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Securing and Retaining Employees and Labour Practices

Policy on Securing and Retaining Employees and Labour Practices

To realize corporate growth and personal growth and happiness in accordance with its HR Policy, NEC develops and fairly evaluates personnel, who drive the growth of its businesses. We also work to create an environment where employees can work with ease and comfort and thereby display a high level of performance.

Aiming to realize fair assessments, NEC has established a system that evaluates employees based on their contributions to businesses, regardless of such attributes as age or gender. We pay appropriate wages and bonuses according to employees’ roles and results based on various laws and regulations, labour agreements, and internal regulations. In addition, for regular employees, we have introduced medium- to long-term incentives, including a retirement lump-sum plan, a defined contribution pension, and employee stock ownership plan (introduced for NEC Corporation and a part of the NEC Group).
Furthermore, bearing in mind the import of laws pertaining to equal pay for equal work, we have enabled fixed-term contract employees and other non-regular employees to use some of the systems established for regular employees.

At NEC, labour and management are working together to implement flexible workstyles, prevent overwork, and encourage employees to take leave in compliance with the relevant legal systems of each country. In addition to these systems, we are bringing about a rewarding work environment through discussions and by cooperating with the workers union and management on issues covering the personnel system, benefit programs, the realization of work–life balance, and a workstyle by which all employees have the opportunity to reach their full potential. In particular, we have childcare and nursing care systems that exceed statutory minimums and have led other companies in the establishment of a teleworking system, which we introduced as early as 2000. Through these and other initiatives, we are working to create an environment where diverse personnel can play a part.

Medium- to Long-term Targets, Priority Activities and Progress, Achievements, and Issues

Medium- to Long-term Targets and Priority Activities

(Scope: NEC Corporation unless otherwise specified) Period: April 2021 to March 2026

  1. Employer of Choice—Transformation into an employer of choice and increase in job satisfaction
    • Engagement score of 50%1
    • 1.
      According to a survey by Kincentric, a global human resources consulting firm. A score of 50% roughly corresponds to the global top 25th percentile, Tier 1 level.
  2. Establish conditions that provide the optimal place and the optimal time in striving to elicit optimum performance
    • Provide the experience necessary for employees to facilitate their own growth
    • Implement office reforms that foster trust and co-creation
    • Provide a workplace that allows for seamless execution of duties that overcome time and space restrictions
    • Foster a work culture that encourages a diverse range of human resources to provide value

FY2023 Goals, Progress, Achievements and Issues, and FY2024 Goals

FY2023 Goals

  1. Increase motivation
    • Achieve yearly 5-point increase on Pulse Survey score
      (Job fulfillment score/Productivity score/Condition score)
  2. Establish conditions that provide the optimal place and the optimal time in striving to elicit optimum performance
    (1) Promote self-determination of an ideal workplace and time to support well-being
    • Establish a variety of workspaces that utilize digital mechanisms such as congestion detection and other systems, as well as spaces for interaction with people outside the Company
    • Expand eligibility for remote workers, enabling application of the systems regardless of whether an employee has a compelling reason
    (2) Promote initiatives to improve productivity and engagement within the organization
    • Assess organizational soundness via data analysis and introduce productivity assessment
    • Expand the number of active users of the “Thanks/Praise” system within the NEC Group (15,000 people)

Progress, Achievements and Issues

  1. Increase motivation
    Scores in Pulse Surveys improved at NEC and its consolidated subsidiaries (March 2022 to February 2023) Job fulfillment score: +1.9 points, productivity score: +0.7 points, condition score: +2.1 points

  2. Establish conditions that provide the optimal place and the optimal time in striving to elicit optimum performance
    (1) Reformed offices to build trust and spur co-creation
    • Implemented new teamwork-focused designs to establish offices as Communication-Hubs
      - Created floor layouts and concept guides
    • In addition to the FIELD at Head Office, opened Innovation-Hubs in Osaka, Shin-Kiba, and Tamachi
    • Introduced rules for remote work in November 2021 for employees with a compelling reason. Updated guidelines for remote work as a way of working while at home or places far removed from assigned worksites. Abolished the eligibility restriction of having a compelling reason in July 2022
    (2) Promote initiatives to improve productivity and engagement within the organization
    • Continued development of two dashboards that visualize workloads of employees in terms of their mental and physical condition, by using data accumulated in data platforms for diagnosing organizational soundness
    • Introduced a Groupwide “Thanks/Praise” system at NEC in November 2021, as a measure for the purpose of fostering a culture where employees mutually commend and build up each other through positive feedback by showing gratitude using stickers. Expanded the system throughout the NEC Group (except for certain Group companies) the following year in April 2022 (100% introduction rate)
    • Active users of “Thanks/Praise” system reach 14,713 people (including the NEC Group)

