HR Strategies And Performance—Base Pay In Our Company

 Contexts

Introduction

Company profile

Analysis

1 Key environmental factor influence on our company;

2 Main business strategies of our company;

3 Human resource management strategies in our company;

4 Focus on critical analysis of one of the HRM strategies --- performance-base pay

Company profile

Conclusion

Bibliography / References

 

 WRITTER  John Liu (ox tendon 牛筋)

 

Introduction

This article will critically analyze and appraise the human resource manage strategies in our company, which includes

1 key environmental factor influence on our company;

2 main business strategies of our company;

3 human resource management strategies in our company;

4 focus on critical analysis of one of the HRM strategies --- the performance-base pay

Company profile      

Advance Technologies Co,.Ltd ( http//www.adv-tech.com.cn )established in 1994, it specialized in barcode industry including the sales of barcode product and software exploiting. It is a director of Auto Identification Manufacture China.

  In the 2004 the amount of business reached 20millions, and also this company obtained a award in terms of China Auto-Identification Association Top Ten Enterprises issued by AIM China.

Current HR status

There are fifty employees in this company, which consist of thirty people in Guangzhou headquarter, twelve people in Shenzhen branch office and eight people in Shanghai branch office. The organization structure is as below:

 analysis

1 key environmental factors impacting on the company

.Analysis

1. BACKGROUND

  Barcode is belonged to IT field that need high technologies to support any business activity. As the feature of IT field, the investments are focused on people’s brain not like the traditional industry investing more on fix asset. Therefore underlining human resource strategies is extremely important for our company. In fact, the turnover rate is so high that it seriously influences the growth of business. It seems to most of the IT firm that the fatal issue affecting on the development of company is the turnover. Similarly, Those who work in our company just for only one year, even a few months then quit result in the company spending a plenty of time and energies to train the new staff. From entry to independent work it must take at least half a year. It is rightly expected that these employees can contribute to the company at this time. They, however, are likely to submit the report of resignation. Why these phenomena frequently occur? This is ascribed to both internal and external factor.

 

1.1.  Internal environment

  There is no long-term motivating policy for employees, who reckon this is private solo enterprise, not like the state-enterprises, joint-venture, multi-national enterprise, or government agency can provide various kind of welfares to them. It doesn’t deserve them to devote their time and energy to this enterprise. The remuneration system of our company now is not enough to attract them. They are waiting for the opportunity. Once having a opportunity provided a promotion or high pay, they will transfer their job.   

 

 1.2.  External Environment:

   Some powerful company such as Techtrend Co,ltd which is a multi-national enterprise, can offer a perfect remuneration system to strongly attract the excellent talents to join them from other company. In the barcode industry, it really facilitated to establish a small firm since it does not need much money and more people. Almost everyone especial Chinese people who has a strong aspiration of being a boss. Some employees, therefore, resigned to set up a new company while they feel they are mature and familiar with this market. No sooner they would be the destructive   competitors combating with our company, because they were very familiar with the original company’s operation.

In other words, solving these problems rely on the business strategies of this company and remuneration system in the human resource strategies. How to maintain the staff stabilization? How to retain the talent? Did this remuneration system meet the development of this company? In the following item 3.5, we will elaborate the remuneration system in our company. 

 

2.  Major business strategy of our company

Distributing the barcode supplies (Label and ribbon) and barcode equipment (barcode printer and scanner), connecting the network with Radio Frequency Barcode Terminal as well as providing system solution for the client are main business of our company. Due to the sale of barcode supplies and barcode equipment not need high techniques, so the competition is very severe in the market.

 On the other hand, the system integration need a sound coordinated teamwork and high techniques to support the implementation of project, otherwise the project are utterly not accomplished. So a few rival can participate the completion in this segment. Relatively weak competition can heave the value of our company. Intermec’s product and technology, which is one of the largest barcode equipment manufacturer, stand for the developing trend in the world. Following Intermec’s developing orientation is a strategic target of Advance Technology, naturally aligning the human resource strategies to match the strategies of company is imperative.

