Abolishing Mandatory Retirement and Seniority for Talent Acquisition and Expertise Retention

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Abolishing Mandatory Retirement and Seniority for Talent Acquisition and Expertise Retention

Honda Revamps Personnel System, Abolishing Mandatory Retirement and Seniority System for Executives

Honda Motor Co. is undergoing a significant personnel system reform, eliminating the mandatory retirement age for highly skilled and technical employees and the "seniority system" for executives. This move aims to attract and retain talent in new fields like artificial intelligence and software, crucial for the company's future success in the evolving automotive landscape.

Executive Vice President Noriya Kaihara, in an interview with The Asahi Shimbun, announced the comprehensive implementation of a merit system starting in June. This system will replace the seniority system for executives, ensuring promotions and salary increases are based on individual performance and contributions. Additionally, department manager salaries will see a boost of 2 million to 3 million yen ($12,850 to $19,270) annually, further incentivizing skilled personnel to join Honda.

"Being able to do all key technologies by ourselves is the key to winning in the EV market and becoming increasingly competitive," Kaihara emphasized. This focus on self-reliance in key technologies aligns with the company's strategy to develop and manufacture its own electric vehicles, a crucial step in the transition towards a more sustainable future.

Furthermore, Honda is abolishing the mandatory retirement age for certain employees, allowing those in highly skilled or technical positions to continue working past 65. This move acknowledges the valuable experience and expertise these individuals possess, ensuring their continued contribution to the company's success.

While the rise of electric vehicles is expected to impact the demand for gasoline-powered vehicles, Kaihara believes it's crucial to retain and pass on the knowledge and technologies developed over the years. "Gasoline-powered vehicles will not disappear completely. There are some technologies that should be retained," he stated. This balanced approach ensures Honda remains competitive in both the traditional and emerging automotive markets.

The personnel system reform is independent of the ongoing business integration discussions between Honda and Nissan Motor Co. Kaihara affirmed that regardless of the integration outcome, Honda's commitment to its new personnel approach remains unwavering. This signifies the company's dedication to building a future-proof workforce capable of navigating the challenges and opportunities of the rapidly changing automotive industry.