Luận văn tiếng Anh EMPLOYEE COMPENSATION AT THE HO CHI MINH MUSEUM CONSTRUCTION JSC.doc

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Luận văn tiếng Anh  EMPLOYEE COMPENSATION AT THE HO CHI MINH MUSEUM CONSTRUCTION JSC.doc

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Luận văn tiếng Anh EMPLOYEE COMPENSATION AT THE HO CHI MINH MUSEUM CONSTRUCTION JSC

FOREIGN TRADE UNIVERSITY FACULTY OF BUSINESS ADMINISTRATION Major: International Business Management -*** GRADUATION THESIS Thesis title: EMPLOYEE COMPENSATION AT THE HO CHI MINH MUSEUM CONSTRUCTION JSC Student name : Vũ Khánh Linh Class : A1 – High Quality Intake : K46 Supervisor : Dr Đào Thị Thu Giang Hanoi, May 2011 TABLE OF CONTENTS ABSTRACT CHAPTER I: INTRODUCTION .7 1.1 Statement of the Problem 1.2 Objectives of the Study 1.3 Subject of the Study .8 1.4 Scope of the Study 1.5 Structure of the Dissertation CHAPTER II: LITERATURE REVIEW .9 2.1 Overview of Salary and Wage 10 2.1.1 Definition of Salary and Wage 10 2.1.2 Roles of Salary and Wage 13 2.2 Payroll Account 13 2.2.1 Definition and Roles of Payroll 13 2.2.2 Public Payroll 14 2.2.3 Construction of a Public Payroll Account 20 2.2.3.1 Legislature regulation 20 2.2.3.2 Salary structures 21 2.3 Salary and Wages In Construction Companies 22 2.3.1 Time-based Pay 23 2.3.2 Product-based Pay 24 2.3.3 Package Contracts 27 2.3.4 Standards to Pay Structures 27 2.3.4.1 Educational backgrounds 27 2.3.4.2 Craft levels of manual workers 28 2.3.4.3 Pay levels of white-collar staff 29 2.4 Bonus Payment 29 2.4.1 Definition of Bonus 29 2.4.2 Types of Bonus 30 2.4.3 Effects of Bonus 31 2.5 Bonus Payment In Construction Companies 32 CHAPTER III: METHODOLOGY AND DATA .33 3.1 Research Approach 33 3.2 Data Collection Method 34 3.2 Research Methodology - Case Study 35 CHAPTER IV: EMPIRICAL FINDINGS 37 4.1 Overview of the Ho Chi Minh Museum Construction JSC 37 4.2 Current Payroll Systems At The HCMCJSC 46 4.2.1 Regulations on Minimum Payment at the Company 46 4.2.2 Regulations on Pay Levels, Pay Scales at the Company 48 4.2.3 Construction of the Payroll Account 55 4.2.4 Salary/Wage Payment Systems at the Company 58 4.2.4.1 Time-based pay 58 4.2.4.2 Job-based wage 61 4.2.4.3 Product-based pay 65 4.2.5 Bonus Payment at the Company 67 4.2.5.1 Allowances and welfares 68 4.2.4.2 Salary increase procedure 68 4.2.4.3 Bonuses and awards 70 4.2.6 Assessments on the Payroll System 72 4.2.6.1 Achievements 72 4.2.6.2 Limitations and Reasons 74 CHAPTER V: CONCLUSION .76 5.1 Recommendations for the Company 76 5.1.1 Improve the Performance Assessment 76 5.1.2 Improve the Time-based Pay System 77 5.1.3 Improve the Job-based Pay System 80 5.1.4 Improve the Unit Cost Standardization 82 5.1.5 Improve the Reward System 83 5.2 Limitations of the Study 86 LIST OF REFERENCES… 88 LIST OF FIGURES AND TABLES Figure 4.1: Organizational Structure of Ho Chi Minh Museum Construction JSC 40 Figure 4.2 Salary increase procedure 69 Table 2.1: Diagnosis Criteria for Public and Private Companies - Problem Contexts 15 Table 2.2: Alternative Decision Rules for Public and Private Problems Bureaucratic and Contingent Action Models .16 Table 4.1: Quantity and Quality of Technical and Management Staff .41 Table 4.2: Quantity and Quality of Blue-Collar Workers39 .42 Table 4.3: Financial Results of the Company from 2007 to 2009 42 Table 4.4: Performance-indicated Ratios 44 Table 4.5: Pay Table for Members of the Board .46 Table 4.6: Pay Table for Executive Director, Deputy Directors, and Chief Accountant 48 Table 4.7: Pay Table for Professional / Departmental Staff 49 Table 4.8: Status allowances for Head of Department, Deputy Head of Department 50 Table 4.9: Pay table for directly in-charge construction workers .53 Table 4.10: Report of salary in the years from 2007 to 2009 56 Table 4.11: Reward – Bonus Funds from 2007 to 2009 57 Table 4.12: Job-based wage contract 61 Table 4.13: Contracted team payroll 63 Table 4.14: Output quota and unit cost of 1m2 beam forms 66 Table 4.15: Employees’ Incomes from 2007 – 2009 73 LIST OF ABBREVIATIONS ATM Contr CQC Dep GPD IT JSC KPI MATL MEP Mgmt Automatic Telling Machine Contract Construction Quality Control Department Gross Domestic Product Information Technology Joint Stock Company Key Performance Index Material Mechanical, Electrical and Plumbing Management Prj PRP USD VND Project Performance-related Pay United States Dollar Vietnam Dong ABSTRACT This study is on the regime of salary, wage and bonus payment at the Ho Chi Minh Museum Construction JSC It first aims to provide insights on salary, wage and bonus, their theoretic definitions and roles as important components of an employee compensation plan Subsequently, it will review the applications, achievements and limitations of the regime at Ho Chi Minh Mausoleum Building JSC, as an illustration for the academic background Afterwards, suggestions and solutions will be given to improve the employee payment regime at the company In general, the study can contribute to the systemization and improvement of the salary, wage and bonus