.3  Human resource management strategies

Any HRM strategies must link to its business strategies. The HR management strategies rely on the business strategies of the company. We put the human resource strategies in our company into five step;

3.1) Setting criteria of recruitment 3.2) recruitment  3.3) selection  3.4) training  3.5) performance management and remuneration system

3.1 Setting criteria of recruitment 

Every enterprise expects it can recruit excellent talents. What is the best talent? What kind of the people do we want? Perhaps we want those who are endowed with high quality, hard working, loyalty, integration and so on. However high quality is equal to high pay desires. In the initial stage of growth, the manager had hired some people with high degree, but the fact proved that disregarding at any cost to seek so call talents is infeasible. This approach to HRM strategy was not suitable for our company, it wasted a plenty of money and time. Because these employees with high degree had high wants including high remuneration, good working environment, the opportunity of promotion, as well as the challenge in the work. Our company can’t completely offer him all the sound condition. According to Maslow’s Hierarchy of Human Needs Theory ,there is a hierarchy of five needs Physiological, Safety, Social, Esteem, Self-realization (1)      Although he can gain high pay, if lack of challenge, he would be bored by the commonplace work, and also his sell-realization needs can’t be satisfied. Thus, he has to quit. Reviewing the experience of the human resource management of last several years. It was concluded that recruiting those whose degree low but with potential talent are more suitable for us

3.2 recruitment

What way do we adopt to recruit the people? There are a couple of way of recruitment, advertisement on TV and newspaper, employment agency, E-recruiting, headhunting and referrals. Which one is the best. Employment agency, TV advertisement and headhunting are expensive for us, we usually adopt newspaper advertisement, E-recruiting and referrals. I have to mention individual recommendation is probably better approach to recruiting on some occasion. Currently a manager in Shanghai office, a sales manager in Guangzhou and a vice general manager, who have some relation with general manager, are referred by general manager. of course, these key persons were not originally employed to be the manager. All of them were promoted from low position.

3.3  Selection

In this process, our selection work is very simple and superficial.. It is overdue emphasizing professional knowledge and skill; pay less attention to personality and psychological issue. Nowadays the teamwork appears more and more important. Advocating teamwork is a part of our business strategies. Taking personality and psychological test can avoid recruiting someone who is hard to co-operate with other colleagues.

3.4  Training

Due to barcode industry is a new developing market. It is hardly to recruit the persons with professional skill. Thus, Cultivating by us is the only way for our company. Every new staff should be trained for two weeks. Professional training for all the employees once per week is a conventional wok. The staff with experience would instruct the green hand. The organization often dispatched someone to attend the training held by other company. 

3.5  Performance management and remuneration system

 Labors-market competition is the amount an organization must pay to compete against other companies that hire similar types of employees. These labor-market competitors typically include not only companies that have similar types of products but also those in different product markets that hire similar types of employees (2).   So the following forms of remuneration were formulated under this situation

 3.5..1)  Current forms of remuneration

 

3.5.1.1)  Direct revenue   (see sheet 1 and sheet 2)

 

Allen Zhou’s pay in December 2004 (manager in Administration)

Basic   Salary

Commission/    Bonus

Allowance

Minus

Total

A

B

C

D

F

G

H

I

J

K

L

M

4000

500

1000

500

500

768

768

400

*

-230

*

7438

Sheet 1

 

Wu Shouwen’s pay in December (salesman in Marketing Department)

Basic   Salary

Commission/    Bonus

Allowance

Minus

Total

A

B

C

D

E

F

G

H

I

J

K

L

1500

300

300

200

1270

1270

200

*

*-

*

3770

                              Sheet 2

 

A. Position;  B, Education;  C. Working experience;  D. Service duration in this company  E. special skill;  F. Half commission/bonus released in current month;   G. Half commission/bonus released in the end of year;  H. Communication allowance;. I. Business allowance;  J. Ask for vacation;  K. Violation of regulation;  L. Total pay in current month.

