Fill the Organization with Attractive Talent Mid- and Long-Term Human Development and Support for Middle-Aged and Older Employees

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1 Presentation for the Japan-German Conference by the German Institute of Economic Research Human Resource Management and Employment Policy in the Aging Society Fill the Organization with Attractive Talent Mid- and Long-Term Human Development and Support for Middle-Aged and Older Employees September 15, 2010 Shiseido Co., Ltd. Mitsuo Takashige, Corporate Officer and General Manager of Personnel Department

2 Corporate Profile Foundation 1872 Headquarters Capital * Tokyo, Japan 64.5 billion Yen *As of April 1, 2010 Employees * 40,600 (Japan:25,800, Overseas:14,800) Consolidated performance (FY2009) Sales Operating income billion yen 50.4 billion yen (Overseas sales ratio: 36.9%)

3 Business Line of Shiseido Group Domestic Overseas Cosmetics (52%) Cosmetics (33%) Counseling Global Brand SHISEIDO Self-selection Non-Shiseido Toiletries China Professional(2%) Healthcare(2%) Non-Shiseido/Mail-Order(4%) Professional Use(5%) Others Frontier science business, restaurant operation, and others Note: ( )shows the percentage of FY2008 consolidated sales

4 Today s Themes I II Mid- and Long-term Human Development Support for Middle-aged and Older Employees

5 Shiseido in Terms of Employment Turnover rate of new employees (career-track) for past 3 years About 2% (Average 30% + among competitors) Service years Male 18.4 yrs (Average 13.1yrs *1 among competitors) Female 17.5yrs (Average 8.6 yrs among competitors) Items that gained higher scores than others in the Employee Satisfaction Survey Sense of fulfillment at work Pride and loyalty to company Attractiveness to employees Popularity among graduating college students *2 No.2 Best companies for employees *3 No.8 Sources: *1:Survey conducted by the Ministry of Health, Labor, and Welfare in 2008 *2:Survey conducted by Mainichi Communications (University students who graduated in 2010) *3:Survey conducted by Nikkei Inc. in 2010 (Company ranking based on employee-related indicators)

6 Corporate Culture that Respects Human Power Once called Shoseido (hall of scholars) Recruited female employees as beauty consultants and contributed to the empowerment of working woman Established the Training Department that supervises all human development and training programs THE SHISEIDO WAY <Corporate Behavior Declaration> The diversity and creativity of our employees make them our most valuable corporate asset. We strive to promote their professional development and we evaluate them fairly. We recognize the importance of our employees personal satisfaction and well-being, and seek to grow together with them.

7 The 3 Visions Rebirth as a 100% Customer-Oriented Company Brighten Our Brand: A Valuable Management Resource Fill the Shiseido Organization with People with Own Appeal

8 Create Environments where Employees and Company Grow Together Create Pleasant Working Environments and Help Every Employee Develop His/Her Ability Gender Equality Support for Working Women Mid- and Long-term Human Development Career Support Promotion of Workand-Life Balance Develop talents who can contribute to both companies and local communities

9 Ecole Shiseido Gender Equality Support for Working Women Mid- and Long-term Human Developm ent Career Support Promotion of Workand-Life Balance Structure of the corporate in-house university Ecole Shiseido Board of Directors Secretary General (Chief of HRD Dept.) Deans (7 Faculties) President (CEO) Vice President (VP) Deans (Interdisciplinary) International Affairs Business Administration Liberal Arts Staff Administration Finance & Accounting Production R&D Advertising Creation Sales & Marketing Beauty Services

10 Scenes from Ecole Shiseido Gender Equality Support for Working Women Mid- and Long-term Human Developm ent Career Support Promotion of Workand-Life Balance Deans (officers) at the forefront of human development Ecole de Hayama (Shiseido Training Center)

11 Mid- and Long-term Human Developm ent Career Support Promotion of Workand-Life Balance Gender Equality Support for Working Women Core personnel training In each field [IT, logistics, legal affairs, and personnel affairs] Business skill development training Practical seminar in value creation Corporate Field-specific training structure MOT Follow-up Training Core Training BM Training Advanced Course Description: MOT (Strategic Leadership Development) Training Mandatory training Autonomous, Reformative Leader Training (management version) Optional training Management training for new executives Training of leaders for R&D Selective training Social interaction training Cross-sectoral training Advanced Training Seminar in time management techniques Lecture in statistical analysis Seminar in patent application Overseas study among centers/offices Global R&D office training Global R&D technical training Intermediate Training Practical training at distributors Creative workshop (4 times per year) BM Lecture Basic Course Lecture for improving sales career (advices) Lecture for improving sales career Training beyond affiliates and fields External Training Design technology training Sales Reform Training Training for improving statistical and investigational skills Beauty management training Upskilling training Training for <High make course> improving Self-changing Leader development training (basic )Lecture in manufacturing [Quality control Self-changing Leader development training (application) <H&BC counseling management skills Seminar in core technology Lecture for new supervisors and sales staff Middle-class follow-up lecture training> Training for improving the skills of staff Technical assistance approval program Training for candidate staff Ⅰ ] Lecture in manufacturing [Quality control Lecture in manufacturing [Basic knowledge Specialist Lectures (externally based) Short-term overseas training Beauty communication dept Route-specific Training (Education & Training/ Store Management /Counter Professional) Ⅱ ] Aesthetician development course nail care course Basic management training Sales Improvement Basic program for improving statistical skills New staff training Ⅱ ] Good Taste Lecture BII Basic training Ⅲ Lecture Basic seminar in patent (I-IV) Sister training Beginner Workshop to Acquire Certification as Leader for Work Including Organic Solvents Basic training Ⅱ Training Lecture in manufacturing [Basic knowledge I] Basic lecture in cosmetic techniques Follow-up lectures for new employees of distributors Training of new employees (high school/technical college graduates and college/ graduate college graduates) Training of new employees in RC Lectures for new Lecture for BC I employees of distributors Good Taste Lecture BI Basic training Ⅰ The financing Production accounting Sales & Advertising Research & Beauty marketing production development Management SⅢ / BⅣ SⅡ/ BⅢ SⅠ/ BⅠ, BⅡ

