Strategic remuneration in R&D centers of Chinese SMEs-Case study of Dongguan Huamei Food Co., ltd

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Abstract

 

Strategic remuneration is a key aspect in the human resource management. This study focuses on the finding of the human resource management issues in the R&D divisions of the Chinese medium and small sized companies which are on the raise but to some extent restricted in the development with a lack of labor supply and employee motivation among the researchers because of the a number of factors. This paper will use the case of Dongguan Huamei Food Co., ltd by doing original survey on the company’s R&D center with the aims to provide conclusions and useful recommendations to the company and also to other similar Chinese medium and small sized companies that are facing similar problems.

 

List of figures

Figure 1 Product series of Dongguan Huamei Food Co., ltd………………………… 13

 

 

List of charts and tables

Chart 1 Age groups of the researchers……………………………………………………….. 20

Chart 2 Education background of the researchers……………………………………….. 20

Chart 3 Number of years spent in Dongguan Huamei Food Co., ltd……………… 21

Chart 4 Answers to the question “Do you agree that you are highly motivated to do your current job?”   22

Chart 5 Answers to the question “What are the key fields you find you have difficulties in and are not satisfied with?”…………………………………………………………………………………………….. 22

Chart 6 Answers to the question “How many years more are you sure that you will continue to work in Dongguan Huamei Food Co., ltd? ”…………………………………………………… 23

 

 

List of tables

Table 1 Research and development teams in Huamei…………………………………… 14

 

Content page

 

Acknowledgement…………………………………………………………………………………………… 2

List of figures………………………………………………………………………………………………….. 3

List of charts and tables……………………………………………………………………………………. 4

List of tables…………………………………………………………………………………………………… 5

1.     Research background…………………………………………………………………………………. 8

2.     Research objectives……………………………………………………………………………………. 9

2.1      State the Chinese SMEs’ difficulties in managing the HRM issues in their R&D centers    9

2.2      Probe into the reasons under the difficulties in managing the HRM issues in the R&D centers  9

2.3      Use strategic remuneration to provide solution to these problems…………… 9

3.     Literature review……………………………………………………………………………………….. 9

3.1      Knowledge, experiences, skills, qualification and personality traits required of a food researcher     9

3.2      Strategic remuneration in R&D centers……………………………………………… 11

3.3      Food science education resource in Dongguan city…………………………….. 12

4.     Case analysis…………………………………………………………………………………………… 12

4.1      Company background and product information…………………………………. 12

4.2      Importance of R&D center and its current issues according to the management    14

4.2.1     High labor turnover ratio among the food researchers………………… 15

4.2.2     Difficulties in attracting new food researchers………………………….. 17

4.2.3     Lack of standardization in the R&D center………………………………. 17

4.2.4     Low performance and efficiency in the R&D activities……………… 18

4.3      Original questionnaire on the current researchers in R&D center in Dongguan Huamei Food Co., ltd     19

4.3.1     Research design……………………………………………………………………. 19

4.3.2     Analysis……………………………………………………………………………….. 19

5.     Summary of the findings and critical discussion………………………………………….. 23

6.     Recommendations – Eight steps approach to strategic remuneration and compensation in R&D centers     24

6.1      Develop strategic business objectives………………………………………………… 24

6.2      Develop HRM objectives………………………………………………………………… 26

6.3      Develop employee remuneration objectives……………………………………….. 27

6.4      Job analysis……………………………………………………………………………………. 29

6.5      Job evaluation………………………………………………………………………………… 30

6.6      Pay survey…………………………………………………………………………………….. 31

6.7      Job pricing…………………………………………………………………………………….. 32

6.8      Implementation………………………………………………………………………………. 33

List of reference…………………………………………………………………………………………….. 34

Appendix Questionnaire on the researchers in R&D center in Dongguan Huamei Food Co., ltd   38

 

 

 

Strategic remuneration in R&D centers of Chinese SMEs

-Case study of Dongguan Huamei Food Co., ltd

 

1.        Research background

 