FY2024 Goals

  1. Increase engagement score
    2023 One NEC Survey engagement score: +5 points year on year

  2. Establish conditions that provide the optimal place and the optimal time in striving to elicit optimum performance
    (1) Promote self-determination of an ideal workplace and time to support well-being
    • Accelerate building of Communication-Hubs and roll out Innovation Hub FIELDs to several bases, including Tamagawa and Sapporo
    • Response to further workstyle changes since COVID-19 was recategorized as a Class 5 disease in Japan
    (2) Promote initiatives to improve productivity and engagement within the organization
    • Expand data types subject to analysis and analysis angles (productivity and effects of work) in health checkups
    • Set evaluation indicators for “Thanks/Praise” and conduct events, etc. to enhance the effectiveness of measures

System for Securing and Retaining Employees and Labour Practices

The People and Culture Division and business units play a leading role in liaison and coordination between workers and management. Making reference to the various guidelines put forth by the International Labour Organization (ILO) and other bodies, the NEC Group Human Rights Policy acknowledges employees’ three primary labour rights—the right to organize, the right to collective bargaining, and the right to collective action. In addition, the labour agreement that NEC has concluded with NEC labour unions guarantees the right of workers to bargain collectively and stipulates that management must consult with workers if any changes are to be made to important labour conditions, such as wages and work hours. To provide a venue for such discussions, a central labour and management council meeting is held biannually.

In addition, at NEC Corporation, the labour agreement states that all employees are labour union members, except for certain general employees who conduct management duties or designated operations.

NEC’s labour union is called the NEC Workers’ Union, and is a member of the NEC Group Federation of Workers’ Unions, which is a federation of workers unions of certain NEC Group companies (Approx. 44,100 union members as of September 2022).

Furthermore, the NEC Group Federation of Workers’ Unions is a member of an umbrella organization, the Japanese Electrical, Electronic and Information Union.

Labour-management relationships are stable, and there are no particular issues of note.

Contribution to Initiatives Related to Labour Standards

NEC is a member of certain working groups set up by the Labour Policy Council, which conducts investigation and deliberation of important matters regarding labour policy in response to inquiries from the Minister of Health, Labour and Welfare and others.

Employee Evaluations

Evaluations That Promote Personal Growth

NEC conducts two-way dialogues between managers and their supervisors to serve as the basis for personnel evaluation and development. These one-on-one meetings, which are held between all employees and their supervisors, help align the goals of each employee in their roles with the goals of the Company’s business strategy. Presently, about half of NEC employees have these one-on-one meetings at least once a month.

  • To achieve business goals, supervisors provide coaching aimed at business management and help employees with growth and career development.
  • In fiscal 2019, the Group adopted the Code of Values as a shared standard of conduct. Since then, in one-on-one meetings, supervisors have been providing feedback and coaching that, while focused on results, places increased emphasis on conduct.
  • The Company introduced “Feedback from Others,” a system for receiving multifaceted, 360-degree feedback. We provide managers with training to increase their managerial capabilities and help them to elicit independence, creativity, motivation, and autonomy from the members of their team and maximize team performance.

In cases other than employee preference, where it is necessary for work, workplaces and workstyles may be changed or employees may be transferred or sent on assignment. However, in these cases, the labour agreement stipulates that the labour union must be notified at least seven days in advance.

Long-Term Incentives for Employees

Initiatives Aimed at Heightening Motivation with Respect to Career Development

NEC Corporation has prepared retirement allowances calculated based on a bonus-linked point system and defined contribution pension plans as retirement benefit and pension programs. We have transitioned away from a defined benefit pension plan, which was premised on long-term employment, to focus on our defined contribution plan, so as not to limit the range of career options open to employees, to ensure that new graduate hires and mid-career hires are treated fairly, and to motivate employees to develop long-term careers in a variety of directions, be it inside or outside the Company.

Benefits and Welfare System

In April 2020, NEC Corporation launched a new “cafeteria-style” benefits and welfare system called “Will be.” It allows employees, including contract, temporary, and part-time workers, to select and design their own benefits rather than following a benefits and welfare system prepared by the Company based on an assumed model life plan. Under this benefits and welfare system, employees are granted a certain number of points, and they can select various benefits and welfare services within the scope of their points, according to their needs. There are a wide range of options to meet employees’ various needs, such as self-investment for growth, health improvement services, assistance for use of childcare and nursing care services, donations to volunteer groups and disaster-affected areas, purchase of time-saving home appliances, and so forth.

We provide employees who are providing childcare and nursing care with special points that are separate from their basic earned points.

In fiscal 2023, we expanded the scope for nursing care points so that they can be used with grandparents or people in the “Needed Support” category under Japanese law. Furthermore, we revised the system so that employees using childcare points or nursing care points can each receive these benefits fairly on an individual basis, rather than allocating them by
household as before.

