Hitachi, Ltd. · TSE:6501

Hitachi — Investor Day (October 2022)

53 slides from Hitachi's investor day presentation, Oct 12, 2022

1. Slide 1: HR Strategy aligned with Management Strategy

   HR Strategy aligned with Management Strategy (Progress over the past 10 years and the future) Senior Vice President and Executive Officer, CHRO and Head of Corporate Communications Hidenobu Nakahata © Hitachi, Ltd. 2022. All rights reserved.

2. Slide 2: Today's Presenters/Q&A Sessions

   Today's Presenters/Q&A Sessions Hidenobu Nakahata Senior Vice President and Executive Officer, CHRO and Head of Corporate Communications Lorena Dellagiovanna Vice President and Executive Officer, Chief Sustainability Officer and Chief Diversity, Equity & Inclusion Officer(CDEIO) © Hitachi, Ltd. 2022

3. Slide 3: Keynotes

   Keynotes ⚫HR strategy is an important part of management strategy. We formulate and implement them aligned with the management strategy. ⚫Hitachi has drastically changed its management strategy since 2010. (From “products and systems business" & “ domestic focus” to "Social Innovation Business" & “g

4. Slide 4: Enhancing human capital as a key theme for sustainability goals

   A key theme in achieving our sustainability goals : Enhancing human capital 8 themes are "Sustainability Goals," which extract the value provided from Hitachi's materiality. The most important factor in realizing the vision of our SIB is our people. By Gathering the power of Hitachi Group’s over 300

5. Slide 5: Agenda

   Agenda 1. HR strategy aligned with management strategy (overall picture) 2. Main HR measures 1) Implementing DEI, Securing & Developing Global Leaders 2) Securing & Developing Digital Talents 3) Fostering Global Hitachi culture 4) Promotion of job-based HR management in Japan 3. Implement KPIs for H

6. Slide 6: Agenda

   Agenda 1. HR strategy aligned with management strategy (overall picture) 2. Main HR measures 1) Implementing DEI, Securing & Developing Global Leaders 2) Securing & Developing Digital Talents 3) Fostering Global Hitachi culture 4) Promotion of job-based HR management in Japan 3. Implement KPIs for H

7. Slide 7: 1-1. HR Strategy aligned with Business Strategy (Transformation of Management Strategy)

   1-1. HR Strategy aligned with Business Strategy (Transformation of Management Strategy) Change in management strategy from MMP2012 In response to the business crisis in 2009, Hitachi has made a major shift in its management strategy. In accordance with digitalization and globalization, Hitachi has s

8. Slide 8: 1-2. HR Strategy aligned with Business Strategy (Transformation of Management Strategy)

   1-2. HR Strategy aligned with Business Strategy (Transformation of Management Strategy) Change in Management Strategy from MMP2012 ① Resolve current and future issues of customers and society. Social Innovation ② Provide services which include innovative technologies such as IoT / AI Business / big

9. Slide 9: Reference: Example of Global Social Innovation Business

   【Reference】 Example of Global Social Innovation Business A new case of Lumada solution of smart mobility in Genova, Italy World's First Smart Mobility Digitally Connects Entire City Transportation Network to Optimize Public Transit Services Offer railway vehicles/operation system IoT-based mobility

10. Slide 10: 1-3. MMP2024: Further Growth by expansion of Lumada business

    1-3. HR Strategy aligned with Business Strategy (Transformation of Management Strategy) MMP2024 : Further Growth by expansion of Lumada business Growth Model that expands profit, which is the data-driven cycle of value co-creation with customers ⇒Accelerate Growth (Revenues double from 1.4 trillion

11. Slide 11: 1-4. HR Strategy aligned with Business Strategy (Overview)

    1-4. HR Strategy aligned with Business Strategy (Overview) Business Direction and Required Talent and Organization Management Strategy Drive Social Innovation Business Expand Global Business ● Under fast-paced business environment, identify current and future issues which societies and customers fac

12. Slide 12: 1-5. Required Talent and Organization

    1-5. HR Strategy aligned with Business Strategy (Overview) Required Talent and Organization (Significant change from the past) Keywords : ”Diversity, Equity and Inclusion” and “Proactive individuals” Past Future Japan’s GDP was the world's second Expansion of Overseas Market highest. (High economic

13. Slide 13: Reference: Global Expansion of Business and Changes of Headcount

    【Reference】 Global Expansion of Business coming with Changes of Headcount Outside Japan, both the sales amount and the number of employees have recorded more than twice of those in 1999. ⇒Increase overseas workforce through M&A and other ways to expand overseas business in growing markets in the MMP

