1000 Business Lessons Every Businessman Must Know

Chapter 48 Salary Design and Incentives: Improving Employee Motivation (1)
[-]. Salary design
388. What are the main contents of salary design?
Salary mainly refers to the monetary remuneration or rewards that employees receive for providing labor or services to their organizations.Salary is the payment form of labor price, and it is also the price performance of human capital competition in the market economy environment.

The general salary structure is: salary = basic salary + bonus + allowance
(1) Basic salary - guaranteed salary

This part of the salary is part of the basic living guarantee for employees.It is divided into hourly wages and piecework wages.The wage system is divided into position wage system, functional wage system and structural wage system.

(2) BONUS.Bonuses are divided into attendance bonuses, benefit bonuses, project bonuses, red envelopes, etc.

(3) Allowances.Allowances are divided into regional allowances, living allowances, and labor allowances.

389. Factors that cannot be ignored in salary design

When designing compensation, factors such as the business strategy of the company, the development stage of the company and its market position should be considered comprehensively.For example, if an enterprise wants to adopt a low-cost expansion strategy, it must adopt a relatively low wage standard and reduce the proportion of management and technical personnel wages; if the enterprise is in the growth stage, it must adopt high flexible wages and increase the proportion of performance wages. Improve the salary design of the salary standard; if the enterprise is in a leading position in the market, it should adopt a relatively stable salary system, such as the skill salary system, with the average salary standard, emphasizing the salary design of performance, skills, and seniority.

The scope of formal compensation design is relatively broad, and the following factors should be considered emphatically:

(1) Competitive position.The salary design of the enterprise means the position of the enterprise in the competition for talents.This involves at which level the company's salary should be positioned, whether it is the highest in the industry, or should it be kept in the middle, or should it be kept at a low profile.

(2) The overall level of salary.Formal compensation design aims to describe the nature of wage levels, and at this level decisions are more precise and essentially quantitative.This decision is primarily a trade-off between the competitiveness of the talent market and the economics of product cost.

(3) Salary payment and promotion form.For example, determine whether to promote according to merit, or to adjust unanimously after a certain period of time, what is the ratio between salary and reward, and so on.

390. Job Analysis and Evaluation Before Design

Job analysis is the basis for determining compensation.On the basis of business analysis and personnel analysis, the management should clarify departmental functions and position relationships, and the human resources department and department heads should cooperate to prepare job descriptions.

Job evaluation or evaluation focuses on solving the problem of internal fairness of salary.Through evaluation, compare the relative importance of various positions within the organization, obtain the position rank sequence, establish a unified position evaluation standard for salary surveys, and make different positions comparable.

There are many methods of job evaluation, among which the more complex and scientific one is the score comparison method. This method first determines the evaluation factors related to salary distribution, and then defines different weights and scores for these factors, and then compares them.The Hay model and CRG model, which are more popular in the world, both adopt the method of quantitatively evaluating the value of the position, comprehensively evaluate the position from the three major elements and several sub-factors, and obtain the salary level through comprehensive evaluation of various factors.

391. It is also necessary to conduct a salary survey
This is mainly carried out to solve the external fairness of salary.Organizations need to refer to wage levels in the labor market when determining wage levels.Organizations can entrust more professional consulting companies to conduct investigations in this area.

The object of the salary survey is to choose an organization that has a competitive relationship with itself or a similar organization in the same industry, focusing on the loss of talents and the source of recruitment.

The salary survey materials include the salary growth status of the previous year, the comparison of different salary structures, the salary data of different positions and positions at different levels, the status of bonuses and benefits, long-term incentive measures, and analysis of future salary trends.The accuracy of the salary survey can only be guaranteed if the same standards are used for job evaluation and each provides real salary data.

392. Carry out accurate salary positioning

After analyzing the salary data of the same industry, it is necessary to choose different salary levels according to the organizational situation.There are many factors that affect the salary level of an organization.

From the outside of the organization, the country's macroeconomics, inflation, industry characteristics and competition, talent supply and even changes in foreign currency exchange rates will have varying degrees of impact on salary positioning and salary growth.

