Innovation Of Incentive Scheme For Employees In The Financial Industry

Employee incentive scheme is an important research topic in the field of economics and management. In the context of China’s economic transformation, the financial sector plays a crucial role in the real economy. Whereas the sector asks for more financial professionals, the current incentive mechanism lags behind. The unjustifiable salary structure and the mismatch between incentive mechanism and employee desires have led to increasing costs to companies and unfavorable utility for employees.The thesis shows the current salary distribution mechanism and incentive scheme in China’s financial sector, and then reveals the dilemma that practitioners are faced with. With the utility function defined, the thesis attempts to explain the improperness of the current incentive scheme. The case study on a commercial bank which has implemented flexible benefits mechanism illustrates the necessity and feasibility to implement a flexible incentive scheme in the financial industry. A few constructive suggestions are given on how to improve the mechanism.To implement the reform, both government and companies need to roll out new rules and policies. The innovation of incentive mechanism not only affects every employee who works in financial sector, but also lays the ground for China’s future economic growth.