RISK OF SALARY INCREASE TO THE COMPANY
Every employee must have hope that one day will experience an increase in wages or salary. With the increase in wages of work is expected to ease the cost of daily living in which the needs of the price of basic needs everyday more expensive. But to make a decision to raise the salaries of employees need a careful consideration of the company. This is because there are some effects or risks that the company gained when raising the salaries of employees. The risks for employee salaries for the company are as follows:
- Increase production costs
The cost of production is the cost that a company needs to produce a good, the cost of raw materials for the manufacture of goods until other operational costs. The cost of goods production will automatically increase when there is an increase in employee salaries. This is because employees are involved in the production process of goods, so that the wages of employees are covered in the cost of goods production. when the cost of production increases then the selling price of products on the market will increase as well.
- Reduce corporate profits
Profit is the profit the company earns. Companies with high profits will grow rapidly. But when the cost of production increases, then the sale price of goods will rise in the market. So the goods must have a high enough competitiveness in order to compete with other similar products. But if failed to compete, it will reduce the amount of profit received by the company.
- Increase company budget
When raising employee salaries, the company will automatically add its own budget to pay its employees. This budget is likely to have an effect on other matters related to the development of the company, especially in the process of producing goods.
- Threat of layoffs
As production costs increase, it must be balanced with high competitiveness in the market. If that does not happen, then the company will think to rely on machines as a means of production of goods. Automation by machine. Using a production machine of course would not require too many employees. So companies will tend to reduce the number of employees in order to cut the cost of goods production. Therefore prone to layoffs.
- Investor trust
Investors have an important role in the process of running a company. Investors invest a stake in a company because they believe that it will benefit from it. However, if the company experienced a decrease in turnover or loss, it will affect the level of investor confidence.
- Go out of business
If the selling price of the product is high enough and unable to compete in the market, then the company will incur losses. That’s because the profits received by the company will decrease or even the cost of production does not come back again. Certainly the company’s income becomes unbalanced between the cost of outgoing and entry, ie the outgoing costs are greater than the entry fee. When it happens continuously it will make the company go bankrupt alias bankruptcy.
If you read the six points above, it’s horrible, but as we all know, every year the local government announces the new UMP value, the new provincial minimum wage which tends to always go up every year, meaning that inevitably and it is difficult to avoid any increase wages for company employees.
So what should companies do? Employees should be how?
Ideally, in order to avoid the negative things described above, it should be ensured that every employee wage increase, coupled with increased employee competence, increased productivity and increased sales, so that increased costs can be covered by increased profits for the company.
Of course we all do not want it, if the company where we work closed because it can not afford to pay salaries of its employees? if forced to close, how many heads of families will lose their livelihood and inevitably we have to look for other companies as our source of livelihood. Such a circle would be like that, over and over again.
Therefore, it takes a joint awareness between the company and the employees, that the company must pay the salaries of all employees and employees must be aware that in order for companies to continue to pay salaries, then the company must generate profits. new profits can occur when there is an increase in sales, increased productivity, increased business speed, decreased cost and decrease in leakage or wastage.
Fellow HR, at a time, the company must be able to calculate, how many employees optimally for the company, which is able to provide optimum profit as well. How? of course by doing Workload Analysis or Workload Analysis, Analyze business processes and ensure effectiveness and efficiency
