Human Capital Strategy

Strategy

Fundamental Philosophy

Measures and Policies

Improving Quality of Relationships

Will Management (Personal Will, Career Development and Educational Programs)

PIM

In-House Manufacturing and Self-Production

Commitment System

Compensations and Recruitment

Interaction between Measures and Policies

Indexes and Goals

Strategy

Fundamental Philosophy

■Figure 1. ES survey and consolidated business results

Measures and Policies

Our strategy for improving job satisfaction and encouraging evolution is composed of the following main measures and policies.

Improving Quality of Relationships (Importance of Mutual Trust)

DISCO Group recognizes the importance of high-quality relationships among employees in improving the quality of output. Improving quality of relationships, which refers to the mutual trust built between employees, is an important part of increasing employee satisfaction and making sure our human capital strategy, which emphasizes the importance of individual opinion and freedom, is functioning as intended.
To ensure employees fully understand the quality of relationships concept, it is integrated into the educational systems at DISCO, such as the programs for increasing job satisfaction and new employee training. In addition, DISCO invests time and capital into programs that build good relationships and mutual trust, such as company-sponsored lunches and initiatives that encourage spontaneous conversation within the office.

Will Management (System Reflecting Individual Will)

DISCO Group has established systems that enable employees to shape their work style based on their will (inner initiative). These systems include the freedoms to choose the content of their work, their department, and the office to which they belong.

＜Personal Will Accounting＞
DISCO Group employs a unique managerial accounting system that calculates everything within the company, from tasks to services to equipment, using an internal currency called Will, which allows employees to manage their own income and expenditure. Within this system, employees engage in the development and tasks of their choice and earn Will as income. Moreover, employees can use Will to request work from others, even if they themselves do not hold a management position. Through this management accounting system, Will income and expenditures act as a quantitative visualization of each employee’s individual performance, which allows employees to see their own performance objectively.
Furthermore, within this system, effort is made to eliminate top-down management, in which tasks are assigned through orders by a superior, and instead employees perform tasks only once mutual agreement has been reached. This system encourages employees to be conscious of their trustworthiness and relationships with their colleagues, as well as to take responsibility for their results and reputation. Moreover, when an employee makes a mistake at work or when a development project fails, instead of being reprimanded by a superior, they take responsibility through losses in Personal Will. This helps prevent excessive reprimand that would cause employees to become demotivated or lose trust in the company. Instead, results are expressed through their Will profit , which is then reflected in their bonuses.
To promote company policies, instead of issuing orders, DISCO utilizes Personal Will Accounting to motivate employees, by implementing systems offering large amounts of Will as part of the policy, for example. In addition, DISCO holds presidential and managerial town meetings designed to induce employee behavior rooted in employees sharing in the opinions and thoughts expressed at these meetings.

＜Career Development and Educational Programs＞
Under the system of Personal Will Accounting and the idea that strong will (inner initiative) allows employees to fully apply their individuality and abilities, the fundamental policy at DISCO is that employees will mold their own careers through choice and personal responsibility. Based on this policy, DISCO has prepared systems that allow employees to design their career of their own initiative.
Major Systems
-Personal Will Accounting: a system that encourages employees to take on tasks they are interested in trying so that they can gain experience and improve their skills
-Freedom of transfer: If an employee wishes to transfer to another department as part of designing their own career, they have the freedom to do so as long as they can come to mutual agreement with the department they wish to join. As part of this system, the employee’s current department can attempt to persuade the employee to stay but cannot prevent them from transferring.
-Application University: All employees who join DISCO as new graduates in a career-track position are assigned to a department called Application University after new employee training. In Application University, they learn about applications technology, which combines DISCO equipment and consumables to attain the best processing conditions, and explore which department they would like to join, while at the same time working on completing the multiple requirements for graduating from Application University. More specifically, these new employees proactively reach out to departments for work to earn Will so that they can discover which departments interest them. If they then come to mutual agreement with a department, they will be able to join that department upon graduation from Application University.
-Training System: In addition to new employee training and other position-based training, employees have access to over 600 on-demand e-learning lessons and 400 training sessions, both online and in-person. Employees are able to take the training of their choice by paying Will. As this Will payment goes to the employees who develop and conduct the training, these employees will be motivated to improve their training so that more employees will participate, which leads to high-quality internal education.

