Advances in Economics, Business and Management Research, Series volume number 141
Proceedings of the First ASEAN Business, Environment, and Technology Symposium (ABEATS 2019)
Identification of Compensation System in Culinary
Business: The Case of Bogor City, West Java
Province, Indonesia
Lindawati Kartika Dikky Indrawan *
Department of Management School of Business,
IPB University (Bogor Agricultural University) IPB University (Bogor Agricultural University)
Bogor, Indonesia Bogor, Indonesia
linda@[Link] rdikky@[Link]
Abstract— The objective of this research is to identify the role in reducing wage inequality in Indonesia [2]. The
Compensation System for Small Medium Enterprise (SME) minimum wage affects the wages of employees and finally
in the culinary business at Bogor City, West Java Province. increases the sectoral wages, especially the formal sector [3,
The subjects of this study were 24 SME in the culinary 4].
business. Data collection used primary and secondary data
through questionnaires, observation, in-depth interviews, In addition to the importance of minimum wages as the
and literature studies. The results show that the average external environmental element for the basis of
salary for the entry-level starts from above IDR 1.8 million compensation stipulation, the internal environmental
until above IDR 5.1 million for top management level for element that consists of organizational policies and the
SME in the culinary business in Bogor City. Most salaries organizational ability to pay the salaries for its employees
were below the regulated minimum wages. Two out of ten also plays an important role in stipulating the compensation
compensable factors affected the job value, namely formal [5]. One of the causes of employees‟ dissatisfaction is their
education and human relation skill. salary [6]. An appropriate and fair salary will make
Keywords: base pay, culinary business, small medium employees feel valued for the work they have done. One
enterprises, Hay system, Eckenrode method consequence of an inappropriate compensation system at
the company is the emergence of employee turnover
I. INTRODUCTION intentions, which can impact on the company's turnover.
The intention of turnover is the desire of employees to quit
One of the businesses that develop along with the
the organization that provides them monetary wages or
development of the tourism sector in Bogor refers to the income [7]. A high turnover rate will create a negative
culinary-based small and medium enterprises in the form of impact on the organization, produce instability and
restaurants or cafes. Bogor takes a second rank for the uncertainty in labor conditions [8]. Employee turnover
largest number of restaurants in West Java after Bandung. retention is the way to solve the employee turnover. The
This case demonstrates that Bogor has great potential in the retention refers to the definition of holding, maintaining,
culinary business. The great potential of culinary cluster in continuing, and preventing it from leaving [9]. Therefore,
Bogor should be put in good use. ot only quantity but the employee retention can be seen as a way or a company
welfare improvement of human resources in this culinary strategy to retain its employees.
business should also be noted. It highlights the realization
Employee payroll conditions, which are still under the
of Decent Work or commonly known as job eligibility.
minimum wages of Bogor, especially for the culinary
This effort is consistent with Sustainable Development
business (restaurant or café), are supposed to have further
Goals (SDGs) number 8, which contains efforts to promote impacts on employee turnover problems. An inappropriate
sustainable and inclusive economic growth, productive and compensation stipulation may lead to injustice that produces
comprehensive opportunities, and decent work for all [1]. low job satisfaction. Therefore, the culinary business in
Bogor needs an appropriate compensation system. This
However, in 2019, there are still many businesses, study is conducted to identify the financial compensation
mainly small and medium enterprises, that have not system of the culinary business in Bogor. The study aimed s
implemented a wage system that refers to the minimum to identify the employees' salary system for the culinary
wage set by the Government. Wage or salary is a form of business in Bogor.
financial compensation directly given to the employee in a
production process. The amount of wages is influenced by II. MATERIALS AND METHODS
Government Regulations regarding minimum wages, either A. Sample and data collection
through Provincial Minimum Wages (UMP) or Regency
Minimum Wages (UMK). This stipulation aims to keep This study conducted from January until February 2019,
employees' wages in balance and not go further below the which involved 24 SME in culinary business consisting of
poverty line because minimum wages play an important restaurants and café located in Bogor City. Primary data
obtained from the survey results on employee's salaries in
Copyright © 2020 The Authors. Published by Atlantis Press SARL.
