Global Human Capital Management

• Approach to Human Capital
• Global Human Capital Management
• Global Human Capital Strategy
• Selecting and Developing Global Leaders
• Strengthening Recruitment and Developing Digital Talent
• Initiatives to Put the Right Person in the Right Place
• Fostering the Hitachi Culture and Improving Employee Engagement Globally
• Talent Development Initiatives to Establish a Learning Organization
• Initiatives at Regional Headquarters to Develop Employee Skills
• Transformation to Job-Based HR Management
• Adopting a Platform for Global Human Capital Management
• Ensuring Fair Evaluation and Compensation

Approach to Human Capital

Approach & Policy

Hitachi believes that human capital, in other words, people are the source of our value. Therefore, we leverage the combined power of our global network of employees to provide value to our customers and society, contributing to the creation of a sustainable society.
As our Social Innovation Business expands globally, Hitachi believes in the need for diverse talent and an organization that adapts quickly to a world of constant change, working as one team in which people from different countries, regions, and business units work in a proactive manner. To realize this, we strive to promote talent development and improve our internal environments.

Global Human Capital Management

Structure

Hitachi established the Growth Strategy Meeting, Risk Management Meeting, and Human Capital Strategy Meeting under the Senior Executive Committee. These meetings deliberate important management matters. The Human Capital Strategy Meeting convenes at least twice a year to discuss and decide Hitachi Group’s human capital strategies and policies, and submits proposals to the board of directors when necessary. These discussions include measures to foster an organization and culture for growth, and to secure and develop talent.

Global Human Capital Strategy

Strategy & Target

Hitachi conducts a human capital strategy linked to our management strategy. The 2024 HR Strategy, which was formulated based on the Hitachi Mid-term Management Plan 2024, sets out our mission and vision for human resources management. More specifically, the strategy defines our vision of becoming an employer of choice in the global marketplace, and a vibrant organization where individuals aspiring to make social contributions come together. To this end, we pursue a variety of measures around the three key pillars of People, Mindset, and Organization, built on an underlying Foundation.
Based on this strategy, Hitachi aims to promote talent development that contributes to solving social issues. In addition to on-site work instruction, we conduct programs across the group to improve individual capabilities, skills, and specialties.
Diversity, Equity and Inclusion is an important factor in executing our HR Strategy. We aim to build an organization in which diverse employees respect each other’s differences and can innovate.

Diversity, Equity and Inclusion

Overall Human Resources Strategy Linked to Management Strategy

Mission	Contribute to Business through Diverse Talent, Equitable Opportunity and Inclusive Organization
Vision	We lead transformation into “Employer of choice” in global market - Become a vibrant “Talent Destination” that contributes to society Become “The World’s #1 HR pioneers” who cope with changes and contribute to business

*1 MaD!: Make a Difference! (employee idea contest)

*2 JD: Job description

Selecting and Developing Global Leaders

Activities

Hitachi develops global management leaders, operating the Global Leadership Development Program (GLD), which is led by top management and the Nominating committee for the medium- to long-term development of management leaders who will drive change and innovation.
To develop candidates for future positions as CEO, heads of business units, and other management leaders, we select several hundred candidates from around the world to join the GT+ talent pool. We provide these individuals with challenging assignments^*1 involving on-the-job and off-the-job training and coaching. The percentage of non-Japanese nationals and women among the selected applicants has been increasing year by year.
In addition, the GT+ group includes talented employees, who are aiming to fast-track into leadership positions, selected through the Future 50 program. The candidates in this program receive intensive training through work assignments, including management positions, and opportunities for in person discussions with independent directors.

*1Assigning highly demanding tasks.

Selection of Diverse Human Resources as Management Leadership Candidates

Management Leadership Candidate Training (Internal)

Strengthening Recruitment and Developing Digital Talent

Strategy & Target

Activities

Materiality

To accelerate our Social Innovation Business using digital technologies and expand Lumada business (Revenue: FY2021 1.38 trillion yen ➞ FY2024 2.65 trillion yen), as a growth driver, Hitachi has secured and developed digital talent who will drive digital transformation (DX). We will flexibly recruit and train people at GlobalLogic, a leading company in digital engineering services, and other companies as we expand our business scale, as well as strengthen our human resources through M&A based on market trends and regional strategies. In Japan, we will also promote a personalized recruitment program that emphasizes matching each candidate's career needs with the job, such as with internships for new graduates. Additionally, we will further strengthen the acquisition and development of digital talent necessary for business growth by developing talent through Hitachi's unique DX training system and expanding training programs that incorporate practical experience.

