Luận văn Tiếng anh: Employee compensation at the ho chi minh museum construction jsc

serve as the basis for determining the payment rate. The wage distribution among labor groups and in each of them must be based on the laborers’ workdays, pay grade and participation rate of each labor. For Managers, Technicians, other Departmental staffs who are indirectly in charge of construction jobs: Payment will be made based on length of service and overall performances of the production and business units. But the minimum wages to be paid to officers and employees who fulfilled their responsibilities and tasks are defined as follow: Engineers and other university-graduates, working fulltime and fulfilling all duties must be paid the minimum: 2,100,000 VND for the grade 1 / 8 and 1.5 million VND for fresh-graduated engineers who are in the probation period. Graduates from college and vocational schools, working fulltime and fulfilling every task, must be paid salaries equal to at least: 1.7 million VND for the grade 1 / 12 and 1.2 million VND during short-term contract trial. Salary paid to other tiers according to the formula: TLTT = Minimum Salary = Salary Coefficient ´ Minimum State Salary ´ 2.20 Or more specifically: Minimum salary of a permanent staff = His/her current salary coefficient ´ 1,350,000 ´ 2,20 The minimum state salary is determined by the State, and uniformed in all enterprises within the country. When the State changes this amount, the Company’s salaries will be changed proportionately. The new statutory minimum wage is 830,000 VND (implemented from May 1st, 2011); however the minimum wage in Hanoi region according to decree 108/2010/NĐ-CP is 1,350,000 VND since January 1st, 2011. Thus, the minimum wage that the Company is applying is the minimum wage adjusted for Hanoi region today, 1,350,000 VND. In addition to the above provisions of minimum wage, the Company encourages firms, workshops and units to pay higher salaries for officials and employees who perform their jobs well, and adjust the basic salaries based on specific job characteristics and working conditions. If staff does not complete the task and the unit pays less than the minimum regulated amount, they must report to the Director for approval. Typically employees are paid on the 15th and 30th day of each month. If the 15th or 30th of the month falls on a Saturday, Sunday, or national holiday, the employees will be paid the weekday before, usually a Friday. The payment on the 15th is known as advancement pay, and the pay on the 30th is remainder pay. Regulations on the Company’s pay table as follow: - Because Ho Chi Minh Museum Construction JSC is a state-owned enterprise, its pay grades and pay scales shall comply with the laws on public sector’s payment. - The salary grades and positions of employees who only used to calculate the mode of social insurance, health insurance, overtime pay, night work, work stoppage, annual leave, holidays and other absences of employees action. Also is the basis for calculating salary for each time    Here is the salary scales and payrolls of a number of components: Table 4.5: Pay Table for Members of the Board Unit: 1,000 VND Positions Salary coefficients and ranges 1. Chairman of the Board - Coefficients 6.97 -7.30 - Salary range 6,830.6 – 7,154 2. Members of the Board (excluding Executive Directors, Deputy Directors) - Coefficients 5.98 – 6.31 - Salary range 5,860.4 – 6,183.8 (Source: Human Resources Department) Table 4.6: Pay Table for Executive Director, Deputy Directors, and Chief Accountant Unit: 1,000 VND Positions Salary coefficients and range 1. Executive Director, Directors - Coefficients 6.44 – 6.97 - Salary range 6,311.2 – 6,830.6 2. Deputy Directors - Coefficients 5.98 – 6.31 - Salary range 5,860.4 – 6,183.8 3. Chief Accountant - Coefficients 5.65 – 5.98 - Salary range 5,537 – 5,860.4 (Source: Human Resources Department) Table 4.7: Pay Table for Professional / Departmental Staff Unit: 1,000 VND Positions Salary coefficients and ranges 1 2 3 4 5 6 7 8 9 10 11 12 1. Senior engineers, employees in economics/business divisions and professional departments - Coefficients 5.58 5.92 6.26 6.60 - Salary number (1,000 VND) 5,468 5,802 6,135 6,468 2. Intermediate-level engineers, employees in economics/business professional departments - Coefficients 4.00 4.33 4.66 4.99 5.32 5.65 - Salary number (1,000 VND) 3,920 4,243 4,567 4,890 5,214 5,537 3. Regular engineers, employees in economics/business divisions and other professional departments - Coefficients 2.34 2.65 2.96 3.27 3.58 3.89 4.20 4.51 - Salary number (1,000 VND) 2,293 2,597 2,901 3,205 3,508 3,812 4,116 4,420 4. Regular staff, technical supporting staff - Coefficients 1.80 1.99 2.18 2.37 2.56 2.75 2.94 3.13 3.32 3.51 3.70 3.89 - Salary number (1,000 VND) 1,764 1,950 2,136 2,323 2,509 2,695 2,881 3,067 3,254 3,440 3,626 3,812 (Source: Human Resources Department) Table 4.8: Status allowances for Head of Department, Deputy Head of Department Unit: 1,000 VND NO. Positions Salary coefficients and ranges 1 Head of Department or a similar rank - Coefficients 0.5 - Salary ranges 490 2 Deputy Head of Department or a similar rank - Coefficients 0.4 - Salary ranges 392 From the above tables, we can see that high-level officers have high salary coefficients, and the salaries they receive are higher than the other grades. Therefore, it will encourage them to strengthen their sense of responsibility and contribute more in the work of management. Meanwhile, it also creates incentives for workers, because in order to be promoted, they have to continuously