Case Study On State-owned Enterprise Compensation Performance Management

With the continuous deepening of the reform of state-owned enterprises,state-owned power enterprises in monopoly industries have attracted public attention with the salary and performance management being a public focus.Since the separation of power plants and power supply network in 2002,the electric power enterprises have started to face serious difficulty.The monopoly of National Grid,the competition from strong energy groups in different provinces,the rising standards imposed by the government,the increase of coal prices which constitute 2/3 of the costs of an electric power enterprises,all of these contribute to that difficulty.Given the fact that the market in China has its own features and policies,how to use the successful incentive policies and performance management system adopted by companies both at home and overseas so that the state-owned enterprise can benefit from them and gain competitive strength has been a topic worth discussion and study.Based on the study results both at home and overseas,this paper employs incentive theory and case study method to conduct a research.With international experiences and taking the status quo of our state-owned enterprises into consideration,the research focuses on salary and performance management.It starts with the study of theoretical foundation of salary and performance management,the current situation of the research in this area.Through such study no research regarding the salary and performance management of the state-owned enterprises in China has been found.Then this paper proceeds with the introduction of features and functions of salary and performance management and presents how to organize and use the current management methods to achieve incentive effects with a pre-set goal.It further summarizes the programs and methods to conduct salary and performance management.Based on the relevant policies and regulation in the state-owned enterprises of China,the paper analyzes the cases and presents suggestions to improve.By studying the case of HN Power Plant performance & salary management,we hold the point that,there are some key problems on the performance & salary management policy of the state-owned enterprise: firstly,there is certain bias when the related government department formulating the performance & salary management policy of the state-owned enterprise;secondly,the senior executives of the state-owned enterprise do not fully aware of the incentive function of the performance & salary management,and keep the mind on the level of “salary releasing and paying for extra hours”;thirdly,the functional department in charge of performance & salary management pay more attention to the quantified targets,and ignore the fact that a lot of management work could not be quantified.Thus we advise that,when the related government department implementing the reform of performance & salary management as well as the enterprise formulating and practicing performance & salary management work,more attention should be paid to the aspects such as level adjustment of the enterprise organization,trial on the ESOP,salary information disclosing,etc.