Initiatives to Put the Right Person in the Right Place

Activities

Hitachi created its policy on organization and talent allocation, which stipulates the process of considering the optimal organizational structure for achieving organizational goals, maximizing the performance of the entire organization, and securing and allocating talent to optimize configurations. In this way, we ensure organizational and positional management by placing the right person in the right place. Our basic policy is to assign talent that meets the competency requirements of the position in question, utilizing diverse talent including that from outside the group, from a group-wide and global perspective regardless of attributes such as age, gender, or nationality. We conduct business- and regional-based talent reviews to achieve a more optimal match between the job and talent as part of the promotion of job-based talent management. We seek to achieve further growth for the entire Hitachi Group through global talent management measures conducted in common at all Hitachi Group companies including global performance management (GPM), succession planning, and succession candidate development.

Fostering the Hitachi Culture and Improving Employee Engagement Globally

Strategy & Target

Activities

Hitachi has welcomed approximately 100,000 employees through several large-scale M&A transactions in recent years. We will work with these new colleagues to share the universal Hitachi Mission and Values (founding spirit) and foster a culture as One Hitachi, improving employee engagement^*1 and achieving further innovation and growth.
Hitachi monitors employee engagement every year through Hitachi Insights, a global employee survey. We plan and implement actions to improve employee engagement. Specifically, executives and managers from each department share the survey results of their own organizations with their members to identify organizational issues and continue the PDCA cycle through the planning and implementation of actions that serve as measures for improvement.

*1Employee engagement: The willingness of employees to work autonomously to understand the company’s strategies and policies, as well as to take on challenges in their work, and to achieve results

Instilling a Shared Culture in Post-merger Organizations

For Hitachi, creating synergies with companies acquired through M&A, such as GlobalLogic and Hitachi Energy, is an important strategic initiative. In order to become One Hitachi, it is essential to instill a culture such as the Hitachi Group Identity. Therefore, Hitachi actively holds town hall meetings for leaders and culture discussions for employees.

Mindset Reform: Make a Difference!

Since fiscal 2015, Hitachi has been holding an ideas contest in which all group employees can participate, with the aim of strengthening the mindset of ownership and fostering a corporate culture. Over the past nine years, a total of more than 4,930 ideas have been put forward, contributing to the creation of new businesses and the cultivation of a corporate culture. 471 new ideas were submitted from all over the world in the 2023 contest with the theme of “I like your ‘idea!’ One Hitachi. Let’s create together.” The final jury, which included the President and executive vice presidents who are the heads of major business sectors, were involved in evaluating the ideas. Initiatives are underway with commitment from senior management toward commercialization and realization for the idea that received the Gold Ticket, the highest award.

Improving Employee Engagement

Materiality

As part of its human capital management, Hitachi has set employee engagement score^*2 as a KPI. In promoting the planning and implementation of actions to improve engagement based on the survey results of the global employee survey, Hitachi Insights, we are working to identify engagement drivers (items that have a high degree of correlation in increasing engagement) as one of the means of identifying issues and improving them.
In fiscal 2022, we achieved the target (68.0%) set in the Mid-term Management Plan 2024 ahead of schedule. We therefore set our sights even higher with a new target of 71.0%, and in fiscal 2023 achieved an engagement score of 68.6%. In response to the results, Hitachi will work to improve engagement by making an overall Hitachi Group approach toward the issues identified as engagement drivers. Such issues include, fostering global Hitachi culture, promoting well-being, promoting the right person for the right position, and better communication from senior management.

*2Employee engagement score: Employee engagement is measured in terms of four factors (pride in working for Hitachi; whether it is a workplace one would recommend to others as a great place to work; job satisfaction and sense of accomplishment; and desire to continue working for Hitachi for the foreseeable future)

Examples of initiatives across the Hitachi Group

• Instilling the Hitachi Group Core Competencies^*3 and linking them with all human capital measures
• Improving human capital mobility (e.g. Global Talent Mobility^*4, Job-Based HR Management)
• Promoting communication toward business direction and growth of the organization and employees (e.g. town hall meetings, one-on-one meetings)

*3Hitachi Group Core Competencies: Formulated based on Hitachi's founding spirit (Hitachi Values) and business strategies, etc. They specifically define how to embody the Hitachi founding spirit as behaviors expected of all Hitachi Group employees.

