Introduction to the design of compensation system in the early stage of production of Qinhuangdao Shouqin Metal Materials Co.

   A. Brief introduction of the personnel composition of Shouqin Company

   Shouqin is a medium-sized iron and steel metallurgical joint venture financed by the plate company in 2003, with the following personnel composition: 600 administrative, professional and technical personnel and workers with high technical operation level were drawn from each process plant of Shougang Corporation and the plate company; 400 college and university graduates and workers with work experience were recruited through the society; 441 trainees were recruited in the technical school. The personnel at this stage are unstable and mobile; and the proportion of newly recruited personnel is large, the skills of these personnel need further training and improvement; Shougang and plate companies draw personnel with high skill level; how to effectively integrate these personnel, need to establish a scientific and systematic compensation system to attract and motivate talents, so as to achieve rapid growth of the company, grow the strength of the enterprise and carry out rapid capital accumulation.

   Compensation system design

  (1) Design idea of compensation system

   It is a “double-edged sword” for the enterprise, which can attract, retain and motivate talents if used properly, but may bring crisis to the enterprise if used improperly. The establishment of a new, scientific and systematic compensation system is of great significance for enterprises to gain survival and competitive advantage in the era of knowledge economy.

  Shouqin is currently in a rapid growth period, and a large proportion of its employees are newly recruited with primary skills, so it needs to formulate a reasonable career development plan for them and actively guide them to improve their skills; after production starts, it is Shouqin’s central task to quickly reach production, form capacity and create benefits. After the start of production, we propose to establish a set of skill-oriented
①and value-oriented
We propose to establish a skill-oriented ① and value-oriented ② compensation incentive model. For the main groups of the company, we will implement the post-performance grade salary system, and for other special groups, we will implement flexible salary forms, such as annual salary system for middle and senior management and share ownership plan for the management team, so as to form a diversified salary distribution pattern. This distribution model will be conducive to mobilizing the initiative and enthusiasm of the company’s employees, establishing an effective internal salary incentive and restraint mechanism, and achieving the goal of “pay for work, efficiency first, and fairness”.

  (2) Salary market survey and level determination

  Therefore, whether the level and structure of salary and benefits are reasonable or not directly affects the living standard of employees, their enthusiasm and sense of belonging, and the operation and development of the company. It is very necessary to establish a reasonable salary system for enterprises, and the premise of establishing a reasonable salary system is to accurately grasp the current market salary “market” situation in the region, especially for enterprises in the same industry.

  In Beijing, we selected the third steelmaking plant of Shougang, which is similar to our company in terms of job setting; in Tangshan, we selected the second refractory plant (according to the survey, the wage level of this company is in the upper reaches of the whole Tangshan Steel Group); in Qinhuangdao, we selected Qinhuangdao Shougang Plate Co. In order to establish competitive advantage of talents among enterprises in different industries in the same region, we selected Qinhuangdao Bondi Company and Qinhuangdao Bohai Aluminum Company, both of which are private or joint venture enterprises with high wage levels in Qinhuangdao itself.

We made a detailed analysis and comparison of the profit, sales revenue, total cost, number of employees, annual per capita salary, the ratio of salary to sales revenue and the ratio of total salary to total cost of these enterprises, and combined with the fact that Shouqin is in the rapid growth period, the general skill level of employees is low, and the level of enterprise efficiency is also in the primary stage, therefore, it is suitable to implement the salary strategy of low starting point and fast promotion in the market Therefore, the overall salary level will be slightly higher than the average level of similar industries in Tangshan area and Qinhuangdao area, and the annual per capita salary level will be about RMB 30,000.

   The growth of total salary should follow the principle of “the growth of total salary is lower than the growth of profit and tax, and the growth of per capita salary is lower than the growth of labor productivity”. The following five main factors should be taken into consideration when approving the increase of total salary: the efficiency of the enterprise and the improvement of the workers’ skills; the change of the guiding price of the labor market in the region; the change of the salary level in the same industry; the change of the social consumer price index; the salary level should be adjusted once a year.

  (c) Classification of job levels and job types and the design of corresponding salary model

  Based on Shougang Corporation’s “Metallurgy and General and Service Posts Grading Standards” and the evaluation results of job labor elements, after detailed job (position) evaluation, the company divides all the jobs into 3 layers and 14 categories from the level of adaptability, skill level and responsibility required by the incumbent, and through the above division, it can clearly confirm which employees are the core of the enterprise Through the above classification, we can clearly identify which employees are the core staff of the company and reasonably determine their salary pattern and salary level. The combination of annual salary system and stock options for middle and senior staff is based on the fact that Shouqin is in the start-up period, a growth stage, and needs a driven leadership team, which needs to be highly motivating in terms of salary design, combining high compensation with a medium to high degree of reward. Although this is riskier, it can promote rapid growth and high returns.

For professional and technical management level and operation level, we implement the post performance grade salary system which is closely related to the position and performance, and also make the individual performance and group performance closely linked. The salary composition of the personnel implementing the post and grade salary system is mainly divided into four units: post and grade salary unit, bonus unit, welfare unit and allowance unit.

In the process of setting the job salary level, we pay attention to highlight the importance of technical management category, and its salary level starts from higher, the R&D category has higher salary level than technical service category; the planning category has higher salary level than executive category; the professional and technical management level has higher salary starting point and higher overall salary level than operation level.


   Since the official implementation of this salary system in August 2004, it has achieved the expected incentive effect and formed a good atmosphere of learning skills and comparing technical business level among employees, which has injected vitality into the development of the enterprise.

At the same time, due to the introduction of the point value quantity, since June 2005, under the situation that the steel market has fallen sharply and the profit of the enterprise has decreased significantly, the performance salary level can be adjusted in a timely manner through the up and down fluctuation of the point value quantity, so that the personal interests of the employees are really closely linked with the overall interests of the enterprise and the organic unity of individual goals and enterprise goals is realized.