According to incomplete statistics, China has more than 1,200 R&D (Research and Development) centers set up by multinational companies and as of the end of 2009, 465 of these R&D centers were established as independent legal entities with approval of the Ministry of Commerce. These centers have a total investment amounting to 12.8 billion US dollars and registered capital of 7.4 billion US dollars (Peopledaily.com.cn 2010). With the rapid economy growth of China, there is a trend of more and more companies that are eager to establish their own R&D centers to support the technological innovation, these companies include a large number of SMEs (Small and Medium Enterprises). SMEs’ desire to set up their own R&D centers had been enhanced by the government’s policy. During “11th Five-Year Plan” period, Chinese government vigorously promotes independent technological innovation of SMEs, which realizes the spirit of “Law on the Promotion of Small and Medium-sized Enterprises” and “The Outline of National Medium and Long-Term Plan for Sci-Tech Development” as well as features enterprises as main players and market as main orientation (Apec-smeic.org 2008). When China is on its way to becoming a major research power, the Chinese local SMEs face several key problems which are majorly related to the human resource management:

 

l  Chinese Small and Medium Enterprises have a size disadvantage; they cannot compete head to head with the large multinational corporations.

 

l  Chinese Small and Medium Enterprises emphasizing the local market have less access and are less attractive to the foreign R&D talents.

 

l  Chinese Small and Medium Enterprises have less experience in setting remuneration strategies in R&D centers, and talents in these centers are not motivated to work to their full potential.

 

2.        Research objectives

 

This research will aim at studying the strategic remuneration/compensation in R&D centers of Chinese SMEs and provide a step to step instruction for these centers to follow to increase the employee motivation and overall effectiveness of the R&D efforts. The detailed objectives of this study will include:

 

2.1    State the Chinese SMEs’ difficulties in managing the HRM issues in their R&D centers

2.2    Probe into the reasons under the difficulties in managing the HRM issues in the R&D centers

2.3    Use strategic remuneration to provide solution to these problems

 

3.        Literature review

 

3.1    Knowledge, experiences, skills, qualification and personality traits required of a food researcher

 

And according to Susan Hodgson (2010, p. 228) food scientists study and properties and behavior of foods from raw materials through processing to the final product, using a variety of scientific disciplines, notably chemistry and biology, but also physics and nutrition. Food technologists use food science and other technological know-how to turn raw material into finished products for the consumer in an industry that is becoming increasingly sophisticated. This means that the food researchers should possess knowledge of a wide range subjects such as chemistry, biology, physics and nutrition, and this in another word would request the candidates to have at least a bachelor degree in the relative majors through obtaining which they will learn the courses such as food chemistry, food analysis, food microbiology, food engineering, and food biology (Bower 2009).

 

Based on the view of Susan Echaore-McDavid (2008, p. 157), to perform well in their job, food researchers or scientists need effective communication, problem-solving and critical thinking skills. Also they have to have strong writing and computer skills. Besides, they need excellent interpersonal skills in order to work well with other researchers, engineers, managers, technicians and also many others. This means that a qualified food researcher should not only has the needed problem-solving skills, writing skills, computer skills and critical thinking skills that we generally understand as the skills that a researcher should have, but also he or she need to be a team player and knows the basic communication skills in order to fulfill the job requirements as a food scientists.

 

The positions of food researchers will tend to have a requirement of related working experience in particular for the senior food researchers. Even entry level food research assistants are strongly encouraged to gain career-related experience prior to graduation in the form of an internship, summer job, or co-op. Co-op is a program of alternating semesters of work and school. Paid work terms of increasing responsibility enable students to graduate with the minimum equivalent of one year of relevant work experience. Full-time enrollment during the semester prior to the first work term is usually required for students studying the food science and related majors (ncsu.edu 2007).

 

And in term of the personality traits, according to Amy Brown (2011, p. 483) food scientists and technologists usually operate in a team and should enjoy interaction with other people. They should be innovative and interested in the scientific and technological aspects of converting raw food materials into a variety of shelf stable processed foods, with consumer appeal. They must also be committed to lifelong learning and keep up with technological developments in a modem society. These personality traits again reconfirm the importance of the communication skills required of a good researcher and also a need to continual learning rather than concentrating on the single job content.