*4Global Talent Mobility: Mobility of human resources across business sectors and countries/regions

Examples of initiatives at group companies

• Leadership Enhancement and Development (LEAD) Program at Hitachi Rail
  The LEAD program seeks to develop managerial leadership skills in conjunction with the Hitachi Values.
  Training opportunities have been given to 1,000 manager-level employees to promote understanding of the Hitachi Values and the Hitachi Group Core Competencies, improving the competencies required of leaders, and promoting engagement.

• Well-being initiatives at Hitachi Digital Services
  Hitachi Digital Services is encouraging employee enrollment in the Mental Health First Aid (MHFA) program to improve mental health and well-being. The MHFA program provides content for employees to learn how to recognize the symptoms of a mental health problem in themselves or their co-workers, empowering them to take appropriate first response actions. Employees who take the course can earn MHFA certification. In fiscal 2023, 55 people obtained the qualification with eight sessions taking place to exchange ideas on mental health among those certified as mental health first aiders. A number of webinars also took place with a medical expert giving lectures on a wide range of health-related topics, including stress management, sleep, hormones, and more. There were 10 webinars in fiscal 2023 covering topics such as stress management, the importance of sleep, family planning, pregnancy and infertility treatment, menopause awareness, and general health practice.

Talent Development Initiatives to Establish a Learning Organization

Activities

It is essential to foster a culture in which every employee can continue to acquire the necessary skills and capabilities, to provide new value continuously in a currently unpredictable and rapidly changing environment, for example, with the increasing complexity and severity of social issues and the rapid evolution of digital technology. To enhance organizational capabilities globally, Hitachi provides a learning environment where employees can access necessary learning promptly, aiming to cultivate a Learning Organization to drive business growth.
For example, we offer various training programs focused on enhancing specific skills and expertise, including digital talent development programs, along with standardized training for managers globally aimed at fostering the growth of the Hitachi Group.

Training for Managers

Initiatives at Regional Headquarters to Develop Employee Skills

Activities

Hitachi is an organization with global operations, so our skills development programs are implemented primarily by regional headquarters in keeping with the focus of each region’s business operations and cultural environment. Through these efforts, we seek to identify and nurture our global leaders across the group.

Transformation to Job-Based HR Management

Approach & Policy

Activities

Hitachi is shifting toward job-based human resource management. With this shift, we can clearly define roles, as well as the skills and experience needed, making it possible to appoint talent who can perform those jobs according to their abilities and motivation, regardless of their nationality, gender, age, or other attributes. By doing so, we will enhance the motivation of each employee and the sense of unity between Hitachi and the individual, helping both to grow and flourish.
To visualize jobs and talent, Hitachi has adopted job descriptions (for approximately 100,000 positions including domestic group companies as of the end of FY2023) , and has conducted talent reviews to consider the placement and development of each employee based on their aptitude and career orientation. Hitachi has also introduced the Learning Experience Platform (LXP), a system that supports autonomous upskilling and reskilling. On this platform, an AI interface recommends internal and external learning content according to the career aspirations, etc. We are also promoting support for employees’ autonomous career development. We are offering LXP within Hitachi, Ltd. and to group companies in Japan in stages.
In addition, we are reviewing the entire human resource management system and framework, aiming for completion by fiscal 2024. As an example, in October 2023, Hitachi Ltd. began a trial of a system of internal and external side jobs, to support employees who are taking on the challenge of self-directed career development.
Furthermore, labor and management at Hitachi, Ltd. have agreed to revise the compensation system for non-managerial positions (approximately 20,000 people) in June 2024 with the introduction of a job-based grade system. In the future, we will formally introduce the internal and external side job system and rebuild our benefits system.

