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【External experts】

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  Mr. Minoru Noda (Facilitator)

  Professor
  Meiji Business School
  Graduate School of Global Business

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  Ms. Mika Makiyama

  Executive Vice President
  Acting General Manager of Customer Solution Division
  General Manager of Gas Business Division
  The Kansai Electric Power Company, Incorporated

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  Ms. Naoko Tobikawa

  General Manager, Human Resources Department
  SG Holdings Co., Ltd.

【TESS Holdings Co., Ltd.】

• ● Representative Director and President: Kazuki Yamamoto
• ● Executive Managing Director: Toshihiro Takasaki (President & Chief Executive Officer of TESS Engineering Co., Ltd.)
• ● Director, In-charge of ESG and Women’s Empowerment, General Manager of the Human Capital Strategy Division: Mayumi Yoshida (Chair of the ESG Promotion Committee)
• ● Head of Asset Management Team, Finance Unit, Administration Department: Yukari Ito
• ● Head of Human Capital Development Team, Human Capital Strategy Division: Ena Kawashima
• ● ESG Promotion Committee Diversity & Inclusion Working Group: Hiroki Matsumoto,* Teppei Imai*
• ● ESG Promotion Committee Secretariat: Yoshihiro Matsumoto,* Eri Matsuoka,* Hinano Mizuta, Haruki Tanikawa, Airi Asada
• ● Other observers* (Audit and Supervisory Committee Members, Internal Audit Office, and others)
• *Online participation

Communication between senior management and employees

TESS Holdings (THD) Yoshida：　We at TESS Holdings aim to promote more active communication from senior management to the managers, recognizing this is one of our challenges. I understand that at Kansai Electric Power you worked on an initiative to reform organizational culture. Did you see any changes as a result of this initiative?

Kansai Electric Power Makiyama：　I can certainly these some steady changes. Conversely, our motivation survey results revealed that there was a divergence between the thoughts of senior management and employees, so we think this is an issue for us.
The senior management team takes every opportunity to communicate policies and other messages via e-mail or portal site. Our basic approach is that, in addition to such means of communication, the senior management team also share the policies and their thoughts with the middle managers, who then use their own words to get the messages across to their subordinates. With this flow, however, it is often the case that senior management’s thoughts and intentions are not accurately communicated as the information is passed on to employees through others, and in a way, it is filtered. That is why we believe that it is necessary to have opportunities for direct dialogue between senior management and employees in addition to the existing communication flow through organizational layers. We are currently discussing a specific initiative, internally.

Meiji Business School Noda：　How is it at SG Holdings?

SG Holdings Tobikawa：　We face similar issues. Our annual engagement survey results show that employees’ failure to resonate with management policy and the company’s directions to a high degree is one of the main factors that lower their engagement. The senior management expects the department heads and managers to clearly communicate the policies to the employees, but we believe that their intentions are not fully understood at present. We have come up with an improvement measure of having dialogue between senior management and employees, like Kansai Electric Power, and we are now in the process of planning for implementation.

Meiji Business School Noda：　I had some difficulties in communicating values at a company when they were expanding their business globally. It was hard to accurately communicate the Japanese people’s way of thinking, especially as it involved cross-cultural communication. Then I took a clue from the missionary practices, paying particular attention to the way values are conveyed in Christianity.
In the propagation of Christianity in the past, a highly direct approach was mainly employed. Specifically, its base message was something like “if you believe in this, your life will be enriched.” The overall picture is that Christians from a civilized society tell people in an uncivilized region to believe in Christianity by saying things like: “Believe in Christianity, and you can eat better food.” The modern-age practice is, however, completely different. Today, the main approach is to deliver a message while being considerate of other people’s values by asking questions such as “God is in your heart; what do you value now?” For example, when people are asked “How do you interact with your neighbors?,” their reply will be something like “I try to get along with them.” This is quite similar to “love your neighbor as yourself,” a teaching from the Bible. In a way, they have already put this value into practice without realizing it, and this is something that often happens. So, this is an approach of telling people that “Recognize values that you can also find in the Bible and put them into practice. If anything is missing, study the missing parts with us,” and I find it quite effective. This means that any values cannot be communicated in an essential sense without a process of thinking and acting by oneself. I applied it to the company’s efforts to instill its vision as I talked about earlier. I also searched for the existing local cases and used them to point out that their thoughts or views have something common with the company’s vision, thus creating empathy. That was our first step, and it was followed by a question of “How would you put it into practice?” In this way, we tried to ensure that they think by themselves and take actions with full understanding, and that was the approach we focused on. Naturally, there were inevitable differences in values, resulting in each country’s version of visions created in some countries. In such cases, however, we did not say it was wrong but was flexible enough to incorporate an excellent part of these versions into the global vision. The lessons I learned from this experience are how significant it is to co-create a vision with employees while aligning with their thoughts and values, not through a top-down, one-way approach. People are not committed to what they are just instructed to do, but when their thoughts are in line with the company vision, they will take a more proactive attitude. In other words, in order to instill a vision, a process of making them start thinking by themselves is absolutely essential. I believe that a vision must be a product of co-creation.