 

3.2    Strategic remuneration in R&D centers

 

Remuneration which is one of the most important HRM activities refers to the total compensation package; that is, the monetary as well as the non-monetary compensation which an employee is offered in exchange for his labor (Andrews 1988, p.20). Early researches already show that organizations seeking a competitive advantage employ remuneration practices that encourage, facilitate and reward that desired employee behaviors (O’Neill 1955). When remuneration is used as a strategy to help achieve the business objectives, it is the core of the term strategic remuneration or compensation. Strategic compensation is the compensation of employees in ways that enhance motivation and growth, while at the same time aligning their efforts with the objectives, philosophies and culture of the organizations (Bohlander & Snell 2010, p.413). According to the Agency Theory, utility functions of the principal and agent are divergent and sometimes contradicting and that for the agent to behave in the interests of the principal, the principal has to work out a compatible remuneration contract and for the agent to serve the principal’s utility function (Preker 2007, p.151), and the theory requests that effective remuneration contract should be either effort-based if the effort could be observed or estimated, or outcome-based if the outcome is observable. And to ensure that a company’s remuneration is in accordance with the overall business objectives and organizational culture, Raymond J. Stone (2010, p.453) proposed an eight steps strategic remuneration approach which includes: Develop strategic business objectives, Develop HRM objectives, Develop employee remuneration objectives, Job analysis, Job evaluation, Pay survey, Job pricing and Implementation. This model will be applied in the study to discuss the guidelines to be followed by the R&D centers of Chinese SMEs in setting strategic remuneration to increase the performance of the R&D centers.

 

3.3    Food science education resource in Dongguan city

 

Though there are a number of higher education institutes in Dongguan with which the education service is sufficient for a medium sized city like Dongguan, but at present there is only one university, the Dongguan University of Technology (DGUT) that offers a related major of “food science and engineering” under the category of “light textile and food”, a four year bachelor degree program. The Dongguan University of Technology (DGUT), founded in April 1992, was ratified by Ministry of Education in March 2002 to start four-year undergraduate programs and entitled to confer the Bachelor’s Degree (dgut.edu.cn 2010). With only one higher education institute and also the offering of the food science major is only limited in a bachelor level with only about 50 graduates per year, compared to the strong demand of the food research specialists in Dongguan (Dongguan is a famous food production center in the south China), we can conclude that the local education does not produce enough of talents in the major of food science.

 

4.        Case analysis

 

4.1    Company background and product information

 

Dongguan Huamei Food Co., ltd  was established in 1991 in an industrial zone of Donguan City, South China’s GuangDong Province focusing on the food production with its own brand, Huamei. Dongguan is a famous modern manufacturing metropolis, ranking 12th of “National Top 100 Cities” in terms of comprehensive strength. It was also awarded as “The Most Charming City of China”, and ” The Most Economically Dynamic City in China”. The most famous food product is the product lines of Huamei Moon cakes. With two decades’ dedication to the package food industry, the company has turn the originally a small factory into a domestically leading food manufacturer with its own brands. The most recent remarkable event in the history of Dongguan Huamei Food Co., ltd is its establishment of the first subsidiary company in the middle China’s Hubei province. In term of product coverage, the company makes Huamei moon cakes, Golden sand moon cakes, milk-partner biscuit, Huafu soft biscuit (with Belgium origin), Koekje cookie (with Holland origin) and Huamei cookie. And the company also provides OEM services to other companies under various brands.

Figure 1 Product series of Dongguan Huamei Food Co., ltd

Source: Huameifood.com 2011

As of today, with help from the two manufacturing plants, more than ten modem product lines and hiring more than 1000 employees, Huamei owns a production capacity of 80 tons biscuit per day and 1,800,000 moon cakes per day. Its products are marketed in more than 30 countries covering four major continents.

4.2    Importance of R&D center and its current issues according to the management

 

With a prosperous future, since 1995 Huamei has invested heavily in its Research and Development (R&D) center which is located in its headquarter in Dongguan, next to its first manufacturing plant in a small town of Dongguan, namely Chashan. Now the center owns a research and development team of 43 researchers being in charge of four major functions as following:

Research Team

Team leader

Senior researchers

Research assistant

Total

Packaging Design

1

2

2

5

Recycling Technology Development

1

4

5

10

New Product Development

2

8

10

20

Food Safety Research

1

2

5

8

Total

5

16

22

43

Table 1 Research and development teams in Huamei

Source: Internal document

 

With the expansion of the business from a small factory that was mainly involved in the OEM activities for the oversea food brands to a leading packaged food manufacturer in China with several brands that belong to its own, the company had long found out that the development of its R&D center has been lagged behind compared to the rapid growth of the business which leads to the strong market demand of the Huamei products. After talking to the R&D head and HR manager of the company, four major challenges and difficulties have been summarized which the R&D center is encountered right now.