This is an open access article distributed under the CC BY-NC 4.0 license -[Link] 26
Advances in Economics, Business and Management Research, Series volume number 141
the culinary-based business in the Bogor. A job factor d. Human Relation Skill. Human relation skill
questionnaire carried out to find out the key factors of work. functions to measure the extent to which jobholders
It used a ranking scale, where the respondents were asked to interact with others. Jobs that involve the
rank the objects relatively [10]. In addition, unstructured interpersonal interacts are valued at s higher level
interview techniques were also conducted to find out the compared to those who do not have these
compensable factor. The secondary data contained a general requirements [15].
description of the culinary-based business in Bogor, e. Creativity. This factor is utilized to measure the
literature books, and journals that are relevant to the innovation level or the artistic talent that is
research. necessary for task implementation [14].
f. Physical Effort. This factor is used to assess the
The sampling method used in this study was non- physical efforts, level of difficulty, and pressure, as
probability sampling with a purposive sampling technique. well as the frequency (percentage of the time) of
Purposive sampling technique is a technique with certain job tasks [16].
considerations or criteria [11] to determine the experts in g. Responsibility. This factor functions to calculate
ranking the compensable factors. There were 565 the number of people under the supervision and the
respondents from 24 culinary businesses in Bogor. level of complexity.
Furthermore, the judgment sampling was performed in h. Risk of Job. This factor is employed to measure the
selecting the experts as the respondents of the study [11]. amount of loss because of the mistakes made by the
The selected experts were the Owner of Culinary business, job holder [17].
Store Manager, and Academics in the field of human i. Asset Liability. This factor is used to know the job
resource management. responsibilities, especially for financial assets (e.g.,
cash, vouchers, checks, debit & credit, invoice
payments, budgets, income, physical asset), office
B. Data Analysis
equipment, tools or instruments, vehicles, factory
Data processing and data analysis used the descriptive & machinery, personal or others’ belongings;
statistical analysis, compensable factors analysis based on production goods, and stocks [16].
the Hay system concept, Point System, and Eckenrode j. Decision Making. This factor aims to assess how
method. Descriptive statistics used to analyze data through far someone or employee involved in solving the
the description of the collected data in order to make a problems [18].
general conclusion [12].
3. Determining the factor weight
In a point system, the assessors allocated numerical The level of factors was determined using the opinions
values for certain occupational factors, and the total value of experts. The method used in determining factor
will provide a quantitative assessment of the relative value weight was the Eckenrode method. This method was a
of the work [13]. The stages of conducting the point system weighting method used to determine the degree of
method were: importance or weight of each criterion specified in
decision-making [19]. The weight value was important
1. Selecting the group of work. because it may affect the final total value. This weighting
Several levels of job titles were grouped into job grades. method was carried out by changing the sequence into
The average restaurant and café in Bogor had several values such as sequence one into the highest level (value)
position levels or grades. and sequence five into the lowest level (value). The steps
in the calculation using the Eckenrode method were as
2. Identifying the compensable factors. The method used follows:
for the compensable factors was the Hay System. It
divided the compensation factors into three parts, a. deciding the work factor,
namely know-how, problem-solving, and b. determine the weight of the work factor by
accountability. giving score for the answers, the first list will
be multiplied with the value obtained by
a. Formal Education This factor used to assess the reducing the factors and sequence,
lowest level of education in a company to carry out c. The sequence value previously obtained from
certain job tasks [14]. the experts is multiplied by the value of the
b. Job Experience. This factor used to assess the multiplier,
lowest level of job experiences owned by the d. determining the minimum points, maximum
employees. points and then the interval,
c. Managerial Skills. This factor is used to qualify the e. specifying the job value and
jobs that have various functions or tasks considered f. the value of each point is obtained by dividing
as more complex tasks and jobs that only have the total incentives with total points.
specific functions. Consequently, the higher
complexity and the stronger managerial skill is
necessary to complete the tasks given to the
employees [15].