As of March 31, 2023, approximately 19,000 people applied for these services online.

NEC Pension Plan

In October 2020, NEC switched to a single defined contribution pension plan. In operating the plan, meetings of the NEC Group Defined Contribution Pension Committee are convened by the labour–management councils of the Company to ensure continuous, employee-oriented monitoring over the provision of defined contribution investment products.

In fiscal 2023, as part of a revision of defined contribution investment products that had been in progress since the previous fiscal year, the Group excluded defined contribution investment products for the first time since introducing the defined contribution pension plan. When excluding the products, we introduced designated investment products so that members’ benefits would not be impaired due to procedural errors, etc. We also provided careful notification and reminders to holders of excluded products, and 70% of those eligible had been able to revise their products autonomously by the cut-off date.

Moreover, in our continuous investment education, we have broadly revised the educational content covering defined contribution pension plans, and revamped the program into a microlearning format that can pinpoint the parts that need to be covered based on individual comprehension. We have also provided an individual consultation desk to provide advice on asset formation and by conducting an employee survey to examine measures for improving financial well-being, we are working to meet the asset formation-related needs of our diversifying workforce.

Hiring and Attrition

Initiatives to Hire New Graduates

Conducting initiatives to secure diverse human resources through job-matching hiring

  • Starting with the new graduate hires who will join the Company in March 2024, we will carry out job-matching hiring. We will present around 60 students with a job description for the division and work type, then have the students sit a test regarding their desired department and work type, guaranteeing an initial placement if they pass.
  • Division and work type include technology-type positions and system engineering, as well as specialized positions such as legal affairs, accounting, and human resources and general affairs. Around 70% of the planned hires have been hired through job-matching hiring. For sales and general staff employees, we will continue to carry out bulk screening as before.
  • Since fiscal 2021, we have utilized a system that entails hiring new graduates for specific jobs. Rather than paying talented new employees starting salaries based on their academic background, the new system provides remuneration based on the roles that the new employees assume.
  • In an effort to acquire and develop top-level R&D talent, we have introduced the Selective Compensation Program for Professional Researchers targeting leading young researchers (including new graduates), with no upper limit on compensation for non-managerial employees.

Increase in Mid-career Hiring

To assign personnel to appropriate positions in a timely manner, we have conducted a wide-ranging review of the way we utilize human resources. We are hiring more mid-career personnel, who enable us to implement business strategies immediately. This includes the utilization of external human resources. Thanks to our initiatives in this regard, in fiscal 2023 we hired 596 such personnel, which is roughly a 1:1 ratio with new graduate hires, and is helping speed up job-specific human resource management.

  • In fiscal 2023, we hired 69 employees using a referral recruitment system that uses the personal networks of NEC employees.
  • In fiscal 2023, we hired 71 employees using a direct sourcing service for directly contacting prospective employees.

Inclusion of Mid-career Hires

We hired 596 mid-career hires in fiscal 2023, around the same number as new graduate hires. In light of the increasing number of mid-career hires, we are implementing the following initiatives.

  • We have been providing web-based training on interviewing to employees responsible for conducting interviews with prospective mid-career hires.
  • Mid-career hires join an online orientation.
  • We distribute onboarding manuals to departments to which mid-career hires are assigned.
  • We collect employee feedback via our Voice of Employees questionnaire after a fixed period upon joining NEC.

Mid-career hires have diverse approaches and perspectives based on their experience working at other companies outside NEC. These employees serve as the catalyst for cultural transformation by putting forth ideas to improve existing operations in their assigned places of work.

Employee Survey

One NEC Survey

To realize NEC’s Purpose, we believe highly motivated employees are essential, and we have been conducting initiatives aimed at transforming into an employer of choice. Once a year, we conduct a global survey of all NEC Group employees, aiming to achieve an engagement score of 50%2 by fiscal 2026. By achieving this score, we aim to become a highly engaged team corresponding to Tier 1 at the global level. The whole Company is continuing to undertake these initiatives.

  • 2.
    According to a survey by Kincentric, a global human resources consulting firm. A score of 50% roughly corresponds to the global top 25th percentile, Tier 1 level.

Compensation

Bonuses are paid twice annually, calculated based on the Company’s performance and individual evaluations. Moreover, starting salaries for new graduate hires have been increased with the expectation of further participation of young employees and with a view to strengthening the Company’s competitiveness in hiring.

Healthy Work–life Balance: Support for Those Balancing Work with Family Commitments

Support for Childcare and Nursing Care Support

Support for Childcare

NEC Corporation supports employees who are balancing work with childcare with benefits such as childcare leave and reduced working hours, in addition to measures such as the following.