 

 

4.2.1            High labor turnover ratio among the food researchers

 

Employee turnover refers simply to the movement of employees out of an organization (Bohlander & Snell 2010, p.93). High labor turnover ratio among the senior researchers is actually common in the high-technology business divisions. According to Jolly (2005), an important feature of high-technology business sectors is their large proportion of knowledge workers. And as claimed by Autier and Picq (2005) that competing through people is especially relevant in knowledge-based industries and business divisions which is due to that people in these contexts are the most distinctive resource and obviously the management of R&D HRs is an important challenge in value creation for high technology business.

 

Though the business of the company is rapidly expanding, one problem that surrounds that company in the recent years has been the high turnover ratio among the senior food researchers who had spent a number of years with the company. In the past three years, the company has lost 12 research assistants, 8 senior food researchers and 3 team leaders. This means that the average annual turnover rate reaches 17.8% based on the current total employee number of 43. According to the HR manager of the Dongguan Huamei Food Co., ltd, though the industrial annual turnover rate in the R&D centers is unknown based on his experiences and the company’s historical data, an annual turnover rate would be normal if it is controlled within 5 percent.

 

While one of the five researchers who left the company was inevitable as it stems from the retirement of an old food researcher, the most frequent reason behind the loss of other four senior researchers is the better offers provided by the competing companies in the industry. These offers involves majorly higher salary and compensation, bigger room for promotion (such as moving to a management level out of the R&D positions), promises to provide oversea study and learning opportunities and other benefits such as housing subsidy and children education assistance. Among these benefits provided by the competitors, by talking to the HR manager of the company, we have concluded two major reasons for the high turnover ratio: the first reason is that the though the company is growing rapidly, the R&D center of the company is still in a small scale which provides limited room for future career growth because the hierarchy in the R&D center is relatively simpler and flatter; the second reason is that location of the R&D center is too far away from the center of the city and other research institutes which makes the life inconvenient to these senior researchers. For example, the necessary entertainment activities are insufficient and also some of the senior researchers who have children have found out that there are few quality good schools to choose for their children and for the convenience of their children’s education some of them choose another city to continue their research.

 

High labor turnover ratio has major impacts to any industry. According to (Mathur 1993, p.136) these impacts include hiring cost for the recruitment of new employees, training cost, loss of production in the interval between the separation and replacement etc., reduce the profit of the factory. The high labor turnover ratio among the senior food researchers in Dongguan Huamei Food Co., ltd is shown in four major ways: firstly, the departure of the senior food researchers is not necessarily a bad thing because it provides chance for the young researchers and research assistants to move up the hierarchical level; secondly, the departure of the senior researchers bring loss of special skills and the importantly the professional knowledge and experience in the company which could not be replaced in a short period of time; thirdly, the ultimate impact on the R&D center and the company as a whole is the slowed down process of the R&D activities especially those that were led by these senior researchers; lastly, the loss of the senior food researchers had directly result in the higher cost of recruitment and training because these high quality talents in many cases will not be available in the labor market and could only be accessible through special channels such as head hunters which usually incurs high costs.

 

4.2.2            Difficulties in attracting new food researchers

There are difficulties in attracting new food researchers for Dongguan Huamei Food Co., ltd which share similarities with the high labor turnover rate among the senior food researchers. We try to list them out as following in the perspective of the candidates: first of all, like mentioned above Donguan city is not a major large city in China. It is reported that in generally Chinese college graduates flock to big cities for jobs, even if that means compromising their quality of life (Cntv.cn 2011). Confirmation of the preference of big cities among the fresh graduates is the stories of “ants tribes” which refers to the college graduates roughing it in shabby rentals in city outskirts for a chance at a job in big cities. Hence the difficulty of attracting new food researchers or fresh graduates to become food research assistants is common among the companies in the medium and small cities. Secondly, the salary level in the town is not high enough to attract the new researchers to a strange city. Though it is known that in China working in a city far away from the home town is very common, if a medium sized company like Dongguan Huamei Food Co., ltd could not provide a competitive salary and compensation to the fresh researchers there will be little hope that quality new food researchers will be attracted to apply for the positions provided by the company.

