Building Reward and Competition Regulations in Enterprises

work. They are willing to work overtime to meet sales targets when necessary. Thanks to that, the company has surpassed its competitors Sams Club and Walmart in many different areas, especially the loyalty and dedication of employees. Compared to the 21% of employees who quit their jobs every year at Sams Club, this number at Costco is only 6%. Because of the high number of employees quitting, the cost of recruiting and interviewing also increases. This cost for Wal-Mart and Sams Club is estimated at $2,500/employee. "Imagine how Walmart and Sam's Club will be worried about finding enough employees when the business grows?", Helena Sweva, a human resources expert at Ernst & Young, commented. "Because Costco employees are satisfied with their jobs, they will work hard to achieve business targets. They often apply the method of inviting customers to try new dishes sold at the store or discounting new products on certain occasions. Indeed, Costco's sales staff have proven that they have the ability to sell much better than Sams Club employees. According to calculations, for every square meter of floor space, Costo employees sell products worth 795 USD/day, while this figure at Sams Club is 516 USD/day, at BJs Wholesale Club Inc is 411 USD/day. Costo employees are always creative, flexible in thinking of different ways to sell to attract customers. For example, what size is the right size of package, arranging it so that customers can easily pick it up themselves, choosing which items to sell to both be convenient for customers and bring in more profit for the company. With such steps, Costco employees have demonstrated their creativity. The enthusiastic response from customers has forced many other retailers to reconsider their employee pay practices.

It can be said that an optimal salary payment method is the method that is approved by most workers and is suitable for the company's circumstances. Depending on the specific business activities, each company will have different forms of salary payment. Here are some common salary payment methods applied by companies and corporations around the world 16 :

1.2. Experience in salary increase and bonus in the US :

In the United States, employees receive annual raises. It is relatively easy to get a raise within the same pay grade or pay range, but it is more difficult to get a raise in a pay range.

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16 Business Forum www.dddn..com.vnOctober 20, 2008, according to Unicom/Bwportal

difficult. For example, a level 3 worker (the last level of the level 2 salary scale) who wants to be promoted to the level 3 salary scale must meet the standards of that salary scale. They must have enough points according to the job standards of that salary scale. Usually, they must go through advanced training courses either opened by the company itself, or at vocational training schools; they even have to study at night universities to improve their qualifications. The requirement to improve professional qualifications necessary for salary increases ensures that employees have the capacity to work for the company. Only those who have enough qualifications are considered for salary increases, those who have higher salaries than others are because their qualifications and abilities are better than others. This makes the salary and bonus system fairer and more effective.

Furthermore, annual salary increases in American companies depend on the company's profit and loss, so the number of people who receive a raise is determined annually. First, departments propose a list of employees who will receive a raise, which must clearly state the qualifications of each person according to the standards set by the human resources department. American companies often then convene a promotion committee consisting of the director, union representatives, and employees. This committee will consider other criteria (such as seniority, being late, being absent from work, having good work performance) in addition to the criteria that employees already meet when they are nominated.

1.3. Experience in fair rewards and punishments

To make the evaluation work effectively, the manager must apply a fair reward and punishment policy. Because nothing makes employees feel more discouraged than when the meritorious and hard-working are not rewarded while the lazy and wrong-doers are rewarded; those with achievements and those without achievements are rewarded equally. To evaluate objectively and give reasonable rewards and punishments, the company relies on a standard system with specific scales presented in the job description. American companies are very interested in monitoring trainees or new employees. If these people do a good job, the manager will promptly reward and encourage them. These new employees will be deeply impressed and happy with these rewards. Thanks to that, they will be more interested in the job. However, if the new employees make mistakes, they will be specifically instructed on where they went wrong.