14. Slide 14: 1-6. History of HR Management transformation

    1-6. HR Strategy aligned with Business Strategy (Overview) History of HR Management transformation (continue from 2011) ~MMP2015 ~MMP2021 MMP2024 ~ Transform to SIB Toward Global Leader Moving Toward New Growth Building a foundation for growth in SIB - Sustainable Growth with assets by acquisition -

15. Slide 15: Reference: Roadmap of HR strategy in 10 years (2011-2021)

    【Reference】 Roadmap of HR strategy in 10 years (2011-2021) 2011-2015 2016-2018 2019-2021 Implement Execute HR measures Start mindset, Global HR Initiatives D&I, Talents Corporate culture approach Global Human Resource Global Management 3.0 Human Resource ■ Implementation of Workday GPM/TR/ GLD Manag

16. Slide 16: Agenda

    Agenda 1. HR strategy aligned with management strategy (overall picture) 2. Main HR measures 1) Implementing DEI, Securing & Developing Global Leaders 2) Securing & Developing Digital Talents 3) Fostering Global Hitachi culture 4) Promotion of job-based HR management in Japan 3. Implement KPIs for H

17. Slide 17: 2. Main HR Measures (Major HR actions in 2024 MMP)

    2. Main HR Measures (Major HR actions in 2024 MMP) Pillars Main HR Measures ①Implement HR actions related to diversity, equity, and inclusion Implement global HR Platform People (Talent) ①Select and develop Management Leaders Today’s HR Strategy Optimize talent (workforce and capability) and engagem

18. Slide 18: Reference: Disclosure of KPIs (targets) related to Talents in 2024MMP

    【Reference】 Disclosure of KPIs (targets) related to Talents in 2024MMP Quantitative KPI settings for HR strategic targets and implementation of HR measures for achievement are required. Strengthen acquisition and development of digital talent which is key for growth Contribute to a sustainable socie

19. Slide 19: Implement DEI: Concept & Governance structure

    ① Implement DEI, Select and develop of diverse Management leaders (1) Concept & Governance structure Concept Structure Diversity, Equity & Inclusion President & CEO in Hitachi is engine to grow Keiji Kojima our business. Talent Diversity Adviser: Independent Director Gender, nationality, age, Cynthi

20. Slide 20: What is expected of Hitachi's management leaders

    ① Select and develop of diverse Management leaders (2) What is expected of Hitachi's management leaders Requirements of Leaders ◼ It is not enough that he/she has a deep understanding in his/her own business fields. It is required to make a business decision and execute it at own risk under an uncer

21. Slide 21: Implementing DEI in Executive class

    ① Select and develop of diverse Management leaders (3) Implementing DEI in Executive class Achievement to reach 10% in female and non-Japanese executives class* in FY2021. Achievement / Setting a New Goal of 15% Ratios for Female and Non-Japanese Executive and Target Corporate Officers by FY2024 to

22. Slide 22: Building a pipeline of leaders

    ① Select and develop of diverse Management leaders (4) Building a pipeline of leaders (select & develop on the nominating committee and executive side) The Nominating Committee and the Executive Committee work together to "select" and “develop" talents who will "lead change and innovation" CEO Nomin

23. Slide 23: Unique development program for emerging talents Future 50

    ① Select and develop of diverse Management leaders (5) Unique development program for emerging talents “Future 50” The president commits to select and develop 119 candidates for change-driven global management in order to create leaders who will lead Hitachi for the next 100 years. In order to acqui

24. Slide 24: Secure & Develop Digital Talents: HR Strategy Linked to Lumada Business

    ② Secure & Develop Digital Talents (1) HR Strategy Linked to Lumada Business Goals and Strategies Accelerate growth through Lumada business. Increase in both its revenues and profit as a percentage of total revenues and profit ⇒Securing and developing digital talents is essential to realize Lumada b

25. Slide 25: Define and Strengthen the Required Talents

    ② Secure & Develop Digital Talents (2) Define and Strengthen the Required Talents Clarify our digital business to identify and strengthen the required capabilities and scale ①Recruiting, ②Development, ③M&A to strengthen capability Design thinker Data scientist Plays a leading role in the identificat

