Development and utilization of human resources

Pursuing happiness for individuals as the starting point
of value creation

Since its foundation, the TOK Group has always considered employees as valuable assets of the company. Under the Policy on Utilizing Human Resources, which defines to never forget that business always starts with people, the TOK Group pursues a sustainable future society filled with happiness – and this starts from the pursuit of happiness for individuals in the workplace. As part of these efforts, TOK has endeavored to improve employee engagement. Based on the results of the engagement survey conducted in 2019, the company has promoted personnel system reform to embody a company where employees can achieve personal growth and contribute to business performance. The new personnel system was subsequently introduced in January 2022. The new system shifts to a role grade system from a management by objectives system, which focuses on the expected roles in each position and proportionate performance. Fair treatment and promotion systems were established with the introduction of points-based rating system where employees can accumulate points during the entire period of the same grading to use as a promotion standard. TOK also has established specialist systems for each job type in order to leverage the specialty of individual human resources, such as the executive fellow system that treats specialists in higher positions equivalent to directors, and fellow positions and SP positions applicable to employees. These implementations give the employees further diversifying job courses.

It has passed one year since the introduction, and TOK has successfully created a work environment where every employee is able to perform their tasks with the clear recognition of what is expected for their own roles. On the other hand, however, we have observed an inadequate understanding of the new system in some employees; to solve this, periodic training will be implemented for managers and evaluators in order to increase their ability to provide an explanation to their staff and further disseminate the new system. The TOK Group will pursue the happiness for individuals through these measures based on the new personnel system, and it will create high added value through the higher performance of each employee, which shall result in further enhancing corporate value.

* Based on responses in the employee engagement survey that is periodically conducted with employees of the TOK Group

Policy on Utilizing Human Resources

Since its founding, employees have been the greatest asset of the TOK Group.
The Company’s human resource policy is based on the following five principles, derived from its long-held philosophy that human resources are a company asset.

Never forget that business always starts with people.
Any discrimination within the Company and among employees is strictly prohibited.
Ensure full compliance with applicable laws and regulations, as well as fair and equal compensation.
Educate personnel and promote creativity to become a company that develops innovative technologies.
Ensure personnel systems are based upon performance, emphasizing and ensuring transparency.

Management executives commit
to the improvementof employee engagement

TOK sets an employee engagement indicator as one of the KPIs for the remuneration system for directors linked to medium-term and long-term performance since 2022, thereby strengthening the engagement of the Board of Directors in employee measures and enhancing sustainability governance. Under this scheme introduced with the strong intention of the president, the management executives pursue improvement in “employee engagement” and “employee-friendly environment” as the two key indicators. The results of the engagement survey conducted in October 2021 revealed that in the “employee engagement” category the TOK Group is globally competitive, while it showed the potential for improvement in the “employee-friendly environment.” Therefore, TOK set KPI objectives to improve “employee engagement” by three points and “employee-friendly environment” by seven points and is promoting measures to attain these objectives. In FY 2022/12, the individual departments and subsidiaries promoted the following measures.

➊ Increasing education and training opportunities

➋ Personnel rotation and other measures for removing barriers among divisions and departments

➌ Evaluating challenges made based on the pluses rather than the negative aspects

➍ Preparation for a Self-Career Dock support system as career planning

➎ Establishing relationships of trust by strengthening communication between managers and employees

➏ Introducing innovative operating methods

➐ Accumulating praises and small successes to establish experience of success

➑ Increasing human resources by strengthening recruitment

The Board of Directors continues to monitor initiatives on the execution side concerning sustainability issues, such as employee engagement, carbon neutrality, and risk management. In the meantime, the operation of the Council of Directors started in June 2022, consisting of directors, executive officers, and the heads of related divisions. The Council has frank and open-minded discussions on broad management issues, including ESG and sustainability, which leads to decision-making by the Board of Directors.

Diversity and inclusion

For the further promotion of female personnel and the further appointment
of international employees

The TOK Group achieved a record-high ratio of women in senior and middle management and a record-high ratio of women among the overall employees in FY 2022/12, owing to the effects of continued efforts to recruit and retain female employees and to promote them to senior and middle management. The Group also achieved a record-low difference in average tenure figures for men and women. TOK will enhance the environment for the further promotion of female employees by improving the awareness of individual female employees and of their departments and supervisors.

As a result of the continued efforts to increase local development and production sites and the emphasis on merit-based hiring aimed at the further employment of international human resources, both the number and percentage of international employees have consistently increased. The ratio of local hires in overseas management positions as one of the KPIs for material issues stood at a record-high 56.2%. These tendencies will continue as overseas sales increase. The Group has also continued intra-group human resource exchange for international synergies in insights and values, which is to be further enhanced.

* Errors in Integrated Report 2021 regarding the number of users for 2021 have been corrected.

