VUILD management Co., Ltd.
The real reason why it is difficult to achieve a 4% wage increase at small and medium-sized enterprises by simply passing it on to prices. Now is the time for serious “reskilling” in small and medium-sized enterprises.
Is it really possible to achieve a 4% wage increase in small and medium-sized enterprises just by “passing on prices”? What is the real reason why it is difficult to raise wages by 4% at small and medium-sized enterprises?
A recent article in the Nikkei Shimbun (February 9, 2024) states, “Nissho-Rengo cooperates in passing on price to small and
medium-sized enterprises,” stating that wage increases for small and medium-sized enterprises in 2024 are an important theme, and confirms the policy of promoting price passing on. There was a report that. The issue of “wage increases for small and medium-sized enterprises” is being discussed in the current Diet session, and there is a policy to implement a tax system for raising wages in addition to passing on this price.
Is it really possible to achieve a 4% wage increase through “price pass-through”?
The answer is that it is impossible to raise wages by 4% at small and medium-sized enterprises simply by passing it on to prices.
VUILD Management Co., Ltd. (Kawasaki City, Kanagawa Prefecture, Representative Director Shoichi Akiyoshi) is a “Business Field Management Improvement Promotion Organization” (a nationwide As a support organization that is familiar with small and medium-sized enterprises (only 14 organizations), we are developing activities to realize “serious wage increases for small and medium-sized
enterprises.” We will explain why it is difficult to simply “pass on costs” and introduce the necessity and specific methods for “serious reskilling to increase labor productivity” in small and medium-sized enterprises.
[Image 1: https://prtimes.jp/i/132656/6/resize/d132656-6-c31735829cc5ce252a48-0.jpg&s3=132656-6-cdd245876f51b4406db37846bac3bca0-474×355.jpg] The Act on Strengthening Small and Medium Enterprises, etc. includes “Guidelines for each business sector” that include “revitalizing the organization,” “creating multi-skilled workers,” “ascertaining actual costs” to avoid receiving orders below cost, and reducing and optimizing man-hours. There are seven guidelines, including the importance of “process design” to achieve this, and even small businesses (up to 20 employees) are recommended to strengthen two or more of them.
However, the reality is that most small and medium-sized companies do not even know the existence of these “Business Field Guidelines.” A bigger issue than the inability to pass on prices is the fact that cost accounting has not even been established. In particular, regarding the issue of price pass-through, the guidelines call for “understanding the actual cost,” but the “estimated cost” is necessary when negotiating the price when accepting an order. In other words, the fact is that many companies are not even able to perform “standard cost calculations” that calculate the labor costs, material costs, outsourcing costs, etc. to be XXX to manufacture this product. Many companies create their own estimates and negotiate prices in an analog manner.
“Price pass-through” has certainly been in the spotlight due to last year’s soaring material costs, etc.
There are many companies that are weak in numbers and DX that have not even established cost accounting.
We should recognize that this is the main reason why small and medium-sized enterprises have been unable to raise wages for many years.
Another major issue is the lack of management that takes labor productivity into consideration.
For this reason, there is a company president who accepts orders even at bargain prices, and says, “I’m busy with big orders, and my employees are working late and working hard.” However, labor productivity They don’t seem to notice that it’s low.
Labor productivity is important not only in the amount of added value per employee, but also in the amount of added value per hour, but of course, as the number of working hours and man-hours of employees increases, labor productivity will decrease. Companies with high labor productivity have management and employee training that thoroughly pursue added value per hour.
Regarding labor productivity, unfortunately, very few presidents can immediately come up with numbers when asked, “What is the labor productivity of your company?” From past experience, only about 10% of small and medium-sized enterprises can answer this question, and more than 60% of small and medium-sized enterprises (SMEs) that are in the red, or those that are somehow in the black, do not seem to correctly understand the importance of labor productivity.
[Image 2: https://prtimes.jp/i/132656/6/resize/d132656-6-720f6380f8634fcbf874-1.jpg&s3=132656-6-cd40f6326e1fdcd1ae84e3be9342c9fa-2000×1500.jpg] Labor productivity differs depending on the size of the company and the industry.While it is 12 million yen for large companies, there is a large disparity of 6 million yen at best for small and medium-sized companies. In addition, industries such as food and beverages and apparel have low rates.
Annual income is calculated by multiplying this labor productivity by the labor share rate (60% for small and medium-sized enterprises), and if the average annual income is 3.6 million yen, labor productivity of 6 million yen or more is required.
Some small and medium-sized enterprises have achieved a 4% wage increase and are growing and developing as highly profitable companies.
The common points are that they are able to manage with an awareness of “labor productivity,” that they are able to “visualize costs” and “visualize profits” for employees, and that they are able to conduct sophisticated “human resource development and education.” I am.
[Image 3: https://prtimes.jp/i/132656/6/resize/d132656-6-ba1fe97ac52ea059aabb-2.jpg&s3=132656-6-92dc461b8a116ee0b3381a54c9f102c1-2000×1500.jpg] The portfolio analysis shown on the right plots sales and operating profit margins for each product group and customer group. For example, it is an important management analysis method that allows you to understand the trends in profitability of the top 10 customer groups and decide what to do.
Naturally, it’s good to have high sales and high operating profits, but even among the top 10 customers, there are few “stars” and many “problems,” and some of them are “losers.”