improve their professional qualifications and work effectiveness. Table 4.9: Pay Table for Manual Construction Workers Unit: 1,000 VND Industries/Groups of industries Craft levels, salary coefficients and ranges I II III IV V VI VII 1. Electrification, electricity and IT Group I - Coefficients 1.55 1.82 2.16 2.55 3.01 3.56 4.2 - Salary number (1,000 VND) 1,519 1,784 2,117 2,499 2,950 3,489 4,116 Group II - Coefficients 1.67 1.96 2.31 2.71 3.19 3.74 4.4 - Salary number (1,000 VND) 1,636.6 1,921 2,264 2,656 3,126 3,665 4,312 Group III - Coefficients 1.78 2.1 2.48 2.92 3,.45 4.07 4.8 - Salary number (1,000 VND) 1,744.4 2,058 2,430 2,862 3,381 3,989 4,704 2. Basic construction, building materials: ceramics, glass Group I - Coefficients 1.55 1.83 2.16 2.55 3.01 3.56 4.2 - Salary number (1,000 VND) 1,519 1,793 2,117 2,499 2,950 3,489 4,116 Group II - Coefficients 1.67 1.96 2.31 2.71 3.19 3.74 4.4 - Salary number (1,000 VND) 1,636.6 1,921 2,264 2,656 3,126 3,665 4,312 Group III - Coefficients 1.85 2.18 2.56 3.01 3.54 4.17 4.9 - Salary number (1,000 VND) 1,813 2,136 2,509 2,950 3,469 4,087 4,802 (Source: Human Resources Department) Table 4.9 shows, for direct production workers, the wages they receive are proportionally corresponding to their craftsman level. This is the motivation for workers to constantly learn and improve their skills. Therefore the Company’s average craft level will increase, contributing to improve the construction quality as well as the Company's reputation. Construction of budgets for salary/wage and bonus payment The construction of the Company's payroll account is based on a number of facilities such as production and business results of the Company, the unit wage assignment, the Company's revenue and other funds. Therefore, constructing the payroll account is very difficult. However, putting together salary and bonus plans are necessary and important because the income of workers depends on salary, bonus fund. If the business makes profits, the salary, bonus fund will be big, the income of the employees will be high. And reversely, if the business was stagnant, the income of workers will be reduced accordingly. The formula that the Company uses to determine salary under the production plans and business results: VTH = (E * DT) + VBS + VDP Of which: VTH: Planned salary budget E: Wage unit costs DT: Turnover of the Company corresponding to the wage unit costs VBS: Salary supplement fund VDP: Salary reserve fund from the previous year Table 4.10: Report of salary in the years from 2007 to 2009 Data 2007 2008 2009 Average number of workers (persons) 2,524 2,594 2,509 VTH n (million VND) 66,363.3 94,600.635 123,711.97 VTH n+1/VTH n (%) 142.5 130.77 Revenue (million VND) 433,451.652 501,970.779 522,864.418 VTH n / Revenue (%) 15.31 18.85 23.66 Through the above data we can see, in recent years, the salary budget of the Company tended to increase. Salary budget in 2008 was worth 94,600.635 million, equivalent to 142.5% of 2007 salary, thus increased by 42.5%. Salary fund in 2009 was 123,711.97 million VND, which grew 30.77% from that of 2008. The Company's salary budget increase in 2008 was due to several reasons: The average numbers of labors increased, production and business situations were good, and workers had stable jobs. Comparing 2009 to 2008, the average number of employees decreased, but the salary fund of the Company still increased, which probably was because of the efficiency in production and business activities, and the Company’s application of the new salary, from 620,000 VND to 800,000 VND (implemented from 1.1.2009). From the above table, we could also see the growth rate (in percentage) of the salary budget on Company revenue throughout the years. It was up 3.54% in 2008 compared with in 2007, increased 4.81% in 2009 compared with 2008. This is also consistent with the fact that the average number of employees had increased. However, Company should also evaluate whether the increase of the revenue percentage to fund salaries would affect the Company profits. The reward fund of the Company was formed on the basis of setting aside a percentage from the profit after tax amount. Thus, it would change in proportion correspondingly with the change in profit after tax, and also percentage to be set aside and reward policies of the Company. The reward fund set up in recent years in the Company as follows: Table 4.11: Reward – Bonus Funds from 2007 to 2009 Data 2007 2008 2009 Net incomes (VND) 433,451,652,132 501,970,779,144 522,864,418,198 Profit after tax (VND) 19,756,652,536 13,019,194,616 52,455,542,847 Percent set aside (%) 7.7 8.9 4.86 Reward – Bonus fund (VND) 1,522,592,726 1,155,777,632 2,551,705,053 Absolute change (VND) -366,815,094 1,395,927,421 Relative change (%) -24.09 120.78 (Source: Finance - Accounting Department) As the data from Table 11 shows, the reward policy of the Company had made significant improvement. Specifically, in 2008, the reward fund reduced by 366,815,094 VND, equivalent to 24.09%, but the set-aside percentage increased 1.2% compared to that of 2007. It reflects, though profits decreased, the Company still spent a significant proportion to set up the reward fund to motivate and encourage employees. In 2009, though the set-aside percentage was smaller than that of the previous 2 years, the profits achieved was large so the reward fund amount was still up by 1,395,927,421 VND, equivalent to 120.78% increase. Payment systems at the Company Time-based pay: Currently the Company is applying the method of payment over time for those whom work is not directly