 

4.2.3            Lack of standardization in the R&D center

 

Another issue in the R&D center in the company is the lack of standardization for the various activities in the R&D divisions. Though it is believed that customization is more important than standardization, product-related R&D is dominant (Boutellier, Gassmann & Zedtwitz 2008, p.720), the lack of standardization is a major constrain for the further expansion and development of the R&D center because standardization would means that it costs little time for new researchers to get familiar with the company’s R&D activities which are well organized according to relative standard operation processes (SOPs). According to the words from the head of the R&D department of Dongguan Huamei Food Co., ltd, the lack of standardization is a dilemma that the company has been facing for a long time. On one hand, standardization requires the new hiring of some fresh researchers and management who are familiar with the standardized R&D activities in the package food industry; but on the other hand it is difficult for the company to attract these new researchers and management due to the offer provided by the company is not much attractive than the competitors. This has caused the fact that there has been a long time the standardization of the R&D activities is lagged behind the standardization of the production activities.

 

4.2.4            Low performance and efficiency in the R&D activities

 

According to the head of the R&D head of the company, the R&D center is now facing low performance level and low efficiency in the R&D activities. Based on his view, since R&D activities usually allow flexible work time, the R&D major researchers are permitted to define their own work time according to the needs of their R&D activities, but according to the data of the company the average staffing time contributed by the R&D employees has decreased from 9 hours to 7.8 hours from year 2000 to 2010 indicating that the staffs in the R&D centers are contributing less overall time to the company though such decrease is caused by a number of factors. What is more the new product cycle has been prolonged by 30% in term of the time needed to develop a total new product. These facts make the management believes that with the expansion of the R&D center has not come with an increase of work efficiency or even can not keep the original operation efficiency level though it is known that the management of a bigger R&D center would be more difficult than managing a smaller one. Below we will use an eight steps strategic remuneration approach proposed by Raymond J. Stone (2010, p.453) to offer solutions to some HR issues faced by the R&D center in Dongguan Huamei Food Co., ltd.

4.3    Original questionnaire on the current researchers in R&D center in Dongguan Huamei Food Co., ltd

 

4.3.1            Research design

 

The questionnaire survey will be carried out with the objectives to assist the human resource management department to identify areas for improvement, build on achievements, and set new directions regarding the topic of researcher recruitment, motivation and retention and also find out reasons and employee attitudes regarding the high turnover ratio that has been identified by the management from the view of the 43 researchers. All the 43 researchers will be advised to take part in the survey one by one in a small room only with a research assistant during the working time with the permission from the management so that the participation will be influence the performance of the food researchers. And the questionnaire paper will be collected right away when the employees finish answering all the questions. As a small scale research, this research will use a descriptive and casual research. A descriptive research provides data describing the “who, what, when, where and how” of an issue and a casual research will aim at offering reasons behind some facts (Crosby, DiClemente & Salazar 2006, p.78). We will look into the motivators behind the problems of employee motivation issues and retention in the questionnaire.

 

4.3.2            Analysis

All the 43 employees in the R&D centers had all participated in the questionnaire, and all the papers collected are later confirmed to be valid, this may be due to the survey was delivered to them by the HR department and they had treated the survey in a serious manner. Regarding the demographic background of the surveyed employees, as we can observe from the above two charts, with the increase of the ages, there are fewer researchers and the majority (more than a half) of the researchers are falling in the age categories between 20 to 35 and the researchers who are more than 41 aged old account only about a quarter of the total.

Chart 1
Age groups of the researchers

 

Chart 2 Education background of the researchers

 

The low percentage of the old researchers to some degree reflects the fact that the turnover rate in the R&D center is unusually high. And about the education background, the food science and engineering and also other related majors such as nutrition and chemistry still are the key education background criteria when the company recruit new researchers into the R&D center. Based on our calculation, the average years spent in the company in the R&D center is about 4.5 years. And regarding the key reasons to take the current job, the majority of the employees had chosen “To gain the working experience in food research” and “To support my personal and family life financially” and very few of them had chosen the reason “Because of the good reputation of Dongguan Huamei Food Co., ltd” suggesting that many of the researchers are looking for short term experience and the salary provided by the company rather than work in a long term plan.

Chart 3 Number of years spent in Dongguan Huamei Food Co., ltd

 

While asked about whether they that the salary, benefits and related compensation is sufficient compared to the contribution they have made to the research work in the company, 16 out of the 43 researchers choose the “agree” option while 12 others even choose the “strong agree” option indicating that a total 28 out of the 43 surveyed staffs are not satisfied with the current salary and benefits level. It seems that there is some correlation between a “low” salary and benefit pay in the perspective of the employees and the low employee commitment and performance. In response to the questions “Do you agree that you are highly motivated to do your current job?”, the result is not satisfactory as seen from the chart.