payment regime at public/State-owned organizations Hopefully, better systems at many other enterprises can be made, with adjustments to the individual circumstance of each enterprise Chapter I: INTRODUCTION 1.1 Statement of the Problem Payment to the employees – Salary, wage and bonus – always receives great concern because of its social-economic significance For the employees, these payments are important because they could be their sole incomes, to support their whole families’ lives For every business, it accumulates in the expense account that takes up a great proportion in total costs It can be the driving force behind the increase of labor productivity, if it is paid in accordance with the employees’ contribution; or otherwise if it is not Therefore, how to construct a sound payroll account and how to select an appropriate payment form – so that a payment could be both the mental and physical reward for an employee, his or her real strong motivation to a better job, and also one of the reasonable expenses for business – are very essential Payroll issue is not new; however many deficiencies still need to be addressed now to perfect the work of paying salary, wage and bonus in enterprises – especially in State-owned enterprises – to ensure that the payments are equitable and reasonable for the employees, thus drive up profits for the business 1.2 Objectives The dissertation has three objectives: First, it is to contribute to the background theory of payroll, which is done by clarifying the concept of salary, wage and bonus, their determinants, their efficiencies in different payment systems Second, it is to illustrate how State companies in Vietnam make payments to their employees, taking the scenario at Ho Chi Minh Museum Construction JSC as a case for study, and reviewing its achievements and limitations in payroll Third, it is to suggest possible solutions to improve the payment regime at Ho Chi Mnh Museum Construction JSC, some of which could be applied nationwide in other State companies 1.3 Subjects Subjects of the Study: Salary, wage, and bonus – their definitions, impacts, constructions, and reflections in different payment systems 1.4 Scope The Study provides analysis and evaluation of the payrolling at Ho Chi Minh Museum Construction JSC, a State construction company 1.5 Structure of the Study The Study will be divided into five parts: Introduction to the subject, general theoretic background of payroll in State construction companies, data methodology, founded results, and conclusion of the Study In the first part, brief introduction will be provided to explain the importance of salary, wage, and bonus payment, the objectives of this Study, and how its contents will be elaborated 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 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 = TL tt * HSLCB *Ntt*Hsc*Hht + Hpc*TLtt*Hsc + Lcđ 22 Where: TLt: Salary that the employee receives TLtt: Minimum salary as legalized HSLCB: Pay grade’s coefficient 80 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 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 not violate any codes of conducts Grade C: Hht = Applied to employees who: - Work performance is passably - Good punctuality 81 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 82 5.1.3 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 jobbased 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 V sp TLi = m ∑n j* t j* h j * ni*ti*hi j =1 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 83 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: n ∑ d ij Hi = j =1 n ∑ d kj j =1 Where : j: Number of objectives n ∑ dij : j =1 Total marks the worker number i receives for completing objectives j n ∑ dkj : Total marks of the worst performer who has the lowest marks j =1 for completing objective j Objective j could include objective of days of working, attitude and work performance, etc 84 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 5.1.4 Improve the unit cost standardizations Reasons: 85 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 5.1.5 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 86 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 feasible16 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: 16 Robert J Greene, nd Effectively managing direct compensation Available online at: http://www.sncba.org/ pdf/Direct_Compensation_WP.pdf Accessed on 15 March 87 - 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 : 88 o The building rated as qualified by the Quality Control Committee o 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: o The building progress is as planned o 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 89 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 o 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 o Voting must be objective and honest o Products’ quality must be examined carefully 5.2Limitation of the Study Due to the scope of the dissertation and the boundaries of resources, the following delimitations have been made: - The