involved in the production or construction process, so the results of their work cannot be accurately measured quantitatively. Positions to which the Company is applying the method of payment over time are: Management positions: Executive Director, Deputy Director, etc., and Departmental staffs, who are not in direct charge of production and construction’s on-site processes. Time-based salaries of the Company’s employees are calculated on the following basis: - Based on the individual’s pay grade and corresponding coefficient. - Based on the position’s coefficient. - Based on the employee’s number of working days in the month. As described in the Company’s accountant’s memo, the monthly time-based salary for an employee shall be calculated as follows: TLt = *Ntt*Hsc + Hpc*TLtt*Hsc + Lcđ Of which: TLt: The salary of the month TLtt.: The minimum salary prescribed by law HSLCB: The pay grade’s coefficient 22: Number of working days in month Ntt.: Number of actual working days in month Hsc: The position’s coefficient Hpc: The position’s allowance coefficient Lcd: Paid holidays Here are some examples demonstrating how to calculate the monthly time-based salary: Mr. A, Head of Construction Engineering Department, pay grade’s coefficient is 3.7, professional position’s coefficient is 1.9, number of working days of the month is 23 days, responsibility allowance for the position of Head of Department is 0.5. So his monthly salary shall be calculated as follows: TLt = *23*1.9 + 0.5*1,350,000*1.9 = 10,051,302 VND Mr. B, Deputy Head of Construction Engineering Department, the coefficients for pay grade, professional position, and responsibility allowance for his position are 4.2, 1.9 and 0.4 respectively, number of working days is 23 days. Thus his monthly salary is: TLt = *23*1.9 + 0.4*1,350,000*1.9 = 12,288,682 VND Using the time-based method of payment create some advantages for companies such as: helping managers work more easily on salary payment, salary associated with time factor should encourage employees to stay, thus helping retain the employees for the longer time they work in the Company, the higher pay grade’s coefficient they will have. Basically, it’s the payment method which emphasizes on the employees’ years of service and loyalty. Time-based salary also has several disadvantages. Not associated with labor productivity or production results, it only pays based on the time employees are physically present at the Company, not on how effectively they use that time. Thus it’s hard to manage and stimulate the working environment at the Company. Job-based pay: Ho Chi Minh Museum Construction JSC pay job-based wages to frontline workers directly engaged in construction works. The wages paid to employees are calculated based on the actual working day. The steps to pay wages: Step 1: The Company evaluates the contract value; this value is the total amount of wages that the workers executing the contract are entitled to receive. Step 2: Calculate the total number of days all workers need to complete the contract. Step 3: Calculate the unit wage cost for a day work. Step 4: Calculate the wage for each worker according to the actual number of days they work. The following is an example of paying wages in a production team: Table 4.12 JOB-BASED WAGE CONTRACT Works: Construction of Tower B’s body Team leader: Lê Thuật NO. Tasks Unit Results to deliver Total amount (đồng) Unit volume Unit cost 1 Pump water to maintain and reinforce concrete structures in roof m2 3670 1,500 5,505,000 2 Sanitize spaces in construction joints m 520 20,000 10,400,000 3 Roll the wheel chocks into roof, attic floor, sleepers, cross bars and beams’ spaces con 5000 1,000 5,000,000 4 Concrete the attic floor m3 150 35,000 5,250,000 5 Concrete the roof m3 250 45,000 11,250,000 6 Clean the area, remove yoke levers, excess wood pieces m2 1250 10,000 12,500,000 7 Concrete basement platforms, Tower B’s floors m3 42 120,000 5,040,000 Total 54,945,000 With the total contract value of 54,945,000 VND, the Company will divide it by the total number of working days. The 21 members of the team are working full 31 days, so the total amount should be 31 * 21 = 651 days. Thus, the unit cost is equal to 54,945,000 / 651 = 84,400 VND per day. We multiply this unit with the actual number of days of the employee work to pay their wage. Following is the team payroll for completing the contract work: Table 4.13: Contracted Team Payroll NO. Names Wage Working days Wage (VND) 1 Lê Thuật 31 2,616,000 2 Đào Trọng Vỹ 31 2,616,000 3 Nguyễn Bá Hùng 31 2,616,000 4 Bùi Văn Anh 31 2,616,000 5 Bùi Văn Yêu 31 2,616,000 6 Hà Công Nguyên 31 2,616,000 7 Trần Văn Duy 31 2,616,000 8 Bùi Văn Tiệp 31 2,616,000 9 Bùi Văn Nghĩa 31 2,616,000 10 Bùi Văn Việt 31 2,616,000 11 Bùi Văn Tá 31 2,616,000 12 Bùi Văn Giao 31 2,616,000 13 Bùi Văn Duy 31 2,616,000 14 Bùi Văn Trường 31 2,616,000 15 Bùi Văn Hiếu 31 2,616,000 16 Bùi Văn Thịnh 31 2,616,000 17 Nguyễn Văn Biền 31 2,616,000 18 Nguyễn Văn Thanh 31 2,616,000 19 Bùi Văn Minh 31 2,616,000 20 Nguyễn Văn Vỹ 31 2,616,000 21 Quách Công Niềm 31 2,616,000 651 54,945,000 For a Company operating in construction field such as Ho Chi Minh Museum Construction JSC, paying job-based wages is one of the payment methods that best suit the Company’s works. This method of payment has several advantages, such as it encourages employees to work more actively and flexibly. When a worker is on contracted work, he will have the motivation and attention to finish the job as quickly as possible, and to complete it before the deadline. Yet his work quality is still