Message from Outside Director
Dentsu Group Corporate Governance
The shape of corporate governance at the Dentsu Group will change substantially starting in 2020. This is because the Group will come under a pure holding company, Dentsu Group Inc., one that governs and manages subsidiaries through stock ownership and does not conduct business in the advertising agency or any other. Its businesses will be handled by the subsidiaries, including Dentsu Inc. Thus, we should consider how the conversion will improve the Dentsu Group’s governance and how we might use this system to contribute to the anticipated improvement.
Dentsu Inc. has been conducting business in advertising while managing subsidiaries as an operating holding company. However, improving Group company governance and Groupwide internal controls has become a substantial burden, because we must also consider how these apply to our global subsidiaries. Through the Group’s conversion to a holding company structure, Dentsu Inc. will become a new subsidiary of the holding company. This does not mean that Dentsu Inc. will never manage subsidiaries that handle a portion of the Group’s domestic businesses. Instead, the move will allow the company to focus almost entirely on the execution of Japan business.
It can be said that the most significant theme to consider when discussing current Dentsu Group governance is the question of how we can improve aspects of global governance that also apply to overseas subsidiaries.
It will be up to the holding company to improve the effectiveness of our global governance system. The roles of Groupwide governance and business execution will be divided among the holding company and its subsidiaries. While Group management through a holding company has a number of merits, probably the most important aspect is that it facilitates the introduction of major management reform. Separating decisions regarding management strategy from those of business execution management will more clearly delineate responsibilities, leading to more efficient management and faster decision-making.
Progress in globalization and digitalization has resulted in demand for speedy management. The success of our business depends on how quickly, yet precisely, we respond to the needs of customers and clients. Converting to a pure holding company structure will help the Group function more flexibly by contributing to business integration, M&As, as well as the diversification and reorganization of internal Group businesses. By delegating the execution of business to subsidiaries, we can cut costs by slimming down the holding company, while revitalizing the businesses managed by subsidiaries and clarifying management responsibilities.
Since this will result in smooth personnel administration and labor management, we anticipate greater employee motivation.
In short, by converting to a holding company structure, the Dentsu Group is confident that it can improve Group governance and achieve next-level growth.