Feature Interview

September 2015

Arc Communications' External Directors: 10 Years, Looking Back and Forward

The External Directors: Improvement Prompted by Financial Data and Customer Feedback

Ohsato: They say that the external directors' function is to supervise the managers. But, our board meetings are held only on a bimonthly basis. So, finding efficient ways to accurately convey the company's situation to our external directors involved trial and error.

Mase: From the very launch of Arc, you presented us profit and loss statements for each department and estimations for the three following months. The company has never seen any deficits since its launch, but there was a tough succession of months when estimations were always in the red. But I think that, because the results were open to scrutiny, we could sufficiently understand the business characteristics of each department and give accurate advice as external directors.

Ohsato: We have prepared monthly financial statements for each business since we started Arc, and we made this information available to our employees, so we decided to also use this data for the external directors meetings. So it actually wasn't too difficult because we didn't have to prepare them specifically for those meetings.

Shinbori: The results of having shown the monthly financial statements to your staff for ten years are really visible. With this system, each employee is constantly aware of how his/her work affects Arc's profits, which is why they are so good at making decisions. I also think this is precisely the reason why management never crumbles, regardless of the various endeavors Arc is taking on.

Ohsato: The staff members make efforts and deal with it, so I hadn't realized this until I was asked this question during a board meeting: "You like starting new things, but as a manager have you decided which should take precedence now between doubling the results of an existing business or wielding your employees into making as much sales with a new business?" I still remember thinking, "Wow, that's a case of a president running wild." (Laughs)

Shinbori: As external directors, we had to think of how to obtain more information in addition to the financial statements, and how to use it to make the right decisions. As external directors, we have the advantage of knowing what's happening outside of Arc, but to some extent we also have to be familiar with the internal state of affairs at Arc...

Mase: During board meetings, you made sure to inform us of the opinions and comments from your customers, temporary staff, employees and such. Come to think of it now, the early meetings were, like a whack-a-mole game, a way of going through the events one by one, conjecturing about Arc's state of affairs, finding problems and solving them.

Matsuzaki: Certainly, by thoroughly examining actual cases one by one - what the customer requires from Arc, how you try to meet their expectations - Arc's stance becomes very clear.

Ohsato: That's because I wanted to give a better understanding of Arc, so I gave as many details as possible, whether it was an internal or external matter and whatever its size. Still, doing that ensued in more problem reports and discussions. To be honest, there were times when the severe comments I got from the external directors made me a little bitter, as I felt they didn't fully grasp the internal situation. (wry smile)

Mase: It looks like we only gave you very severe feedback. (Laughs)

Ohsato: Not at all, you were very supportive advisers. You often cheered me up when you sensed signs of anxiousness, by saying that "managing is considered a solitary position, but you can rely on us!" It was always reassuring to know that I could count on the external directors, even for matters I couldn't discuss with my employees.

Matsuzaki: The external directors functioned as a chaperone as well as a cheering party.

Ohsato: Yes. The term "external director" gives an impression of being distant, but in Arc's case, the external directors are much closer partners, like "brothers in arms." And, since I've demonstrated "just the right amount of impudence," they don't hesitate to take initiatives and try solving problems, which is one of the wonderful aspects of our external directors. (Laughs)

Matsuzaki: This might well be the quintessential demonstration of your strength (laughs), but after a mere six months in this position, I can't really imagine what type of practical work the external directors have done...