Research Paper on Salary Management of Foreign Enterprises

Research paper on salary management of foreign-funded enterprises

Abstract In the context of the new economic normal, with the continuous upgrading and optimization of the industrial structure and the reduction of government preferential policies, the development of foreign-invested enterprises generally faces Dilemma, attracting and retaining talents has become the focus of competition, and scientific and reasonable salary management is an important link for enterprises to form talent advantages and is of great significance to enterprise development. Taking AK Company as a representative of foreign-invested enterprises, it analyzes the problems existing in its salary management such as a single salary structure, separation of performance appraisal and salary incentives, and an imperfect promotion system, and proposes corresponding salary management improvement measures in a bid to improve the company's salary management. The development of foreign-invested enterprises has served as a certain inspiration and reference.

Keywords foreign-invested enterprises; salary structure; variable salary; promotion system

Foreign-invested enterprises refer to enterprises that operate in accordance with the laws of the People’s Republic of China and the People’s Republic of China. According to the regulations, enterprises established in China that are jointly invested by Chinese investors and foreign investors or invested only by foreign investors. As economic development matures and supply-side reform continues to deepen, my country's economy is moving towards a new normal trend. However, in recent years, my country's foreign-invested enterprises have performed poorly and faced difficulties in development. The reasons mainly include the following aspects: First, the labor costs continue to increase, compressing the profit margins of foreign enterprises; second, the adjustment and adjustment of the preferential policies originally enjoyed by foreign enterprises. The reform of my country's tax system has brought certain operating pressure to foreign companies; third, the strength of local companies has increased, and market competition has become increasingly fierce; fourth, my country's legal system has been continuously improved to severely crack down on commercial bribery and monopoly. Under this situation, some labor-intensive foreign-invested enterprises in my country have moved to South Asia, Southeast Asia and other regions. Some foreign-invested enterprises have actively adjusted and promoted their own transformation and upgrading, and more technology-intensive and asset-intensive foreign-invested enterprises have moved into China. At the same time, there are some problems in salary management of foreign-invested enterprises in my country, which restrict their development in China. With the development of the knowledge economy, outstanding talents have become a key factor for enterprises to maintain vitality and creativity and achieve sustainable development. As an important part of human resources management, salary management plays an effective motivating role in attracting and retaining talents. Therefore, this article takes AK Company as an example to conduct research on the salary management of foreign-invested enterprises.

1. AK Company and its salary management status

AK Company is a wholly foreign-owned biotechnology company founded in 1995 and located in Hangzhou, Zhejiang Province. It is the global strategic production base of XX Group, with a total number of employees of more than 600 people. The company uses the technical support from the headquarters and the production base in China as a guarantee for development. Currently, the company's products involve biological diagnosis, medical equipment and other fields, and are sold in more than 140 countries around the world. It has successfully developed medical equipment such as blood glucose meters and hemoglobin analyzers. and corresponding detection reagents and other rapid diagnostic products. As a company that is transforming from a labor-intensive to a technology-intensive enterprise, AK Company is in the same situation as most foreign-invested enterprises in our country. Therefore, with AK Company as a typical representative of foreign-invested enterprises, its research results have great implications for foreign-invested enterprises. The development has certain practical significance. In the early days of investing and building factories in China, AK Company mainly produced and processed products and had a relatively simple organizational structure. However, as the objective environment and its own strength continue to change, AK Company has transferred some of its technology research and development work to my country, and the inflow of technology research and development talents has made its organization scale continue to grow. Therefore, AK Company has formed its current salary system based on its own development. The details are as follows: From the perspective of employee salary levels, the average monthly income of AK Company individuals is around 5,000 yuan. According to data released by the China Business Industry Research Institute in 2017, the average monthly salary in Hangzhou is 7,608 yuan. In comparison, the average monthly personal income is at a low level in the region. From the perspective of salary structure, it includes three parts: fixed salary, variable salary and benefits.

