Human Capital

Human capital is one of the most important assets of TSMC. The Company is committed to providing quality jobs with good compensation, meaningful work, and a safe work environment for its employees; moreover, it is dedicated to foster a dynamic and fun work environment. The Company’s efforts in fostering a “Great Place to Work” are highly recognized, and TSMC has received many awards, including the major prize in Ministry of Labor’s first “Work-Life Balance Award” in 2014.

TSMC believes that all employees should be treated with dignity and respect. The Company is committed to upholding workers’ rights and respects internationally proclaimed human rights, as outlined by the United Nations Universal Declaration on Human Rights and the International Labor Organization’s fundamental conventions on core labor standards.

At the end of 2014, TSMC and its subsidiaries had over 43,591 employees worldwide, including 4,385 managers, 18,552 professionals, 3,530 assistants, and 17,124 technicians. The following table summarized TSMC workforce at the end of February, 2015:

Workforce Structure for TSMC and Its Subsidiaries

Recruitment

The growth of TSMC relies on the continued services and contributions of its devoted employees; in order to strengthen the momentum of its growth, the Company is dedicated to recruiting professionals for all positions available. TSMC is an equal employment opportunity employer, and its practices center on the principles of open-and-fair recruitment. The Company evaluates all candidates according to their qualification as related to the requirement of each position, rather than race, gender, age, religion, nationality, or political affiliation.

Taiwan’s Labor Standards Act states that companies may not employ workers under the age of 15, and that children between the age of 15 and 16 are not permitted to perform heavy or hazardous work. In addition, child labor is also strictly forbidden under International Labour Organization’s (ILO) standards. The Company fully complies with the above-mentioned laws and standards. Management has never hired employees under 16 years of age since the Company’s establishment and will not do so in the future.

Students with technological expertise are highly valued in talent sourcing. As such, TSMC established a total of four university-level research centers in National Taiwan University, National Chiao Tung University, National Tsing Hua University, and National Cheng Kung University since 2013. The mission of the centers is two-fold: to develop top graduate students for future employment, and to encourage selected academics to consolidate different research domains under one umbrella for more effective synergy. Under this mission, TSMC provides hundreds of millions of NT dollars in seed money for leveraging funding from the National Science Council.

In 2014, the above-mentioned four centers sponsored more than 100 faculty and hundreds of students across the fields of Electronics, Material Engineering, Physics, Chemistry, Chemical Engineering and Mechanical Engineering.

In order to cultivate a young talent pipeline for recruitment both locally and around the world, TSMC deploys a number of recruiting activities and university programs, including Joint Development Programs, University Shuttle Program, Summer Internship, Job Fairs in Taiwan, U.S., Singapore and India, as well as a series of Fresh Graduate Career Symposiums for soon-to-be graduates. These multiple channels effectively enable TSMC to recruit from targeted pools in support of the Company’s constant growth.

TSMC’s continuous growth requires constant talent sourcing and recruitment activities to support its business. The Company recruited over 3,200 managers, professionals, and administrative staffs, as well as over 2,300 assistants and technicians in 2014.

People Development

The development of employees is an integral and critical factor for the growth of a company; employees’ learning and development should incorporate the essence of “systematic, disciplined and planned”. TSMC is committed to cultivating a continuous and diverse learning environment, and it has initiated “TSMC Employee Training and Education Procedure” to ensure the Company’s and individuals’ development objectives can be achieved through the integration of internal and external training resources.

Based on the nature of the individual’s job, work performance and career development path, the Company provides employees a comprehensive network of learning resources, including on-the-job training, classroom training, e-learning, coaching, mentoring, and job rotation. For each employee, a tailor-made Individual Development Plan (IDP) is provided.

The Company provides employees with a wide range of on-site general, professional, and management training programs. In addition to engaging external experts as trainers, hundreds of TSMC employees are trained to be qualified instructors to deliver their valuable know-how in internal training courses.