study is limited to the payroll activity in a State-owned construction company, and not other parts of the operation or production in this company or in a private organization - Due to the context of case company Ho Chi Minh Museum Construction JSC, the chosen systems of salary payment are limited to timebased, piece work, and job-based Other pay systems are neglected - In this research, quality control as well as performance assessment methods are only mentioned but not investigated - It is not possible to cover all of the legal instruments regulating payroll; therefore only relevant excerpts are discussed in this study 90 LIST OF REFERENCES Frederick Taylor, Early Century Management Consultant [e-journal] The Wall Street Journal June 13, 1997 http://www.cftech.com/BrainBank/TRIVIABITS/FredWTaylor.html [Accessed May 4, 2011] Anon.1865 The piece work principle in agriculture Journal of the Statistical Society of London 28 pp 29–31 Dan, Ariely et al., Large Stakes and Big Mistakes, Working Paper 05-11 Steven M Bragg, 2004 Essentials of Payroll: Management and Accounting New York: J Wiley and Sons Anna, Dubois & Lars-Erik, Gadde, 2002 Systematic combining: an abductive approach to case research, Journal of Business Research, vol 55, pp 553-560 91 Colin, Fisher, 2007 Researching and Writing a Dissertation: a Guidebook for Business Students, United Kingdom: Pearson Education Limited William, Foddy, 1993 Constructing Questions for Interviews and Questionnaires – Theory and Practice in Social Research United Kingdom: Cambridge University Press B., Gillham, 2000 Case Study Research Methods, London: Continuum International Publishing Group Robert J., Green, 1998 Alternatives to Time-based Pay, Questia [e- journal] Abstract only Available at: http://www.questia.com/googleScholar.qst? docId=5000142592 [Accessed 14 March 2011] 10 Morley, Gunderson; W., Craig Riddell, nd The changing nature of work: implications for public policy [pdf] Institute for Research on Public Policy Available at: http://faculty.arts.ubc.ca/criddell/1chgnat.pdf [Accessed 7th April 2011] 11.Susan M Heathfield, nd Bonus Pay About.com Guide [internet] Available at: http://humanresources.about.com/od/glossaryb/g/bonus.htm [Accessed 15th March 2011] 92 12 Bernd Irlenbusch and Gabriele K Ruchala, 2006 Relative Rewards within Team-Based Compensation [Internet] Published online in December 2006 13 Dr Paul, M Johnson et al,, 2005 A Glossary of Political Economy Terms [Internet] Alabama: Paul.M.Johnson Available at: http://www.auburn.edu/~johnspm/gloss/human_capital [Accessed 11th March 2011] 14 Ran, Lachman, 1985 Public And Private Sector Differences: CEOs’ Perceptions Of Their Role Environments JSTOR: The Academy Of Management Journal, 28 (3), pp.671 – 680 15 Karl, Marx, 1995 The Capital vol [Online] s.l.: Marx/Engels Internet Archive Available at: http://www.marxists.org/archive/marx/works/1867-c1/ [Accessed 11th March 2011] 16 Sharan B., Merriam, 1998 Qualitative Research and Case Study Applications in Education, Jossey-Bass Inc 17 R., O'Donnell, 1987 "real and nominal quantities," The New Palgrave: A Dictionary of Economics, v 4, pp 97-98 18 V M Ryss, 1970-1979, The Great Soviet Encyclopedia, 3rd Edition 19 Gilbert, B., Siegel, 1992 Public Employee Compensation and Its Role in Public Sector Strategic Management New York: Quorum Books 20 Frederick Winslow, Taylor, 1911, The Principles of Scientific Management [Online] Google Books 93 Available at: http://books.google.com/books? id=HoJMAAAAYAAJ&pg=PA3#v=onepage&f=false [Accessed May 4, 2011] 21 D., Usher, 1987, "real income," The New Palgrave: A Dictionary of Economics, v 4, pp 104-05 Hamshire: Palgrave Macmillan 22 Robert, K., Yin, 2003 Case Study Research: Design and Methods, Thousand Oaks, CA: Sage Publications, Inc Available at: http://eprints.ucl.ac.uk/14458/1/14458.pdf [Accessed May 4, 2011] 23 Bùi Nữ Thanh Hà , 2008 Kế toán xây dựng Hanoi: University of National Economics pp 35-36 24 Nguyễn Văn Hảo et al 2002, Giáo trình kinh tế trị [pdf], Vietnam: Ministry of Education and Training 25 Phạm Văn Lâm, 2006 Một số giải pháp hồn thiện cơng tác trả lương, thưởng Công ty cổ phần Cơ khí Xây dựng Cấp nước BA, Hanoi University of Civil Engineering 26 Bùi Thị Hà Thu, 2008 Hoàn thiện công tác trả lương, trả thưởng cho CBCNV người lao động Công ty Cổ phần Tư vấn - Đầu tư xây dựng Ba Đình BA, Hanoi: National Economics University 94 ... of an employee compensation plan Subsequently, it will review the applications, achievements and limitations of the regime at Ho Chi Minh Mausoleum Building JSC, as an illustration for the academic... systems 1.4 Scope The Study provides analysis and evaluation of the payrolling at Ho Chi Minh Museum Construction JSC, a State construction company 1.5 Structure of the Study The Study will be... interviews with the staff, including the Chief Accountant of the company and other employees Thus, the author can gather documents and details of the company’s payroll policies, how they are carried

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