News Stop: 12 May 2006

Local SMEs slow to reform wages.

Local SMEs slow to reform wages by Christie Loh, Today Online, dated 12 May 2006. Quoting excerpts from the article:

“Such firms should overhaul their salary structures now, says Manpower Minister….

Only 19 per cent of employees in small and medium enterprises (SME) have a monthly variable component in their wages, compared to 54 per cent in large companies….

While the benefits of flexi-wages are clear, the implementation can be challenging for SMEs faced with a lack of resources and understanding, said Mr Francis Chan, the Association of SMEs’ head of research.

In January 2004, a tripartite taskforce proposed three ways for employers to make wages flexible enough to respond to changing economic conditions: Introduce a monthly variable component, implement a variable bonus linked to Key Performance Indicators (KPI), and narrow the maximum-minimum salary ratio for the majority of employees to an average of 1.5 or less…..

“We take note that it isn’t as fast as we like. But like most things, when you are starting from a large base and you’re moving up, your initial years can be slow. But … the few initial successes will be a great spur for other companies who want to make it big,” Dr Ng said.

He added that SMEs should overhaul their wage structures now, with salaries expected to rise with the buoyant economy.
The National Wages Council will release its annual guidelines next week.
Besides introducing flexi-wages, small businesses should also map out career advancement paths and offer clear incentives to reward workers who hit their KPIs.”

Someone by the nick of Buzz pointed out in Tomorrow.sg in this article and commented the following: “There is a big difference between ‘ you work for me and let’s build a unilateral world’ and ‘let’s work together and build a unified world’. Since the former is preferred for obvious reasons, be prepared to be ‘taken to court’ to keep the mother of all business going!”

Here are my thoughts to the issue. Most bosses above my age are still living under their parents’ view of how bosses should behave. Their management style is very much like “You work for me” mentality. That’s why most worker wages are very low for local companies. All the money they squirm and save are placed in their own pockets instead of putting some into the welfare. The win-win mentality is not there yet, and the issue is a cultural one. Human resource management is important. Believe me, the executive director of the research institute I worked in, is very particular about the career advancement of the staff. Here’s something to note. You don’t need money to win loyalty and hearts, but the passion and frame of mind to help your employees and they will help you to grow it bigger.

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