Chart 4
Answers to the question “Do you agree that you are highly motivated to do your current job?”

 

Chart 5
Answers to the question “What are the key fields you find you have difficulties in and are not satisfied with?”

Chart 6
Answers to the question “How many years more are you sure that you will continue to work in Dongguan Huamei Food Co., ltd? ”

 

As the chart indicates, pay and benefits and career life advancement has been listed as the top 2 concerns which lead to the dissatisfaction of the employees which further results in the low employee performance in the R&D center of the company. And as the next chart above shows, the majority of the researchers actually do not have a long term plan to work in Dongguan Huamei Food Co., ltd and only very few of them expressed that they would continue to work in the company for more than five years time and in the last question of the survey regarding the fundamental reasons that the employees would choose to leave the company except the retirement arrangements, three major kind of reasons are listed: 1) Better offer from competitors; 2) Not enough of room for promotion in  Dongguan Huamei Food Co., ltd; and 3) Personal reasons (such as marriage and children’s education).

 

5.        Summary of the findings and critical discussion

The result of the original survey has suggested that the employees in the R&D center of the company, Dongguan Huamei Food Co., ltd, are not working very well with the company. Problems found include: 1) As a matter of fact, a total 28 out of the 43 surveyed staffs are not satisfied with the current salary and benefits level, in order word, as a result, we can conclude that a competitive salary structure is not provided by Dongguan Huamei Food Co., ltd; 2) Researchers in the R&D division of the company are not receiving enough of training and education opportunities which should have enhanced the professional skills of the employees; 3) Though the salary and other compensations and benefits could be uncompetitive than the competitors, many employees seem to be willing to continue to work to obtain a consecutive long enough of working experience until they find a better offer; 4) When a good enough better offer is provided, the majority of the staffs would not be hesitating to leave the company resulting in great loss. A key common reason behind many employees’ dissatisfaction about the current research work is the problem of a less competitive salary and compensation system, below we will adopt an eight steps approach to help establish strategic remuneration and compensation in R&D center of Dongguan Huamei Food Co., ltd.

 

6.        Recommendations – Eight steps approach to strategic remuneration and compensation in R&D centers

 

6.1    Develop strategic business objectives

The business objectives identify the results that the business would like to achieve in the medium to long term plan. In addition to generating profits, this can include the expectations from internal stakeholders around a variety of topics such as markets, technology, growth and sustainability. And strategies refer to the rules and guidelines by which the vision and mission will be implemented which address the topics across the business as a whole (Novacovici & Woofter 2008, p. 9). Strategic Business Objectives (SBOs) are specific, measurable goals that are participatively developed at all levels of the enterprise or company. Companies develop strategic plans with annual five-year goals. Goals must typically be specific, quantifiable, challenging but “do-able,” and tied directly to a reward system (bmpcoe.org 2007). And according to Stone (2011) in order to create a remuneration system that is in accordance with the corporate strategic business objectives, there are three steps in the objective and policy setting phases before the actual enactment of the detail remuneration system: Step one is to develop strategic business objectives; Step two is to develop HRM objectives and Step three is to develop employee remuneration objectives. These three steps should be in an integrated process without conflicts.

 

The strategic business objectives in Dongguan Huamei Food Co., ltd could be found in four dimensions: in term of the financial dimensions, the company has internally set the target to be increasing the revenue by an annual 25% and increase the net profit by a 30% annually which will require the company to control the expense growth while the sale is growing fast; and in term of customer side, the company will focuses on develop and consolidate the current customer base and anticipate future customer needs through the customer feedback and introduce the new and existing products into the new markets; and in term of internal and operational objectives, the company would like to have all the products meet the standard of excellence guidelines, develop and implement a promotional plan enhance an increasingly growing business, increase efficiencies through use of new technologies and also develop new products that suit the most recent customer characteristics and needs. Based on these strategic business objectives, we can conclude three directions: the first direction is that the business of the company expects a rapid growth trend which the company tries to enhance and strengthen through aggressive marketing strategies and also enhancing operational efficiency; the second direction is that the company would like to increase the product safety and quality standardizing the production procedures in term of implementing the standard of excellence guidelines in both the R&D and manufacturing processes; and the last direction is the company’s intention to promote product innovations to better consolidate the existing customer based and penetrate into the new customers and markets to expand the business ambitiously.