THD Yoshida：　It means that the process of aligning the existing practices by employees with the company’s policies is more important than top-down, one-way communication, isn’t it?

Meiji Business School Noda：　Exactly. In some cases, the more information that senior management tries to communicate to instill their vision, the more employees become hesitant. The more they are told things one-sidedly, the more they will shut themselves off. I think that it would be better for the employees themselves to talk about the company’s vision. It would deepen their understanding.

Kansai Electric Power Makiyama：　Putting my thoughts into words often helps me realize that I have not fully organized my thoughts despite feelings to the contrary. I think that dialogue brings awareness and makes people think of a vision as their own issue. For instance, when the KPIs developed by their head office are just thrust onto the front-line workplace through one-way communication, people feel cornered into doing something. Conversely, when KPIs are developed together with them, incorporating their views, these workers will take more proactive actions. Entering into dialogue on multiple occasions takes time and energy, but I believe it is a shortcut to ensure that ideas or thoughts will be embraced by people.

Meiji Business School Noda：　When I was involved in designing training courses by job levels at a major system integrator, a section manager said that it would be impossible to conduct all of them. As the manager talked, it turned out that they wanted to do some of them, so I said that they could implement the parts in which they were interested. Later on, I received feedback that they worked on other measures as they found them interesting once they started. This experience tells me that the key to getting ideas across and well understood is a process of making people take ownership and letting them talk things through in their own words.

THD Yoshida：　Actually, there are a certain number of employees who never take the initiative, and it is difficult to get them to talk.

Meiji Business School Noda：　A company designed a process to instill its vision, based on their judgement that it would be ineffective to uniformly convey the message to all the employees. What they adopted is a phased diffusion strategy. This strategy is based on the diffusion of innovation theory, which categorizes a market into several groups including Innovators, who have a strong interest in new things and are the first to adopt them; Early Adopters, who are conscious of new values and are highly influential; and Early Majorities, who place high value on trends and past records and adopt new things after they feel a sense of security. At this company, they expected the vision to be embraced by the Innovators and Early Adopters without so much effort, and so they decided to focus on how to approach the Early Majorities. As the Early Majority group is careful and tends to place high importance on reputation and past records, it is important to let them know or make them understand what it means to themselves. Accordingly, the company determined that the effective approach was to communicate their vision by focusing on the employees with high affinity, who are always willing to do something, instead of cascading the vision through the organizational layers. Under this approach, it becomes easier to instill the vision among the Early Majorities by spreading the ideas through those with high affinity, in a natural way.

THD Yoshida：　The approach of focusing on and starting from people with high affinity, instead of cascading the ideas through the organizational layers are new to me. That was very helpful, and I really appreciate it.

Initiatives to drive DX

THD Ito：　At our company, we worked on an initiative to automate invoice processing. In the course of implementation, we received some feedback such as “the existing procedures are less time consuming” and “the existing processes are more efficient.” The project members were required to provide a thorough and careful explanation about the significance of implementation and its advantages, while taking this feedback on board with sincerity.
The system was finally implemented, but even after that, we received feedback such as “its effectiveness is not clearly evident” and “conversely, it increased the workload.” I think such responses reflect their concerns or confusion as they face a large change in operational procedures.
We assume that there is a large potential to achieve higher operational efficiency by utilizing AI and information systems. In implementing such projects, it is essential to obtain the understanding and acceptance of the field staff. I would appreciate it if you could share examples of your initiatives or give us any advice.

SG Holdings Tobikawa：　We faced similar issues when we moved onto a cloud-based HR system for HR-related procedures. Many of our drivers and field staff did not have an e-mail address, and the workplace remained stuck in a paper-driven culture. We have worked on implementation of the new system at the operating companies for about two years, but the human resources staff were accustomed to the paper-based procedures and their opinions were “the paper-based processing is less time consuming,” “our drivers do not fully utilize a smartphone,” and so on. The top-down instructions were not enough for transition to the new system and the field staff often backed off. What we did then was to continuously hold regular weekly meetings with the relevant human resources staff, striving to cultivate the awareness that this was a project the company as a whole must work on. We continued this effort for about half a year until we finally saw some progress in its implementation. As people who dislike change tend to be very eager to do their work in their own ways, I think the key is to make them understand that this is a company-wide initiative.

Meiji Business School Noda：　What was their reaction after implementation?

