English Top>News Releases>2003>SDK to Introduce New Personnel System

News Releases

SDK to Introduce New Personnel System

December 18, 2003

Showa Denko K.K. (SDK) will introduce a new personnel system in January 2004 whereby both managers and union workers will be rewarded according to respective accountability and performance. The new system is intended as a measure to increase each employee’s commitment to the success of the Company’s business strategy.

SDK’s current salary system is based on the job qualifications of respective employees that reflect personal capability he/she has demonstrated. Under the new system, however, the size of each job is evaluated by an objective standard. Based on the results of such evaluation, each job will be classified into one of several job grades.

Each employee assigned to a certain position will set forth objectives for a given year to fulfill the Company’s expectations for the position. Performance rating will be made mainly in terms of how far the employee achieved the objectives, but achievements outside the scope of initial objectives will also be considered. Highly motivated and capable employees will be provided opportunities to play more important roles and given due reward according to their contributions.

For employees in managerial positions, remuneration will consist of basic annual salary and performance-based annual salary. When the job grade is the same, the same amount of basic annual salary will be paid in the form of monthly salaries and bonuses. There will be no pay increase so long as an employee remains in the same job grade. As for the performance-based annual salary, a certain amount of fund will be allocated to respective business segments in proportion to their contributions to the consolidated business results. Then, individual employees in a given business segment will be given additional amount of monthly salaries or bonuses in line with his/her performance rating. Each business segment will decide on the amount of additions to individual employees at its own discretion. (A maximum of ¥120,000 can be added to monthly salary while no specific limit is set to additions to bonus payment.)

The remuneration system for union workers will be based primarily on the same concept. However, there will be a certain salary range in a given job grade and employees may receive an increase or decrease of basic salary each year within the said range according to the degree of their contributions. Meanwhile, the set annual pay raise system will be abolished and payments not directly linked to work, such as housing allowance and the salary-by-age system, will be terminated in principle. The Company is now negotiating with its labor union over introduction of a bonus system that partially reflects the Company’s business results.