Research And Design Of The Compensation System In KY Water Service Company

The compensation system is an important part of human resource management for every company, which should not only meet the requirements of enterprise development strategy, but also follow the trend of the external market environment. It is one of the hardcore of employee incentive mechanism. Scientific and reasonable compensation system can improve the efficiency and vitality of companies to achieve their strategic goals faster and better.KY Water Service Company is one local state-owned enterprise (SOE) possessing historical background and great social responsibility. After decades of stable development, this company has become the most profitable and biggest SOE in the locality, which also is at the top-ranking of the colleague enterprises in province. However, this SOE did not participate in the market competition due to its monopoly condition. Thus, its desire of reform is not strong in past time. Especially for the compensation system, it has followed the previous salary payment method formulated by State-owned Assets Supervision and Administration Commission (SASAC) for all SOEs, which did not match development direction and strategic objectives of this company. Therefore, this backward situation results in much adverse effect including insufficient vitality of old employees, low morale of new employees, slackness in work of normal employees and no promotion for outstanding employees, which has significantly influenced the developed speed of this company.This research, which combined the realistic status, used KY Water Service Company as a case study. A survey related to all employees was designed and utilized to understand the true view and opinions of compensation system from the employees. Through the analysis of the results about this survey, the issues related to current compensation system were found out containing salary distribution, position setting and performance appraisal, whose influence on the development of the company was illustrated. After identifying these problems, a brand new compensation system was designed according to the suggestions from Milkovich’s Salary Management, which was used to introduce modern enterprise management concept for the company and make this compensation system more scientific and reasonable.Through the investigations, position setting was adjusted according to positions analysis of different categories and levels, which clearly indicated job content and requirement for each position. The duty and responsibility of each position was divided according to company’s future development strategy. Then, company could focus on the core position and key team for the improving the efficiency of these employees. Meanwhile, the performance appraisal system was redesigned and performance management organization was built. Different positions would be classified and be examined by various methods during performance appraisal. Examination results from each month and quarterly would be directly connected to the income for each employee, so the performance appraisal can really play the role of staff incentive and punishment, enhance human resource management, morale of employees and work environment, which would dramatically increase the efficiency and the market competitiveness of the entire company. This study also can be a reference and provide some inspiration for the same type of companies.