On The Incentive Mechanism Of China's Current State-owned Enterprise

The incentive mechanism is a complex system adopted in state-owned enterprises for the purpose to promote the employee's initiative, creativity and potentials. During transition process of economy system from a planned system to market one, China has established corresponding reform objectives in reply to the change. With the deepening of the reform, the existing enterprises will be finally divided into two categories: one is mainly responsible for implementing the state policies in the form of solely state investment-the responsibilities are undertaken by a few of the current major and backbone enterprises, and the other is mainly market-oriented and exists in the form of stock share, which is regarded as genuine modern enterprises. Most of the current Chinese enterprises in the future can be classified into the later category, on which this paper focuses its discussion.This paper consists of five chapters. The first chapter is a brief introduction, and the second chapter analyzes the related incentive mechanism theories. Chapter three explores some incentive measures to those businessmen running the state own enterprises in China. Chapter four discusses the incentive measures in relation to labor force in the state -owned enterprises. The last chapter concerns the elements of the corporate culture incentives.On the ground of an extensive research into various references and on-site survey into some real industries, the author reveals in this paper the three major existing weaknesses of the incentive structure in the state-owned enterprises, such as increasingly weakening material incentive measures, awkward incentive constraint structure to industries managers, and the out-dated non-material incentive system not in accordance to the development situation. The paper starts with a systematical theoretical analysis and introduce the common problems existing in all enterprises, such as the principles of system, dynamics, elasticity, and center-on-human. Based on the above-mentioned analysis, the establishing principle of a new enterprise is explored. After analyzing the incentives to the enterprises, the author presents the other four elements such as control power, credit, share, and reward. Irrelevant proposals on yearly salary, share-holding incentives, and motivation methods to meet owner's spiritual needs are introduced. As to the labor force incentive mechanism, the paper discusses the three major aspects such as payment, share holding, and spiritual needs. The corporate culture mainly explores the characteristics, internal meaning, and the expression of the incentives system application. Some counter-measures are hereby suggested.