Discussion About Compensation Reform Of NingXia Petrochemical Branch Establishing Motivation-oriented Compensation

Excellent employees will be the key factors that may affect the development of the company. And compensation is the basic tool which be often used to retain excellent employees. So it is great important to study compensation in a company. This article reviewed the theories of compensation, performance and motivation firstly. Then it dissertates the motivation function of performance related pay (PRP), by discussing the relationship of performance, compensation and motivation. The article indicates the importance of establishing PRP by analyzing the current operation situation of Ningxia Petrochemical Branch. The article analyzes the factors affected the company's compensation, then demonstrates the strategies that Ningxia Petrochemical Branch should carry out when it reforms its current compensation constitution.According to the external consistency principle, the compensation amount of all sorts of employees is determined. Then based on motivation theories, the compensation structures are discussed, namely the ratio of the fixed part and flexible part of compensation. Obviously, the flexible part of compensation is the access to motivate employees. The performance appraisal is designed and how the performance result and the compensatoin can be connected is also dissertated. In this way, the complete compensation system is constructed. The problems that might emerge during carrying out the compensation system reform are discussed, and the strategies that be carried out tosolve the problems are also pointed out. The conclusion can be made that it is feasible to establish a motivation-oriented compensation system by PRP in Ningxia Petrochemical Branch. However, the compensation should be improved on continuously according to the development stage of the company.