Performance Evaluation System And Corporate Incentives - Chinese Logistics Company Case Analysis

With the continuous deepening of state-owned enterprises' reform in China, it's drawing more attention how to establish motivation mechanism in state-owned enterprises. In recent years, studies on enterprises motivation mechanism has mainly focused on property rights system reform and motivation mechanism for enterprises' operators. However, this thesis focuses on another important aspect of motivation mechanism, i.e. staff motivation mechanism. The impact and value of performance appraisal system upon motivation mechanism are discussed in details by analyzing the case that describes the background and the process of a state-owned enterprise establishing its own performance appraisal system. This thesis aims at providing solutions to state-owned enterprises in their efforts to establish localized performance appraisal system. Performance appraisal system is not only the foundation of motivation mechanism, but also one of the most challenging fields in Human Resource Management. Enterprise is able to evaluate staff's performance accurately through this valuable method, and apply appraisal results to designing staff compensation and benefit package, planning personnel training and development, as well as giving proper role assignment. As a result, a logical connection between staff's performance and rewards can be established through which staff can be motivated to fulfill company's strategy and consequently improve the overall performance. Therefore, how to minimize subjective factors and to reach objective judgment during appraisal remains a big challenge to all Human Resource managers. It may be more difficult for those state-owned enterprises to establish performance-oriented motivation mechanism, for they are still dominated by the traditional concept of egalitarianism under planned economy. In this case, Hua Tong Company was facing serious management problems and forced to implement reform to improve its core competitive capacity. The company's strategy was adjusted, and new performance appraisal system was established. It was a beginning for their practice regarding the establishment of motivation mechanism. Thus they included HR strategy in their overall strategy implementation. It is hoped that those enterprises facing nearly the same problems would learn from this case that under what circumstances should performance appraisal system be reformed. To establish performance appraisal system involves setting reasonable criteria on the basis of job analysis, making effective and feasible policies and monitoring the implementation by HRD. The analyzed case shows that though some progress has been achieved by some state-owned enterprises, there remains many defects nearly in each important link. This thesis tries to analyze the main problems easily occurred during the establishment of performance appraisal system and provide technological and implementing solutions respectively.