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March 24, 2024 20:00 Japan Standard Time
The huge gap between the total market capitalization of Japan and the United States is said to be due to Japan’s slow progress in treating human resources as capital to extract value.
Although both Japan and the United States have hit record highs in stock prices, Japan’s total market capitalization still lags far behind that of the United States.
The government requires public companies to disclose information related to human capital and aims to expand this requirement.
Learn about diversity
Hitachi will launch a system in April for about 50,000 employees in its information technology department to reflect the extent to which employees contribute to organizational diversity in performance evaluations and compensation.
Aspects of employee performance include whether they actively respond to the opinions of others, whether they convene members at meetings, listen to their opinions regardless of position, and give priority to younger employees.
Hitachi plans to implement this system because its overseas branches account for more than half of its sales and employees, and it understands that diversity is critical in dealing with a variety of customers.
Nomura Holdings, Inc. launched a system last year to actively evaluate employees who contribute to creating a comfortable workplace.
Nomura offers incentives to employees who take parental leave because they are seen as proactive. The securities firm was once known for its male-dominated, passionate sales force, but now chief human resources officer Yukiko Ozaki said it “recognizes that diversity goes hand in hand with profitability.”
A survey of corporate human resources managers conducted last September by the Japanese branch of human resources giant Adecco Group AG showed that about 90% of companies had implemented diversity initiatives in the past year.
Human resources investment
It emphasizes that the management of human resources is based on measures that recognize the diversity of the organization, related to management strategies and retraining, etc.
Through the ability of each employee, intangible assets such as intellectual property rights and brand power are increased, thereby increasing corporate value.
Japanese companies lag behind in investing in human resources.
According to data from the Cabinet Office, the ratio of human resources to gross domestic product fell to 0.1% in the five years since 2010, compared with an average of 0.41% in the five years since 1995. In the United States, this figure remains at 2% during the period following the collapse of US investment bank Lehman Brothers.
“During the ‘lost thirty years’ after the end of the bubble economy, Japanese companies viewed talent as a cost-cutting tool rather than as capital,” said the co-chairman and part-time director of the Human Capital and Enterprise Value Organization, a group led by industry and academia. Professor Masahiro Fukuhara said. Professor at Hitotsubashi Business School.
The government requires companies to disclose information related to human capital as disclosure elements, starting with their annual securities reports for the fiscal year ending March 31, 2023.
According to the Japan Productivity Center, 60% of companies provide human capital disclosures of less than 2,000 words, an amount that is not considered adequate for disclosure.
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