guaranteed by the agreement closely. However, when using this method of payment, the Company must still pay attention to some issues: - During the implementation of the contracted work, Company must still appoint personnel to closely monitor the quality and progress of the construction. - The calculation of wages that the Company is applying is quite simple, only based on working days; so the contribution of each worker in the construction process is hard to be seen, and it’s difficult to fully realize the person’s potential. The payroll would not encourage the workers to work hard but probably rather cause internal conflicts, because different workers, whose skills and performances are different, receive the same salary. Product-based pay The method of product-based payment is also applied by the Company to direct construction workers. To pay based on products, the Company has developed its own output quotas. According to Ryss (1979), output quotas is the quantity of production units (or operations) that must be produced (or completed) during a time unit (hour, shift, or month), under defined organizational and technological conditions, by a single worker or group of workers possessing the appropriate skills. Depending on the type of work, an output quota can be expressed in pieces or in units of length, area, volume, or weight. In other words, it is the time unit required to complete a certain production or operation unit. Ho Chi Minh Museum Construction JSC will determine the necessary time unit for a group of workers to complete a certain job, as illustrated in the later example. Unit wage cost is the wage rate calculated by multiplying average hourly wage of the team or hourly wage of the worker with the output quota (time unit). Here is the example: Table 4.14: Output quota and unit cost of 1m2 beam forms Types of beams Craft levels Average hourly wage (VND) Hours to assembly (hour) Unit costs (VND) Flitch beam 3 0.2413 0.15 0.0362 Rolled beam 4 0.2813 0.24 0.0675 Camper beam 4 0.2813 0.48 0.1350 (Source: Finance - Accounting Department) Multiplying the average hourly wage with hours to assembly the beams, we have the unit wage costs as described in the above table. Then product-based wage of a worker is calculated by the following formula: TLi = E * BL * Qi Of which: TLi: Product-based wage of the i-th worker E: Unit wage costs BL: Pay grade of the i-th worker Qi: The volume of finished products of the i-th worker, usually calculated in m2 or m3. Using this way of payment offers the Company several advantages such as: - Paying by product will create incentives for employees, make them eager to work; as wages that the employees receive are associated with the results of their performance. If they do more, they will enjoy more, and vice versa. Therefore, they will try to work to improve their income. - As a clear method to determine payments, paying by products helps managers calculate the remuneration paid to frontline workers more easily. Also, because the unit wage costs and volume of outputs have been proposed in advance, the workers will not question their salary and inflict conflicts with others. But this way of payment also has some disadvantages. Because the wage itself depends heavily on the number of products, the employees probably tend to work fast, indiscriminately, which thereby may reduce the quality of their works. Allowances payment and recognition systems at the company Allowances and welfares - Status allowance: Manager positions will enjoy a status allowance each month, which value equivalent to 10% of basic salary. - Travel allowance: Members of staff who frequently travel for business trips are entitled a travel allowance of 250 000 VND/month. Members of staff who occasionally travel for business trips will have travel allowance calculated as below: + 15000 VND per time, per one-way route < 10 km. + 25 000 VND per time, per one-way route from 10 – 20 km. + 35 000 VND per time, per one-way route from 20 – 30km. + 50 000 VND per time per one-way route >30km. - Welfares: Getting married: Wedding congratulation of 200,000 VND. Death of a sibling or relative: Funeral of 200,000 VND . Natural catastrophy or fire: Assistance of 300,000 VND Need-based grant: From 200,000 to 500,000 VND per employee Salary raising procedures Regulations on raising salary are described below: - Consideration time for salary raise: Each year in April, the company will make reviews and considerations for salary raise. - Subjects of pay raise: White collar employees who have been at the current salary step/level for one year, not violated codes of conducts, codes of labors or other regulations, fulfilled all tasks assigned, are subjects of salary raise. If violated any regulation, he or she will be skipped the raise for one year. Next year, the employee will only be considered if not re-violating the regulations. - Exceptional raise will be awarded to excellent/distinctive employees, who are recommended by the direct manager of their team. - Salary increase procedure: The below table demonstrate the procedure to increase salary at the company: Figure 4.2 Salary increase procedure After receiving the positive decision, the employee will enjoy an increase of 5 – 20% more than the current salary. Bonus and awards: Annual bonus: At the end of each year, the company will review financial results and evaluate employees’ performances to determine the percentage excerpt from profits to be transferred to the bonus fund, as well as the bonus amount of each employee. Monthly bonus: On the next-to-last working day of the