Sharp CEO warns of job cuts for staff who perform poorly

The new chief has revealed that merit now equals job security at Sharp.

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James Martin/CNET

The chief executive of Sharp has warned that up to 7,000 jobs could be cut in a restructuring effort following the acquisition of the tech giant by Foxconn.

Tai Jeng-wu, who took the role at Sharp following the completed acquisition of the financially fragile company in a deal with roughly $3.5 billion, told Japanese publication Nikkei that the company will now focus on rewarding the best employees -- and reprimanding the worst.

In an overhaul conducted under Sharp's new parent company, Foxconn, the electronics maker will adopt "performance-based compensation" to encourage employees to work to the best of their abilities -- while staff who "simply sit around collecting a paycheck" will be dealt with in another manner, Nikkei reports.

At the same time, thousands of jobs could be cut in what Tai calls "staff optimization."

"If possible, I would like to keep current employees in place, but we'll be forced to make cuts if there is no improvement," Tai said.

Under the shake-up, a new system will be created that will demote underperforming managers and supervisors, while the buck for hiring and firing ultimately lies with the Sharp president.

The changes taking place in such a short amount of time since the Foxconn-Sharp deal was completed earlier this month has made some employees uneasy, which is an idea the executive acknowledges.

However, Tai called these concerns "normal" and said that "without pressure, Sharp's restructuring will never succeed."

In a second interview with the Wall Street Journal, Tai said Sharp would invest heavily in research and development in the future, while Foxconn will provide support in components and manufacturing.

Sharp fell into heavy financial trouble several years ago due to a volatile display market -- an area the company made most of its profit -- but the company is still a major provider of display panels for Apple products, such as the iPhone and iPad.

Before the acquisition, Sharp sold off many assets and licensing rights -- including a $23.7 million deal with Hisense which gave the Chinese manufacturer the right to use the name Sharp across the US -- but Tao hopes to cancel such deals to keep the Sharp brand strong.