Human Capital Management

This section outlines our strategies, approach to governance and other initiatives based on identified risks and opportunities.
To enhance sustainability disclosure, the Group began reporting in 2025 on human capital in addition to climate change, using the frameworks of governance, strategy, risk management, and metrics and targets.
For strategy in particular, we conducted a scenario analysis based on Japan’s projected future population to identify significant risks and opportunities that could impact our business.
The results will be reflected in future management decisions and in the enhancement of risk management.
We will continue to strengthen human capital management while making ongoing improvement.

Governance

The Board of Directors has ultimate authority for determining the Group’s fundamental management policies, key issues, and other matters required by law, and meets, in principle, once a month.
At Board meetings, management strategies, including major policies related to sustainability, are discussed and resolved to ensure the sustainable enhancement of corporate value.
In addition, to enable swift decision-making and flexible organizational responses, the Management Committee, attended by directors, full-time Audit & Supervisory Board members, executive officers and business heads, meets twice a month in principle.
In an effort to maximize human capital, the Corporate Legal Department conducts cross-functional risk analysis and evaluation, and regularly submits reports to be discussed at meetings of the Group Management Committee, with the Board of Directors supervising related business execution.

Given the nature of the Group’s business, we consider human capital to be the source of value creation across diverse forms of capital.
As such, discussions related to human capital represent a significant proportion of agenda items at both Board of Directors and Group Management Committee meetings.

Board of Directors and Group Management Committee Agendas (2024)

In addition, the management of a Motivation Company, which uses employee motivation as its growth engine, places its business and organization on an equal footing.
To embrace this philosophy, the Chief Executive Officer (CEO) concurrently serves as the Chief Human Resources Officer (CHRO).
Moreover, members of the Board of Directors have extensive experience in organizational and personnel matters, enabling them to make informed management decisions that effectively link business strategy with organizational strategy.

Skill Matrix

• Note:

• Up to four areas of expertise or experience are listed for each individual.
• The above table does not represent all the knowledge or experience possessed by each person.

Strategy

We conducted a scenario analysis to assess the medium- to long-term risks and opportunities that human capital may present to our business.
For the current fiscal year, we targeted all domestic Group companies, identifying risks and opportunities expected to affect future operations and estimating their potential financial impacts in 2028 and 2035.
As the basis for our scenarios, we referenced Population Projections for Japan.

The assumptions for this scenario analysis are as follows:

As part of the scenario analysis, we first identified the human capital-related risks and opportunities expected to arise across our entire value chain, and then selected those considered to have the greatest potential impact on the Link and Motivation Group.
Next, we examined each risk and opportunity by referring to external environmental assumptions and the Group’s circumstances, organizing the logic for calculating financial impacts and the internal and external data required for estimation.
We then quantified the financial impact using the data and evaluated the significance of each item to the Group.

The risks, opportunities and financial impact identified through the scenario analysis, as well as our policy for addressing them, are as follows.
Going forward, we will continue to conduct scenario analyses to further improve accuracy and incorporate future projections into our management strategy deliberation process, thereby enhancing our resilience to an uncertain future.

Risk Management

To facilitate deliberation on various risks related to Group management, we regularly monitor, evaluate and analyze the status of major risks. We also work to provide necessary instructions and supervision to each Group company, and have established a system for regularly reporting relevant matters to the Board of Directors.
For risks related to human capital, we assess materiality by considering the scope of impact and the scale of related businesses, identifying relevant risks, and evaluating them while also accounting for current and future policy trends.
These risks are prioritized based on their level of impact and likelihood of occurrence, and responses are formulated and implemented in coordination with relevant divisions.
The processes for identifying, evaluating and managing human capital risks are integrated within the Group’s overall risk management framework and are managed and reported in the same manner as strategic and financial risks.

Metrics and Targets

The Link and Motivation Group’s business is a knowledge-based business, and we consider human capital to be the source of value creation across all forms of capital.
Accordingly, we treat business strategy, which maximizes customer value, and organizational strategy, which maximizes human capital value, as equally important and link the two in our management practices.
Within our organizational strategy, we focus on increasing human resource capabilities and organizational capabilities (engagement) through investment in recruiting, training, systems, and corporate culture, aiming to maximize productivity as the return on human capital investment.

KGI: Productivity

As key indicators of productivity representing the return on human capital investment, we monitor human capital ROI^* and gross profit per employee to assess the balance between business and organizational strategies.

• * Human capital ROI = Adjusted operating income ÷ Investment in human capital
  Adjusted operating income is a profit indicator that measures operating results. It excludes temporary factors such as goodwill, right-of-use assets, and impairment of fixed assets from operating income.
  Investment in human capital reflects total expenditures, including employee salaries and bonuses, statutory internal and external welfare expenses, commuting expenses and other executive compensation.

KPI: Human Resource Capabilities

We place importance on human resource capabilities, which indicate the degree of alignment between the abilities required by the organization and those possessed by individuals.
For this indicator, we monitor the Role Survey Rating, which ranks employees on an 11-level rating scale based on the consistency between the expectations and satisfaction of those around them regarding their performance in fulfilling expected roles at each level.

KPI: Organizational Capabilities (Engagement)

We place importance on organizational capabilities (engagement), which represents the degree of alignment between the organization’s vision and individual motivation.
For this indicator, we monitor the Engagement Rating, an 11-level scale based on engagement scores calculated from the degree of consistency between employees’ expectations and satisfaction toward the company, their supervisors and their workplace.

• Notes:

• 1. Engagement Score is a registered trademark of Link and Motivation Inc. (Registration number 6115383).
• 2. Engagement Rating is a registered trademark of Link and Motivation Inc. (Registration number 6167649).
• 3. Calculated based on data from approximately 5.09 million respondents in 12,650 corporate diagnoses.
• 4. Excluding Link Dining Inc., which is engaged in other businesses

For more details and other indicators, please refer to the data page.

Data