Extend Oil Group Nanniwan Oil Production Plant Of Pay System

Nanniwan Oil Extraction Plant is a subsidiary enterprise of Yanchang Petroleum Group Corp. Ltd. According to Yanchang Group Ltd's arrangement, Nanniwan Oil Extraction Plant established the position/skill pay system in 2006. After the international financial crisis of 2008, international oil price fluctuations forced the oil companies to cut costs, but under the existing pay system, the salary costs of Nanniwan Oil Production Plant keep rapidly increasing and brain drain more seriously. This thesis focuses on the issues related to Nanniwan Oil Extraction Plant's salary system reform.This thesis studied the necessity to change the compensation system of Nanniwan Oil Extraction Plant at first. We emphasized that under China's labor market, enterprises has more option to set up their compensation. Therefore it is possible to motivate employee by raise wages while maintaining an appropriate income increases; At second, in the light of data collected through on-site interviews and questionnaires, this thesis evaluated the effect of existing compensation system using employee satisfaction survey data and staff turnover rate and showed that there were some defects in Nanniwan Oil Extraction Plant's compensation system, including lack of job evaluation system, unscientific design and unfair performance evaluation, etc. By regression models, we find that some features of Nanniwan Oil Extraction Plant's compensation system, such as low wages, injustice promotion, induce lower employee satisfaction and higher turnover. And then, the thesis combine the reality Naniwan faced and the reform objective of Yanchang Group ltd., proposed a new compensation program based on merit pay and a payroll management policy suitable to state-owned enterprises. According to the normal procedure of compensation system design, we constructed four kinds of compensation structures for Nanniwan Oil Extraction Plant. By doing job evaluation, delineating pay grades, setting up compensation components and compensation levels, we filled in the details of compensation system. Especially, the thesis proposed to link salary budget growth with added value growth rate of enterprises after excluding the effect of industrial growth on single enterprise. This is a new proposal to wage system reform in resource-based industries and monopoly industries in China. At last, this thesis studied the necessary supporting policies and institutions to accomplish wage system reform, which request to build a harmonious corporation culture, to integrate the human resource management, to strengthen the communication and coordination in the reform process, and to construct soft benefits.