Research On The Strategy And Its Tactics Of Performance-related Pay Of Higher Learning Institutions

In recent years, with the deepening of China’s reform and opening-up policy, rapid economic development has improved people’s living standard while bringing about the problems of unfair income distribution, income disequilibrium among different higher learning institutions and the unscientific income distribution system within higher learning institutions. Since July,2006, higher learning institutions have implemented the reform on post and performance related pay system. Thereafter, Faculty and staff’s pay includes post-related pay, seniority pay, performance related pay and benefits, among which post-related pay and seniority pay are base pay, regulated by the uniform national policy and standard; performance-related pay reflecting one’s achievements and contribution, which is determined by the supervising department, and distributed by higher learning institution independently; and benefits which are regulated by the government according to the specific posts, locality and different situation. Whether performance-related pay can be effectively implemented is the key of this round of reform. Higher learning institutions are required to implement it from January 1,2010 by the government. However, most of the higher learning institutions have struggled in reform and are not yet to take the step.Performance-related pay should be implemented through effective pay system design, whose prerequisite is the formation of pay strategy and its tactics. This thesis applies pay theory, incentive theory and personnel management theory into the analysis of the development of our pay system from the economic and management perspective. Foreign salary system is used for reference and the uniqueness of higher learning institutions and teaching profession are taken into consideration. Normative analysis is used as the main research method. The author proposes to formulate strategies in effectively implementing performance-related pay in higher learning institutions based on its developing strategy and choose level tactics, structure tactics, formation tactics, payment tactics and adjustment tactics to realize it, while obeying strategic principle,fair principle, competitive principle, incentive principle, economical principle, legal principle,et.Pay level tactics mainly focuses on external competitiveness. Among the four types of pay level tactics, there are market leading tactics, market matching tactics, cost-oriented tactics and mixed tactics to choose from. The supervising department will choose market-leading tactics to determine the total amount of performance-related pay and exert classified guidance and control on the higher learning institutions. So it can strike a balance among different institutions and define the proportion of fund that the government finance and the institution itself will undertake respectively according to the non-profit nature of higher learning institutions and the classified channel of fund allocation. Higher learning institutions will take mixed tactics for different posts. Market leading tactics will be adopted for high-level talents and key posts while market matching tactics may be adopted for other posts while ensuring external fairness and internal consistency.Pay structure tactics refers to setting corresponding pay standard based on different post hierarchy, so as to reflect the fairness and motivation of income distribution within the organization. Pay structure can be categorized into equal pay for the same post, different pay scales for the same post, pay grades system and broad banding system. Pay grades system will be applied in performance-related pay in higher learning institutions, i.e. "pay grade" and "pay point" should be set according to some specific vertical range for the same series of posts at various levels. Appropriate overlapping is allowed for adjacent posts while different series of posts can have independent reference frame but should be in line with a fixed "horizontal scale". Thus, the interests of the faculty will be linked with the interests of non-teachingstaff, while the key position of the faculty is highlighted and key posts emphasized to better address the relations among different posts.Pay formation tactics refers to the specific components of pay and its proportion. It is to reflect rewards for the faculty’s contribution and to serve as motivation. Pay theory normally divides pay into two categaries, fixed rates and variable rates. According to the proportion of the two, there are three pay modes, namely:flexible, stable and eclectic. Flexible mode and stable mode are quite extreme situations, thus eclectic mode is usually adopted, i.e. faculty and staff are evaluated by their posts and performances; most of their income is relatively stable; fixed and variable rates are in appropriate proportion. However, compared with high-tech enterprises and overseas higher learning institutions, the base pay in our pay system is quite insufficient in safeguarding function. Therefore, performance-related pay should be further divided into basic part and motivational part. Through constructing mathematical model, it is deduced that basic performance-related pay will count for around 60% of the total. In general, "pro-stable mode" should be selected. Different departments and different posts in different institutions should vary in the formation of performance-related pay, which can be further divided into more parts, but the proportion of each part should be carefully calculated.Payment tactics is the regulation about payment method and payment cycle. Faculty and staff of different positions and different ages have different needs. Performance-related pay should be delivered in monetary term through combination of monthly pay in advance and yearly end settlement. But from the perspective of total pay and continuous incentives, payment tactics should be diversified and combined based on posts, on individuals and on time so there will be direct and indirect incentives, short-term and long-term incentives. Institution-oriented distribution system of basic performance-related pay and the motivational performance-related pay fixed in colleges and departments should be established.Pay adjustment tactics regulates pay adjustment mechanism. Performance-related pay should be adjusted annually according to annual assessment and change of posts and total pay standard should be adjusted timely according to the social and economic development. Meanwhile, systematic total pay adjustment mechanism should be established according to the institution’s financial capability. At the initial stage of performance-related pay, reform should be promoted through pay raise. Afterwards, performance-related pay raise should be linked with the performance of the faculty and staff, so as to unify the individual objective with the institution’s strategic objective.Higher learning institutions are widely acknowledged as the field where reform on performance-related pay encounters great difficulties. A variety of factors, such as the institutions’ development policy, external environment, internal conditions and campus culture as well as the national policy, the institutions’ overall interests and the individual interests of the faculty and staff should be considered. Balance should be achieved among the institutions and departments, among departments, between teaching and researching, among different disciplines, between teaching faculty and other staff, between staff on posts and the retired. Reform on contractual employment system, performance appraisal system, financial management system and other supporting systems should be promoted. Guidance and control should be enhanced by the nation, in the mean time, research, analysis and scientific decision-making should be conducted by the institutions in order to realize the benefits of performance-related pay system.