SG Holdings Tobikawa：　As a result of implementation, we achieved higher operational efficiency, so we feel it was a good initiative.
Some employees expressed their concerns in response to our internal survey; for example, they were worried they might lose their jobs with the spread of AI. At the same time, I believe that an increasing number of employees are taking a positive attitude toward AI, such as aiming to be a talent that can fully utilize AI.

Meiji Business School Noda：　How is it at Kansai Electric Power?

Kansai Electric Power Makiyama：　In our organization, our basic attitude is “we will do it when we decide to,” so we have rarely been in a situation where we would not proceed with implementation. The top management took a lead to drive digital transformation and introduce AI, but in terms of the operational aspects of digital transformation, the management, including myself, may be facing more difficulties. There are a lot of requests for digitalization from employees, and we even have a waiting list for DX projects. At the Customer Solution Division, for which I am responsible, we provide employees with training on no-code system development. Through such training, even the older employees from the front-line workplaces who are less IT-savvy come to realize that it is easier to develop or utilize the systems than anticipated, leading to higher motivation and upskilling. From this experience, I have learned that digital transformation is an effective way to provide reskilling opportunities, in addition to serving as a tool to increase operational efficiency and create values.

Meiji Business School Noda：　To promote digital transformation, I think the only effective way is to increase the number of people who embrace it, thereby making those who do not work on it a minority. When a trading company embarked on automating complicated operations, they faced resistance from the employees. The operations involve different forms, delivery dates, payment terms, etc. for each client, and these employees claimed that it was impossible to automate such complicated tasks. However, once the automated process started to be introduced, their mindset changed to thinking “we can do it if we try.” Subsequently, the implementation process went smoothly and speedily. Having said that, about 10 to 20% of employees refuse to change until the very end. I believe that, unfortunately, we have to be prepared for such a situation

System to drive digital transformation

THD Takasaki：　At Kansai Electric Power, do you have a company-wide scheme to manage planning and systems for digital transformation, or does each operating division take the initiative in implementing this? Please tell us about your systems to promote digital transformation.

Kansai Electric Power Makiyama：　Our Office of IT Strategy is responsible for developing and managing company-wide policies and rules and a security policy, while each operating division takes the initiative to drive digital transformation. In 2018, K4 Digital Co., Ltd. was established jointly with Accenture Japan Ltd to promote digital transformation at our company. At present, each operating division has established their own digital transformation policy including utilization of AI, and K4 Digital provides support for this.

THD Takasaki：　So, you have no dedicated staff for digital transformation in each operating division, right?

Kansai Electric Power Makiyama：　We assign personnel dedicated to digital transformation in each operating division, and they collaborate with the Office of IT Strategy and K4 Digital. While we hire mid-career DX talents, we also make an effort to develop such talents internally. In addition to the company-wide DX training, divisional training is conducted. We are striving to ensure that these trainees gain strong knowledge and can translate this into practice through these training programs.

Meiji Business School Noda：　As far as the digitalization of routine tasks is concerned, it can go relatively smoothly. When people see colleagues and others working on digital transformation, some of them may want to give it a try.

THD Takasaki：　Once people see success stories, some of them may follow suit. At our company, as the characteristics of business operations are different for each department, discussion and planning regarding digital transformation takes place in each department. I sometimes feel it might be more efficient to have a structure to supervise the entire company in terms of digital transformation.
When we built a document database to go paperless, there were some complaints from the field staff, such as “it may have reduced the administration departments’ workload but it’s more work for us.” On the other hand, we have seen some positive effects; for example, remote work has become possible thanks to the paper-less work environment. I think that once such positive cycles spread, efforts will speed up.

THD Yoshida：　People tend to dislike change, so it is quite natural to face many negative reactions at the initial stage of implementation. More importantly, we must see how changes are judged after a certain period of time. If things do not improve over time, there may be some problems with the change process. I think it is necessary to keep the initiative going for a certain period of time while facing and accepting their resistance.

Meiji Business School Noda：　An IT company assigns employees from its information system department to the operating departments, and they call this a “double-chair” scheme. These employees belong to the information system department and, at the same time, are responsible for digitalization support for each operating department. They work onsite at each operating department, supporting their digital transformation from Monday to Thursday. On Friday, they return to the information system department at the head office to learn about new technologies and share the initiatives at each responsible department. Another example is found at an automobile manufacturers. They work on the development of employees who are interested in AI and computers, with an aim to develop digital talents, even if their initial skills are at an Excel user level. They provide over 1,000 employees a year with opportunities for reskilling. Their policy is to develop internal talents because hiring such a talent is quite difficult. As with this company, finding an employee who is interested in digitalization in an operating department and providing them with learning opportunities can accelerate digital transformation.

Middle managers’ workload

THD Yoshida：　Professor Noda told us about the increasing workload of middle managers at the keynote speech. Are you taking any measures to tackle this at Kansai Electric Power?

