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As global mega-competition continues to intensify, the Daikin Group must meet the crucial challenge of accelerating our approach to rapid management in order to maintain our competitiveness. We must not merely adhere to the conventional mindset and approaches that proved successful in the past. Today, we require a willingness to engage in immediate “creative destruction.” We must achieve this by making quick, timely decisions and by focusing the collective powers of the group. Our other challenge is to enhance our consolidated governance, employing our full potential in order to maximize the group's corporate value.
Over the years, we have pursued enhanced rapid management and more effective consolidated governance. In working toward our improved corporate governance practices, we have followed four policies:
(1) renovating management systems in a way that promotes strategic management and speedier management decisions; (2) using the virtual company system to promote strong management emphasis on corporate value and give divisional managers greater authority and responsibility;
(3)implementing measures related to unique personnel and organizational management systems needed to realize a "fast & flat" Group management framework; and
(4) ensuring that management emphasizes openness, transparency, and responsiveness to stakeholders.
We are fully aware of the need to adopt more rapid implementation in order to achieve results and display further transparency and stability in light of rising corporate social responsibility (CSR) concerns. Therefore, we have instituted multiple corporate governance reforms since 2004 based on the following three pillars:
- Introduction of an Executive Officer System to accelerate implementation
- Divisional restructuring in an effort to more effectively manage and follow up on the targets and performance of the drive toward independent divisional management
- Promotion of further measures to improve transparency and stability, including appointment of an additional outside auditor and establishment of a new Human Resources and Compensation Committee.
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In pursuing faster execution based on self-guided judgment and decision-making in terms of our business, community, and functions, we introduced a new executive officer system.
Under this new system, the board members are held responsible for speedy, strategic decision-making and strict supervision of the entire group, which has resulted in a reduction in the number of board members by half. In addition, the position of internal board member has been combined with that of executive officer; in other words, internal board members shall also serve as executive officers. This initiative represents our efforts to build on our strengths in field-oriented decision-making and implementation, as each board member can mingle with the front-line employees when devising and implementing a basic strategy according to his or her own reality-based assessment of the situation.
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| In addition to performing their regular functions, the vice president and Senior Executive Officer will now assume responsibility, as their ”missions”, for an important group-wide issue corresponding to their specialties. Through this approach, management will concentrate their efforts on achieving rapid results.
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| Although we have taken advantage of the self-responsible management approach of the conventional corporate system, we have sought to avoid its disadvantages - notably, its long decision-making process and bloated organizational units. Accordingly, we have instituted a virtual-company system incorporating eight divisions, which we recently integrated into four: the Domestic Air-conditioning and Refrigeration Division, the Global Air-conditioning and Refrigeration Division, the Chemical Division, and the Education Division. The major aim of this approach is the more efficient distribution and application of managerial resources. Building on this base, we will strive to further enhance Daikin's value by setting and evaluating progress toward clear quantitative targets including ROA, FCF, and other profit and management indicators, thereby demanding specific results.
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Tadasu Tachi, advisor of Kaneka Corporation, and Chiyono Terada, president of Art Corporation, have served as Daikin's external board members since 2002, participating in our decision-making by adding their independent and unbiased perspective. Both Mr. Tachi and Ms. Terada kindly agreed to continue providing their services this year. The Advisory Council system introduced in 1999 has proved quite valuable in this uncertain era thanks to the wide-ranging opinions and direction provided by the committee members. All committee members have agreed to remain in office and strengthen our management capabilities.
The voluntary Human Resources and Compensation Committee was also established as a deliberative body for the CEO in order to ensure more transparent deliberation and consultation and to contribute to the development of executive personnel. Our officers are responsible for specific duties - including safety, quality, and environmental conservation - reflecting our particularly focused concerns in these fields. In June 2003, we established our Corporate Ethics Committee under the chairmanship of the COO and appointed a corporate ethics officer to ensure greater group-wide compliance with laws and regulations. Now, with the appointment of our CSR officer, we intend to actively address our corporate social responsibility beyond the range of mere legal requirements. Specifically, we will address areas such as environmental protection, operational safety, appropriate customer response, protection of human rights, and maintaining a policy of transparency and openness. |
Our group cherishes its traditions, culture, implicit knowledge, people-oriented management, and management philosophy of valuing our employees, all of which have been cultivated throughout our history. We will build on this heritage toward our larger goals and pursue a great step to the future through successive reforms that will keep us at the forefront of our industry.
We appreciate your continued support as we implement these management policies. |
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