1、Wage System Innovation in Small and Middle Manufacture Enterprise Zhang bi-xi School of Economics and Management Guangdong University of Technology Guangzhou, China Xie xiang-tian School of Economics and Management Guangdong University of Technology Guangzhou, China X Abstract-For small and middle
2、manufacture enterprises (SMME), the problem of workers wages in multi-variety and batch production system are studied in this paper. Based on analyzing the operation characters of the enterprises, the piece rate and its shortages in the enterprise have been studied through cases. For the purposes of
3、 reducing the production cost, improving the productivity and the job quality, the approaches to ameliorate the wage systems have been developed which are adapted to multi-variety and batch-order production enterprises. It has been proved that the new wage system has a better stimulating effect than
4、 the traditional one, which can predigest the wage management for the enterprises. Keywords- Piece-rate, Labor Productivity, Batch production. I. THE OPERATION CHARACTERISTICS OF SMALL AND MEDIUM MANUFACTURING ENTERPRISES After the entrance of WTO, the small and medium-sized manufacturing enterprise
5、s in China face more extensive and heated competition than ever before. The market demand becomes more diversified, personalized and changes quickly. Only by providing higher quality products with lower cost, better adaptability, shorter delivery time and better services, can SMIME win the competiti
6、on. To satisfy the customers demands and reduce the risks, foreign and domestic dealers have changed their ordering mode. Traditionally, dealers usually order large quantities of products periodically, but now they would like to order small batches randomly for various goods many times. For adapting
7、 to the demand mode, the enterprise production mode has changed from the traditional make-to-store mode to the make-to-order mode. The diversified varieties, variable batch and random ordering mode have brought many new challenges to SMME, for example, the logistic control, quality standardization a
8、nd control, production plan and schedule, delivery time guarantee and production cost. With the frequent changes of tasks, how to determine and adjust the piece-rate will determine, to a large extent, whether the enterprise can normally develop and win the market competitions. II. WORKPIECE-QUOTA MA
9、NAGEMENT PROBLEMS IN SMME Work piece-Quota management is the base of manufacture enterprises. Work piece-Quota level affects a companys production plan, due-date, staffing, workers wages, production costs and other important issues 2. For Make-to-Order enterprises, because the variety of products an
10、d quantity ordered vary frequently, its difficult to determine correctly the Work piece-Quota, thus it is hard to guarantee the fairness of the workers wage level. Traditionally, workers wages are calculated on the basis of hourly rate or piece rate. In hourly rate system, working hours and hourly r
11、ate determine the workers wages. This method is easy to manage, but it cannot inspirit the workers. In practice, it has been found that work-hour rate based on pay system always results in slowdown of work efficiency and decrease in productivity. While in piece rate system, workers wages have to be
12、decided by product quantity produced and the piece-rate. This pay system will encourage workers to improve productivity, but workers tend to focus more on quantity than on quality. In addition, statistical work and management are hard to control. With the frequent changes of product varieties, quant
13、ity and work activity, how to ensure the rationality and the accuracy of the quota, and, from which, to determine the reasonable workers wage level, all these will have direct impact on the work productivity, due-date, cost, quality and other issues. A. Work piece Quota Imbalance Results in Lower La
14、bor Productivity Absolute value of the quota and relative-value of the quota inconsequence are the major problems in the make-to-order enterprises 34. The former means that the quota level is either too high or too low. In the latter case, there is unfair difference in work piece quota levels among
15、different jobs. Imbalance work piece quota level has serious negative impact on productivity. For those whose work piece quotas are higher, they will feel dissatisfactory, and their work efficiency and product quality will be affected. While those whose work piece quotas are lower, they will worry a
16、bout the possibility that the work piece quotas will be increased if they have a high work efficiency, thus they tend to slow down their work on purpose, which will result in the lower productivity. In practice, because it is difficult to set a reasonable work piece quota level, many SMME adjust the
17、 quota level frequently according to the workers real wage level. To resist this, workers will reduce production pace deliberately. It can be concluded that the inconsequence or imbalance of work piece quota is an important reason for the lower productivity. B. Work piece-Quota Inconsequence Makes I
