Investigation Report by the Investigation and Review Committee
The Board of Directors at Dentsu Group Inc. received the "Report on Inappropriate Coordination, etc., on Tokyo 2020 Olympic and Paralympic Games" by the Investigation and Review Committee (official name: Investigation and Review Committee of Outside Experts on the Current Case Related to the Tokyo 2020 Olympic and Paralympic Games) via the Special Committee.
Content and Summary of Recommendations of the Investigation Report
Content of the report
Three Problematic factors related to this case
(1) Organizational culture with an excessive “client first” emphasis
Dentsu has built its current position in the advertising industry by becoming close with its clients, identifying their true intentions that the clients themselves are not aware of, continuing to deliver results that exceed their expectations, and building strong relationships of trust with clients. While this proactive attitude toward work has become a source of dentsu's competitiveness, it also tends to cause dentsu into thinking that the results justify everything, and it may also cause employees to have tunnel vision or become short-sighted at work. At the root of the problem in the Issues, the Committee considers that there have been an organizational stance or organizational culture in which accomplishing results and objectives was so emphasized that there was a lack of consideration for such risks, which may have led to dentsu having an excessive “client-first” bias.
(2) Inadequate awareness of compliance risks
It can be pointed out that, in conjunction with the problems mentioned in (1) above, those involved in the Issues and management personnel lacked adequate awareness of compliance risks. This is reflected by the fact that issues that occurred in other companies and organizations during the same period or in close proximity to the Issues were not considered as potential issues for dentsu itself. In addition, even the issues that occurred at dentsu were regarded as a local issue and were not linked to an improvement in awareness of compliance in general.
(3) Significant lack of consideration for fairness and transparency of procedures
Likewise, it can be pointed out that, in conjunction with the organizational stance of having an excessive “client-first” bias, dentsu significantly lacked consideration for the fairness and transparency of procedures. This is evident in the fact that (i) measures to appropriately manage risks from the perspective of conflicts of interest associated with the secondment of dentsu personnel to the Organising Committee (such as establishment of information barriers) were not implemented, (ii) the Organising Committee did not reexamine the changes in risks associated with its becoming more like a public institution over time, and (iii) the changes in risks associated with the change in the selection method of vendors were not reexamined even after the selection of vendors for test event planning services was decided to be conducted through competitive bidding method using the comprehensive evaluation method, instead of the single tendering method originally envisaged.
Summary of recommendations
1 Reform compliance awareness based on strong management commitment
- Update of Corporate Philosophy and Code of Conduct
- Redefining concepts such as "client first" and "success"
- Management's continuous commitment: Ensuring consistency of communications and actions
- Ensuring the effectiveness of functions for the supervision of management
- Ensuring the effectiveness and transparency of measures to prevent recurrence (such as monitoring and forums for dialogue with stakeholders and external experts)
2 Strengthening risk management system
- Assessment and strengthening of risk management system based on the holding company structure
- Introduction of a project-based risk management system
- Strengthening the monitoring function
- Reform of secondment system and information barriers
- Learning lessons from past failures at an organizational level
3 Strengthening Legal and Compliance Functions Based on the Needs of the Times
- Strengthening the resources and authority of the Legal and Compliance Division
- Development of internal rules and operational procedures
- Strengthening education and training systems
4 Revision of the personnel system with an awareness of incentives
- Review and revision of the overall personnel system with an awareness of incentives
- Consideration of disciplinary action for persons involved in the Issues
- Ensuring diversity and flexibility in respect of human resource diversity and flexibility
