The analysis of performance pay in state-owned enterprises

An analysis of performance pay in state-owned enterprises

State-owned enterprises should not only make strain choices on the wage system based on the actual situation, but also in the process of salary design and specific implementation should also continue to seek and apply a variety of flexible measures to make up for the deficiencies in the wage system, so that the incentive and management of the pay system to make the pay system more effective.

1, performance pay overview

Performance pay, also known as performance pay, incentive pay or wages linked to the assessment, is based on the work of the employee was hired to work on the job, according to the technical content of the job, the size of the responsibility, the intensity of the labor intensity and the environment to determine the level of the post, the economic efficiency of the enterprise and the price of the labor force to determine the total amount of wages to pay the employee's labor achievements. Employee's labor results as the basis for the payment of labor compensation, is the labor system, personnel system and wage system closely integrated wage system. Performance pay consists of four parts: basic pay, age pay, post pay and incentive pay. Performance pay system has its superiority side, but there are also shortcomings.

2, the advantages of performance pay

(1) the individual's income is directly linked to his or her own performance, will encourage employees to create more benefits, while not increasing the fixed costs of the enterprise. (2) A rigorous, long-term pay-for-performance system is an effective way for a company to continually improve its employees' ability to work, their work methods, and their performance. (3) This method allows good performers to be rewarded as well as acquiring and retaining good performers. (4) When the recession, although there is no bonus, but because of the lower cost of wages, the company can also not fire people, less firing, so that employees have a sense of security, increase employee loyalty; when the economy recovers, the company also has a sufficient pool of talent.

3. Disadvantages of pay for performance

(1) Pay for performance encourages competition among employees and undermines trust and teamwork among employees. Employees will block information and conserve experience among themselves, and may even compete for customers. This approach does not work for companies that must require teamwork to produce good output. (2) Pay for performance encourages employees to pursue high performance. If the employee's performance is not aligned with the interests of the organization (department, company), it may happen that the individual's performance improves and the organization's performance decreases instead, at which point this method loses its value. For example, a salesman may make many promises of free services to a customer in order to close a deal, and the company may invest high costs in order to fulfill the promises.

4, there are four main forms of pay for performance: performance pay adjustment; performance bonuses; monthly/quarterly variable pay; special performance recognition program

(1) performance pay adjustment. Performance pay adjustment refers to the employee's performance appraisal of their basic salary adjustment, pay adjustment cycle is generally calculated by the year, and the proportion of pay adjustment according to the performance appraisal results should be different, the better the performance appraisal results, the proportion of pay adjustment should be higher accordingly. Salary adjustment, there are two issues need to pay attention to: First, the salary adjustment not only includes salary increases, but also includes salary reductions, so as to be more incentivized. Secondly, the salary adjustment should be in the position or the employee in the pay grade corresponding to the pay range, that is to say, the employee's basic salary increase or decrease can not exceed the maximum or minimum value of the pay range.

(2) Performance bonuses. Performance bonus, also known as a one-time bonus, refers to a one-time award based on the employee's performance appraisal results, the reward is somewhat similar to the performance of the salary adjustment, but for poor performance will not be fined.

(3) Monthly/quarterly variable pay. Between performance pay and performance bonuses there is also a compromise reward, that is, based on the results of the monthly or quarterly performance evaluation, in the form of monthly performance bonuses or quarterly performance bonuses to recognize the employee's performance. This monthly performance bonus or quarterly performance bonus is generally determined by multiplying the basic salary by a coefficient or percentage, and then cashed out in the form of a one-time bonus. In practice, often comprehensive assessment of departmental performance and individual performance.

(4) special performance recognition program. Special performance recognition program refers to the individual or department far beyond the requirements of the work, show special efforts and achieve excellent performance or make a significant contribution to the case, the organization gave an additional reward and recognition. It can be as varied as praising someone in an internal newsletter or on the office bulletin board, or as rewarding a vacation or a significant cash award.

5, the significance of the implementation of pay for performance

(1) to help improve business performance. Enterprise performance is based on individual employee performance and the formation of an effective pay for performance management system can improve employee performance, which in turn helps to improve the overall performance of the enterprise.

(2) to help ensure that employee behavior and the consistency of corporate goals. The realization of enterprise performance depends on the hard work of employees, people have long been formed **** knowledge. However, there is a key intermediate variable between the employee's efforts and the company's performance, that is, the direction of efforts and the consistency of corporate goals, if the employee's efforts are relatively high, but the direction of the company's goals are the opposite, not only will not enhance the performance of the company, but also have a negative effect. An important way to ensure that employee behavior is consistent with corporate goals is through the use of pay-for-performance management. As the performance appraisal index has a guiding effect on the behavior of employees, so by setting the assessment index consistent with the enterprise's goals, you can guide the behavior of employees to the enterprise's goals.

(3) helps to improve employee satisfaction. Improving employee satisfaction is of great significance to the enterprise, and satisfaction is linked to the degree of fulfillment of employee needs. After the basic ` life is guaranteed, according to Maslow's hierarchy of needs theory, each employee will have an inherent need for self-respect and self-fulfillment, performance management is to meet this need from two aspects, thus helping to improve employee satisfaction.

(4) helps to realize the scientific rationalization of human resource management decisions. The implementation of performance pay can improve accurate and reliable information for other functional activities of human resource management of enterprises, thus improving the scientific and rational decision-making.

6, the design of pay for performance

Generally speaking, the design of pay for performance includes three phases: the preparation phase, the communication phase, the validation of the performance plan and the confirmation phase. In the preparation stage, managers need to understand the strategic development goals and plans of the enterprise, the annual business plan, the annual work priorities of the department, the basic situation of the employee's position, the employee's performance appraisal results of the last performance cycle and other information. At the same time, managers also need to decide what kind of communication to use for performance planning.

(1) Determine the performance appraisal objectives. Performance appraisal objectives, also known as performance goals, is the employee in the performance appraisal period of the various tasks and work requirements defined and categorized to determine the key performance indicators of each position. These post key performance indicators must directly reflect the concept of enterprise development as the center and the strategic objectives of the enterprise, the performance objectives can be set as financial and non-financial objectives, according to the importance of the performance objectives of the different levels of different stratification, the size of the assessment of the post on the indicators should be shared by the size of the responsibility.

(2) Determine performance pay. Performance pay = key performance objectives?P?Key performance appraisal of the actual score / 100. The above formula, the key performance objectives here can be set to profit or other indicators, specifically due to the different positions of the individual and different: key performance appraisal of the actual score = performance objectives weighted score? Target completion rate, target completion rate = key performance actual value / key performance target value; P is linked to the percentage of commission or performance pay basic score.

The key performance indicators contain more than one specific target, which prompted us to determine a ratio coefficient for each specific target, according to the degree to which each specific target is achieved, the calculation of performance pay. However, in practice, employees who have completed only a few objectives in the total task and have not been able to achieve other objectives may also receive performance pay. Therefore, when designing performance pay, a more perfect approach is to design minimum standard values for KPIs, which must directly reflect the strategic objectives and annual benefits of the enterprise. If performance fails to meet the specified minimum standards within a specified period, the individual employee will not receive performance pay. Through this approach, individuals can be effectively motivated to achieve balanced performance between short-term and long-term goals.