Master's Perspective ➂ Why do wage reforms in small and medium-sized enterprises fail?

We are explaining the fundamental concepts of strategies for growing a company (future breakthrough power) through three themes. Please use this as a reference.

We would like to introduce the perspective of our Meister: "Why do wage reforms in small and medium-sized enterprises fail?" The issue arises because the wage theme is viewed solely from the aspect of wage systems, which obscures the essential themes of management. What many business owners struggle with is the "reform of the profit structure through the variable nature of labor costs," and for that, the following three points are crucial: 1. Building control techniques for labor costs, which make up the largest portion of fixed costs, 2. Thoroughly instilling the philosophy that there can be no distribution without productivity, 3. Focusing on four major points for variable cost transformation (building management techniques, reviewing personnel composition ratios, wage reform, and reassessing personnel treatment and employment types). In other words, the transformation of labor costs into variable costs cannot be solved by wage systems alone; a company-wide reform is necessary. Recently, many small and medium-sized enterprises have been implementing various management measures such as operational management of business plans, personnel evaluation systems, competency requirement documents, and performance evaluations. However, these efforts are often disjointed and resemble a mandala pattern, lacking a systematic approach, which leads to failure. The reality for many small and medium-sized enterprises is that "business plans are unrelated to personnel evaluation sheets" and "there is a weak connection between business plans and performance evaluations." *For more details, please download the PDF or contact us.

others