Within the organization, profitability, payment capability, and personnel quality requirements are the key factors that determine the salary level.The development stage of the organization, the scarcity of talents, the difficulty of recruitment, the market brand and comprehensive strength of the organization are also important influencing factors.

In terms of salary positioning, organizations can choose a leading strategy or a following strategy.The leader in salary is not necessarily the organization with the loudest brand, because an organization with a good brand can rely on its comprehensive advantages, and it is possible to find good talents without spending high salaries. Rely on salary only.

393. The salary structure design should be reasonable

The salary structure refers to the corresponding relationship between the value of each position (position) of the enterprise and the actual salary or salary rate.Generally speaking, there is a one-to-one relationship between the relative value of each job position and the actual paid salary or salary rate. The greater the relative value of the job, the higher the actual paid salary or salary rate.The relationship is more of a linear relationship.

When designing a salary structure, it is often necessary to consider three factors:
One is their job grade;

The second is personal skills and qualifications;

The third is personal performance.

Corresponding to it in terms of salary structure are position salary, skill salary, and performance salary, and some combine the former two as the basis for determining the basic salary of employees.

Salary structure design is to determine the relationship between work value and remuneration.It embodies the fairness within the enterprise, and can also test the rationality of the enterprise's salary system.

394. Formulation of salary plan

(1) Select the factors that affect job wages.Determining factors and classification of post salary:

①The payment factors selected by the enterprise according to its own situation.

② Determine the scoring standard and total score for each factor, and form a standard scoring table.

(2) Comparing the situation of each position in the enterprise with the standard scoring table, the score of each position can be calculated.

(3) Arrange the scores of each position in the enterprise from large to small or from small to large, and then divide the salary level and the corresponding salary amount.

①The standard salary table of the enterprise (job level) can be summarized.

② Reasonable division of salary levels:
For large enterprises, there may be dozens of salary grades.

For medium-sized enterprises, there can be 10 to 20 salary levels.

For small businesses, there can be around 10 salary levels.

This handbook gives five categories of [-]-level schemes, which have great adaptability.

③Determine the difference between grades and open the grades between grades.Generally speaking, the adjacent grade difference is small in the low-level position (such as 10 yuan, 15 yuan), and gradually increases with the promotion of the position, and the adjacent grade difference in the highest position is the largest (such as 100 yuan, 200 yuan).

(4) The remuneration discussed above generally refers to the amount of after-tax wages, and the individual income tax must be withheld by the enterprise. Therefore, the enterprise should consider the impact of the total pre-tax wages on the financial cost of the enterprise.

(5) Overtime pay is only for junior managers and workers, while middle and senior staff are free of charge.

(6) General adjustment (increase, cut) wage method for employees.

①Adjustment in the same proportion (for example, increase or decrease by 5%), resulting in a widening of the staff level gap.

②Adjustments in equal amounts (such as an increase or decrease of 100 yuan), resulting in a narrowing of the staff level difference.

③Different proportions and unequal adjustments can maintain the level difference, but the operation is complicated.

(7) Formulate methods for employees' seniority wages.

① Distinguish between the social working years and the working years of the enterprise, and the social working years shall be converted into the working years of the enterprise according to a certain proportion.

②Seniority wages can be one year yuan, increasing year by year in equal amounts.It is also possible to set different seniority salary standards in different seniority groups.

(8) Combination of performance appraisal and length of service.

①Excellent employees in the assessment, under the same working age conditions, the salary adjustment range can be larger.

②Employees with good assessment will have a slightly smaller salary adjustment under the same working age conditions.

③Employees who pass the assessment will be adjusted according to the general standard (or lowered or fine-tuned).

395. Wage system selection
The wage system, also known as the wage system, refers to the basic principles used by enterprises to stipulate the distribution method of wages and divide wage standards.It includes determining the salary components of different employees and the proportion of each salary item, and also includes the payment form of salary, that is, determining the basis for salary calculation, whether it is based on working hours, production volume or sales volume.

Multiple wage systems have arisen because different companies have adopted different standards, and even different departments of the same company have adopted different standards.

Common wage systems include: technical grade wage system, position grade wage system, post skill wage system, contract wage system, commission wage system, etc.