26. Slide 26: Actions for Strengthening Talents Inside/Outside Japan

    ② Secure & Develop Digital Talents (3) Actions for Strengthening Talents Inside/Outside Japan Accelerate the strengthening of digital talents through the acquisition of GlobalLogic and use of recruitment and development schemes. Actions in FY20, 21 Actions in FY22-24 ＋21,000 Acquisition of GlobalLog

27. Slide 27: Share the Hitachi Values with 100,000 New Colleagues

    ③ Foster Global Hitachi Culture (1) Share the Hitachi Values with 100,000 New Colleagues and Foster the Growth Culture Welcoming more than 100,000 new colleagues and new organizations, improve engagement through penetration of Hitachi’s universal values and evolution of culture towards growth Cultiv

28. Slide 28: Actions for Smooth PMI (e.g. GlobalLogic)

    ③ Foster Global Hitachi Culture Communication (2) Actions for Smooth PMI (e.g. GlobalLogic) System Close communication for mutual understanding / implementation of HR measures Direct communication Employee event Culture Diagnosis between executives Celebrating new members of Hitachi Group - Visualiz

29. Slide 29: Actions to Change Behavior Through Opportunities

    ③ Foster Global Hitachi Culture Opportunity (3) Actions to Change Behavior Through Opportunities Embody the company mission Cultivating Growth Mindset “Contribute to society” - Humanitarian Aid for Ukraine - through idea contest “Make a Difference!” Quick decision-making and implementation of suppor

30. Slide 30: Implementation Status of Global HR Management Platform

    ③ Foster Global Hitachi Culture System (4) Implementation Status of Global HR Management Platform Accelerate PMI by introducing a common global platform Penetrate growth-centered behavior through group-wide common HR measures Human Capital Management Global Employee Survey Platform(Workday) FY18 FY2

31. Slide 31: Shift to Job-based HR Management in Japan: Background

    ④ Shift to Job-based HR Management in Japan (1) Background 370,000 employees in Hitachi Group globally Overseas (210,000) : “Job-based” HR management is already in place Japan (160,000) : “Membership-based” HR management remains (Need to review for business growth) Changes in Global Business Environ

32. Slide 32: Direction of HR Management Transformation

    ④ Shift to Job-based HR Management in Japan (2) Direction of HR Management Transformation Changes in Business Environment Business Direction of Hitachi Social Issues in Japan Changes in Individual Employees Japanese traditional Employment System System that allocates tasks to personnel without defin

33. Slide 33: Reasons of the Shift: Changes in Business Environment

    ④ Shift to Job-based HR Management in Japan (3) Reasons of the Shift: Viewpoint from Changes in Business Environment Previously From now on ⚫Market of Japan grew into 2nd largest in ⚫Expansion of overseas markets (Japanese market the world, Business growth centering remains unchanged) on/originating

34. Slide 34: HR Management Which Hitachi Aims At

    ④ Shift to Job-based HR Management in Japan (4) HR Management Which Hitachi Aims at (continuous goal from 2013) “Growth” of Organization AND Individuals, fostering “growth mindset and culture” Objective Offering values through the global social innovation business and self-realization of employees t

35. Slide 35: Actions taken from 2013 and Future Plans

    ④ Shift to Job-based HR Management in Japan (5) Actions taken from 2013 and Future Plans Convert the system and structure to a job-based system, and take time to communicate the need for a job-based system, leading to a change in employee awareness and behavior. FY Actions from 2013 to 2021 Ongoing

36. Slide 36: Agenda

    Agenda 1. HR strategy aligned with management strategy (overall picture) 2. Main HR measures 1) Implementing DEI, Securing & Developing Global Leaders 2) Securing & Developing Digital Talents 3) Fostering Global Hitachi culture 4) Promotion of job-based HR management in Japan 3. Implement KPIs for H

37. Slide 37: Set and fulfill HR strategy KPI aligned with business goals

    3-1. Set and fulfill HR strategy KPI aligned with business goals (1) Design HR Strategy and KPIs according to business goals and business strategy Management Target & Major Management MMP 2024 Goals Strategy Aligned HR Strategy KPI (Ex.) KPI Expand business by Lumada Secure and develop digital talen

38. Slide 38: Status of HR strategy and target for FY2024 (global business expansion)

    3-2. Set and fulfill HR strategy KPI aligned with business goals (2) Status of HR strategy and target for FY2024 ① (global business expansion) Human Resource KPIs for global business expansion Toward customer & market-oriented global business operations FY2012 FY2018 FY2021 FY2024 Results Results Re