how to avoid similar mistakes. On the contrary, those who have worked for a long time in the company will have less contact with the superior managers because they know how to adjust their work. If the self-assessment of the employee's performance is checked to be correct, the manager must honestly have forms of reward and encouragement for them such as end-of-month bonuses and commendations in the newsletter. In the case of senior people making mistakes, if they are minor, the manager must promptly analyze and clearly state the cause of the mistake. If those mistakes have a serious impact on the company, the manager can take strong measures. For example, the Hewlett Packard Company, specializing in the production of electronic computers in the US, has applied a penalty by reducing the bonus fund. Specifically, five HP computer software design drawings contained errors that, if implemented, could have cost $250,000, and three directors punished the design department by reducing its year-end profit sharing by $250,000. The company emphasized that “The company rewards and punishes according to the equivalent quality of the work: everyone is responsible for any quality loss; and rewards are only given to individuals who have

achievements” 17

2. Lessons learned from Japan:

2.1. Experience in evaluation in Japan:

In Japan, evaluating an employee is often based on basic criteria such as: work performance, ability, and whether they are diligent in their work. In evaluating work attitude, an employee's collective work attitude is very important because Japanese companies often value the success and reputation of an entire group, even an entire corporation, rather than an individual. For this reason, Japanese companies do not consider individual talent as the most important factor. They often prioritize recruiting employees who are thoughtful, work with a community spirit, all working towards a common goal of "for the company".

2.2. Experience on salary and bonus in Japan:

In Japanese companies, the treatment of new and old employees is somewhat different. Those who have worked for a long time will of course be given more preferential treatment due to their dedication and commitment to the company. After a long time (about 5 years) working at a Japanese company,

17 Thomas J.Peters and Robert H.Waterman, “In Search of Excellence”, p. 55

New employees receive different incentives than when they first started working at the company. Therefore, young people who have just started working should not be impatient if they have not received salary incentives. The Japanese have a proverb "Sitting on a rock for 3 years", which is similar to the Vietnamese proverb "With diligence, iron can be turned into needles". Patience is required. And to be able to work effectively in a team, it is necessary to do 3 things: Report - Contact - Discuss. (If there is anything, employees must report to their superiors; there is regular contact and exchange between superiors and employees, and they always discuss and ask for opinions before doing any work.)

Depending on the company, there are differences between working hours and wages. But most of them are paid in two ways: monthly and hourly. Monthly wages are applied to employees at companies. (However, there are also differences between employees in the same company - depending on their level and the length of time they have worked at the company, each company has its own specific salary). Hourly wages are mostly paid for overtime at the factory or any other job other than the main job. In Japan, a new employee is often "supervised" by someone (maybe a colleague who started working before or a direct superior) about their working time and efficiency. Therefore, there is no such thing as an incompetent person who sits around all day doing nothing, even just "chatting", is still considered a good employee, acceptable because he has worked enough hours as prescribed 18 . Japanese companies focus on quality and work performance and rely heavily on that to calculate salaries.

II. PROPOSAL TO BUSINESSES

1. Perfecting the salary and bonus system

For a salary system to truly play its role, businesses need to have effective salary policies. The company's salary and bonus policies must ensure fairness within the organization, reflected in the fact that the business ensures equal pay for equal workers, thus encouraging workers to work actively. In addition, businesses should stipulate that employees' salary income must account for 70% - 80% of total income.

18 Website “ Center for Vietnam and Southeast Asian Studies – VNU-HCM – University of Social Sciences and Humanities” Thursday, January 15, 2009.

19. Currently , salaries in many enterprises account for less than 70% of the total income of employees. The remaining income of employees comes from other sources such as bonuses and allowances. Therefore, enterprises need to make reasonable adjustments to the salary fund.

Increasing wages commensurate with the performance of employees also needs the attention of businesses. Wages must be closely linked to the quantity and quality of labor, must reflect the dedication of employees, reflect the true role and position of employees in the Company. From there, wages will stimulate them to work enthusiastically with the highest spirit and responsibility. This increase can be taken from the Company's profits.

Enterprises also need to create a salary level that is competitive in the general market and takes into account the average living standards of employees. If employees are assured of their lives, they will of course feel secure and voluntarily stick with the business for a long time. The cost of paying salaries is a concern of the Company's management, but it is necessary to consider the benefits of increasing salaries. Increasing salaries can motivate employees and at the same time create conditions for retaining and attracting talent for the Company.