12 Hierarchal training structure Gender Equality Support for Working Women Mid- and Long-term Human Developm ent Career Support Promotion of Workand-Life Balance Management SⅢ BⅣ SⅡ BⅢ SⅠ BⅠ BⅡ Legend: Mandatory Optional Selective Promotion of Employee Autonomy 2 nd Year in Company Follow-up Training 1 st Year in Company Follow-up Training New Employee Training Support for Self-improvement (correspondence education) Improving Management Skills for Managers Management Training Newly Appointed Evaluator Training Executive Candidate Development Business Leader Training External Training Next Leader Training Beauty Corporate Finance & Accounting Production Research & Development Advertising Production Sales & Marketing Career Development Training II Career Development Training I General Education Department All staff Leaders Management College Joint between Departments (Fields)

13 Establishment of Career Design Center Gender Equality Support for Working Women Mid- and Long-term Human Developm ent Career Support Promotion of Workand-Life Balance Career Design Center to be established in 2011 to enhance career support for employees Basic Policy of Career Support Foster awareness of independent career development Increase the value in labor market Example of Career Support at the Center Career Design Seminars Provide opportunities for middleaged and older employees to take inventory of their skills and look ahead Offer various career opportunities Energetic corporate culture on the principle of work-andyou-will-be-rewarded. Career Counseling Provide career counseling services at the right time and in the right way (i.e., , letters, face-to-face meeting)

14 Services to Child-rearing Female Employees Gender Equality Support for Working Women Mid- and Long-term Human Developm ent Career Support Promotion of Workand-Life Balance Systems introduced to help female employees balance their work and life (childbirth and parenting) In-house Day Day Care Center Kangaroom Kangaroom, a day care center, was established in a corner of the headquarters building. Also open to other companies in the area (2003) Kangaroo Staff Program Kangaroo Staff Program was introduced to allocate temporary workers to cover beauty consultants who leave work for childcare in the early evening (2007)

15 Promotion of Work-and-Life Balance Gender Equality Support for Working Women Mid- and Long-term Human Developm ent Career Support Promotion of Workand-Life Balance Review working style (i.e. long-hours of work) to allow employees to spend more time on outside activities Significance of Work-and-Life Balance Promotion Employees can gain information and values otherwise unavailable at the company and meet more people through outside activities. Employees can let fresh air into the company and encourage the creation of new values. Realizing work-and-life-balance is the simultaneous achievement of personal well-being and company growth. [Examples] Strict requirements of company-wide lights-out at 10 p.m. and in-advance application of overtime work Organizing Work-and-Life Balance Week several times a year to educate its importance Inclusion of Review of Working Style and Improvement of Labor Productivity as one of the managers evaluation items

16 Today s Themes I II Mid- and Long-term Human 中長期的な人材育成 Development Support for Middle-aged and Older Employees

17 Efforts for Post-Retirement Reemployment Post-retirement reemployment system introduced to fully utilize the middle-aged and older workforce Objective To create environments where middle-aged and older employees can continue to work as long as they have motivation and ability and to build up an energetic corporate culture Post-retirement reemployment system To ensure employment until age 65 at which pensions are payable To reemploy the applicants who retire at 60 and then meet prescribed requirements Senior expert system To reemploy the talent with strong expertise after retirement and treat them in a way that matches their capabilities

18 Support for Various Working Styles Support the second career for middle-aged and older employees Establish a family-care leave system and shorter working hour system Flexible retirement system after age 45 Treat the retirement after age 45 the same as that at mandatory age Provide regular retirement benefit plus special benefit when a person meets prescribed requirements Measures to help employees balance family-care and job Family-care leave: Up to one year per one family member and at a time. Up to three years in all. Shorter-working time for family care givers: Up to 2 hours a day. Up to one year per one family member and at a time. Up to three years in all.

19 Support for Activities in Local Communities Shiseido Life Quality Beauty Seminar Employees visit facilities for the elderly and the physically challenged to provide beauty seminars Joined by a wide range of employees, including officers Also actively running seminars overseas Japan NGO Council on Ageing (JANCA) awarded Shiseido as the Best CSR Company for an Aged Society (May, 2010) Beauty Volunteer System Retired beauty consultants register for voluntary activities and help seminars More than 400 registrations More than 2300 participations in a year Beauty volunteers working at seminars

20 Future Challenges It is necessary to allow ever more flexible work arrangements and conditions to utilize the skills and experiences of middle-aged and older employees and support various working styles. It is also important to improve environments and conditions that are appropriate and attractive to middle-aged and older employees. Declining childbirth and the aging population will accelerate the aging and shortage of labor force. It thus is critical to establish an organization that can adjust quickly to changing society, for example, by changing business processes and focusing on core businesses with the help of outsourcing.

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