TSMC’s training programs include:

• New Employee Training: includes basic training and job orientation for new employees. Furthermore, newcomers’ managers and the Company’s well-established Buddy System are in place to support the newcomers in their assimilation process in both corporate culture and work requirements.
• General Training: refers to training required by government regulations and/or Company policies, as well as training on general subjects for all employees or employees of different job functions. Such training includes subjects of industry-specific safety, workplace health and safety, quality, fab emergency response, languages, and personal effectiveness.
• Professional/Functional Training: provides technical and professional training required by different functions within the Company. TSMC offers training courses on equipment engineering, process engineering, accounting, information technology, and so forth.
• Management Training: programs are tailored to the needs of managers at all levels, including new, experienced, and senior managers; optional courses are also available.
• Direct Labor (DL) Training: enables employees of the production line in acquiring the knowledge, skills and attitudes they need to perform their jobs well and to pass the certification for operating equipment. Training includes DL Skill Training, Technician “Train-the-Trainer” Training, and Manufacturing Leader Training.

In 2014, TSMC conducted 1,453 internal training sessions, which translated to a company-wide total of 844,174 training hours with the participation of 536,493 attendees. Employees on average attended over 19 hours of training with the training expenses reaching NT$83 million.

Apart from internal training resources, our employees are also subsidized when taking external short-term courses, credit courses and degrees.

Compensation

TSMC provides a diversified compensation program that is competitive externally, fair internally, and adapted locally. TSMC upholds the philosophy of sharing wealth with employees in order to attract, retain, develop, motivate and reward talented employees. With excellent operating performance, employment at TSMC entitles employees to a comprehensive compensation and benefits program above the industry average.

TSMC’s compensation program includes a monthly salary, an employee cash bonus based on quarterly business results, and employee profit sharing when the Company distributes its profit each year.

The purpose of the employee cash bonus and profit sharing programs is to reward employee contributions appropriately, to encourage employees to work consistently toward ensuring the success of TSMC, and to link employees’ interests with those of TSMC’s shareholders. The Company determines the amount of the cash bonus and profit sharing based on operating results and industry practice in the Republic of China. The amount and form of the employee cash bonus and profit sharing are determined by the Board of Directors based on the Compensation Committee’s recommendation, and the employee profit sharing is subject to shareholders’ approval at the Annual Shareholders’ Meeting. Individual awards are based on each employee’s job responsibility, contribution and performance.

In addition to providing employees of TSMC’s overseas subsidiaries with a locally competitive base salary, the Company grants annual bonuses as a part of total compensation. The annual bonuses are granted in line with local regulations, market practices, and the overall operating performance of each subsidiary, to encourage employees’ commitment and development within the Company.

Employee Engagement

Taiwan’s Labor Standards Act and the fundamental convention of ILO prohibit all forms of forced or compulsory labor. TSMC stands firmly with the protocols and never forced labor from involuntary persons with menace of any penalty.

The Company encourages employees to maintain a healthy and well-balanced life while making use of their time spent at work with high efficiency and better effectiveness. To enrich employees’ work experience, TSMC continuously implements programs to enhance their communication, well-being, benefit, recognition and rewards. The various initiatives include the following communication, benefit and recognition programs:

Employee Communication

TSMC values two-way communication and is committed to keeping the communication channels between the management level, subordinates and peers open and transparent. To ensure that employees’ opinions and voices are heard, and their issues are addressed effectively, impartial submission mechanisms, including quarterly labor-management communication meetings, are in place to provide timely support. Our continuous efforts lie in reinforcing mutual and timely employee communication, based on multiple channels and platforms, which in turn fosters harmonious labor relations and creates a win-win situation for the Company and employees.

A host of two-way communication channels are constructed to maintain the unobstructed flow of information between managers and employees, including:

• Regular communication meetings are held for the various levels of managers and employees.
• Periodic employee satisfaction surveys are conducted, with follow-up actions based on the survey findings.
• The corporate intranet, myTSMC: the website features Chairman’s Talk, corporate messages, Executive interviews, and other activities of interest to employees.
• eSilicon Garden: the website hosting TSMC’s internal electronic publication is updated on a bi-weekly basis with inspirational content featuring outstanding teams and individuals, as well as major activities of the Company.
• Complaints regarding major management, financial, and auditing issues are handled by the following channels with high level of confidentiality:
  – The independent Audit Committee; and
  – Ombudsman system led by an appointed Vice President.
• Employee Opinion Box provides a channel for employees to express their suggestions or opinions regarding their work and the overall work environment.
• Fab Caring Circle in each fab takes care of the issues related to employees’ work and personal life; the system is dedicated mainly to direct labors (DL) of the Company.

