Employee Engagement

Advantest conducted our first Global Employee Engagement Survey in 2018. Though the implementation of the survey was postponed due to the outbreak of COVID-19, three years later, in the fall of 2021, we repeated the Gallup survey (Next implementation scheduled for 2024).

Ever since gaining various insights through the initial survey in 2018, Advantest has continued to make steady efforts. We believe that each of these activities will become a retention measure and become the driving force that turns the wheels of both "individual strengths" and "organizational strengths", ultimately leading to the improvement of the Group's profitability and productivity, customer satisfaction, and reduced turnover. In other words, engagement improvement measures per se serve as profit margin improvement measures, productivity improvement measures, customer satisfaction increase measures, and retention measures.

Purpose of the Survey

Advantest continuously pursues a culture in which all employees are appreciated, respected, and work together to achieve common goals. The purpose of this survey is to provide employees with opportunities to share their thoughts on our company or organization. It stimulates dialog between the manager and the team, which ultimately leads to creating ideas for improving our company or organization from every level. The survey results provide a clue to knowing what the employees think of their work or work environment and how the company can support its employees. The survey makes it possible to identify the company's strengths and the fields that require improvement through open feedback from employees. In addition, we will take actions for improvements so as to raise the level of employee engagement in work and workplace environments, with the aim of improving the performance of the company as a whole as well as the performance of individual employees. Advantest believes that individual and organizational strengths are the two "wheels" that not only drive employee engagement but are needed to enhance the comprehensive strength of human capital.

Engagement and its Basics

Employee engagement refers to the emotional commitment of employees to their organization or its goals. An employee who is engaged in work does not only do what is minimally required, but goes about his/her work enthusiastically and energetically, with an effort to output more than what is required. According to a survey conducted by Gallup, Inc., engagement among employees worldwide is only 15%. In addition, it has become clear that there is a connection between employee engagement and the following indexes.

• Profitability, customer ratings, and productivity (in direct proportion)
• Turnover, absenteeism, safety incidents, and quality defects (in inverse proportion)

Implementation of the Survey and Future Plans

The survey during fiscal 2021 was conducted from October 12th to 26th for all employees of the Advantest Group who had been employed for three months or longer at that point. The response rate was 90%. The survey was conducted using the platform of Gallup, Inc. in an online format in which anonymity is ensured.

Results

The results showed significant improvements over 2018, including an increase in scores for all items in Q12 (12 questions for engagement measurement derived from the findings of Gallup, Inc.). The overall average score was 3.64, an increase of 0.16 points from the previous survey. This is by far the biggest improvement among companies who consecutively completed the Gallup survey. We also saw an improvement in awareness and opportunities related to the category of Recognition (the need to know that efforts are recognized and valued) and Development that were highlighted during the previous survey, marking 26% for the ratio of Engaged (diligent) employees, a 6-point increase from the previous score. This survey confirmed that the engagement level of Advantest Group companies is considerably higher than the standard for each country. These are clear indications of each of our employees' efforts to understand the importance of engagement, and shows how they have embraced and implemented our corporate reforms such as "INTEGRITY" and "Leading with INTEGRITY," yielding measurable results.

Our overall score is not high, when compared to other companies participating in Gallup's survey, and there is still room for improvement. After sharing information with each department, where department leaders discussed the factors that may have led to these results, we drew up action plans to address each issue.

Future plans

A third Gallup survey is scheduled to be conducted in 2024. This survey plays a meaningful role not only in confirming activity results in numerical terms, but also in terms of instilling an awareness of engagement as part of our corporate culture. Engagement varies considerably depending on the customs and cultures of each country. While localized efforts are necessary, our INTEGRITY Core Values, which are the foundation of our corporate philosophy, The Advantest Way, are shared globally. We believe that it is essential to enhance engagement by executing action plans that address the characteristics and challenges of each department, sharing information about activities across the entire Group, and promoting investment in human and economic resources aiming to foster our corporate culture.