Enabling employee free will through the Will management system helps promote innovation, improve productivity, and distribute personnel as appropriate within the company, leading to overall optimization. DISCO also works to create a corporate culture that improves employee satisfaction and motivation, as well as encourages autonomy and personal responsibility for achieving better results and designing their own career.

PIM（Performance Innovation Management）

Since its implementation in 2003, PIM (improvement activities) has improved not only productivity through the improvement of everyday tasks but has also achieved better performance connecting to the evolution and improvement of products and services. All employees engage in PIM regardless of their position or employment type, and the system is structured such that employees want to engage in PIM of their own initiative.
PIM is an activity in which employees keep a database on a daily basis listing anything they notice that could become a trigger for making improvements, such as tedious steps within their work or issues faced by customers, and then conduct method changes (evolution and improvement within work) based on these notices. PIM is applied to a wide range of targets, from increasing the efficiency of back office jobs to developing new technology.
In addition, PIM applies the Personal Will system to encourage employees to participate of their own inner initiative, with large amounts of Will awarded to the best improvement-related ideas.
Although DISCO does invest time and capital into PIM, we aim to maximize long-term profit through the cultivation of a culture that generates evolution and innovation by encouraging employees to sharpen their troubleshooting abilities and implement improvements on a daily basis.

In-House Manufacturing and Self-Production

This policy promotes manufacturing being conducted in-house as much as possible, not only within the engineering and manufacturing divisions but within all divisions, which means in-house manufacturing is applied across a wide range, such as to manufacturing facilities, essential parts, and IT systems. This is a business strategy that aims to improve our ability to adapt to change, and at the same time, it is also a part of our human capital strategy that aims to cultivate employees’ ability to evolve.
In-house manufacturing creates opportunities for employees to try something in a new field and accumulate know-how within the company. Furthermore, with in-house manufactured equipment and facilities, it is possible to implement improvements quickly since all aspects are created internally. Expanding the range of products and services able to be handled in-house leads to fast and flexible support in response to customer requests, which connects to improved customer satisfaction.
In-house manufacturing interacts with the abovementioned PIM in a way that generates a positive cycle of improving employees’ ability to evolve, which also helps accelerate subsequent improvements.

Commitment System

At DISCO and a portion of our subsidiaries, we have implemented a “commitment system,” in which employees can express their commitment by promising to give their all in their work and maintain the trust of those around them, and by also taking responsibility for putting that promise into practice. All regular employees have the opportunity to make this commitment, and those who do receive a monthly allowance starting from 100,000 yen on the condition that, if it is determined that they are not committed to their work or to maintaining trust relationships, they will voluntarily leave the company.

In the current fiscal year, over 75% of DISCO employees have expressed their commitment, proving that people with strong motivation and initiative are at the heart of our business. Additionally, through this system, we strive to nurture self-driven individuals who are constantly assessing themselves to drive improvement and promote value creation by highly-engaged employees.

Compensation and Recruitment

In the chapter titled “General Principles of Management” in the Management Guidelines of DISCO VALUES, which is the DISCO Group’s corporate philosophy, we state: “Equal opportunity is given and equitably rewarded.” We apply this mindset when thinking about employee compensation and other benefits, implementing a compensation system that emphasizes correlation with the company’s business performance and the individual’s level of contribution. Typically, if a company that has strong business performance fails to provide employee compensation that adequately reflects those results, it can lead to a decrease in employee motivation. By providing adequate compensation to DISCO Group employees based on business performance, we are able to prevent such situations from occurring, and instead are able to maintain and boost our employees’ engagement and their willingness to take on new challenges.

