Message from an Outside Audit & Supervisory Board Member (Independent Officer)
Building an advanced governance system to lead to improvements in corporate value
In 1974, entered The Mitsubishi Bank, Ltd. (currently MUFG Bank, Ltd.). Involved in international business and securities business, was based overseas for 12 and a half years. When based in Germany was involved in the development of payment systems. Drawing on his extensive knowledge and experience of areas that include finance, management, and IT, both in Japan and overseas, was subsequently involved in the management of such companies as MITSUBISHI MOTORS CORPORATION and Metropolitan Expressway Co., Ltd.
Evaluation of the Board of Directors’ Effectiveness
FANCL’s outside directors and outside Audit & Supervisory Board members comprise lawyers, certified accountants, marketing experts and, like myself, people experienced in management as well as people with diverse skill sets. What is expected of outside officers at Board of Directors’ meetings is to comment on the ways of thinking of the management ranks who conduct the execution of business. At the same time as being in a position akin to a watchdog, I consider it important to constantly be aware of the feedback from shareholders and to speak for them.
For us to fulfill those roles, it is important for executive function information to be shared with outside directors, and in that respect the environment at FANCL is very well developed.
We are provided with ample opportunities to understand the business, such as on-site visits, product tours, and briefings, and prior explanations of the materials relating to agenda items are carefully carried out in detail. In the case of themes that take time to review from various perspectives, we also hold theme sessions separately from the directors to deepen discussion.
Moreover, at Board of Directors’ meetings, the chairman, President and CEO Shimada urges many people to speak and proceeds in a way that enables free and easy discussions, and thus the effectiveness of Board of Directors’ meetings can be said to be extremely high.
FANCL’s Features Seen from Outside the Company
At FANCL, the Founding Philosophy—Eliminate the “Negatives” with a Sense of Justice—has been firmly instilled in all Company staff, and everyone is constantly being called upon to put that philosophy into practice. Therefore, FANCL is developing products not to simply pursue profit but also to demonstrate its strong awareness of how the Company can contribute to society. This philosophy serves as the source of FANCL’s product development capabilities, and as these represent the most fundamental elements for a manufacturer, I consider that possessing strengths in this area to be a major feature.
Incidentally, in addition to the achievement rate of financial indicators as a performance-linked portion, indicators that include CO2 emissions, employee engagement, and business partner evaluations have been incorporated into executive compensation.
The management ranks are thus also required to remain aware of the non-financial aspects of management.
In addition to that, I think that FANCL also possesses major strengths in terms of digital technology. FANCL’s IT Systems Division is overwhelmingly rich in both quality and quantity when compared with companies of a similar size and scale.
In the spring of 2022, FANCL’s unique FIT3 core system commenced operation, and the Company has reached the point of being able to estimate and analyze each problem from customer behavior. This will give rise to opportunities to bring about evolution in conventional styles of sales and marketing in a ground-breaking manner. In this way, as an outside director I have great expectations for the DX strategy that FANCL is currently pushing ahead.
Expectations from and Challenges for Global Strategy
I believe that expanding business overseas is indispensable for FANCL’s future growth. The important thing is to firmly recognize that what is considered common sense in Japan will not always be relevant overseas. Moreover, the flexibility to be humble and to flexibly change policies, strategies or tactics should a mistake be made is of paramount importance in a global strategy.
I also think that building up overseas employees is a pressing issue. At the same time as hiring human resources outside Japan as assets who contribute immediately to ascertain local information, FANCL must send overseas ever greater numbers of home-grown employees who possess a thorough understanding of our corporate philosophy and business. To have them experience life locally will be very important in developing professionals for overseas business. There is a large amount of inspiration and skill that can only be gained by coming into close contact with a country’s culture and customs. This is because it is from those experiences that the new ideas and developments for business will arise.
I also think that, eventually, overseas expansion will be best accelerated by adding non-Japanese directors and executive officers and forming a management tier that demonstrates diversity.
FANCL’s Board of Directors is very well established and evaluates the effectiveness of its meetings. Moreover, to build a more advanced governance system that matches the business environment and that will lead to improvements in corporate value, it is essential that the environment be one in which harsh opinions from the standpoints of outside directors can be expressed frankly.
To that end, I think it important to further deepen communications between those outside the Company and executive departments and build strong relationships of trust.
The promotion of DX is also expected to improve work efficiency and give employees more time to think for themselves. I want employees to spend this time looking not only at other sections of the Company but also at other companies and at broader society. When they feel the changes in Japan and the world and think about what they can do as FANCL, the ideas for new products and new businesses should expand infinitely. As a result, in 10 to 20 years’ time, FANCL will not be limited to the current framework of cosmetics and health foods. I believe that FANCL can surely grow into a company that is said to create new value and remains essential for the next generation.