Nihon Keiei Co., Ltd. (head office: Toyonaka, Osaka; President and Representative Director: Tatsuya Hashimoto) conducted a nationwide survey of business executives on the actual state of HR evaluation systems at small and medium-sized enterprises. In today’s rapidly changing business environment, as interest in human capital management grows, HR evaluation systems that influence employee motivation and productivity have become more important than ever. However, the survey found that fewer than 20% of companies have evaluation systems that are fully functioning, highlighting widespread issues such as formalized, ineffective systems and operational challenges. Key findings include: only about 20% of companies, or 18.9%, said their evaluation systems are fully functioning, while roughly 80% said there is room for improvement; the top issue cited by executives was “variation in evaluations depending on the evaluator,” at 63.8%; and the most common evaluation management method was “Excel or paper,” at 34.0%, showing that delayed digitalization is increasing operational burden. As background, HR evaluation systems are an important foundation for organizational management at many SMEs, but serious challenges are often observed in practice, such as systems becoming merely formal after implementation or employees failing to accept evaluations because criteria are unclear. Although such systems are meant to support corporate growth, in reality they often fail to perform their intended role due to the difficulty of operation. In light of this situation, Nihon Keiei surveyed 100 SME executives and HR managers on how HR evaluation systems are operated, why they become formalized, and what concerns companies have when introducing or reviewing such systems. The company has released a report summarizing the results to visualize the challenges SMEs face and communicate the importance of building and operating effective systems based on objective data. The survey was titled “Survey o