electroparts manufacturing, inc

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Group 3ELECTROPARTS MANUFACTURING, INC.

Point of View: Mr. Juanito Sanchez

Time Frame: 1989

Key IssueHow should the management benefit the supervisory staff of Electroparts Manufacturing,

Inc. (EMI) given the minimum wage hike?Due to the increase of minimum wage, all salaries of daily paid workers increase. This does notdirectly affect the supervisory staff of EMI, as its provisions do not include them. However, dueto the loyalty and hard work the staff has put into EMI over the years, action might need to beundertaken as to preserve employee morale.

Areas for Consideration1. EMI has been on an upswing for the last two years due to local and international orders.

2. EMI is having difficulty keeping up with the demand of their products.3. There are 46 daily paid workers affected by the minimum wage hike. There are eight

members of the supervisory staff that are not affected by the minimum wage hike.4. The supervisory staff receives fringe benefits worth Php 512 per person.

Assumptions1. EMI will experience consistent growth in the coming years.2. There will be a need for EMI to expand as to keep up with the demand of their products.3. Given the figures, the minimum wage hike will cost EMI an increase of Php 1,150 for

daily wages and approximately Php 900 per month given the employees overtime pay,which will add up to Php 2,050 of additional salary expense every month.

4. The fringe benefits received by the supervisory staff are high in monetary value.

5. The average of 25 working days specified for the daily paid workers also apply to thesupervisory staff, which means they work from Monday through Saturday.

Alternative Courses of Action

There will be no change in salary of the supervisory staff.Given that the provisions of the minimum wage hike do not include the supervisory staff, there isno need to increase wages. Their fringe benefits already cost a lot, and EMI would be incurringexpenses that would be unnecessary if their salaries were also increased. Although this mightrisk employee morale, the supervisory staff has already been loyal to the company for manyyears without any wage increase.

Give the supervisory staff an increase in wages, following the 39% increase of minimum wage,on top of their fringe benefits.Since minimum wage was given a 39% increase, giving the supervisory staff a parallel increasewould be another possible move for the company. This will incur an additional Php 10,120.50aside from their fringe benefits, and the daily paid workers salary increase and social benefits.

Although this is a very high amount, it can be covered by the current flow of business growth,and would greatly improve employee morale and loyalty to the company.

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Delineate regular working hours from hours of overtime of the supervisory staff.The supervisory staff works from 8-9AM until 7PM from Monday through Saturday, covered bytheir monthly salary. To impose a more organized system at the same time reward theseemployees for their hard work, working hours should be delineated from overtime. For example,EMI can impose a work schedule of 9AM until 5PM every weekday. Any hours of work thatsurpass that will be considered as overtime, which is paid by a bonus of 25% of the hourly

salary per hour of overtime, following the overtime pay procedures EMI has with its daily paidworkers. This course of action would grant the supervisory staff a small increase in salary,which would be enough to enforce company loyalty and boost morale without incurring as big acost as a 39% salary increase.

Invest on the employees.A big factor of the companys expenses comes from the fringe benefits received by thesupervisory staff. Because of this it would be beneficial to use this as a means to improve thequalifications and performance of the staff. For example, Jorge Basco, Roland Cruz and LuisSan Juan should be asked to continue their degrees, outside work hours with the expensesshouldered by the company. Gina Trinidad should also be asked to take at least a vocationalcourse, while Miguel Santos should finish his schooling. Cynthia de Leon should also take the

CPA Boards and become certified. Again, the company will shoulder all expenses. Although thismight seem very costly, EMI should consider this as an investment. With the consistent growthof the company, expansion would be inevitable. These employees should be qualified for thepositions they are holding not just through experience but by educational background as well.Even if outsourcing other qualified individuals should expansion arise would be cheaper, itwould be more beneficial to the company if someone from inside the organization were to leadbecause of the experience and the trustworthiness the employee has.

Final Decision

Delineate regular work hours, and invest on the employees.

By combining these two courses of action, the supervisory staff will feel appreciated by thecompany, thereby deepening loyalty and establishing morale. Also, delineated work hourswould be beneficial to the members of the supervisory staff who would be continuing theireducation outside of work hours. Investing on the staffs education would also be beneficial forthe company in the future. Although expenses will arise because of these courses of action, it isbetter to spend on the employees for company growth rather than sacrifice work quality in thelong run.