Human Resources Strategy

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To create social value and customer value and to ensure sustainable growth for the Group, we are focusing on a human resources strategy that links with our growth strategies to achieve our ideal situation, and will reflect this in our various types of programs.
Specifically, we have defined the ideal situation for both our organization and our human resources and are developing a human resources management program to build the ideal human resources portfolio to achieve our ideal situation. Through this, the MEDIPAL Group intends to continue to contribute to people’s health and the advancement of society by being proactive and constantly evolving, no matter the changes in the operating environment.

Vision for our ideal human resources situation:
future-oriented human resources

We have defined future-oriented human resources as our vision for the human resources that we need to realize the Group’s management philosophy.

Common Values
For its human resources, the MEDIPAL Group places great importance on integrity, morality, and a sense of mission as common values and considers these qualities to be the foundations of decision making.
Integrity: Always take a sincere approach and behave with fairness and honesty.
Morality: Act with general common sense as well as in compliance with laws and industry rules.
Sense of mission: Take responsibility and behave in accordance with what is right for the organization and oneself.
For the future of the MEDIPAL Group, we have defined six requirements for the future-oriented human resources to strengthen our business foundations, drive transformation, and develop our business broadly: sharing management philosophy; creativity; understanding the essence; involving others; communication; and analysis, identifying issues and resolution.

Image for human resources	Specific behaviors
Sharing management philosophy (Communication with vision)	Consistently make decisions to realize the management philosophy Set clear visions and shares them with enthusiasm to inspire others to become involved
Creativity (Creation of new value)	Collect information from a range of sources and creates new value for society and customers Propose innovative and original ideas that do not hang onto the past, regardless of how things were done before Capable of seeing things from an external perspective
Understanding the essence (Asking oneself)	Constantly ask oneself a question about the purpose of the MEDIPAL Group, including as its employees Ask oneself what is being worked toward and ensures that the means do not become the ends Spare no effort to achieve growth for oneself and others
Involving others (Teamwork and network)	Foster a sense of unity by working beyond the confines of one's own group and eliciting collaboration across departments Self-motivated to actively collaborate with people taking a leadership role to achieve organizational targets, and offers constructive opinions while engaging in work beyond the scope of work Always listen for information to expand knowledge and one's personal network
Communication (Excellent communication skill)	Listen closely and develop the trust of others, and engage in dialogue based on real intentions Engage in an exchange of constructive opinions with free and open-minded discussions and provide accurate feedback. Capable of leading constructive conversation, even in difficult situations Achieve personal growth by listening to others
Analysis, identifying issues and resolution (Addressing institutional issues)	Self-motivated to scientifically analyze the current status of the organization that is belonged to, identify issues, and work independently to resolve them Think of what can be contributed rather than searching for reasons to avoid contributing, and get started with a sense of speed

Grand Design of the Human Resources Strategy

We have formulated the Grand Design of the Human Resources Strategy as a base for our human resource strategy that links with our management strategy. The goal of our human resources strategy is to maximize the value of the Group human resources. We will realize this through the evolution of individuals in interaction with the evolution of organizations. To achieve this, we built a five-stage individual and organizational growth cycle.
For the evolution of individuals, we will apply programs from the three viewpoints of developing them, bringing them together, and empowering them: ① individuals exercising their initiative and strengths so that ② the outcome and added value result in ③ internal synergy for the growth of organizations. The growth cycle is then completed as ④ the growing organizations create new value and ⑤ expand opportunities for individuals to use their abilities.
This cycle will underpin our human capital, build knowhow, and lead to business innovation to enhance our earnings structure, realizing sustainable growth of corporate value.

Systems to Implement Our Strategy

To pursue the human resources strategy, our Human Resources Strategy Department is working out the entire concept and direction for the Group and developing platforms and other programs for overall management. Based on this, the actual programs are handed over to the administrative and HR departments of each Group company to implement according to their circumstances.
The Human Resources Committee meets once a month to ensure coordination between the Human Resources Strategy Department and the HR divisions of each Group company.
This committee shares problems, measures, and actions for mutual understanding and greater strategic efficiency, engaging in discussion and coordination geared to the best overall outcome. Matters the committee has deliberated on and decided are reported to management levels as needed to underpin consistent strategies and rapid decision making.

