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 will introduce the perspective of our company's 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 the wage system, which obscures the essential themes of management. Many business owners are troubled by the "reform of the profit structure through the variable cost of labor." To achieve this, the following three points are crucial: 1. Building control techniques for labor costs, which account for the largest share of fixed costs, 2. Thoroughly instilling the philosophy that there can be no distribution without productivity, 3. Focusing on four key points for converting to variable costs (building management techniques, reviewing personnel composition ratios, wage reform, and reassessing personnel treatment and employment types). In other words, the conversion of labor costs to variable costs cannot be solved solely through the wage system; 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 initiatives are often disjointed and resemble a mandala pattern, lacking a systematic approach, which leads to failure. In reality, the situation in many small and medium-sized enterprises is that "the business plan is unrelated to the personnel evaluation sheet" and "there is a weak connection between the business plan and performance evaluation." *For more details, please download the PDF or contact us.

Management consultant/Small business consultant