＜Composition of Employee Compensation＞
DISCO’s employee compensation is comprised of the following:
i) Base salary (skill-based pay, qualification-based pay)
ii) Allowances (housing and commuting allowance, city allowance, overtime allowance, special bonuses, etc.)
iii) Bonuses (quarterly bonuses, DISCO VISION achievement bonus, evolution achievement bonus, dividend-linked incentives, etc.)

＜Bonuses＞
DISCO Group adopts ordinary profit margin as an important index within our business strategy. By linking the consolidated ordinary profit margin ratio not only to bonuses for executives but also to employee compensation, DISCO encourages employee awareness of this index’s significance. With this system, DISCO aims to avoid increases in fixed costs while at the same time realizing a top-class level of compensation within Japan based on our high profits.
These returns to employees linked to business performance are proactively distributed not only to a small segment of employees, such as engineers, but also to employees working in back office divisions and both full-time and contract employees (excluding part-time workers) at the Hiroshima and Nagano Works manufacturing sites. In addition, DISCO does not adopt the policy seen at some manufacturers of creating spin-off companies with the aim of lowering personnel expenses. As DISCO is acutely aware that the essence of manufacturing is found at the manufacturing sites, we are working to improve recruitment competitiveness and to secure and retain personnel through improvements to our personnel and compensation systems, which have been standardized across the entire company.
In addition, the compensation system is linked to the abovementioned Personal Will system, with Personal Will income and expenditure linked to employee bonuses. This system is designed so that a larger bonus is distributed to those who produce results with high added value and exchange more value with customers and coworkers.

■Figure 2. Overview of Indices Linked to Bonuses

Below are each of the indices linked to DISCO’s employee bonuses:

¹ Paid to regular employees depending on the stock price level.
² Personal Will can be earned through engaging in improvement activities that contribute to the reduction of GHG emissions. Additionally, each employee’s Personal Will earnings are linked to their bonuses.
³ Conventional stock options and restricted stock-based remunerations are granted as variable remuneration.

＜Performance-Linked Pension＞
For those former regular employees of DISCO who reached mandatory retirement age after over 10 years of continuous service who meet certain conditions, DISCO has implemented a unique pension system for the period between the ages of 65 and 75 to serve as both an appreciation of the employee’s dedication over the years as well as a form of living support. Through this system, DISCO aims to relieve some of the financial anxieties that arise after retirement. These pension payments are not solely based on the employee’s performance appraisal during their time at DISCO, but also fluctuate based on the consolidated ordinary income margin at the time of payment. This ensures that these payments will not lead to the exacerbation of a potential downturn in the company’s business performance, while also encouraging current employees to develop their successors and make contributions to the organization with a focus on the future performance of the business after their retirement.

At the same time, DISCO Group places importance on being a group composed of people who agree with, share, and are able to implement our corporate values. As part of recruitment, we proactively publicize information such as qualities DISCO does and does not want in employees and reasons employees have resigned in the past so that applicants are able to determine whether they agree with our values before they apply, which helps make sure that all employees share the same values.

■Excerpt from DISCO VALUES

The following are excerpts from the “Human Resources” chapter in DISCO VALUES Management Guidelines, established in 2002.

• The capability of an individual increases many times over via organic interaction with others.
• People can demonstrate their abilities to the fullest extent when they act based on their own intent.
  DISCO places importance on the manifestation of each member’s individual intent.
• Displays of originality and capability depend on the intent of each member. DISCO encourages such intentions and ambitions.
• DISCO establishes an environment in which those suited to be members of the organization may continue to perform for as long as possible.
• Personal and family values may differ among individuals. Neither the corporation nor its employees seek to interfere in the individual matters of its employees.
• DISCO does not discriminate or evaluate employees based on personal attributes such as biological sex, sexual orientation, gender identity, age, nationality, race, religion, or educational background.

Please click here for other chapters in the Management Guidelines.

Indexes and Goals