Currently, in the salary scale of many enterprises in Vietnam, the salary levels of employees are quite complicated, including many different levels. This makes it difficult to pay salaries. Simplifying salary levels and forms of salary payment to employees will be an effective way to help enterprises in salary management in particular and management in general. In addition to the method of paying salaries directly to employees, it is possible to pay a part of the employee's salary through an account. In addition to the "fixed" salary that everyone knows and receives, paying salaries through an account aims to financially encourage excellent employees through allowances, bonuses or salary increases (like the "secret" salary payment method of FPT). The salary can be high or low depending on the employee's ability to work. This will motivate employees to work. They will work hard to receive the highest remuneration. To create

19 George T. Milkovich & John W. Boudreau (2002), “Human resource management”, Statistical Publishing House, Hanoi, page 245.

Fairness in salary, the evaluator evaluates the level of work completion and qualifications of the employee and then raises the salary in accordance with that contribution.

To suit the operating situation of each department, especially for large-scale enterprises (general corporations, groups, etc.), enterprises can implement a salary fund policy for departments and centers in their organization. The salary fund of departments and centers will be built and settled based on the labor and salary policies of the parent company, general corporation, and group. The salary structure of employees includes policy salary and salary linked to the performance of departments and divisions in the enterprise.

2. Develop emulation and reward regulations in the enterprise

Many businesses, especially state-owned enterprises, often consider rewards based on the ability to complete work and individual achievements, otherwise they consider rewards for an entire unit with a relatively large number of employees. If rewards are given in a mass way, then individual workers will feel that whether they work hard or not, they will be rewarded, so they have no motivation to improve themselves. On the contrary, rewards based on individuals will not encourage teamwork, everyone works on their own because rewards are based on the achievements of each member, not the whole group. Businesses today use a combination of both methods of reward: rewards based on the level of work completion of each individual and the whole group. This combination not only brings excitement to each individual but also promotes solidarity and effective teamwork.

When developing and implementing rewards and recognition policies in their organizations, businesses should follow these 20 principles to get the best results from rewards. Listen to employees: When moving from pyramid-shaped management departments to multi-functional teams focused on customer accounts, this company questioned its employees and discovered that they were resistant to team-based compensation. Define specific roles: Businesses should establish a system of different levels of compensation based on the specialized skills of each team member. Because each person has a specific function

20 Article by Kimberly Merriman in Harvard Business Review, November 2008

so that managers can easily know the contribution of each member. Employees are evaluated based on different methods such as job knowledge and quality of work. Closely linked to evaluation: All members of a given work group should be evaluated by one manager rather than by a series of functional managers. Uniting the whole group through recognition: Enterprises should encourage teamwork and cooperation by recognizing the contributions of members to the group, and clearly stating and linking the role of the group to the success of the whole company. Enterprises should also be aware that: Many employees feel that it is unfair to pay based on the performance of team members they do not really trust, and that the feeling of unfairness is counterproductive to the process of working in a team. Therefore, there will be no effort to unite the whole group through collective rewards.

Effective rewards and recognition for employees mean that they are consistent with the employee’s personality. Often, recognizing employees for good work is a difficult task for managers. It’s not that rewarding employees is a difficult task to do, but when it comes to deciding how to evaluate employees’ performance, managers are left with a dilemma. Managers can ask individuals what kind of recognition they prefer. But this can be time-consuming, and the result can be a list of employee preferences that may surprise the manager. Alternatively, managers can make predictions about what kind of recognition employees might prefer based on their personality. The most popular system for describing personality is the Myer-Briggs type system, which includes 16 personality types. Psychologist David Keirsey grouped the 16 types into four categories after deciding that four of the 16 had more in common with each other than with the other 12. He called these groups Guardians, Rationalists, Artists, and Idealists. Other names that might better describe the four personality types are Preservers, Strategists, Mavericks, and Energizers. For each of these personality types, it would be useful for managers to know not only which personality type

how, what kind of recognition each group desires, and how to treat each personality type differently. Here is a diagram that briefly describes the four personality types according to David Keirsey.

Figure 3.1 . Personality types and rewards

Source : ACT Education - www.act.edu.vn , accessed on May 2, 2009, at 20:34

From the analysis of the above personality groups, the author finds that there are many ways of rewarding that businesses in Vietnam can apply today. Firstly, rewarding employees by dividing shares in the Company - the better they perform, the more shares they will receive. This means that it is in the financial interests of the Company. Secondly, rewarding the initiatives of employees in the Company - any initiative that is beneficial to the Company should be encouraged and rewarded promptly by the Company to motivate employees to work. Companies should also divide the value of employees' initiatives into similar levels.

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