How to establish an effective salary incentive mechanism for enterprises

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How to establish salary incentive mechanism

How to acquire, retain and make good use of talents has become the primary problem faced by enterprises. The salary system fundamentally guarantees the competitive advantage of human resources, thus bringing great advantages in market competition. Therefore, how to establish a salary incentive system suitable for enterprise development has become a necessary guarantee for enterprises to win in the competition. First, China enterprises should truly establish a people-oriented, people-oriented management concept. Human capital is the most active and important factor in enterprise resources and the first resource. Whether operating machines, managing capital or mastering technology depends on people, the possession of material resources and capital is no longer the decisive factor for the survival and development of modern enterprises. 1, employee satisfaction plays an important role in maximizing enterprise value. The customer-centered business philosophy has been accepted by more and more enterprises. Customers here not only refer to the customers of the enterprise, but also include internal employees. Through the service profit chain, we can clearly see the importance of enterprise employees. As can be seen from the service profit chain in the figure below, the service quality within the enterprise is influenced by the profit and growth potential of the enterprise, while the profit growth of the enterprise comes from loyal customers, customer loyalty comes from customer satisfaction, and customer satisfaction is influenced by the external service value. External service value is created by those satisfied employees, and employees' satisfaction comes from the service quality within the enterprise, which is an interlocking service chain. Maintain employee productivity, improve turnover and profitability. 2. Establish a people-oriented management concept. In order to truly establish the concept of people-oriented human resource management, enterprises must do the following: first, people-oriented and put human capital factors in the center. Humanistic management attaches importance to stimulating people's development, mobilizing people's enthusiasm and tapping people's potential. Understand the needs of employees and meet the needs of employees through a good salary incentive system. Secondly, care about employees and actively improve their working and living conditions. Only by designing the salary system from the perspective of caring, loving and respecting employees can the enthusiasm of employees be stimulated. In the actual situation of China, most enterprises have failed to do this. Many enterprises are faced with the pressure of reducing staff, increasing efficiency and improving competitiveness, and rarely put themselves in the shoes to improve the working and living conditions of employees, resulting in weak cohesion and centripetal force of the staff. Finally, let the system adapt to people, not people adapt to the system. The core of people-oriented management is to respect, protect and motivate people, make the enterprise system adapt to people, and let every employee realize self-management. Only in this way can the enthusiasm of employees and high-level needs be mobilized. People's desire for money is the same, but for people with high cultural accomplishment and quality, the simple material incentive function is weakened and the spiritual pursuit is enhanced. Therefore, the salary incentive of enterprises must start with career development and emotional communication, fully respect and consider the different needs of employees, and retain outstanding talents. Second, the problems existing in the traditional salary incentive system. The traditional salary incentive system in China is fundamentally oriented to enterprises (employers), and there are many problems that deviate from modern management. 1, one-sided understanding of the meaning and composition of wages. China enterprises' understanding of salary still stays at the level of material incentives such as salary. In fact, salary is only a part of salary composition, which can only meet the most basic physiological and safety needs of employees. A large number of internal salary incentives, such as job satisfaction, providing good training and promotion opportunities, attractive corporate culture, teamwork spirit and corporate recognition and gratitude to individuals, are all organic components of salary. They belong to non-monetized hidden salary incentive factors, which can significantly reduce the labor cost of enterprises and can also play a powerful supplement to monetized salary incentive. In China's enterprises, wages have been widely used as a single incentive form for a long time, without distinguishing the various needs of employees. Therefore, this incentive system may play a certain role for young employees who have just joined the work, but it is not obvious for employees who have achieved little in their careers. 2. The traditional salary incentive system has unclear positioning and insufficient incentive function. The salary incentive system currently implemented by most enterprises in China is a salary distribution system with job skills as the main body. This was implemented under the background of the reform of state-owned enterprises in the 1990s. At that time, this system really played an important role in mobilizing the enthusiasm of employees and promoting the development of enterprises. However, this single salary incentive system can no longer meet the needs of modern enterprise management. In the current composition of enterprise employees, the division of labor of all kinds of personnel is becoming more and more detailed, and specialization and scientificity have become the characteristics of the current division of labor in enterprises. It is obviously ineffective to adopt a single salary incentive system in the form of post skill salary for different senior managers, scientific and technological R&D personnel and marketing personnel in enterprises. Therefore, it is imperative to establish a scientific and reasonable salary incentive system for different professional departments. Third, establish a comprehensive reward and incentive system to truly put people first. The overall salary return includes three main contents: salary, welfare and rich work experience. 1, a component of the overall salary return. (1) Direct financial reward. Including basic salary, cash allowance, reward and company equity. This part is the most basic part of the overall return. (2) Indirect economic rewards. Including health and welfare, paid vacation, retirement plan, extra subsidies and personal appreciation. (3) Work content. This represents the quality of the work itself, including the diversity, challenge, importance and significance of the work, as well as the feedback and influence of employees' work performance. (4) professional value. Including personal growth opportunities, ability improvement, organizational team progress, and the stability and guarantee of employment relationship. (5) subordination. Represents the sense of belonging derived from employees' connection with the enterprise. It comes from the good reputation of the enterprise itself served by employees, or the good atmosphere between employees and employees, employees and teams provided by enterprises. 2. Advantages of overall salary return The overall salary return is an employee-oriented salary incentive system, which conforms to the modern enterprise customer-oriented business philosophy and is a major change to the traditional enterprise (employer)-oriented salary incentive concept. It pays attention to the phenomenon that the management level of enterprises in today's society is reduced and the number of management posts is reduced, which provides incentives for development opportunities in salary. The overall salary return highlights the win-win idea of coordinating the interests of enterprises and individuals and maximizing them, and expands the content of salary by using the idea of systematic management, which not only makes enterprises more competitive in investing and stimulating human capital, but also truly embodies the people-oriented management idea. Compared with the traditional salary incentive, the overall salary incentive has the following advantages: (1). The overall salary reward can meet people's needs at different levels and stimulate employees' inherent potential. The essence of people-oriented management is to take people as the center and meet the needs of employees at different levels. With the change of people's values, employees have more and higher-level value demands for work and the rewards it can bring to employees. According to Maslow's demand division, the traditional salary incentive can only meet the low-level needs of employees' physiology and safety, and the overall salary return covers all levels of Maslow's demand theory. The traditional salary incentive has various disadvantages, including high-intensity intense work, depressing boring working environment, refined management, ignoring the importance of long-term investment of employees, pot-shaped reward system and false and vague job evaluation. The total compensation return can give full play to employees' potential in many aspects, such as flexibly arranging working hours according to individual needs, providing and affirming accurate work feedback, formulating welfare system according to individual conditions, holding staff meetings regularly, highlighting the importance of employees' personal performance and working environment conducive to improving efficiency. (2) Overall salary return can improve employee loyalty while restraining salary cost. The total salary return includes an important cost of an enterprise, and for many enterprises, this cost is under increasing pressure. A perfect overall salary return scheme makes the salary cost of an enterprise get rid of factors unrelated to enterprise development and point to factors more closely related to enterprise development, thus improving work efficiency. On the one hand, many enterprises strive to reduce property expenditure, on the other hand, they strive to improve employee loyalty. It is a good starting point to reposition salary as everything that employees can get from working for the enterprise.