Choices Matter More Than Effort: How Output per Employee Shapes Pay

As the familiar saying goes: ‘Choices matter more than effort!’ I want to discuss another issue: output, or contribution, per employee. People in Taiwan’s technology industry generate far more per person than those in services, including financial services. Greater output or contribution creates the possibility of higher pay. My first job was at KPMG. At the time, I felt the gap between pay at Taiwanese accounting firms and firms in advanced economies abroad was enormous. Taiwanese auditors were not necessarily less capable. Regulatory requirements even meant more audit work and working papers. Working until dawn was common, but because audit fees could not be increased, people were reluctant to claim all their overtime. For the same audit scope, an overseas firm might assign three team members while Taiwan needed five or six because of additional regulatory work: listed-company regulators, tax authorities requesting working papers, overseas audit standards, domestic standards, and so on. Yet Taiwanese companies still scrutinized every dollar of audit fees. The result was lower output per employee and per working hour for Taiwanese auditors. Higher pay for overseas auditors was therefore hardly surprising. (The same applies to lawyers, finance, and other services. A service business that cannot serve overseas customers and relies only on Taiwan will struggle. Taiwanese customers’ willingness to pay for services and professional expertise remains noticeably low.) Taiwanese export manufacturers can generate 10–20 million per employee, and TSMC more than 30 million, versus perhaps around 1 million in domestic services. Naturally, pay and employment terms differ. The article mentions that a deputy general manager at a state-owned bank might earn 2–3 million, while a TSMC engineer’s salary and profit sharing start at 2 million. TSMC’s average personnel expense is around 3 million per employee. One person’s starting point is another’s seemingly unreachable destination. The key is that TSMC is the strongest company in its field and serves the world, while state-owned banks largely still earn their money from Taiwanese customers.