Company-wide Activities to Further Boost Engagement

The results of the 2018 Gallup employee engagement survey provided us an opportunity to reflect on our attitudes and mentality towards work.

Since 2019, we have held multiple workshops to deepen all employees' understanding of INTEGRITY Core Values, and since FY2021, we encouraged all our managers to participate in the Leading with INTEGRITY workshops. In addition, the "INTEGRITY Award" was also introduced, enabling Advantest employees to recognize and express their appreciation for colleagues who have demonstrated our corporate culture in exceptional ways.

Inculcation and Evolution of Our INTEGRITY Core Values

Workshop held by
INTEGRITY ambassadors
and Culture Council
(At Advantest headquarters
in Tokyo, December 2022)

The INTEGRITY Awards is a peer-to-peer program that offers Advantest employees worldwide a platform to recognize and express appreciation for colleagues who have demonstrated the Advantest´s Core Values in exceptional ways and who contributed significantly to the transformation of our corporate culture. Nominations are solicited and selected on a quarterly basis, and the selected employees are nominated for the President's Awards, which are presented on an annual basis. In FY2022, a total of 400 cases named 1,203 nominees for the INTEGRITY Awards. Among them, three groups were chosen and commended in the INTEGRITY category of the President's Awards.

The Advantest Group continues to pursue a corporate culture where the contributions and values of individual employees are recognized and respected by showing appreciation for peers. These company-wide activities have penetrated down to the level of each organization and team, generating self-directed activities not only within each organization, but also across multiple organizations.

INTEGRITY Promotion Structure

Cross-organizational Initiatives

"Cross 1on1" is a little different from the conventional 1on1, referring to a place where mentors (advisers) and mentees (those who are advised) can talk one-on-one across organizational boundaries. Mentees are able to gain insights that cannot be obtained from their own department or daily work alone, and foster their potential. Mentors also have the opportunity to improve their coaching skills, which is one of the most important elements of the leadership model.

What started as merely 10 participants in the ATE Business Group (Japan) in 2020, has increased in number over time with each round of 1on1 activity. This activity was selected as one of the President's Award winners of The INTEGRITY Award in FY2021, in recognition of its efforts to implement the EMPOWERMENT aspect of INTEGRITY core values, and the expanded network of communication. By the seventh cool of FY2022, we had more than 140 participants.

Examples of Visualization Tools

From April 2021, the ATE Business Group (Japan) has incorporated an engagement visualization tool to survey the team, followed by team discussion and improvement activities every three months. These initiatives are managed by survey feedback activity promotion members who are volunteers from inside and outside the department, and their participation is optional, decided upon a consensus of the team. This platform of communication includes regularly inviting external lecturers who hold webinars and creating opportunities to share examples of each team's activities. These efforts have drawn interest among our young engineers who reported that work has become easier, requesting for more involvement in these activities.

In FY2022, 32 INTEGRITY Ambassadors (IAs) were appointed worldwide to further promote the transformation of our corporate culture on a global scale. Among them are two members of the promotion team. The survey feedback activities were shared through regular exchanges among the IAs, giving momentum to the development of the activities that transcend organizational walls. These activities, which began in April 2021 with 169 members (22 teams), have increased to 277 members (30 teams) as of March 2023, expecting further growth in our network of activities in FY2023.

FS Global Coffee Talk Offered to Foster Solidarity

Now in its third year, the Field Service (FS) Group's FS Global Coffee Talk has become a popular communication space with a total of 200 to 300 global members participating in hybrid experiences, both livestream and video sessions. In fiscal 2022, four FS INTEGRITY Awards and one FS MVP Award were presented, which not only recognized the dynamic customer activities of the global team, but also spotlighted the logistical support provided to the support delivery team by individual (Single Contributor) efforts in a particular region.

In addition, starting in fiscal 2023, the FS Best-In-Best Award was established and presented by the FS Management Team for selected activities and achievements from the previous year's FS INTEGRITY Award and FS MVP Award winners. Recognition as the best activity and contribution of the year will further motivate members to actively participate in CX (Customer Expectation) improvement activities that drive the growth of FS's core business.