The establishment of the above effective communication channels is one of the key factors contributing to TSMC’s cooperative employee relationship over the years. Under R.O.C. law, employees are granted the right to organize labor unions, and TSMC respects this important right and complies with applicable laws prohibiting activities that hinder our employees’ freedom of association. As of this writing, we have not seen any recent union activity from our employees.

In 2014 and as of the date of this Annual Report, there had been no loss resulting from labor disputes.

Employee Benefit Programs

• Convenient on-site services: cafeterias, laundry services, convenience stores, travel, banking, housing, and commuting assistance－are accessible for employees in the fabs.
• Comprehensive health enhancement programs: physical care and psychological consultation services. Five free counseling sessions are offered to TSMC employees on an annual basis, with extension available depending on the individual’s needs. Other programs include annual health check, weight control, outpatient services, smoking secession, exercise promotion campaign, massage service, sleep therapy, abdominal and neck x-ray, female care, blood donation, liver disease prevention, as well as seminars to raise awareness of personal health.
• Diverse employee welfare programs: including 72 hobby clubs, 33 speeches covering various topics (in 2014), Sports Day, and Family Day. In addition, holiday bonuses, marriage bonuses, condolence allowances and emergency subsidies are also available to cater to employees’ needs.
• Premium Sports Center: a variety of workout facilities available to all employees and their families, as well as exercise sessions conducted by professional instructors.
• Flexible Preschool Service: the childcare service, operated to meet employees’ work schedules, is available in a total of three fabs in Hsinchu and Tainan.

Employee Recognition

TSMC sponsors various internal award programs to recognize employees’ outstanding achievement, both as a team or on the individual level. With these award programs, TSMC aims to encourage employees’ sustainable development that in turn adds to the Company’s competitive advantage.

The award programs include:

• TSMC Medal of Honor, presented exclusively by the Chairman, recognizes those who contribute to the Company’s business performance significantly.
• TSMC Academy recognizes outstanding TSMC scientists and engineers whose individual technical capabilities make significant contributions to the Company.
• Outstanding Engineer Award for each fab and Total Quality Excellence Award recognize employees’ continuous efforts in creating value for the Company.
• Service Award represents TSMC’s appreciation toward senior employees’ dedication and commitment to the Company.
• Excellent Instructor Award praises the outstanding performance and contribution of the Company’s internal instructors in training courses for employees.
• Function-wise awards dedicated to innovation, including Idea Forum, and TQE Awards, etc.

Apart from corporate-wide awards, in 2014, TSMC employees continued to be recognized through a host of prestigious external awards, including Outstanding Engineer Award, Outstanding Young Engineer Award, National Model Worker Award, and National Industrial Innovation Award.

Retention

Continuous growth underlies the commitment of TSMC towards its stockholders and employees, and the retention of outstanding employees is crucial in fulfilling this commitment. From employee’s initial adaptation to professional and career development, TSMC works proactively to provide employees with good compensation, innovative, meaningful and fun work, as well as a safe work environment.

Employees’ overall satisfaction with the Company’s efforts are reflected in the 2014 TSMC Core Values Survey, of which 97% of participants agreed that they are willing to commit fully in their work to make TSMC an even more successful company; while 95% of them concurred with the statement that they are willing to contribute their talents to TSMC and grow together with the Company for the next five years.

In 2014, the Company recorded a healthy and manageable turnover rate of 6%.

Retirement Policy

TSMC’s retirement policy is set according to the Labor Standards Act and Labor Pension Act of the Republic of China. With the Company’s sound financial system, TSMC ensures employees a solid pension contribution and payments, which encourages employees to set long-term career plans and raises their commitment to TSMC.