Highly profitable companies have established this “visualization of profits” through portfolio analysis, share the need to reduce the costs of “problem children,” and other departments are working together to pool their knowledge and pursue profits. It is expanding. Employees are now able to visualize how much labor productivity they need to increase in order to earn settlement allowances and increase their annual income, and they are excited about their activities to pursue profits. A common feature of highly profitable companies is that all seven of the previously mentioned “Business Field
Guidelines”, such as IT/robot utilization and organizational revitalization, have been introduced and firmly established. In order to achieve a 4% wage increase, it is important to strengthen the management capabilities of small and medium-sized enterprises by disseminating “business sector guidelines”
“Business sector management improvement promotion organizations” such as our company are support organizations that can teach all the “business sector guidelines” to managers and employees of small and medium-sized enterprises through seminars etc. It is an organization certified by the competent minister as a. For this purpose, there are only 14 organizations in the country, including the Japan Management Association and our company, but it is important to strengthen the management power of small and medium-sized enterprises by
disseminating and enlightening the “Business Sector Guidelines” that are a service.
To this end, our company not only disseminates the “Guidelines by Business Sector,” but also works to “realize serious wage increases in small and medium-sized enterprises” through educational activities and executive training on the “importance of reskilling in small and medium-sized enterprises” as shown below. We will continue to develop activities for this purpose.
In order to improve the labor productivity of SMEs, serious reskilling of SMEs is now necessary.
In order to achieve wage increases for small and medium-sized enterprises, it is important to “secure capital”, and for this purpose, management that can “improve labor productivity”, that is, “cost accounting” is necessary, and human resources who are good at numbers and DX are needed. The most important thing is to establish a management system that allows all employees to pursue productivity and profitability through training and visualization of costs and profits. For this reason, serious reskilling of small and medium-sized enterprises is needed now.
First of all, we need to “reskill” our company to become a company that can “ascertain standard costs,” which is the most important of the seven guidelines in the “Business Field Guidelines.” If we can “visualize profits” based on the above portfolio analysis and “change our mindset” so that all employees can work together to pursue productivity and profits, the company will definitely become significantly profitable. Masu.
Mr. Inamori rebuilt JAL through a “change in mindset” and
“visualization of profits,” and our company has already transformed more than 20 companies into highly profitable companies, similar to the Inamori method used to rebuild JAL. Based on this experience, we have also focused on developing the next generation of executives. Reskilling for executive development can significantly improve labor productivity in just two months.
Companies that incorporate the above seven “business sector
guidelines” are sure to be “companies that can achieve sustainable wage increases.” Up until now, we have been holding a “3-month management school course” that includes everything, but the “Ultimate management training school 2-month course” allows you to reskill executive training that can significantly improve labor productivity in just 2 months. I decided to open a course.
Since there are many business owners who are worried about improving labor productivity and developing management executives, we also hold “individual consultation sessions with experienced presidents who understand the problems faced by presidents.” We will also explain the specific content of the reskilling course, “The Ultimate Executive Training School 2-Month Course.”
Government/administrators and media people too
I hope that the government will recognize the importance of “serious reskilling of small and medium-sized enterprises now,” and accelerate this through educational activities and policies.
As an organization certified by the Minister of Economy, Trade and Industry to promote management improvement by business sector (one of only 14 organizations nationwide), our company has been making proposals to the Ministry of Economy, Trade and Industry and the government to realize “serious wage increases for small and medium-sized enterprises.” We have expanded our activities. The Kishida Cabinet’s “1 trillion yen reskilling policy” has not made much progress in the past six months, and is still insufficient, and the “reskilling from the perspective of small and medium-sized enterprises” that I have proposed has been put on the back burner. As mentioned above, based on the actual situation of small and medium-sized enterprises, in order to enable management to increase labor productivity, “reskilling at small and medium-sized enterprises” including the management team should be accelerated, I think this should be included in the “Reskilling Policy.”
Finally, it is not possible to achieve a 4% wage increase by simply passing on prices. I would like to emphasize that “developing small and medium-sized enterprises that can manage their businesses with an awareness of labor productivity” is an urgent issue based on the “business sector guidelines” of the Small and Medium Enterprises Strengthening Act.
Company name: VUILD management Co., Ltd.
Representative: Representative Director Shoichi Akiyoshi
Established: October 1, 2008
Location: Kawasaki City, Kanagawa Prefecture
Business content: Management consulting, human resource development including next-generation management team training
Our specialty is transforming ourselves into a highly profitable company through “change of consciousness” and “visualization,” a method similar to the JAL reconstruction Inamori method.
Certified management innovation support organization] (ID:107214002112) Small and Medium Enterprise Agency M&A Support Agency] (Registration number 1868)
On June 17, 2020, we were certified by the Minister of Economy, Trade and Industry as a support organization that can provide guidance and support for all guidelines based on the Small and Medium Enterprise Reinforcement Act. (Only 14 institutions nationwide)
On September 15, 2020, our company’s “headhunting business for small and medium-sized companies in growth fields” was certified by the Ministry of Economy, Trade and Industry as a “career advancement support business through reskilling”. https://vuild-headhunting.com/ [Inquiries from the press and companies regarding this matter] VUILD management Co., Ltd. Public relations: Shirasuna, Akiyoshi
Telephone contact: 090-3201-5559 (Akiyoshi) Email address: Please send to email@example.com or firstname.lastname@example.org.
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VUILD management Co., Ltd.