In Indonesia, most Japanese companies conduct annual wage adjustments in January or April. On the other hand, although it is not mandatory for companies to do so, many companies follow Japanese bonus customs and pay bonuses once or twice a year. Bonuses are paid at various times, with relatively many companies paying them in June, which is one of the Japanese bonus periods after the end of the fiscal year, or in December, which is another Japanese bonus period. In most cases, employees are evaluated and calculated accordingly, but if annual wage adjustments are made in April and bonuses are paid in June, there is not much of a difference because the evaluation periods are close to each other. People with good evaluations are good at both, and people with bad evaluations are bad at both, which can cause dissatisfaction. How should these two differ?

[Basics of wage setting]

Let's go back to the basics and think about what wages are set based on. Wage scales are often set for each position or rank, but this can be said to be set by employment ability. At the time of recruitment, positions are selected according to the employee's abilities, and wages are set according to the abilities of the employee. After that, if the employee has the same ability, wage adjustments will be made to maintain the same level of living, but no further wage adjustments will be made. Wages increase as skills increase. Therefore, the evaluation item for annual wage adjustments focuses on whether the employee's ability to work has improved.

[What is a bonus?]

Bonuses are a form of company profit distribution. The profits earned during a specific period are distributed to the parties that generated those profits. Therefore, bonuses should be paid based on how much the employee contributes to the company's profits, in other words, based on performance. Generally speaking, employees with improved abilities perform better. However, there are times when you are lucky with the market conditions and your business performance improves even without much effort, and conversely, even though you are working extremely hard, there are times when the market cools down and your business performance does not improve at all. Originally, each employee's goals (KPI/Key Performance Indicator) should be set as SMART (Specific–Measurable–Achievable–Realistic–Time Bond) at the beginning of the year, and objectively evaluated based on the degree of achievement, but at least the evaluation items for bonuses should be different from those for annual wage adjustments. Due to some circumstances, contributions may be made that are not included in the goals, so it is necessary to devise ways to include them in the evaluation in such cases. On the other hand, there are some jobs, such as production line operators, in which it is not possible to increase production through one's own efforts, so in such cases, consider other criteria and evaluate performance-related items such as attendance status, compliance with regulations, work speed, number of improvement proposals, etc. By appropriately determining the purpose of payment, evaluation criteria, and evaluation items, and conducting objective evaluations, it will be easier to explain evaluation results and future expectations to employees.
It's not enough just to evaluate and pay. The main purpose of annual wage adjustments and bonuses is to increase employee motivation, and it is important to create a situation where employees can expect even greater contributions in the future.