.a  Basic salary,

Why did we set the basic salary? the basic salary could guarantee the people’s essential needs. the employees prone to accept this approach that they are clearly aware of how much they could gain. What salary criteria did we set? How large the range is depends on the particularly completive environment the organization face(3).  First of all, the investigation of local life standard should be taken, secondarily we should evaluate the lever of remuneration in barcode industry, especially rival’s remuneration. Finally, in accordance with the actual situation of our company involving different position, working duration in the company, professional skill, job experience and educational lever, we respectively set different basic salary for different employees. For example, the supervisor’s basic salary in engineering department is capable of difference with other supervisor’s in sales department as their various sort of situation although their positions are same.       

 b  Commission

This prevalent approach linking to salesperson’s amount of sales is probably the best incentive method. Most of the enterprises set the rule of commission based on performance for the salespersons. It was easy to appraise one’s performance taking advantage of quantitative calculation. In order to motivate employees and earn maximum of the profit for the company, the commissions were calculated by means of computing the proportion of the sales on the pricing sheet, on which there are many different products with different price and different ratio of commission for reference. (See sheet 3), seeing the sheet we learned that he sold the products with higher price, the higher ratio of commission he would get.

 

The rate of commission of selling price per unit

 

% Model	0.5%	1%	2%	3%	4%	5%	8%
Printer 4440	25,000--  26,000	26,001--- 26,500	26,5001— 27,000	27,001-- 28,000	28,001-- 29,000	29,001-- 31,000	Above 31.000
Printer 3400e	10,000--  10,500	10,501-- 11,000	11,001-- 11,500	11,501-- 12,500	12,501-- 13,500	13,501-- 14,500	Above 14,500
Scanner 1800vt	1,000--  1,200	1,201-- 1,400	1,401-- 1,600	1601-- 1,,800	1,801-- 2,000	2,001-- 2,200	Above 2,200
Terminal 730	12,000--  12,500	12,501-- 13,500	13,501-- 14,000	14,001-- 15,000	15,001-- 16,000	16,001-- 17,000	Above 17,000

                  (Sheet 3)

 

On the other hand, the commission was separate two fractions. Half of the commission was released at the current month. Another was released by the end of year if no any bad debt occurred. Of course, any calculation of commissions was based on the repayment of entire case. Why did the manager take advantage of this approach to motivate the employees? What help for the human resource management was this method adopted?

 First, it could really motivate the employees and also effectively prevent that the salesperson is reckless to sell something for pursuing the sales and the commission. Therefore, if the bad debt of case he followed emerged, he would undertake some responsibilities deducted money from this commission in the end of year. For example, before this regulation was set, some salesman had followed up a case that this company was permeated with high financial risk, but he still maintain to do the business with this company. no needless say, the consequence led to a massive loss to our company.

 in addition, we know many enterprise adopted annual salary for the senior manager. Remaining half commission in the end of year is similar to the function of annual salary. If he intended to resign in the middle of year he would have thought over the loss, since he couldn’t take the commission away before the end of year. This is helpful for the management of business process.

c  Bonuses

It is hard to assess someone’s performance via quantitative such as technique supporting engineers and administrative staff who often join some group to deal with some project. If they gain only a fix salary, he would be shortage of impetus to do his job. How to evaluate their performance and enhance their working enthusiasm?

Combining both evaluation of quantitative and qualitative, according to some rate of sum of the sales within this month we can easily calculate the sum of all bonus of this department. Then the department manager respectively evaluated each employee’s performance and dispensed the bonus to everyone in this department. For instance, the total amount of the sales is two million. The rate of bonus of this department is five percent of total, and then the sum of bonus of this department is one hundred thousand. Through this way, we could link the individual motivation of performance with the business of our company. Each employee all paid more attention to our business. As this bonus was dispensed with individual’s will. It is certainly a little unfair for everyone.          

d  Allowance

Allowance mainly included traffic fee, communication fee and business traveling fee. in order to facilitate to contact the employees while they went out for business. The company provided the communication fee for the employees. Those who possessed communication fee were required that they must turn their mobile phone power on during 9:00 to 22:00 in case of some clients made a emergency call for service and technique support.  

3.5.1.2) Indirect revenue

The salary, commission, bonus and various kind of fee all pay in cash., but some part of the remuneration were provided in other indirect form just like social welfare insurance, collectives free tourism and the vacation of exceeding formal standard. sometimes the applicant not only view the direct pay, but also judge the indirect par. So formulating a set of the remuneration system for the HR management is a fatal important

.3.5.2) Problem and solution

1)        Since it was built a set remuneration containing various types of pay. why did the employs still quit ,obviously current remuneration system exists a defect. as the item 1 mentioned, the reason is  no long term policies regarding promotion and increased salary for the employees. Employees who work