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Advances in Economics, Business and Management Research, Series volume number 141
III. RESULTS Finance &
Accounting
A. General Overview of Salary Distribution in the 3 Staff 15 3,502,029 2,000,000 6,100,000
Culinary Business in Bogor
4 Logistic Staff 33 3,217,738 720,000 6,883,418
Fig. 1 shows the comparison of the average salary of Captain /
employees at restaurants in Bogor with the regency minimum Head of
wage of Bogor and Provincial minimum wage of West Java 5 Waiter 19 3,052,117 1,100,000 4,902,500
in 2019. Salary stipulation in most culinary businesses in Marketing &
Bogor still did not refer to the provincial minimum wage or 6 IT Staff 12 2,461,667 840,000 4,700,000
the regency minimum wage. Only 16 out of 24 business 7 Admin 5 2,367,420 2,100,000 3,437,100
(33.33%) met the provincial minimum wage of West Java.
None of these businesses met the regency minimum wage of 8 Cooking staff 149 2,337,829 690,000 6,605,612
Bogor in 2019 (see Fig. 1).
9 Barista 36 2,254,575 750,000 4,500,000
10 Dish Washer 16 2,064,413 1,300,000 2,800,000
11 Helper 96 1,897,010 900,000 3,500,000
12 Cashier 19 1,837,158 750,000 3,201,800
13 Waiter 109 1,531,431 420,000 3,500,000
Total
Employees 565
B. The Result of Compensable Factors using the Hay
Method
We found the factors of compensation in Bogor culinary
business. Based on the collected data of know-how, problem-
solving, and accountability for 24 culinary business, we
clustered the findings and weighted the compensable factors
using Eckenrode system method (Table 2). We found the
biggest weight belonged to the formal education factor with
a percentage of 18.7, whereas the thinking challenge became
Fig 1. Comparison of the average income of the culinary business
staff in Bogor to the Minimum Wages of Bogor and West Java.
the smallest one with a percentage of 7.41. The results
indicated that formal education was the main aspect of
employee recruitment, especially in the culinary business in
Most of the 24 restaurants and cafes had around 34 Bogor.
employees. We identified 13 (thirteen) type of position in the
culinary-based businesses. Table 1 shows these 13 jobs with TABLE 2. ECKENRODE SYSTEM TABLE FOR BUSINESS BASED ON
CULINARY AT BOGOR CITY
a salary that represents the average, minimum, and
maximum. The highest position in restaurant or coffee in Level Inte
Bogor was general manager or restaurant manager with an Subfactors Weight
rval
average salary up to IDR 5,108,889. Meanwhile, other 1 2 3 4 5
position salaries were under the minimum wages of Bogor Formal Education 0.1870 1 6 10 14 18 42
regency, such as Finance & Accounting Staff, Logistic Staff, 9 1 3 5 7
Job experiences 0.0949 9 3 52 74 95 21
Captain / Head of Waiter, Marketing & IT Staff, Admin,
1
Cooking staff, Barista, Dish Washer, Helper, Cashier and Managerial Skill 0.0862 9 2 47 67 86 19
Waiter is still under the minimum wages. The lowest wage 8
received by the waiters (IDR 420,000), while the highest Human Relations 0.1430 1 7 14 - - 64
wage received by Head Chef (IDR 13,000,000). Skills 4 9 3
Creativity 0.0828 8 4 83 - - 37
TABLE 1. SALARY SURVEY RESULT BASED ON 24 CULINARY SME’S FOR 6
13 CRITICAL POSITIONS (INDONESIAN RUPIAH) Physical efforts 0.0741 7 3 52 74 - 22
0
Total Average Minimum Maximum Responsibility 0.0803 8 2 44 62 80 18
No Job Title
Person Salary Salary Salary 6
General Risk of Job 0.0783 8 3 55 78 - 23
Manager/ 1
Restaurant Asset Liability 0.0934 9 3 65 93 - 28
1 Manager 35 5,108,889 2,000,000 12,000,000 7
Decision Making 0.0811 8 4 81 - - 36
2 Head of Chef 21 4,657,929 1,200,000 13,000,000 5
28
Advances in Economics, Business and Management Research, Series volume number 141
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