18、t Difficult To Control the Cost The product variety changes frequently and many tasks are temporary in make-to-order systems, so it is difficult to set the work piece quota correctly, and the time-wage system usually becomes a choice. Under this system, productivity can only be maintained by workers
19、 consciousness； it is hard to control the man-hour cost. For jobs based on handwork, time-wage system usually results in low productivity. If piece-rate system is adopted, because the lack of valid method to set the work piece quota, the quota level tends to be loose, obviously, this will increase c
20、osts. Besides, in the workplace of made-to-order enterprise, to cope with the changes of product varieties, workers are required to have different skills and be able to perform various tasks. The complexity of work result record and statistics will increase significantly. Negligence in Monitoring an
21、d controlling will bring forth statistical errors and thus give the rise of abnormal increase of production costs. C. Work piece Quota Inconsequence Increase the Difficulty of Plan and Control Work piece quota is the primary basis to balance the production capacity, staffing, setting due-date, estab
22、lishing operation plan, carrying through the scheduling and controlling. However, Work piece Quota Inconsequence will increase the difficulty in management, which may cause confusion and crisis in the production scene, under which circumstances managers have to act like a fireman, rushing to solve t
23、he problems in scene. Enterprises like this seldom have effective production plan, because technical facilities cannot be prepared well in advance and material supply time, quality and quantities cannot meet the requirement of production. There will always appear the problems like stand-down for sup
24、plies, equipment failure and inferior quality. As a result, it is hard to predict and guarantee the lead-time of the orders and the late delivery thus becomes quite common. D. Lack of Valid Work piece-Quota Management Makes the Workers Focus more on Quantity than on Quality In an output-based system
25、, quantity is the major factor determining the workers wages. In order to get higher wages, workers always strive for product quantities but ignore product quality and cost, because of which it is difficult for made-to-order enterprises to establish the process quality standard and operation criteri
26、on properly. Process quality mostly relies on workers operation skills and experience. To maintain the product quality, many people are employed to work in manufacture scene to check the product quality, which increase the man-hour consumption, and also, the dependency of the operation workers. More
27、 reject results in the poorly done work have to be done over again, which greatly increase the man-hour and the waste of materials. Although large amount of human resources and time are spent on products quality control, quality complaints and claims from customers still amount high. III. BALANCE AN
28、D ADJUSTMENT OF WORKERS WAGES IN SMME Work piece Quota setting is a basic management function. It reflects a companys overall management ability. Work piece Quota level determines directly the efficiency, quality and cost. 4 Work piece Quota level should be managed effectively. Timely and scientific
29、 adjustment of the quota is an important part of quota management. A. The Basis of Piece Rate Imbalance Adjustment In order to correct the imbalance in piece rate system, a detailed analysis on the historical wage data from many different jobs has been conducted. By comparing the present wage levels
30、 of workers doing different jobs, the existence of the piece rate level imbalance has been found out. Considering the working hours of different jobs vary, we have compared the workers real hourly rate based on the following equation (1): W ei = Si/Ti (1) W ei= real hourly rate of job i； Si = real m
31、onthly wages of job i； Ti = real monthly working hours of job I. First, based on the skills and education level required by each job and the work intensity, referring to the average wage level in the industry, one can determine the planed hourly rate of each job. Definition: i =Wei/Woi； i = the rati
32、onality coefficient of the wage rate level of each job. W oi = planed hourly rate of job i Generally i should satisfy the following two conditions: i 1；(i=1, ,m) 1 2 m m = numbers of types of work. Condition requires the rationality of absolute wage level, i 1 indicates that the wage level is too hi
33、gh and it should result in the increase of product costs, in this case the hourly rate should be reduced appropriately. Condition is the rationality requirement of the relative wage level. Obvious difference in i reflects the fact that workers doing different jobs receive unfairly pay, which will ea
34、sily make the workers feel unsatisfied. Adjustment measures should be made as soon as possible. When trying to adjust the hourly rate of any job, the managers should explain adequately the reasons to the workers and convince them to accept the adjustment. Sometimes, multi-step gradual adjustment is a necessary strategy for the successful and smooth