week, the head of department will write report on departmental employees’ performances. The report will be sent to Human Resource Department, then Execute Director for review and acceptance of bonus. Seniority-based bonus: Length of service is calculated in details, rounded to month (working for more than 15 days is equal to a month in calculation). Seniority-based bonus will be given at the end of the year. Special merit-based awards: To create incentives and motivation for staff to work well, besides having reasonable salary and wage policies, the Company also has special merit-based awards to recognize employees who have achieved excellent results in business or production, which contribute significantly to the development of the Company. Performances of employees are evaluated based on objective and responsibility fulfillment. Awards titles are pretty similar to which of other public organizations; at the present, the company has a list of award titles and criteria, paraphrased as follows: Distinctive employee: Work proficiently, fulfill all assigned tasks. Be integrity; do not violate code of conducts or any honor codes. Comply with the laws of the State, the Company’s regulations and other labor disciplines. Have worked at the Company for at least 10 months (200 days). Able to work well both in group and independently. Have good team work spirits. Outstanding employee: Must meet the standards of “Distinctive employee" but achieves more productivity and greater effectiveness. Have recognized innovations or new technologies that are applied in operations. Be respected and loved by colleagues. The number of “Outstanding employees” does not exceed 20% of the total number of “Distinctive employees”. Distinctive team: Complete all delivered business plan is delivered, organized and maintained a steady movement routine and practical effects. 50% of team members achieved the title “Distinctive employee" No member is disciplined. Be recognized as a strong collective team. Outstanding team Overcome obstacles by determination and innovations, excellently reach (if not exceed) the assigned goals. 100% team members accomplish their targets. 70% team members are regarded as “Distinctive employees”. No member is disciplined. No serious work accident occurs in team. To be qualified for an award, the individual or team must have a short written summary of achievements, and references from the direct manager. Normally, after being nominated by the company, the qualified employee will receive the formal decision from the Prime Minister in about 1 – 2 month (however as stated in Decree 42/2010/NĐ-CP as 1 – 2 weeks). The award packages will typically include a certification, medal, and a grant. Depending on each type of award, and whether it is at organizational or national level, the value of the grant can range from 30% to 450% of the legalized minimum salary for individual award holder, and 80% to 2450% for a team.(Decree 42/2010/NĐ-CP). Assessment on the current Payroll System Achievements First, about the compensation system: The company’s performance has been increasing yearly; therefore its salary budget size also increases. From the salary report at Table 10, it is easy to see that the salary budget size in 2008 was at 94,600.635 million VND, which was nearly one and half the size in 2007. In 2009 it was 123,711.97 million VND, approximately 130.77% of 2008. The bonus budget also increases, which reflects the attention of the employer to this matter. From Table 11, the excerpt percent transferred from profits to this budget increased 1.2% compared to what in 2007. In 2009, the size increased 120.78% from which in the previous year. Second, positive changes in employees’ incomes: Since both the salary budgets and bonus budgets increased, the incomes of employees also increased. It is demonstrated by the following table: Table 4.15: Employees’ Incomes from 2007 – 2009 Figures 2007 2008 2009 Monthly salary (million VND) 63,241.549 88,149.338 119,863 Changes in percent (%) 39,4 36 Average salary (million VND/person) 25.06 33.98 47.77 Changes in percent (%) 35,6 40,58 (Human Resources Department) From this table, we can see that the salary budget size constantly rised through years. In 2009 the changing speed was not as high as in 2008, however the average yearly salary of an employee increased by 5 million VND. This could be explained that the number of employees in 2009 decreased from that of 2008. The average incomes of employees also grew each year. The salary budget in 2009 was smaller than in 2008, but the average income was higher. This is a good sign, because when employees have better income, they will put more effort in the work. Third, retainment of good employees: Through out the course of years, the company doesn’t have troubles in retaining good employees and workers. The number of laborers who resigned took 5% of total number of new applicants. Being able to maintain a team of high-quality employees is a key factor that helps the company performs well in the recent years. To make good employees and workers stay, the company has always tried to have sound compensation plans, and create a friendly, stable working environment for the hires. Limitations Although the company’s payment regime is suitable for the construction field where it is working in, there are still has several limitations that the company can improve. The time-based pay system doesn’t associate the paying amount with job performance of the employee. The current system can only demonstrate how much time the employees are physically at work, not