The salary system chosen by the enterprise is different, and the composition of the salary items is also correspondingly different.Although there are many kinds of wage systems, their essence is composed of wages, bonuses and allowances, but their proportions are different.

At present, although the state has regulations and suggestions on the wage system for state-owned enterprises and other types of ownership enterprises, many enterprises have chosen a wage system suitable for the enterprise in order to better adapt to the market environment, such as adopting a wage system Mainly, combined with other wage system practices.When an enterprise formulates a wage system, it should not simply choose a wage system or a salary distribution plan.On the contrary, adopting different wage systems or distribution schemes according to the characteristics of various departments within the enterprise can play a very good incentive role.For example, an enterprise adopts a commission salary system in the marketing department, and adopts a position-level salary system in the administrative department, but the production department can consider the job skill salary system and increase the proportion of performance-based wages.

396. Salary classification
Although the salary structure is determined.There is a one-to-one relationship between the value and remuneration of jobs and positions, but this will make salary management very cumbersome. Therefore, the large and small salaries of enterprises can be summarized into several grades to form a salary grade series.

That is to classify several jobs or positions of similar value into one grade and stipulate a corresponding salary level.This is wage classification.

Through salary classification, it is possible to determine the specific salary range of each position in the enterprise, to ensure the fairness of employee wages, and to simplify salary management at the same time.

Since a job level corresponds to a salary level, so.The job content, job responsibilities, complexity and arduousness of the job, skill requirements, etc. of this post level can be subdivided into remuneration to determine the salary standard, also called the salary rate.Some wage standards (wage rate) are divided by time (by hour, day, week), and some are divided by labor quota (workload completed).

397. Salary design system
1. Post salary system

According to the degree of responsibility and importance of the position, the complicated and simplified procedures of the work and the working conditions, the grades are divided, and the salary standard is stipulated according to the grades.

The salary changes accordingly when the position changes.However, it may cause the professional and skills of employees to be fixed in one (kind) position.

2. Skilled wage system
The salary level is divided according to the execution ability of a certain job, and the salary will be increased for each additional skill mastered.When leadership positions are limited and people with considerable capabilities cannot be promoted, corresponding wages are also given.

3. Annual salary

The salary is determined according to the working years in the enterprise.It is generally assumed that the longer the working period in the company, the richer the qualifications, the stronger the ability, and the greater the contribution. Correspondingly, the salary is consistent with the qualifications.

4. Structural (Combined) Wage System

Combination of multiple wage systems, for example: structural wages = basic wages + position wages + seniority wages + bonuses + allowances
398. Basic forms of wages

1. Piece (reward) wage system

Calculate wages according to workload.For example:
(1) Linear type.

Earned wages = production quantity of qualified products × single wage rate
(2) Incremental type.

Income salary = production quantity of qualified products × single-piece wage rate 1 (below the quota) income income = production quantity of qualified products × single-piece wage rate 2 (above the quota)
(3) Collective type
Salary earned by the group = qualified production quantity of the group × wage rate per piece

Advantages: Pay according to actual performance, simple calculation, can stimulate efficiency and reduce management burden.

Disadvantages: It is easy to emphasize quantity and neglect quality; excessive overtime to catch up with goods breaks the normal working order; common labor is prone to disputes.

Scope of application: industries and types of work with easy quality measurement and control, relatively simple products, large batches or manual operations.

2. Hourly wage system

Wages are calculated based on actual working hours, including regular working hours and overtime working hours.

Below standard working hours.

Earned salary = actual working hours × hourly wage rate

above standard working hours.

Earned wages = actual working hours × hourly wage rate + bonus coefficient × number of overtime × hourly wage rate
Among them, the bonus coefficient varies between 0 and 1, reflecting different compensation strategies.

Advantages: It is not easy to generate disputes among employees, and the product quality is more guaranteed.

Disadvantages: It is not easy to stimulate work initiative, and there will be a phenomenon of not working hard, which will increase the cost of supervision.

Ideal for: Piece-sensitive, mental tasks and homework.

