the Idemitsu Engagement Index (Idemitsu EI).
The issue is that while employees know and are aligned with the Management Philosophy, this knowledge and alignment are not reflected in their daily actions. Employees engage exclusively in existing operations in their own organization and the number of challenges they take on beyond the boundaries between organizations is limited. In such circumstances, progress will not be made in the development of employees who are necessary for business structure reforms. We are working on the following two initiatives to address these problems.

1. Evolution of HR Systems Emphasizing the Revision of Evaluation Items and the Action Guideline

The current HR systems and Action Guideline were formulated and established when Idemitsu Kosan and Showa Shell Sekiyu integrated their businesses in 2019, under the policy of hammering out new concepts and applying the strengths of the two companies. While the current Action Guideline and evaluation criteria for personnel assessment comprehensively express the values we want to cherish, there are concerns that the terminology is too general, failing to reflect our company's unique values, and that these contents tend to be ambiguous. We believe that because the Action Guideline and evaluation criteria for personnel assessment were established before the formalization of the Management Philosophy, their connection to the Management Philosophy has become tenuous.
We seek employees who are able to clarify what they want to do and what they want to be, think out actions, mobilize the strengths of diverse team members, follow through on actions taking ownership of them, and continue to take on challenges without fearing failure. We will redefine the evaluation items and the Action Guideline based on the Management Philosophy, and we plan to have the new systems. We believe this will lead to people’s daily actions more directly embodying the Management Philosophy.

2. Activities of the Idemitsu Employee Association

Aiming to energize communication between management and employees and promote cross-departmental activities, we established the Idemitsu Employee Association in FY2024, and it began its activities in July. Several full-time administrative officers have been assigned to the Employee Association. They implement and analyze employee engagement surveys, plan and hold townhall meetings, and create other opportunities to collect opinions from individual employees in each workplace, thus creating opportunities for employees to make suggestions directly to management. A feature of the Idemitsu Employee Association is that, unlike a labor union, executives, including general managers, also participate in its activities, and all employees work as one to carry out these activities.
In addition, we have enhanced the employee stock ownership plan to enable more employees to possess company shares. Our goal is to enable employees to participate in management more voluntarily and proactively as shareholders. We expect this to produce synergies with the activities of the Idemitsu Employee Association.
Through these initiatives, we will enable each employee to increase their understanding to take ownership, so that the Management Philosophy and the Vision will become more entrenched and people’s actions will embody it to a greater degree.

To create new value, it is essential that we utilize the strengths of diverse people and combine their wisdom. We need to create an environment where people who are considered minorities, including females, LGBTQ+ people, foreign nationals and people with disabilities, are able to demonstrate their capabilities to achieve their own career plans, leading to their personal development.
At Idemitsu Kosan, we have been focusing our efforts on building an environment which permits everyone to demonstrate their capabilities, with their individual characteristics and values respected regardless of attributes such as job rank, gender, employment status, nationality, and presence or absence of disabilities, by valuing a perspective that considers equity. Since October 2021, these activities have been led by the DE&I Committee, which is an advisory body to the president. As a result, we were able to achieve our targets for three key performance indicators (KPIs) linked to executive compensation: 47% of new hires being women, 4% of managers being women and 93% of eligible male employees taking childcare leave. These are significant improvements from the previous fiscal year. In addition, external organizations’ evaluations of our initiatives are higher than ever before. For example, we received a PRIDE INDEX 2023 gold rating and have been selected to be a Nadeshiko Brand for two consecutive years.
Currently, 13% of our employees and 4% of our managers are female, which is not satisfactory. In FY2024, we will further expand the targets of our program providing in-house mentoring from senior leaders to female employees, which commenced last fiscal year. At the same time, Teijin Limited and Ricoh Co., Ltd., will join us in the cross-mentoring program we launched last year with Tokio Marine & Nichido Fire Insurance Co., Ltd., further enhancing our activities.
In areas other than the enhancement of female participation and advancement in the workplace, we will continue to promote initiatives to expand DE&I, such as the installation of universal toilets and shower rooms for LGBTQ+ people and personnel exchanges aimed at increasing opportunities for staff members who are overseas nationals to work actively within our company.

The initiatives that we have taken to date have led to increased resonance with the Management Philosophy/Vision and expanding DE&I, which are among the three pillars of our human capital strategy. On the other hand, we understand that issues remain in bringing out the full potential of each individual. The factor analysis of the Idemitsu EI indicate that the number of employees who advised that “I have a reasonably good idea of my possible career paths in this company” barely surpassed 50%, although it increased from the previous year, and we take this result seriously.
We will enable each employee to think about the career path they want to follow. Acknowledging that our career support has been overly focused on professional careers, we will implement various initiatives under our policy of supporting overall development, which incorporates both the personal and professional aspects of people’s lives. This is because we believe that professional development is only one part of a person’s life, and that helping people develop fulfilling lives, including their work, will enable every employee to be more engaged and to grow. We believe this will directly contribute to our being more competitive.
An example of a conflict between people’s personal lives and professional careers are the transfers where employees have to change where they reside. We have enhanced communication between supervisors and employees to understand each individual’s wishes, discussing at an early stage before transfers how the transfer will help shape their career and other matters. We have also increased relocation allowances and allowances paid to employees living apart from their families when they return home.
In April 2024, we established the Career Design Department, an organization that is independent of the Human Resources Department. The mission of this department is to promote autonomous career development (i.e., career design) for all generations, propose diverse career paths, offer skill development programs, create opportunities for cross-border learning, and provide career consulting. We will strengthen our support of individuals through a comprehensive system that enables employees to envision their careers by themselves instead of the company doing so, with the support of their supervisors and career consultants.
The Idemitsu Employee Association provides all employees with opportunities to participate voluntarily in discussions for the creation of a better company and a better organizational culture. We hope that creating opportunities for discussions over departments will enable employees to develop personally from a company-wide perspective.
We will also expand the scale of our Job festivals, in which all of the company’s departments share information about their jobs and career opportunities, to enable company-wide interaction. We will continue to enhance the content of these festivals, prompting employees to think about their own careers.
We will continually review our progress in the three pillars of our human capital strategy — Embodying the Management Philosophy/Vision, Expanding DE&I, and Bringing out the full potential of each individual—with KPIs including the Idemitsu EI and take initiatives to improve.