Indices related to female employee participation*1

	2018/12	2019/12	2020/12	2021/12	2022/12
Ratio of women among new hires (%)	43.3	39.4	38.5	17.0	26.4
Ratio of women among the overall employees (%)	12.3	13	13.7	14.0	14.6
Difference in average tenure figures for men and women (years)	9.2	9.3	9.1	8.4	8.1
Ratio of women in senior and middle management (%)	2.4	3.3	3.2	3.8	4.0
Ratio of women on the Board of Directors (%)*2	8.3	7.7	7.7	7.1	10.0*2

*1 Tokyo Ohka Kogyo Co., Ltd. only (employees exclude those seconded from TOK to other companies and contract workers, and include people seconded from other companies to TOK)

*2 The ratio of women on the Board of Directors is as of 2023.

Wage difference between male and female employees(percentage of female wage to male)*1

	2018/12	2019/12	2020/12	2021/12	2022/12
All workers (%)	47.8	49.7	59.1	65.5	65.4
Permanent employees*2 (%)	65.3	65.5	67.4	69.4	68.2
Fixed-term employees*3 (%)	31.5	33.9	49.8	60.4	61.5

*1 Wage: Includes base salary, payment for overtime work, and bonuses but excludes retirement allowance,
commuting allowance, and other allowances.
*2 Permanent employees: Secondees exclude those seconded from TOK to other companies
but include persons seconded from other companies to TOK
*3 Fixed-term employees: Include temporary employees but exclude dispatched temp staff

Supplementary explanation concerning difference:
The reasons for the differences include the low percentage of women in senior and middle management combined with the relatively many female workers at low wage levels as a result of the increased recruitment of new female graduates. In the coming years, TOK will promote the appointment of female managers toward a KPI objective for the material issue “Ratio of women in senior and middle management: Aim to increase to twice the level by 2030 (vs. 2020).”

Number of non-Japanese employees

	2018/12	2019/12	2020/12	2021/12	2022/12
Number of non-Japanese employees (non-consolidated)	11	16	18	18	24
Number of non-Japanese employees (consolidated)	378	412	424	476	524
Ratio of non-Japanese employees (consolidated, %)	22.6	23.9	24.2	26.2	26.9

Ratio of employees with a disability

	2018/12	2019/12	2020/12	2021/12	2022/12
Ratio of employees with a disability (non-consolidated, %)	2.36	2.37	2.67	2.45	2.42

Maintain employees' work-life balance

The lower childcare leave user rate among male employees has been a problem compared to the 100% user rate among female employees. However, male users are increasing as measured in the past few years. In FY 2022/12, 12 male employees used childcare leave with an increase by 1.5-fold from the previous year, and the user rate increased to 57%.* The company will aim to maintain the childcare leave user rate among male employees at 30% or more.

*Errors in Integrated Report 2021 regarding the number of users for 2021 have been corrected.

Number of users of childcare-related systems*1

	2018/12	2019/12	2020/12	2021/12	2022/12
Childcare leave system (number of users)	12	16	19	27	31
Childcare leave system (number of male users)	（1）	（1）	（5）	（8）	(12)
Shorter working hours (number of users)	6	13	12	16	17
Childcare time*2 (number of users)	13	16	16	13	15

*1 Tokyo Ohka Kogyo Co., Ltd. only (employees exclude those seconded from TOK to other companies and contract workers, and include people seconded from other companies to TOK). Errors in Integrated Report 2021 regarding the number of users for 2021 have been corrected.
*2 Flextime system for childcare

Childcare leave user rate among male employees*

	2020	2021	2022/12
User Rate (%)	20.0	33.3	57.1

* Tokyo Ohka Kogyo Co., Ltd. only (employees exclude those seconded from TOK to other companies and contract workers, and include people seconded from other companies to TOK).

Relationship with the labor union

The Tokyo Ohka Kogyo Labor Union was formed in 1976 and belongs to the Japanese Federation of Textile, Chemical, Food, Commercial, Service and General Workers’ Unions (“UA Zensen”). The Tokyo Ohka Kogyo Labor Union has a union shop agreement with the Company. As of December 31, 2022, 1,160 labor union members are affiliated with the Company, and 79.8% of all employees are members of the labor union. Since the labor union was first formed, labor and management have maintained good, cooperative relations. Once every two months, the central labor-management meeting is held to exchange opinions on the operating environment and other labor-management issues. As a part of this process, the Company concluded labor agreements that include provisions on occupational safety and health for maintaining good labor and workplace conditions. When changes in working patterns are made for business purposes, they are always discussed in advance with the labor union. In FY 2020/12, the Company established the labor-management review panel as a forum for labor-management negotiation concerning new personnel systems, re-employment systems, and other systems.