39. Slide 39: Status of HR strategy and target for FY2024 (growth business)

    3-3. Set and fulfill HR strategy KPI aligned with business goals (2) Status of HR strategy and target for FY2024 ② (Talent Shift to high growth business (Social Innovation Business)) Human resource KPIs for growth business expansion, including Lumada business Achieve growth by shifting talents to gr

40. Slide 40: Keynotes (Re-post)

    Keynotes (Re-post) ⚫HR strategy is an important part of management strategy. We formulate and implement them aligned with the management strategy. ⚫Hitachi has drastically changed its management strategy since 2010. (From “products and systems business" & “ domestic focus” to "Social Innovation Busi

41. Slide 41: Hitachi Social Innovation is Powering Good

    Aitachi Seeia innovation is POWERING GOOD

42. Slide 42: Appendix

    [APPENDIX] © Hitachi, Ltd. 2022. All rights reserved. 41

43. Slide 43: Appendix 1. Structure of New Global HR Division (HQ)

    Appendix 1. Structure of New Global HR Division(HQ) Operating as One Team across Countries/Regions/Companies Execute HR strategies and measures from a non-Japan-centric, global perspective for global business expansion. 15 USA 15 India 5 UK 2 Poland Note) Icon M F 2 Singapore 2 China 1 Germany 1 Spa

44. Slide 44: Appendix 2. Progress of Globalizing the Company

    Appendix 2. Progress of Globalizing the Company A Case of Rail Business Unit (Expansion of Global Business) Strongly promote globalization corresponding to market changes Business unit operating as One Team beyond countries or legal entities (Active engagement of diverse talent across the borders) ○

45. Slide 45: Appendix 3. Accelerate Assignment of Diversified Talents to High Positions

    Appendix 3. Accelerate Assignment of Diversified Talents to High Positions Appoint diverse talent to High Positions through fair assessment Name Assignment as of FY2022 Remarks EVP, CFO & CRMO [Apr. 2022] Experience in Other Business 1 Yoshihiko Kawamura [former CSO, Responsible for planning MMP, 20

46. Slide 46: Appendix 4. How Hitachi Academy Develops Digital Talent

    Appendix 4. How Hitachi Academy Develops Digital Talent Development programs of Digital Talent (A) Gain practical experience under professionals' guidance to become a project leader (B) Participate in trainings and exercises to acquire a way of thinking and techniques in the specific area to become

47. Slide 47: Appendix 5. DX Training Programs in Hitachi Academy

    Appendix 5. DX Training Programs in Hitachi Academy Providing approx. 100 specialized courses in alignment with the co-creation process to realize DX. Large Category Middle Category Small Category Broken down to Broken down to skills for DX realization Categorized within Axis of DX necessary element

48. Slide 48: Appendix 6. Values (Hitachi Founding Spirit)

    Appendix 6. Values (Hitachi Founding Spirit) VALUES ［Hitachi Founding Spirit］ MISSION VALUES VISION 和 Have frank discussions between all class of employees, and once a decision is made, work Harmony together to make it success. Act with a sense of honesty and ownership at 誠 all times and never pass

49. Slide 49: Appendix 7. Global HR Management Foundations across Hitachi

    Appendix 7. Global HR Management Foundations across Hitachi Hitachi Global Grading (HGG) Apply global common criteria across the group to rank around 50,000 executives and managers all over the world Manager Hitachi Company A Evaluate positions from four perspectives Position Global Company B in Com

50. Slide 50: Appendix 8. Implement Common Global HR Initiatives Across the Group

    Appendix 8. Implement Common Global HR Initiatives Across the Group Global Human Capital Management Platform (Workday) Globally integrate information, processes, and databases regarding HR management Multiple systems and database Papers Unarticulated Limited to HR Performance Management, Assessment

51. Slide 51: Appendix 9. Shift to Job-based HR Management

    Appendix 9. Shift to Job-based HR Management Implement Learning Experience Platform (LXP) To be introduced in the second half of FY2022 to enhance employees’ reskilling after taking into account the opinions of employees. (Investment in career development support: 400 million yen/year) What is Expec

52. Slide 52: Appendix 10. Disclosure of non-financial information and dialogue with stakeholders

    Appendix 10. Disclosure of non-financial information and dialogue with stakeholders towards enhancing Hitachi’s Sustainable Management In response to the recent rise in ESG investment, Hitachi is proactively engaged in dialogue with shareholders and investors on both financial and non-financial info

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Hitachi — Investor Day (October 2022) on 6ix