Recently, the entry "Suzhou C*Core forces employees to work overtime until 10 p.m., with no weekends" appeared on the hot list of a workplace social app, which aroused heated discussions among netizens. To put it simply, it is rumored that from July 2023, the company's R&D monthly overtime hours will be changed from at least 20 hours to 30 hours, mandatory overtime hours and no benefits will be provided, and the application for compensatory leave will not be approved.
01 It is difficult for enterprises, employees, and everyone
According to public information, Suzhou C*Core Technology Co., Ltd. (hereinafter referred to as "Suzhou C*core") was established in 2001 and listed in January 2022 (SH 688262), which is a chip design company focusing on the R&D and industrial application of domestic independent controllable embedded CPU technology.
As the popularity of the entry continues to ferment, there are also netizens who claim to be employees under the entry to confirm the news, and netizens have lamented that "working hours are comparable to PDD", "compulsory and voluntary, no penny", "I can work 3 more working days a week".
Many netizens said that Suzhou Guoxin's practice is squeezing labor for free, and to put it bluntly, it is laying off employees in disguise and saving layoff costs.
It is true that the economy has continued to be sluggish in recent years, and all walks of life have been sluggish. Under the slogan of "reducing costs and increasing efficiency" and "fattening and thinning", disguised layoffs are indeed endless, which naturally brings great pressure to employees. But the life of the enterprise is not easy, is Suzhou Guoxin deliberately or "forced" by the performance to this?
02 R&D investment, gambling on the future?
As a representative of technology-based enterprises, the profitability of Suzhou Guoxin seems to be a little bad.
Recently, Suzhou C*Core released its 2023 annual performance report, and the company achieved an operating income of 42.9 billion yuan, down 18 percent year-on-year35%；The net profit loss was about 16.1 billion yuan. It is worth mentioning that in 2021 and 2022, Suzhou Guoxin's net profit will be 14.7 billion yuan, that is, the loss in 2023 directly "swallowed" the profits of the previous two years.
Figure 1: Changes in operating income and net profit of Suzhou C*Core in recent years.
Data**: Musheng Consulting, Suzhou Guoxin financial report.
As shown in Figure 1, before 2022, Suzhou C*core's revenue and net profit increased year by year. In 2023, revenue will decline, although it is still higher than the level of 2021, but net profit will show a cliff-like decline.
In response to this decline, Suzhou Guoxin gave the following explanation:
Affected by the cyclical fluctuations of the semiconductor industry, the company's IP licensing revenue decreased year-on-year; Affected by factors such as the destocking of chips in the industry and the decline in the adjustment of chip products due to market competition, the sales revenue and gross profit margin of the company's independent chip and module business decreased year-on-year during the reporting period.
Affected by the prolongation of the production time cycle of some products, the company's two scheduled projects in the order in hand failed to achieve the delivery of customer products and services as expected.
The company has increased R&D investment and market team building, resulting in a significant increase in the company's R&D expenses, sales expenses and management expenses, in addition, the company's investment income, non-recurring income and other non-recurring gains and losses decreased year-on-year.
Among them, the increase in R&D expenses is explained as an important factor. From 2020 to 2022, Suzhou C*Core's R&D expenses increased year by year (Figure 2), and the year-on-year growth of R&D expenses in 2022 was as high as 7011%, accounting for 290%。In the first three quarters of 2023, R&D expenses will be as high as 17.8 billion yuan, a year-on-year increase of 9924%, exceeding the level of the full year of 2022 and accounting for 47 of the company's total revenue in the first three quarters of 20235%。
Figure 2: Changes in R&D expenses in recent years.
Data**: Musheng Consulting, Suzhou Guoxin financial report.
Moreover, as of the first half of 2023, the number of R&D personnel in Suzhou C*Core is 294, a year-on-year increase of about 73%, accounting for 67% of the company's total number of employees.
From the 2023 annual performance report, we can get a glimpse of the reasons for the surge in R&D investment and R&D personnel of Suzhou Guoxin. The company's newly launched series of automotive electronic chips and server high-reliability storage management and control chips (RAID chips) in 2023 have entered the test development and application stage of many customers, and some products have also received customer orders.
It can be seen that Suzhou C*Core has invested a lot of resources and expanded the team in 23 years, although it has not brought "immediate results" returns, but its profitability is expected to improve in the future.
The volatility of the operation is understandable, but the overtime policy introduced under the operation fluctuation does not seem to have been recognized by employees, and it has also caused a lot of criticism on the Internet.
03 Market-based incentives are "stronger than" power generation for love
Regardless of whether the decision to increase resource investment and expand the size of the team is correct or not, in terms of the incident itself, in the face of performance difficulties and the need for employees to work together with the company, can we only rudely ask for mandatory overtime?
In fact, what the company wants is not the working hours of employees, but the work performance, and the efficiency of people. Otherwise, the mandatory overtime policy will only leave a group of "workers" paddling. So, what can be done to make employees more willing and more efficient?
Our advice is:Introduce a market-based incentive mechanism to hold employees accountable for business results and receive benefits or penalties based on business results. In this way, we can fully mobilize the enthusiasm of employees, stimulate the vitality of the organization, achieve the purpose of "everyone is their own CEO", and achieve a win-win situation for the organization and employees.
The evolution direction we see in incentive design is "market-based incentives", and there are three main types:
The first is partner incentives——Achieved through equity incentives (equity, options, restricted**, virtual equity). This kind of incentive cannot be "peppered", and the target must be the core personnel of the enterprise.
The second is project incentives, that is, super profit sharing——Divide the overall value creation of the enterprise into several business units, and then let the value creators share the excess profits in addition to wages. To put it simply, by reforming their own salary structure, employees take out a part of the money to participate in the co-investment and VAM of a certain project in exchange for the right to share excess profits. In such a project, employees and the company co-create value, share risks and share benefits. This mechanism divides the company into multiple business units, so that more "small bosses" can be produced among employees, and the vitality of the organization is improved, so that the potential of the organization can be maximized.
The third is the daily settlement and settlement of blue-collar workers——On the basis of the standardization of each business action, the workflow of employees is optimized, such as food delivery brothers, online car-hailing drivers, etc.
For Suzhou C*Core, the current need to pay attention to project incentives, only by doing this level, R & D personnel can have the feeling of "little boss", and will link the success or failure of R & D with their own income. In fact, a large number of enterprises have the dilemma of R&D incentivesR&D personnel are only responsible for the task, regardless of whether the task can produce business performance. Our practical experience is to make R&D and other important players who can have an impact on performance into business units, and use project incentives to link most of their earnings to business results.
Obviously, this is much better than forcing employees to work overtime across the board. Although the market-based incentive mechanism may make employees uneasy, if they are given greater careers and benefits**, the "capable people" among the employees will naturally accept the recruitment. Especially in this kind of industry that requires "creativity", it is even more necessary to let "capable people" move.