We have also changed the format of the sessions so that it is hosted by each region in rotation. The sessions are now run not only by the FS management team, but also by the global members, with everyone participating. The session moderator, who was not familiar with the format, was warmly supported by the participating members, which also encouraged more lively conversations. This made the session a place for interactive dialogue where a spirit of global teamwork and oneness among the Group could be felt even more.

Initiatives to Improve Engagement in the Production Division (Japan)

Since the production division varies in job types and organizational forms, we believe that measures to improve engagement and support systems should be tailored to each division. We feel that the organization is being revitalized through cumulative efforts of activities.

Starting in FY2019, we are using a survey tool that allows employees to report their monthly work, relationship, and health conditions and comments to their managers. By October 2021, the majority of members are using the tool. In August 2023, the tool will be made available to all production division employees aside from management.

Also, activities, which began in December 2020 amidst the COVID-19 crisis, where we listen to employees' conditions and opinions using the survey function of the collaboration tool are progressing. These activities include online distribution of messages from the Executive Vice President and introductions of initiatives implemented by each division, as well as monthly questionnaires asking employees for their impressions and opinions. The survey responses following the distribution of the messages are received from approximately 40% of the employees, and an interactive communication is realized while the Executive Vice President responds to the questions raised by the employees.

Such interactive communication has evolved to a new stage in 2022. A proposal by a senior employee led to the creation of a course called "What is a Tester?" which was well received that more than half of the employees in the production division took the course. In addition to the conventional activities to enhance the corporate climate and culture as well as the connection among employees, we were able to understand the connection between the work we do and the world, which can be perceived as a big step toward becoming a rewarding workplace. We will continue to promote these initiatives so as to improve productivity as a result of these series of activities.

• Active Utilization of Senior Employees (Japan)

Change to the Culture of Praise & Recognition (Advantest Korea Admin Dept.)

As part of the Advantest's Group-wide Culture Change Journey, Administration department members of Advantest Korea made a small but very meaningful change.

As many psychological studies have shown, praise and recognition are critical to employee engagement. Despite its importance, in many organizations, employees' effort and contribution are often taken as something not special and praise and recognition are hardy seen. That's why the voluntary culture change that our praise and recognition activity created is inspiring.

The first step was to make "praise" the guiding principle and take concrete action. People were given their own compliment pads and stickers, and were guided to give a sticker to a colleague who did great job in a daily routine. We did this activity face-to-face not only to exchange stickers but also to give compliment and appreciation to each other.

The next step was to learn, talk, and empathize together about the meaning and impact of compliment. We regularly watched a variety of videos on compliment and also held workshops twice. Through open conversations, we were able to face underlying negative perceptions of compliment. By sharing positive experiences, we finally became more convinced of its effectiveness.

According to our own internal survey, the result for the question related to praise and recognition improved by 12% and the result for the question related to encouragement to develop improved by 13%. In addition, employees' subjective perception that praise and recognition are much more common and familiar in their culture than in the past is the most reliable evidence of change.

INTEGRITY With New Members of Integrated Companies

Employees of
R&D Altanova, who newly
joined Advantest Group.

As of January 1, 2023, R&D Altanova (RDA) was integrated into the Advantest Group. There was much to be done, including officially consolidating RDA onto the Advantest payroll, benefits and other platforms, but also RDA employees in the US, Pakistan and Costa Rica needed to be inducted into the Advantest Way and learn our INTEGRITY Core Values. The HR team of Advantest America held a total of 17 Core Values Workshops for RDA US, Taiwan, Pakistan, and Costa Rica, including 11 onsite sessions as well as six virtual sessions, to share our values with these new members of the Advantest Group. At the end of these workshops, each participant received the official Core Values Certificate of Completion.

The same procedure is being conducted for Shin Puu Technology Co., Ltd. in Taiwan, whose acquisition we completed in April 2023.