Pursuing flexibility in governance to support Recruit Group's growth

Interview with External Board Directors

Article for Annual Report 2018 (October, 2018)

Conveying Lessons Learned about Overseas Operations and Group Management

Hiroki Totoki

Hiroki Totoki
External Board Director

Mr. Totoki joined Sony Corporation ("Sony") in 1987. During his career at Sony, he worked as Representative Director of Sony Bank Incorporated from 2002, President and CEO of Sony Mobile Communications Inc. from 2014, and has been Senior Executive Vice President, CFO of Sony since 2018 (his current position). He has been an External Board Director of Recruit Holdings Co., Ltd. since June 2018.

Q: What is your impression of Recruit Group?

I am particularly impressed by the Company's energy and brisk growth, as well as the youthful nature of the entire Group. For a company like this, the most important thing needed as an external board director is the guidance obtained from a more diverse, outside perspective. Sony has been active in international markets for decades, and it has a very diverse group of subsidiaries. This has given me a certain amount of experience that I can pass on to Recruit Group.

Q: What is your view on Recruit Group's MM&Aamp;A strategy?

Recruit Group has a very clear awareness of its own strengths, and it has maintained a tight focus on its MM&Aamp;A targets, searching for ways to enhance its reach in areas of core competence. For example, in the acquisition of Glassdoor announced in May 2018, I thought Recruit Group understood very well how prospective users behave in seeking a job, as job seekers would check companies' reviews on Glassdoor, after searching a job on Indeed. MM&Aamp;A is more likely to be successful when a company first decides on the main-stream business and then proceeds with MM&Aamp;As to add businesses consistent with that mainstream business. In this approach, even if MM&Aamp;A fails, the reasons for the failure becomes clear, and the lessons learned from the experience can be used to better effect in the future. I think Recruit Group's MM&Aamp;A strategy is in the right way, with the same approach as above.

Representing Stakeholders and Contributing to Enhanced Value

Q: What is your philosophy with respect to corporate governance?

There is never one "right" answer for corporate governance. It changes depending on each company's conditions and its business portfolio. Once a decision is made, it is necessary to follow through, and support the plan until it begins to bear fruit. Nevertheless, it is essential to always maintain a degree of flexibility. For example, a decision to split business units off from the core may be an effective way to boost efficiency; however, it may also dilute the corporate culture and vision that a company has established over many years. Similarly, as organizations grow larger there is a danger that lines of communication may be neglected. Taking a flexible approach aiming towards long term success is paramount.

Q: What is your role in all these activities?

Naturally my oversight role is to make sure that management pursued strategies that will elevate enterprise value, not only in the short term but in the longer term as well. My role is to serve as the representative of stakeholders. In addition, research and experience shows that diversity is a prerequisite to innovation. The external board directors have an important role to play in contributing diverse views and opinions to any discussion. I will fulfill this role effectively to contribute to Recruit Group's continuing growth and success.