3. Output value content wage system
Similar to the piecework wage system, it is suitable for production front-line workers.

4. Salary system based on commission of sales income
Extract employee income according to sales revenue, suitable for marketing personnel.Among them, there are two forms:
(1) Basic salary + sales commission;
(2) Commission of sales income without basic salary.

5. Project lump-sum salary system

It is suitable for scientific research units and scientific research personnel.

6. Annual salary system

Applicable to the main leaders of enterprises (chairman, general manager).

[-]. Salary management
399. Salary design should be fair

The fixed salary design must ensure the relative internal fairness and external fairness of the salary level of the organization's talents.

Internal fairness means that the salary can reflect the value contribution of each position to the overall performance of the organization. Generally speaking, the human resources department needs to evaluate the position from three aspects.

(1) Requirements for knowledge and skills of the post;

(2) The position's requirements for problem-solving abilities;
(3) The size of the post's responsibilities.The human resources department uses the results of the analysis to determine the range of salary differences and establish a ladder of job salary levels.One of the implicit meanings of internal fairness is that the salary gap between positions should be reflected.

Secondly, the organization also needs to consider the issue of external fairness when formulating a fixed salary, that is, whether the salary is market-competitive.On the one hand, the salary level of each position in the organization needs to be adjusted with reference to the salary level of the same industry to ensure that the company can recruit suitable talents under this salary level; on the other hand, the human resources department also needs to regularly understand the salary changes of competitors to ensure the company Salary levels remain dynamic and competitive.

However, since job evaluation cannot be completely accurate, organizations often introduce a performance-based salary system to make the salary structure fairer, more competitive and flexible, thereby motivating employees.Performance salary mainly refers to the performance bonus determined by the performance evaluation results of talents——talents engaged in the same job may have large differences in income due to different performance.In addition, the organization may also decide whether to issue year-end bonuses depending on the annual performance.

400. Follow the guiding principles

Comply with the relevant laws and policies of the relevant national and local departments on labor wages, including the minimum (wage) living standard, anti-gender discrimination, labor overtime, etc.

Taking into account the rise of the local living price index, wages should be increased accordingly to maintain the original standard of living.

Adhere to the principle of "two no-exceeding" that the increase in wages does not exceed the increase in economic benefits of the enterprise, and the increase in the average real income of employees does not exceed the increase in labor productivity of the enterprise.

Reasonable employee remuneration should meet:

(1) Emphasize the fairness inside and outside the enterprise, and break the big pot;

(2) Can attract skilled people to work in the enterprise;

(3) Can keep talented people in the enterprise without losing them;
(4) It can motivate employees to work hard to do a good job, so as to reward diligence and punish laziness.

According to the labor market price, especially the wage level of companies in the same industry and similar positions, a competitive wage rate is established.At present, professional human resources consulting companies have begun to publicly release salary information for several important positions. Based on this, companies can judge whether their salary levels are too low, too high or the same and make corresponding adjustments, especially paying attention to key positions or personnel that are too low.

With proper consideration of differences in employee needs, the salary and welfare system is flexible and optional.

Calculate the proportion and variation space of human capital cost in the total cost, and consider the final financial payment ability of the enterprise for salary.

Under the guidance of the general financial management rules of the head office, wholly-owned subsidiaries and holding subsidiaries implement the salary management system of the head office; shareholding companies and affiliated cooperative enterprises decide salary distribution on their own.

401. Adjustment of salary plan

The compensation plan needs to be constantly adjusted during the implementation process.The basis for the adjustment comes from three aspects.One is the opinions and suggestions of employees, the other is the change of the enterprise's environment, and the third is the adjustment of the enterprise's business strategy.

First, employees' perception of whether compensation is reasonable mainly comes from comparison.They often compare their pay for their workload with that of others.In addition, it is also compared with the society and the situation of other enterprises, so as to draw a fair and reasonable conclusion.The goal of enterprise compensation management is to achieve the highest employee satisfaction under the condition of the lowest human resource cost.A compensation package that doesn't satisfy the majority of employees is a failed package.Of course, a compensation plan that satisfies employees but pays too much is not a successful plan.

(End of this chapter)