A Railway Transport Enterprises Pay System Redesign

In the economic globalization, Chinese enterprises are facing a more complicated market environment. Competition among enterprises take place mostly by the form of intellectual capital and internal management racing. This will certainly turn the traditional personnel management system to the modern human resource management alternatives. In the modern human resources management, remuneration has been not only the traditional production cost of maintaining the function of the carrier, but also an element closely related to human resource development and corporate strategy. Incentive pay system, as an important part of human resource management, is a core content as well as the most important part of human resources management. As a result, the key of the pay system re-engineering turns to be how to embody the core values and strategic objectives, and how to make incentive pay playing a role in the business to attract and retain quality people and the core staff, and how to stimulate enthusiasm in employees so that enterprises can effectively implement the strategic objectives to promote the continuous development. For large-scale state-owned enterprises, it has been a new and critical subject to design and establish a pay system which is scientific, in line with national conditions and adaptative to the need of enterprise development in the era of globalization.This article is on the subject of a large state-owned enterprise– A railway transport enterprise(abbr. AE from here), an exploration in the re-engineering of its pay system. First of all, this article is under the guidance of 2 principles of major theory: the wages decision theory and the incentive-based theory. It begins with the connotation of pay, the pay system design theory and principles, the general idea and the factors need to take into account, providing the theoretical basis for the pay system re-designing of AE. Secondly, an analysis and empirical research on the pay system of AE. Introduced AE's business background, as well as the unique characteristics of its operating mechanism. The analysis focused on its pay system status quo. After giving credits to the possitive effects of the original remuneration system, the analysis works on its drawbacks and their reason: AE's original pay system is in short of both internal equity and external competitivity. The egalitarianism has its way all around, as a result it became difficult to attract high-quality personnel. In a macro view on the strategic level, the original pay system can not meet the urge of enterprise development; in a micro view from the organization level, the original pay system can not effectively motivate staff. The points were made to clarify the necessity and targets of the re-design. Thirdly, the article presented the guiding ideology for the pay system re-design of AE. 8 principles to adhere to, 3 major goals to achieve, 3 major factors to take into account. Finally, the re-design of the AE pay program. There are highlighted solution in the program for 2 major issues: First, an expansion on the total wage source of AE, based on a reconstruction of the the link model between work efficiency. This solution helps to emphasis the public-good characteristics of AE. Second, a solution to the the issue of core-staff salaries, build a multi-layer payment model to better reflect the different value of employee contribution on different labor positions. At the same time, the article put forward a 3-step implementation of the multi-layer payment model, as well as a comprehensive package of measures. The new pay system not only enhance the fairness of the internal and external to enhance the competitiveness of this industry. It promises to further inspire the staff on their initiative and AE's sustained, steady and rapid development. Hopefully, more companies other than AE could get some idea from this work.