Among them, fixed remuneration includes basic salary, allowances, etc.; variable remuneration includes performance pay and bonus commission; benefits include five insurances, one housing fund, annual leave, etc. AK Company decided to adopt a hybrid compensation strategy based on different organizational structures and employee types. Among them, a market-leading compensation strategy is adopted for technical and R&D personnel. The company hopes to attract a large number of outstanding talents, improve the core competitiveness of the company, and promote its own transformation; it adopts a performance-based incentive salary level for marketing staff to increase their work enthusiasm and create Greater economic benefits; and a follow-up compensation strategy for those engaged in basic daily work such as finance, human resources management, and administrative management. According to the above analysis and research on the salary status of AK Company, it can be seen that AK Company still has many problems in salary management, and these problems are also common problems in salary management of foreign-invested enterprises.

2. Problems and reasons for the salary management of AK Company

(1) The salary structure is single and the economic remuneration is low

The salary of AK Company is fixed It consists of three parts: salary, variable salary, and benefits. Fixed salary is mainly based on basic salary, with an increase of 5 per year; floating salary is mainly bonus, and the year-end bonus is 1-2 months' salary reward depending on the position; benefits include Statutory social security and annual leave lack high motivational measures, so employee satisfaction is generally low. The reason is that on the one hand, AK Company entered the Chinese market at the end of the last century. After more than ten years of rapid development, the company's development stage and environment have undergone tremendous changes. However, the company's salary system has not been reformed and innovated; on the other hand, On the other hand, some foreign companies have faced difficulties in their development in China in recent years. Increased costs have led to a decrease in net profits. Wages cannot guarantee the original 10-20% increase, and it is difficult to increase economic rewards. Therefore, the current salary system is outdated and lacks external competitiveness, making it difficult to attract and retain talents.

(2) Separation of salary incentives and performance appraisal results

According to the company's own situation, the organic combination of salary management and performance appraisal is conducive to tapping the potential of employees and giving full play to the best benefits of salary incentives. best results[1]. However, in the operation and management process of AK Company, there is a problem that salary management and performance appraisal are not closely connected, and variable salary accounts for a low proportion of the overall salary. The main reason is that the company adopts equal pay for equal work as the principle of salary design. Therefore, it is difficult to widen the salary gap between employees with the same position and reflect the different contributions made by employees with different ability levels to the company. Although AK Company has formed its own performance appraisal system and evaluation standards, due to imperfect appraisal tools, lack of ability of appraisers, and the fact that the appraisal results do not have a huge impact on salary and promotion, there is a "formal" phenomenon in the performance appraisal process. This It violates the original intention of setting up a variable salary project, leads to a huge waste of company resources, increases internal consumption, and reduces overall operational efficiency.

(3) The salary and promotion system is unreasonable and career ceilings appear.

The glass ceiling is a metaphor for the invisible obstacles faced by female workers in enterprises who want to reach the top [2]. Although in previous studies, the "glass ceiling" phenomenon occurred among women, with the practical development of foreign-invested enterprises in my country, the "glass ceiling" phenomenon has also appeared in the career development of outstanding local employees. For example: AK Company has a vertical management organizational structure, and management positions are relatively concentrated. Under this condition, most of the middle and senior managers are dispatched from the headquarters. Only a few positions at the grassroots and middle levels are selected through recruitment and are filled by local employees. This will inevitably lead to the phenomenon that some outstanding talents apply to leave after 1-2 years after joining the company. Therefore, in addition to low economic remuneration, the reasons for brain drain also include the failure of enterprises to formulate scientific and reasonable career plans for employees, and the single promotion channels and routes for employees. The above-mentioned problems and reasons of AK Company have a certain reference effect on the salary management of foreign-invested enterprises in my country. The improvement measures and suggestions for the salary management of AK Company also have certain inspiration and reference significance for the salary management of foreign-invested enterprises in my country. .