Human Resources Committee in FY2024

Main discussion points
- Sharing the progress of and challenges involving the introduction of the new HR evaluation systems to Group companies
- Sharing initiatives for improvement and challenges based on the results of the survey of workplace culture
- Considering a human resources training program for the next generation of management and key positions
- Utilizing the talent management system to realize the human resources portfolio
- Progress report on the project to build Group human resources systems
- Hearings with the companies on the human resources strategy and the management of human resources overall

Human Resources Management Program

Centralize, visualize, and analyze HR data

The MEDIPAL Group introduced a talent management system for more advanced management of human resources to integrate and visualize information on human resources possessed by Group companies.
In FY2024, we collected information on career awareness. We also implemented a gradual transfer to the talent management system and collated evaluation information for the operation of the new human resources evaluation system. This information will be analyzed and put to use for the optimal allocation for both employees and organizations, strengthening our human capital.

Hiring

The Group believes it is essential to transform our recruitment activities to focus on quality not quantity, and as such we are shifting to hiring based on the requirements for future-oriented human resources. In FY2024 we hired 11 human resources with advanced and specialized knowledge and secured talent to support the realization of the growth strategies in our Medium-Term Vision. In the future, our approach will be to step up our hiring of human resources with expertise from outside the Company, including via referrals* by employees. In line with this, the entire Group will adopt a hiring policy aligned with the requirements of future-oriented human resources and develop systems to secure strategic talent.

* A process where company employees recommend candidates from their own network or personal relationships for possible recruitment

Training

Build and implement systems to develop future-oriented human resources

To speed up our training of future-oriented human resources, we have launched a project to build a Group-wide development system centered on on-and off-the-job training and self-study in line with the individual business strategies of the Group companies. Deliberations in the project revealed shared challenges throughout the Group such as personal growth, wider promotion of career design, and the development of the next generation of leaders, plus the need for organizational growth to support these. Currently we are steadily implementing specific programs to take on these challenges while ensuring mutual coordination between the various initiatives.
Going forward, we intend to introduce tiered leadership and management training and competency development training open to all types of job levels. Through these initiatives, we support employees’ autonomous growth while continuously enhancing the Group-wide human resources development systems.
The Group is proactively advancing the development of future-oriented human resources through such measures, and is working swiftly to establish and implement a solid foundation for talent development that underpins sustainable organizational growth.

Development of the next generation of leaders
To cultivate the next generation of leaders, we are implementing a selective program through the MEDIPAL Project Design Academy, aimed at enhancing practical management skills and leadership capabilities. All participants have successfully completed the full curriculum and received high evaluations. In addition, we are utilizing external programs to implement selective programs for developing female executive candidates and financial leaders.
FY2024 Results
- Next-generation leader development program, MEDIPAL Project Design Academy: 16 participants completed the program
- Female management and executive candidate development program: 4 participants completed the program
- Financial leader development program: 1 participant completed the program
Strengthening management capabilities and supporting career development
In our training to improve management skills for managerial-level employees, we aim to enhance practical skills by linking goal setting with the demonstration of competency. We also continue to offer correspondence courses to enable each employee to proactively design their own career path. We encourage our employees to adopt career design and foster a stronger desire for personal growth.
FY2024 Results
- Training to improve management skills: 998 participants
- Correspondence courses: 478 participants (147 courses offered)
DX literacy improvement and generative AI project
We are promoting the improvement of DX literacy and the development of DX professionals with our initiative for the “Enhancement of Business with and in Digital.” In FY2024 we launched a generative AI project in which 300 selected employees are striving through trials to improve productivity and create new added value. The insights and challenges identified through the project are being shared inside the Group to be incorporated into future developments.
FY2024 Results
- Number of accesses to the DX literacy improvement self-study program: 2,910
- Number of use cases of generative AI shared within the Group: 7