Kansai Electric Power Makiyama：　I think that it is important not to increase unnecessary work and to avoid rework. Those who give instructions should make them more specific and clearer, while those who receive instructions should try to understand why the task is required, ask questions at an early stage, and ask the priorities of tasks if they receive multiple ones. I believe that both sides should keep such matters in mind so that higher efficiency can be achieved. I personally try to align the directions at an early phase through dialogue or by using a list to clarify the points before they start to prepare documents.

THD Yoshida：　I agree. Those giving instructions may also find their own thinking becomes clearer as they provide explanations to others. No supervisor is perfect, and they learn something from others’ views and change directions. That is why what a supervisor really wants a subordinate to do and what the subordinate understands they really need to do become clearer after a certain amount of communication between them. A supervisor who gives instructions should have a greater sense of responsibility, while a subordinate who receives instructions should have the courage to ask questions or communicate their ideas at an earlier stage instead of just worrying about not clearly understanding the instructions.

360-degree assessment

THD Yoshida：　I heard that at Kansai Electric Power you have conducted a multi-rater assessment. We are now considering a 360-degree assessment, too, and believe that we would need to take certain considerations in implementation as there are mixed opinions on the idea. For example, we believe the required considerations should include:
● The scope to be limited, such as managers only
● Not linked to the personnel evaluation but aimed at providing insight and opportunities for self-development
● Providing both the assessed and the assessors with training in advance
Can you please share how you implement it at Kansai Electric Power?

Kansai Electric Power Makiyama：　At Kansai Electric Power, we perform a multi-rater assessment for the managers. According to the questionnaires targeting people involved with the multi-rater assessment, about 80% of the assessed recognized its advantages and utilized the feedback to improve their operations and employee management.

THD Yamamoto：　I think it would be good if the TESS Group conduct it upon taking sufficient considerations. Let me share with you something I recently heard from a president of a company about their 360-degree assessment.
At the company, they always conduct a 360-degree assessment when considering the promotion of an employee to a management position. Their rules are that no one can be promoted without support from colleagues and subordinates. As I heard, there are some cases where a talent highly rated by their supervisor receives very poor ratings from colleagues and subordinates on the whole. Accordingly, the president was satisfied with their implementation of multi-rater assessment.

Diversity and inclusion (D&I) training at TESS Group

THD Secretariat：　We consider diversity and inclusion as one of the important elements of human capital management. TESS Group holds D&I training for all officers and employees to promote better understanding of D&I within the Group. However, some people said that they fully understand the significance of D&I but they were not sure what to do. In such a situation, what should we do to let them move to the next step and think of D&I as their own issue?

Meiji Business School Noda：　I would hold a case study session on race, a topic that is unfamiliar to the Japanese people.
There are a majority race and a minority race in each country or location. It is therefore an effective topic when thinking about diversity and inclusion.
The key here is to avoid selecting a topic that is too close to reality to ensure that the participants think of D&I as their own issue. If you choose a topic that they may experience at an actual workplace, it will be difficult to take an unbiased approach, as individual emotions and personal experiences will cloud one’s judgment. To make sure that that does not happen, it is necessary to provide people with an opportunity to take ownership and think from a perspective of “what would I do?,” by devising various ways.

Wrap-up

THD Yamamoto：　We are a medium-sized group with about 400 to 500 employees, so I think that our thoughts can be well conveyed and understood throughout the organization with some innovative communication. On the contrary, our recent engagement survey results revealed that there is a “U-shaped curve” of the employees’ engagement. The longer they have worked for the company, the lower their engagement scores get. The curve bottoms out at a certain service-years group, and then rises again. We thought that when we formulated the medium-term management plan last year, we took consideration of the employee survey results although it had a top-down nature. It turned out, however, that our intention was not understood as much as we had expected.
In our organization, there is not much distance between management and employees because of our size. I believe that is all the more reason why we must re-examine our communication methods. As an ongoing initiative, 10 executive officers of our company and our subsidiaries meet on every Monday between 8:00 a.m. to 9:00 a.m. to hold, what we call a “morning session,” to share issues and exchange opinions. This has contributed to smooth communication among officers, but there are still some challenges ahead in terms of conveying messages to the middle managers. On the other hand, I believe that our communication with the younger employees goes relatively well. When we hire a new employee, Mr. Takasaki, Ms. Yoshida, and I interview them at the final interview. There are also many opportunities to interact with them at the joining ceremony and training just after they join us. In addition, Mr. Takasaki and I have a lunch with younger employees who have worked for the company for four years or less at each site, which we call a “shaffle lunch.” In these ways, we take the initiative in interacting with them.
We heard from Professor Noda about placing great importance on how to approach employees who share the company’s vision instead of just cascading messages through organizational layers, and I believe we should focus on this approach going forward. If the employees find the senior management’ approach overwhelming, they may back off and refuse to open up, so I think we need to maintain some form of balance as we move forward.