3. Enlightenment of AK Company’s salary management on the salary management of foreign-invested enterprises

(1) Establish a comprehensive salary concept and focus on the combination of internal and external salary

The so-called comprehensive salary , refers to the company’s systematic rewards for individuals or teams that contribute to achieving organizational strategic goals. When setting up a salary system, we should pay attention to both internal and external salary design, combine traditional salary projects with new reward projects, and formulate a comprehensive salary system based on the company's development strategy. Like AK Company, many foreign-invested enterprises are in a period of transformation and are in urgent need of technical R&D talents and management reserve talents to maintain the long-term development of the organization. Therefore, in the context of fierce market competition, a systematic salary survey should be conducted for external remuneration, and the collected data should be scientifically and professionally analyzed, and the basic salary of each position should be set accordingly to improve the external competitiveness of remuneration; for internal remuneration, , first of all, the working environment and office facilities should be improved, especially the introduction of high-tech equipment; secondly, personalized training programs should be developed according to the employee's ability level to improve employees' various abilities; then, employees with outstanding performance should be regularly trained Recognize and award them to enhance their sense of belonging to the organization and play a role model; finally, organize cultural and sports activities and travel and other projects to strengthen the company's humanistic care and employee communication, form harmonious interpersonal relationships, and satisfy employees' psychological needs Remuneration is needed.

(2) Increase the proportion of variable pay and promote internal fairness

In the setting of variable pay, monthly or quarterly bonuses should first be added to combine employees’ personal performance with salary [ 3], to achieve the purpose of short-term incentive of salary. Secondly, a revenue and profit sharing plan should be formulated to strengthen employees' sense of "ownership". The company must set performance targets for each department at the beginning of the year and retain a certain degree of flexibility. At the end of the year, the company must determine the performance goals of each department based on the company's profitability and the performance of each department. Profit distribution ratio to achieve the purpose of long-term salary incentives. Prior to this, enterprises need to streamline and optimize the original performance appraisal system, use scientific and professional assessment tools, and formulate a new performance appraisal system that suits the characteristics of the enterprise. In addition, companies need to publicize performance appraisal results and departmental performance results to ensure openness and transparency, and the human resources department supervises and verifies the entire performance appraisal process. As a result, the company can not only continue to develop and increase revenue even when the external environment is at a disadvantage, but also greatly improve employees' work enthusiasm and initiative, enhance corporate cohesion, and ensure internal fairness in remuneration.

(3) Pay attention to the long-term development of employees and cultivate and retain talents

Based on Maslow’s demand theory, enterprises formulate scientific and feasible promotion management systems to tailor career development for employees. Planning is based on meeting employees' basic needs and satisfying their self-realization needs. Foreign-invested enterprises like AK Company can set up a multi-channel promotion model. For example, for technical personnel, they can choose to develop either on the technical route or on the management route. The company provides employees with a variety of promotion options to maximize their career prospects. Give full play to employees' abilities, match them with the most suitable positions, and create more value for the company. In addition, enterprises should adjust their organizational structure, appropriately increase organizational levels, and reduce the frequency of use of "airborne troops." When vacancies arise, priority should be given to promoting internal employees, which can shorten the running-in period for employees to adapt to new positions. It can also enable local employees to see career development prospects and reduce turnover rates, which in turn is conducive to the realization of the organization's strategic goals.

[References]

[1]Su Yi. A brief discussion on the construction of performance-based compensation system based on incentive mechanism [J]. Modern Business, 2015, (15): 117-118 .

[2] Bai Donghong, Zhao Xinyuan, Fan Xinping. The "glass ceiling" of foreign-funded enterprises and the turnover tendency of local employees: the moderating effect of volatile careers [J]. China Human Resources Development, 2017, (04 ): 22-31.

[3] Chen Dan. Research on the causes and coping strategies of corporate brain drain [D]. Suzhou: Suzhou University, 2016.

Author: Zhang Peng Zheng Xue Unit: School of Management, Liaoning Normal University;