  • Management training on supporting those balancing work with family commitments, and practice-based training for employees on childcare leave
  • Allocation of additional points to employees with pre-school aged children under the cafeteria-style benefits and welfare system, “Will be”
  • Provision of a parent fund (a payment of 550,000 yen to employees who have become new parents) and a lump-sum payment upon the birth of a child

NEC Corporation acquired the “Kurumin” Next-generation Support Certification Mark from Japan’s Ministry of Health, Labour and Welfare in 2007, 2012, and 2015 in recognition of the Company’s initiatives for childcare. We implemented a series of measures, even including measures that are not incorporated in the action plan, and further improved the work–life balance of our employees. As a result of these measures, NEC Corporation acquired the “Platinum Kurumin” certification in 2018.

The Company is encouraging greater understanding and utilization of childcare leave among male employees by issuing a Guide for Childcare Leave for Men in line with post-natal paternity leave (childcare leave at the time of childbirth) under the revised Act on Childcare Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children or Other Family Members and by publishing stories about the experiences of men who have taken childcare leave.

Nursing Care Support

To support employees to balance work and nursing care, we have established systems such as nursing care leave, shorter working hours, and shorter working days.

In addition, a nursing care plan has been set up within “Will be,” the cafeteria-style benefits and welfare system, to provide employees with a variety of support to meet their needs as they balance nursing care and work.

From fiscal 2021, the number of employees working reduced hours to fulfill their childcare and nursing care responsibilities will decrease. We believe that this is because the spread of telework and super flex time has led to an increase in the number of employees who are able to balance work with childcare or nursing care without having to work shorter hours. In addition, as a result of encouraging male employees to take childcare leave, the number of employees doing so is increasing.

Healthy Work–Life Balance: Workstyle Reforms

Measures to Support Diverse and Flexible Workstyles

Promoting Smart Work 2.0

NEC is working to enable individual employees and teams to display a high level of performance by implementing a hybrid workstyle that optimally combines on-site and remote workstyles.

  • We operate internal and external satellite offices, in addition to the work from home system.
  • Communication-Hubs have been developed to enable team members to exchange opinions openly in an environment that provides high psychological safety, build relationships of trust and align their directions.
  • Innovation-Hubs have been developed to seize the future through connections with various stakeholders, including customers, and across organizational and social frameworks.
  • FIELD has been established as a space for co-creation involving meals.
  • We introduced a flextime system without core working hours (“super flex”).
  • In fiscal 2022, we established guidelines for long-distance work to facilitate a workstyle for people who reside in locations far from their traditional workplace. Since fiscal 2023, this has been available regardless of whether there is a compelling reason for wanting to reside in a distant location.

Special Jury Prize in the Nikkei Smart Work Awards 2023

NEC received a five-star rating in the Nikkei Smart Work Survey, ranking in the top 24 of the 813 companies that responded to the survey. The Company was also selected to receive the Special Jury Prize in recognition of its excellent systems for promoting health, including mental health, and for receiving a five-star rating for three consecutive years.

Introduction of “Thanks/Praise” Platform

In November 2021, we introduced the “Thanks/Praise” platform, which is aimed at facilitating light, positive feedback using stickers in an effort to foster a culture of mutual acknowledgment and enhancement. The program was expanded throughout the NEC Group (except for certain Group companies) the following year in April 2022.

Work–Life Balance

NEC grants all employees annual paid leave, and also grants a separate allowance of five days per year of family friendly leave (up to 20 days can be accumulated). Family friendly leave is paid leave that can be used for reasons such as personal illness, a spouse or partner’s childbirth, childcare, attending children’s school events, family care and local volunteer activities.

The Company is also promoting work-life balance through the following initiatives.

  • Following workers union and management deliberations, NEC Corporation and affiliated companies in Japan strengthened their initiatives to prevent excessive work by revising the standard for overtime, requiring a health check at 70 hours of overtime work, down from the previous 80 hours.
  • We have also created systems that enable employees to have consultations with an industrial physician of their own volition, even if they have not exceeded the above standard.
  • Work status is confirmed by workers union–management committees in each business unit and office and efforts are made to shorten work hours through workstyle reforms, ensure employee health and encourage workers to use paid leave.
  • We established the Guideline for Balancing Treatment and Work for employees. The guideline indicates that employees can make use of systems such as short-time work or short-day work3 to allow them to receive medical treatment or recover from cancer and other intractable diseases.
  • NEC Corporation and affiliated companies in Japan updated their work hour management systems in line with the fiscal 2020 revision of the Labour Standards Act. The Company put systems in place to properly ascertain work hours, rigorously manage overtime, identify potential risks that could lead to accidents during work hours at an early stage and implement countermeasures as necessary to prevent such accidents.
  • 3.
    One day a week is predetermined as a non-work day, on which employees are allowed time off from work.

Work Hour Management

Employees’ average monthly overtime is as follows.