Business structure reform for achieving the Mid-term Management Plan 2025 at NEC
Via NEC News room
Jan 31, 2022
Tokyo - NEC Corporation (NEC; TSE: 6701) today announced business structure reforms for further accelerating and strengthening the execution of business strategies in support of achieving the Mid-term Management Plan 2025. The implementation of reform measures centered on “organizational simplification," “flattening of layers (hierarchies)," “flexibility of organizational design" and the "delegation of authority with clarification and strengthening of responsibility" are set to be introduced through a new business structure which will be effective from April 1, 2022.
With the progress of digital transformation (DX), customer needs are shifting from the improvement of operational efficiency and business innovation within companies and organizations to creating new value and business, including cross industrial initiatives. Moreover, the competitive environment is becoming more global and complex. In order to respond quickly to such changes in the environment, it is essential to allocate NEC's resources flexibly and speedily.
Since the introduction of the business division system in the 1960s, NEC has been operating its business without significantly changing its basic organizational structure. As a result of pursuing optimization individually, the organization has become subdivided, and the authority and investment capacity of the individual subdivisions are insufficient. Amid rapid changes in the market environment and major changes in NEC's business portfolio, the company will undertake drastic reforms with an aim to establish a business structure based on the strategic pillars of the Mid-term Management Plan 2025 in FY2023.
First, in FY2022, NEC will reduce the number of organizations by roughly 2/3, from approximately 150 to about 50, by grouping the current division-level organizations into units that are related to markets, products, services and functions. Additionally, the number of levels from the CEO to staff will be reduced from the current 8 levels to 6 levels in principle.
Through these reforms, the authority and responsibilities of leaders, including department heads, will be significantly strengthened, dynamic resource allocation in response to changes in the market environment will be achieved, as well as the acceleration of both decision-making and the execution of initiatives. In addition, by de-coupling positions and internal job grades, and by enabling more flexible human resource allocation, NEC will promote the selection of youthful personnel for positions of leadership.
The new organization will be based on a hybrid structure between a hierarchy model and a project model, aiming for a system in which highly specialized teams led by agenda leaders flexibly execute projects in order to carry out strategies quickly. For professional positions, from the executive class to staff level, NEC will assign titles according to the level of a position's specialization, and facilitate the transition to job-based human resources management.
At the same time, in order to accelerate DX strategy, NEC will unify digital-related products, services and technologies, including the network domain, as well as strategic consulting, engineering and field marketing functions, into the "Digital Business Platform Unit," which is a cross organizational unit related to digital, aiming to strengthen and expand DX offerings to customers.
In addition, as part of strengthening corporate functions, NEC will integrate the in-house DX reform project team with the in-house IT development and operation functions, and establish a department that will lead corporate transformation, including NEC's own DX. Furthermore, marketing strategy functions, thought leadership functions, communication functions, and corporate design functions will be integrated into the Corporate Planning Department. This will be done to strengthen market analysis capabilities to formulate strategies that can respond quickly to changes in the environment, as well as strengthen the global communication of messages based on the NEC Group's Purpose and NEC 2030VISION, as NEC promotes the theme of “Seize the Future Together."
In FY2018, NEC introduced job-type human resource management for recruitment, training, placement and evaluation of executives, based on the concept of "the right time, the right place, the right person." Now, in order to expand the quality and quantity of human resources with global competitiveness, NEC aims to introduce job-type human resource management for all employees in FY2023. Going forward, NEC will continue to work on reforms for promoting the optimal organization and system for achieving the Mid-term Management Plan 2025, while taking measures to ensure global differentiation and sustainable strengthening of competitiveness.
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