Under a working ethos of valuing the independence and allowing for expression of the abilities of each employee, since 1991 we have incorporated a business target management system for our human resources, based on the principles of abilities and performance.

Under this system, employees set their own targets and plans, according to Company policy, in consultation with their line managers. They then carry out midterm self evaluations of progress and results.

Supervisors evaluate the results and processes involved and reflect the evaluation results in staff bonuses. Employee evaluation results, the basis of evaluations, issues arising in the course of duties, and future directions are discussed three times a year at meetings between employees and their supervisors.

Standards for promotion and demotion and employee evaluation regulations are issued in a Personnel System Guidebook, which is distributed to all staff with supervisory responsibilities.

Murata has established an incentive scheme for new technologies developed by employees. This extends beyond cases where patent applications are filed to cover implementation of a registration system with equality of evaluation and encouragement for new technologies deserving confidentiality as in-house expertise.

Murata, with its emphasis on abilities and performance, provides employees with opportunities that enable them to maximize their potential in accordance with their personal aptitude.

For younger employees, we offer a career path featuring deployment in diverse roles at various locations. Furthermore, for those opting out of managerial channels, we have established a system to facilitate progression as a highly specialized professional, in addition to an in-house staff recruitment system whereby employees select their own career track.

At Murata, after one year of service in departments to which new graduates have been assigned, our personnel division reviews their aptitude, aspirations and desired assignments and duties to verify the appropriateness of their assignments.

Further, younger employees across all job types are placed in a career-oriented job rotation program, under which they experience various tasks and working environments. The purpose of this program is to make these employees aware of their potential that even they themselves may not have recognized. In addition, participants can make use of the know-how and perspectives they have developed through these multifarious work experiences and the human relationships they involve in their subsequent assignments.

Murata's conventional personnel system was based on the idea that all personnel promoted to a certain level would follow a managerial career track. However, while some employees are indeed suited to this course, others are intent on deepening their individual specialist technologies.

Accordingly, we have therefore introduced a system that allows employees at a certain stage in their career to select their professional track toward management or as a highly advanced specialist.

In the future, Murata will continually review its personnel systems, with emphasis on the individuality and aspirations of employees, to create an employee-friendly work environment.

In April 2004, Murata introduced an in-house staff recruitment system. By providing employees with opportunities to select their own career path, this system aims to build a corporate culture that maximizes employees' venturous spirit and independence. At the same time, the Company benefits from a flexible corporate structure that responds swiftly to business needs.

During the first year of the system's implementation, five posts were advertised via the in-house staff recruitment system and approximately 20 people were able to transfer to new positions or locations.

Murata aims to foster self-directed personnel, personnel who display individuality with a venturous spirit and personnel who value customer satisfaction and cooperation. Accordingly, we are constructing education systems that offer employees specialized training at each rank, from entry level to management level, to provide powerful, effective support to individual employees in developing their capabilities.

The first three years after joining the Company are designated as a basic training period. This involves numerous intensive and on-the-job training courses, combined with correspondence courses aimed at gaining qualifications, to develop the knowledge and skills needed to play an active role as professionals in the business community. Even after this basic training period, various training programs are provided, such as education according to each job step and functional training by type of job. By combining these various training programs, Murata facilitates the development of all its employees' expertise, skills and management capabilities.

The roles to be played by organizational management staff have expanded and become more sophisticated, thereby assuming greater importance.

As part of its level-based training programs, Murata provides management staff training, which promotes global operations, while cultivating abilities as business leaders who can promote innovation and managers capable of nurturing their staff members and stimulating the organization.

In particular, over the past few years we have conducted training to raise the capabilities of all managerial staff, based on keen awareness that an important responsibility of management is to cultivate human resources and bolster organizational capacity.

In the future, we will implement training programs that encourage management staff to improve their own capabilities while developing their subordinates' abilities. Through this approach, Murata aims to enhance the ability level of its entire workforce.

Murata has constructed an integrated production system from materials through to finished products, accumulating abundant elemental technologies that span materials, process, design and manufacturing, in addition to the software and evaluation technologies that support them. We are striving to cultivate world-class technicians and engineers who further raise the levels of this expertise and to pass it on to successive generations.

With its R&D foundations laid in vertical integration of technologies, Murata fosters technicians who are specialists in their own specific technological areas, and also need to amass abundant information on related fields. STEP (Strategic Technology Program)* is the Company's original set of activities to support R&D by honing the skills of technicians and engineers in this way. To build a top-level technological system, Murata is carrying out horizontal development of technologies Company-wide and boosting quality through flexible small-group activities. In addition, we publicize our accumulated technologies within the Company through lectures and are promoting training for technicians and engineers.

*Activities conducted in small groups, regardless of positions, that carry out R&D and hold discussions by technical field,

Murata has an overseas training system for young employees, who will play a leading role in the Company in the future. By allowing them to live in and experience business in foreign countries from an early stage, this system trains young engineers and businesspersons to develop international-level capabilities. Each year, approximately 20 employees, selected by application or recommendation, are dispatched to various overseas locations. In addition to studying at foreign universities and research organizations, participants are given opportunities to gain MBAs and other qualifications and to acquire foreign-language skills.

To promote the career development of Murata employees worldwide, we have also established a rotation system to bring overseas local staff to the Head Office in Japan and dispatch them to locations in other countries.

In the current global business community, Murata is encouraging staff to rise to the challenges of acquiring international perspectives and experience.