their productivity or what they do during work time. Therefore, some employees still use their time at work for personal purposes, or do not concentrate on their jobs. This pay system does not motivate employees to put their best in the work, or be more responsible with their results. About the job-based wage contract system, assessing the number of labor days is not reasonable to evaluate job performance of employees correctly. Special team awards require a percentage of team members who have obtained single awards; however these awards’ holders are selected based on votes of fellow team members, so it is possible that a team would nominate an unqualified employee for a special title, therefore gain entry into the team awards. Also, the Company only recognizes employees who have worked at the company for a long time, at least for 10 months (200 days), which really limits the number of acclaimed performers. New-comers, despite being however good, will not be receiver of any award or recognition. The lag time between the award decision and reception of actual bonus is so long that it can demotivate the awarded employees. Reasons for limitations: - The company applies the State payroll system, therefore does not have enough flexibility and practicality in calculating compensation to employees, although the State system provides an easy accounting work. - The time-based salary is not practical and reasonable, because it doesn’t associate work results that the company receive with salary amount that the company pays. It also doesn’t motivate employees, because of the wrong signal that ‘performance doesn’t count’. - Performance assessment, especially at work sites, is not strict enough. The ‘best performers’ recognitions only count on traditional voting system, voted by collegues and direct managers. There hasn’t been a serious human resource managerial, psycho-analytic assessment system for performances of employees. Also, at work sites, the quality control hasn’t been reliable enough. Chapter 5: CONCLUSION Recommendation to the Company Accurately assess work performance, and transparently perform performance voting Reasons: To calculate a correct amount of salary /wages pay, assessing work performance is nessessary, especially at a construction company which could find difficulties in monitoring workers at construction sites. Working day is an important factor that affects the pay amount which the worker is entitled to receive, so calculating working days needs to be accurate and understandable to the employees. Voting: Because voting will determine who will get the bonus, and the bonus amount, it needs to be objective and fair. There must not be any secret influence or emotional voting. Contents: First, timekeeping employees must understand the importance of their jobs in order to be more engaged and responsible. Currently, the vice heads of departments and group leaders are in charge of timekeeping, so the accuracy of the job is quite high. However, there are several cases where the timekeeper and employee/worker belong to the same working unit, which could affect the integrity of the timekeeper. To improve this, the company should have clear regulatory criteria on timekeeping, as well as penalties for laborers who violate, who could be either timekeepers or employees/workers. Second, reducing weightings of head of department’s votes and replacing them with peer ratings. Collegues will vote and comment for each other based on criteria such as working attitude, professionalism, performance results, enthusiasm, etc. When the team members meet, each of them can understand why they are voted in or out, their strengths and weaknesses, as well as believe in a fair, unfavoured system of the company. Therefore, their performances could be improved, and conflicts, misunderstandings could be reduced. Conditions: For timekeeping and performance rating can be fair, the company needs to: First, timekeeper must be clear about their job. It could be done by communication or a short period of training. Second, the company needs to have clear rules about timekeeping, with appraisals and penalties criteria. Third, again, the company needs to be sure that employees are aware of the importance of peer rating system. They should be clear that it is their responsibilities, for their benefits, so they shouldn’t be emotionally affected when rating another person. Fourth, the employee rating system must be easy to understand, not confusing or too troublematic. Improve the time-based pay system Reasons: The time-based pay system at the company only takes into account days of work, and pay level, without the actual performance at work. On this system, the employees only have to go to work everyday to receive a good salary, regardless of what they do there. Good performers are rated equally with bad performers, so it doesn’t motivate employees. Contents: To associate the employee’s performance with their salary, a suggestion on forming a new calculation formula has been done by Pham Van Lam (2001), as cited as below: Salary of the employee is based on: Pay grades, pay level/step rate (pay coefficient), allowance coefficient Actual working days of the employee Responsibility fulfillment coefficient The formula is: TLt = *Ntt*Hsc*Hht + Hpc*TLtt*Hsc + Lcđ Where: TLt: Salary that the employee receives TLtt: Minimum salary as legalized HSLCB: Pay grade’s coefficient 22: Number of working days in month as legalized Ntt: Actual number of working days in month Hsc: Hierachical position’s coefficient Hht: Performance result’s coefficient Hpc: Special allowance’s coefficient According to the above formula, the performance of the employee is included in the salary calculation. The coefficient based on performance result could be as below: Grade A: Hht = 1,2 Applied to employees who: Excellently complete the assigned tasks Have good work ethnics and do not violate any codes of conducts Grade B: Hht = 1,1 Applied to employees who: Sufficiently complete the assigned tasks Have good work ethnics and do not violate any codes of conducts Grade C: Hht = 1 Applied to employees who: Work performance is passably Good punctuality Grade D: Hht = 0,8 Applied to employees who: Fail to complete assigned tasks Violate a code of conduct within the month Skip work How to evaluate the performance of an employee is a critical question. The direct manager could base on KPI, or another performance rating index to assess the job of the employee, if it is not clear-cut in tasks and steps, to avoid bias or limited accuracy. Also, a professional human resource management system should be applied, so that the direct manager can focus on his or her expertise only. He only needs to make reviews and comments about the quality of performance of the employee. Also, if the D-Graded employee has to receive a calculated salary that is lower than the minimum, he or she will be paid the minimum. To apply this new way of calculation, the company need to: - Ensure that the monitoring of the employee’s work is reliable; a timekeeper could be used widely in the organization. Also, the direct manager has to be able to judge his or her staff’s performance objectively, at least know how he or she is spending time at work. - The performance assessment should be objective, not influenced by chances to win recognitions or awards. - Assessment criteria need to be transparent and well-communicated to employees. Improve the job-based pay system Reasons: Ho Chi Minh Construction Museum JSC is a building company; therefore the main payment system that is used for manual workers is job-based pay. However the calculation only based on days of work has been outdated; it does not appreciate the performance, productivity of the worker or take into account the differences in work outputs of the team members. Contents: This method to calculate job-based pay is again suggested by Pham Van Lam (2006). The formula takes into account both the working days and percent of contribution of the employee into the completion of project. TLi = * ni*ti*hi Where : TLi: Wage that worker number i receives Vsp: Amount of wage that the total number of workers receive, or the value of the contract Ni: Actual working time of worker number i Ti: Pay’s coefficient of worker number i Hi: Contribution’s coefficient of worker number i, which relates to the contribution of his/her in completing the task M: The total number of workers The contribution’s coefficient of worker number i (hi) is decided by group votes, his or her work will be assessed by other workers and the team leader. After completing the contract, the team members will have a meeting to evaluate the performance of each worker, and decide how much a worker contributes to the team work. The contribution’s coefficient can be determined in either way: Method 1: The contribution’s coefficient is calculated based on the formula: Hi = Where : j: Number of objectives : Total marks the worker number i receives for completing objectives j : Total marks of the worst performer who has the lowest marks for completing objective j Objective j could include objective of days of working, attitude and work performance, etc. Method 2: The leader of the contruction team will use a prescribed hi table, where has different grades of A, B, and C with relevant marks. Team members also vote for performance of each member. This way, the team leader will have to carefully develop the hi table. However, it should be recognized that this system mandates that performance criteria and performance standards be established and that individual performance be credibly measured using those standards. If a formal performance appraisal system does not exist there is a danger that the variable feature will be used incorrectly or in a discriminatory fashion. Conditions : Calculating job-based pay like this suggestion is rather complicated, especially when determining contribution’s coefficient of the worker. Therefore, when calculating the wages and use performance index, several cautions should be taken: - The coefficient hi of the worker must be determined clearly, transparently, and by the whole team. - The coefficient hi must reflect as much as possible the involvement of the worker in the working process. The person who has the highest hi should have the most dexterity, highest working attitude, to finish their part soonest and of highest quality. The person who has the lowest hi should be a worker who has worked neglectly, failed to deliver the results on time, and/or the results are below quality standards. Improve the unit cost standardizations Reasons: Unit wage cost is still an important component when calculating workers’ wages based on jobs or products. Therefore, it needs to be accurately determined. Fixing unit wage cos tat the company is still a problematic work. These standards have been used for too long, outdated, and failed to reflect the correct actual inputs from the employees. As of current, technology has been developing swiftly, shifting many burdens from the workers to machines, and other automatic/ semi-automatic procedures. The productivity has been increased fast thereof, so these