Influence of Internal Factors of the Enterprise on the Performance-Based Payfor Employees

,Tran Thi Minh Phuong

doi:10.47191/jefms/v4-i10-25

Abstract

This paper is conducted to investigate the influence levels of internal factors of the enterprise on the performance- based pay for employees in State-owned enterprises in Hanoi. Data were collected from getting 120 questionnaires from board of manager, head of Human Resources (HR) administration and HR administrative staff in State-owned enterprises in Hanoi. Based on the data collected, the author use descriptive statistics analysis, cronbach Alpha analysis and Indepentdent T-Test for knowing the influence levels of each independent variable on dependent variable of the performance-based pay for employees. The results show that five internal factors of the enterprise including: production and business characteristics of enterprises; business development strategy; employees; the company's salary payment perspective; and personnel in payroll department have relationships with the performance-based pay for employees. Based on the findings, some recommendations are given for improving wages of employees to ensure the sustainable development of enterprises.

Highlights

Performance-based pay (P3) is a way of paying wages based on an employee's level of performance (Singh & Loncar, 2010)
The method of paying labors according to work performance is a method of calculating and paying wages to employees based on their individual or group achievements; the salary of each person depends on the work results and productivity of the individual or of the group (Tuoi, 2015)
The salary scale system used in these enterprises includes many types, grades to suit each type of worker and ensures that the salary scale reflects the true value of the job

Summary

Introduction

Performance-based pay (P3) is a way of paying wages based on an employee's level of performance (Singh & Loncar, 2010). The method of paying labors according to work performance is a method of calculating and paying wages to employees based on their individual or group achievements; the salary of each person depends on the work results and productivity of the individual or of the group (Tuoi, 2015). The P3 method is becoming increasingly popular and is an important element in the compensation system of many companies. The implementation of this method still faces some limitations. P3 can cause employees to take advantage of the compensation policy for their self-interest and lead all employees’ efforts to activities that directly bring rewards, which negatively impacts other important tasks of the business. Applying P3 without non-financial compensation can erode endogenous motivation and employees’ satisfaction, leading to a decline in labor productivity and profit

Methods

Results

Conclusion