Build and implement talent management systems

The Group is setting up systems to develop future-oriented human resources and is also working on building talent management systems. Our aim is to provide training tailored to individual needs and support career development, as well as expanding opportunities to be active at work to improve employee engagement and reduce employee resignations.
We will focus especially on the systematic, strategic, and sustained development through talent reviews and successor development plans for next generation management human resources and talent holding key positions, fostering core capabilities to support the growth strategy of the Group.
Each of the Group companies is currently engaged in the building of talent management systems as a trial program. In the program, key positions that lead the growth strategies of the Group companies are identified and job descriptions matching these positions are prepared. The talent management system finds human resources with high potential who show strong alignment with the required competencies, then formulates and implements successor development plans after discussions in the Human Resources Development Committee.
Through this trial, we will verify the effectiveness of these systems, looking toward a full-scale rollout through the entire Group in the future.

Allocation

As the Group executes the five growth strategies described in the Medium-Term Vision, we are transforming our human resources portfolio to align with changes in our business portfolio.
To shift our human resources portfolio, we formulate personnel plans for each business for strategic and optimal allocation.
In FY2024, we focused on human resource investment in growth strategy businesses and executed personnel transfers across the Group. We will continue to promote personnel exchanges within the Group and work to establish systems to support employees in developing their own careers.

Evaluation and compensation

We launched a project with members selected from each Group company to develop future-oriented human resources and provide appropriate evaluation and treatment. In this project, we analyzed the current status of the different evaluation and compensation systems in place at the various Group companies. We then considered what parts will be retained in a Group-wide system and whether to tailor some aspects for some of the companies, so that we maintain their competitive edge while also generating synergies for the Group.
This resulted in the definition of MEDIPAL Core Competencies (MCC) shared by the entire Group and we have begun phased introduction of the new MCC-based evaluation system from FY2024, starting with Group companies which have completed preparations for introduction. Linking goal management and competency will promote achievement of individual and organizational goals and development of competency, facilitating the development of future-oriented human resources as well as leading to the optimal human resources portfolio and allocation of human resources for the entire Group.

New Evaluation System in FY2024

Operation
- Seven Group companies adopted the new evaluation system.
- We implemented evaluator training for employees in managerial positions in each Group company, covering goal setting, competency evaluation and utilization, and the holding of evaluator review meetings and the Human Resources Development Committee.
- The Group companies began to hold evaluator review meetings and Human Resources Development Committee meetings.
Outcomes and challenges
- In the initial fiscal year, we gained a certain level of understanding and acceptance of the system through various training courses, information sessions, evaluator review meetings, and the Human Resources Development Committee. Employees in managerial positions and ordinary employees indicated a positive attitude.
- However, there were variations in evaluations due to differences in interpretations among evaluators and how the system is implemented.
- Insufficient coordination of goal management and competency evaluations led in some cases to goals not being achieved and skil ls not developed.
- Going forward, we must continue evaluator and management training and add training to develop competency among those under evaluation to fully establish the system.

Improvement in engagement

The Group regularly conducts surveys on employee awareness and workplace environments to realize a better workplace culture. These surveys use employee engagement and work engagement as metrics to measure the relations between employees and the Company and their motivation toward work, and identify issues in organizations.
The results of surveys in the past three years (FY2022 to FY2024) have shown rising figures overtime. Specifically, employee engagement went from 3.5 to 3.7 and then 3.9 (on a five-point scale) while work engagement went from 2.9 to 3.0 and then 3.2 (on a six-point scale), with both metrics improving consistently over three consecutive years.
Having analyzed the results of surveys so far, the three elements that especially contribute to raising engagement in the Group are the linking of individual goals to organizational ones, open communication, and autonomy within the organization. We will develop initiatives that focus on these elements in the future.
Our aim is to promote mutual understanding and enhanced awareness to create better workplaces by first clarifying the issues for each Group company and then holding dialogues between management and employees as well as internal discussions. We will continue to conduct these surveys to foster a creative corporate culture and promote the active participation of diverse human resources.

Vision for our ideal human resources situation:future-oriented human resources