standards are very faulty, which affect the expenses account of the company. Contents : Therefore to determine the unit wage cost and other paying standards, the company should reconstruct the unit wage cost system with consideration of technology development. Furthermore, constantly updating the system and widely communicating it to the employees are also neccessary. Conditions : The COmpany needs to assign a reasonable expense for reconstructing the unit wage cost system and other paying standards. There should be a dedicated department or unit to review and adjust these standards. Improve the reward payment system at the company Reasons : According to Winslow Taylor, money is one of the best incentives for employees. Though not an alternative to base pay, cash incentive programs can be combined with various pay rate options to produce a total direct pay package which supports the company's culture, structure and environment. The departmental/unit level at which performance can be measured and should be rewarded will have an impact on the types of incentives considered. If it wishes to elicit individual behaviors and/or results, then some type of individual incentive program would be the most feasible Robert J. Greene, nd. Effectively managing direct compensation. Available online at: Accessed on 15 March. . If, on the other hand, work is of a highly interdependent nature or ooperative/supportive effort at the work team or organizational unit level is needed, then some form of group incentive program would be likely to fit the best. As a contrustion company, Ho Chi Minh Museum Construction JSC may find it suitable to use both. Contents : Constructing clear award criteria. Also, some awards should not be quantitatively limited. If an employee is qualified for the award, he or she should be able to claim. This will limit the affected votings in the company, because everyone has the same chance to win. Selection process needs to be clear. There is a tendency that most people who are nominated and awarded are at managerial positions. Obviously, managers contribute very keenly to the improvement of the company, however endeavour of other members of the staff should also be noticed and appraised. There are a number of individual incentive approaches: Using lump-sum bonuses to recognize performance more often than using increases to base pay. For individuals who reach the top step in time-based programs the company can stiff offer annual awards to exceptional performers and those who must be retained. Using fast cash incentive awards to supplement base pay increases for outstanding performers. No matter how base pay rates are administered, it is sometimes desirable to have tangible, short-term reinforcement of outstanding behavior/results. Using fast cash awards enables the company to avert the established annual cycle of reward allocation and bring reinforcement close to the behavior/results being rewarded. For example, awards may be paid to a project team or task force when performance is known and deemed to be deserving of something beyond what the base pay administration program can provide. Also besides the current systems, some suggestions that the company may use are : Construction quality bonus Because contruction quality standards are higher and higher, to keep and improve the company’s credibility, its delivered result to customers must be of high quality, matching the required standards. To ensure that each contruction project follows the quality benchmarks and keep the design as in the blueprints, apart from having on-site technicians, conducting good quality control process, the company should have a bonus of construction quality to on-site workers. This bonus is applied to building teams who have : The building rated as qualified by the Quality Control Committee The building completed on time From the scale and value of each building, the amount of bonus can vary. A building team can have manifold bonuses, as well as their buildings can satisfy the above criteria. Construction progress bonus Because construction sites are mostly outside, during the construction processes they will be greatly affected by weather conditions. Therefore, in many cases, the construction progress must be boosted steadily. In these cases, apart from base pay, the company should consider paying bonus to workers. It will create motivation for them to work more keenly. This bonus is applied to buildings that have close deadlines, and in order to gain bonus, the workers must ensure that: The building progress is as planned. The construction quality is confirmed. Innovative bonus This bonus could be applied to individual, and team who initiate ideas and recommendations to improve the company perfomance. Material saving bonus Saving materials and fuels will help the company cut large expenses. Therefore any idea, method to use less materials and fuels yet doesn’t affect the quality of construction should be highly welcome. This bonus can induce employees to pay more attention to saving materials and fuels, so that they won’t use the inputs too abundantly. To apply the above suggestions, one important condition is that the company must achieve good financial results, therefore it can extract a percentage from the profits to fund the bonus budget. Recognition and award systems must be applied for new employees as well, as long as they have remarkable contribution to the improvement of the company. Voting must be objective and honest. Products’ quality must be examined carefully. 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