High pay: returning operating profit generously to employees (1991)

A design that returns high profit to employees

The significance of this pay system is that Keyence held, from early on, a clear answer to the question of where high profit should go. Where many companies hoard profit internally or hand it to shareholders, Takizaki returned part of it to employees every month and turned pay itself into a weapon for winning talent. A design that holds base salary down and rewards on performance makes employees share the tension that pay falls when the margin falls — embedding into the organization a motive to defend the margin.

Pay linked to operating profit, however, maps the swings of the business straight onto the household. A mechanism that rewards richly in good times and thins out in downturns does not suit people who seek stability. That Takizaki nonetheless prized profit per employee over the share price was an expression of measuring the business by productivity per head rather than by scale. The later reputation of paying among the highest of any maker reads as that idea taking shape over several decades.