Expanding Career Development Support Training and Career Consultation Rooms

At Hitachi, Ltd., we are focusing on fostering a growth mindset that encourages employees to think and act on their own careers. To this end, career training was introduced in fiscal 2022 as a foundational program that directly influences employees' self-directed career development. In addition to the content of the Hitachi Career Development Workshop (H-CDW) focused on self-understanding, the career training program promotes specific initiatives for individuals to make self-directed efforts to develop their career and abilities by giving extra support to formulate action plans toward their intended career. This initiative has been rolled out starting with middle-aged and older employees with approximately 8,700 people having participated so far (as of the end of March 2024). From fiscal 2024, we plan to expand the training to experienced workers, extending the program to all employees within the company.
In August 2023, we expanded our existing Career Consultation Room and launched a careers advice service that supports employees with their own career development and helps to assign the right person to the right place for publicly available positions. The service includes "matching advice" that enables specific consultations on job openings within the Hitachi Group and "career consultations" that support employees’ overall career development.
Going forward, we will continue to support individual self-understanding and career planning while respecting the individuality and aspirations of each employee, thereby linking individual motivation and abilities to improved performance and engagement.

Adopting a Platform for Global Human Capital Management

Activities

Previously, each Hitachi Group company conducted its own human resources measures and systems optimized for overseas operations. However, we reorganized these measures and systems into common global measures, common regional measures, and individual company-specific measures. In particular, we are developing global common human resources management initiatives to integrate with global shared measures. In 2012, we began operating a database, conducting data management, and implementing global leadership development initiatives targeting certain top talent. We continue to expand our efforts through common job grading and performance management, a global learning platform, and a global human resources management integration platform infrastructure. Newly added companies become part of these common platforms over time.

Integrated Platform for Human Capital Management

Through this platform, we share up-to-date and specific talents information (professional skills, career preferences, etc.) via a cloud system. The platform enables centralized management of various processes, including search for talents across the group. We utilize this information for team management, performance management, development planning, and career development. The platform is gradually being expanded throughout the whole Group.

Promoting People Analytics

Hitachi’s People Analytics initiative involves gathering and analyzing data about regular employee awareness and behavior, and putting the data to use in management and human resources measures.
Rather than relying on the experience and intuition of person in charge we visualize data to conduct talent management based on improved decision-making accuracy, the characteristics of the individual employee, and the aptitudes of the individual employee. In this way, we engage in effective and prompt measures regarding our talent, organization, and culture.

Hitachi Global Grade (HGG)

We engage in role- and job-based talent management through the Hitachi Global Grade and other systems to ensure that a diverse base of talent is engaged in pursuing the Hitachi business. The HGG consists of 11 grades, and each position is evaluated based on the common standards of the entire Hitachi Group.

Talent Review

Hitachi uses the business- and regional-based Talent Review as an initiative to strengthen and develop the match between duties and talent. Managers in each workplace meet individually with subordinates to review performance and career plans, after which multiple managers have the opportunity to review each employee. Managers then discuss individual development and job assignments based on the employee’s strengths, weaknesses, and career aspirations. Through these efforts, we encourage the matching of jobs and talent, leading to employee career development and stronger organizational capabilities.

Global Performance Management (GPM)

Global Performance Management (GPM) forms the foundation for business management and performance enhancement with the aim of promoting the sustainable growth of organizations and individuals. Based on Hitachi's founding spirit, we have established the Hitachi Group Core Competencies (behavioral goals), which are the behaviors expected of Hitachi in aiming for sustainable growth, and these items apply to all employees. Supervisors provide coaching and feedback to employees to help them achieve their targets. They encourage continuous performance improvements which lead to the medium- and long-term development of employees. By clarifying the skills and behaviors that individuals need to demonstrate, while explaining how their actions contribute to the success of the business, we cultivate employee fulfillment at work while encouraging employees to take ownership over their work and self-development.

Ensuring Fair Evaluation and Compensation

Activities

Hitachi believes that a fair global system of employee evaluation and compensation is essential for attracting diverse talents, regardless of nationality. Accordingly, we established a Global Compensation Philosophy: A management framework shared by all Group companies based on the principles of ensuring market competitiveness, pay for performance, and transparency.
More specifically, we ensure compliance with the laws and regulations of each country and region in which we operate when determining compensation. For instance, to ensure compliance with minimum wages, etc., in Japan, we conduct comprehensive and periodic checks through our system to confirm that no violations have occurred.
After developing a performance-based compensation system that is fair and competitive in the context of the labor market for the industry in each country or region, we made the system for determining compensation known to all regular employees. We thus evaluate the performance of all regular employees each year and then determine the amount of compensation.
Furthermore, Hitachi, Ltd. introduced a system for all regular employees in which compensation varies according to individual employee performance and company performance. In addition to evaluation results, employees receive feedback on their strengths and areas for improvement identified via the evaluation, as well as challenges and goals for future work to encourage personal growth.