 

6.2    Develop HRM objectives

 

Cascio and Awad (1981) define HRM as (p. 3) “the attraction, selection, retention, development, and utilization of human resources in order to achieve both individual and organizational objectives”. According to Pravin Durai (2010, p. 4) the primary objective of human resource management is to take care of the work life of the employees from the time they join the organization to the time they leave it while ensuring their best possible cooperation in achieving the organizational goals and objectives.

 

The general and common objectives of human resource management in Dongguan Huamei Food Co., ltd could be divided into six major categories: Perform as the tie between the management and the staffs; to keep enough of labor supply among the organizations and avoid the happening of human resource deficiency; to provide further training and education service to better increase the personal and company performance; to devise employee benefit schemes to enhance employee motivation and improve the management employee link; to provide quality working environment and cultural conditions to the employees working inside; and to implement and adhere to the ethical beliefs inside and also outside the company.

 

Among these six general kinds of HRM objectives, in response to the identified strategic business objectives as mentioned above, there are four key HRM objectives in the coming five years: the first HRM objectives is to ensure the sufficient labor supply in the coming five years in which the business is going to expand in a fast speed, to achieve this target retention of the old employees in particular the senior talents and the hiring of the new desired employees with the needed skills and potentialities would both be important and critical; the second HRM objective is to implement and adhere to the ethical beliefs inside and also outside the company because one of the strategic direction is that the company would like to increase the product safety and quality standardizing the production procedures in term of implementing the standard of excellence guidelines in both the R&D and manufacturing processes, the standardization process would be more effective with the ethics support; the third HRM objective will be to provide further training and education service to better increase the personal and company performance because of the company’s intention to promote product innovations to better consolidate the existing customer based and penetrate into the new customers and markets to expand the business ambitiously; the fourth engaged HRM objective is to devise employee benefit schemes to enhance employee motivation and improve the management employee link due to the company target of enhancing operational efficiency and increasing the company performance in the next five years. The definition of the HRM objectives in the next coming five years has been in accordance with the expansive business objectives and also the need of increased operating efficiency as well as stricter requirement of product quality, safety and innovations.

 

6.3    Develop employee remuneration objectives

 

According to Stephen Bach (2005, p. 317), in general terms, remuneration refers to the way in which employees are rewarded at the workplace. These rewards can take various forms, often a broad distinction being drawn between intrinsic and extrinsic reward. Intrinsic reward is a self-generating outcome such as personal esteem and fulfillment derived from the “meaningful” work. Extrinsic reward is reflected in more tangible monetary and non-monetary payment in the guise of wages or fringe benefits provided by the employers. Here we will apply a narrower understanding of the term remuneration by referring it only to the extrinsic reward which majorly concerns with monetary and other substantial and measurable benefits and compensations.

 

And remuneration objectives are those guidelines that determine the nature of a reward system. They also serve as standards against which the effectiveness of the system is evaluated. The classical objectives of any remuneration system are to attract, retain and motivate employees. In addition, many more objectives may be formulated to ensure that the remuneration system contributes to the organization’s overall objectives (Erasmus & Schenk 2008, p. 478).

 

By keeping consistence with the above mentioned strategic business objectives and human resource management goals, five major remuneration objectives could be summarized as following.

 

  1. To hire competent personnel
  2. To retain existing talent
  3. To maintain equity
  4. To reinforce desirable competencies
  5. To contribute to the cost competitiveness

 

The first remuneration objective is to hire the competent personnel, this means that the company could use a high salary and benefit pay to attract the new competent personnel that the company would be in need due to its rapid business growth. And it will help achieve the human resource management objective to ensure the sufficient labor supply in the coming five years; the second remuneration objective is to retain the existing talent which is critical as based on the above findings there is a high turnover rate in the R&D center which create large losses to the company and one key reason would be the unattractive pay and benefits given to them; and the third remuneration objective is the maintain the company equity, according to Tapomoy Deb (2006, p. 300), to maintain the company equity means that organizations would maintain equity in wages or salary payment by balancing the external or market value of jobs with the internal contribution of employees, this will be enhanced by a strategic remuneration scheme; the fourth remuneration goal is the to reinforce desirable competencies by positively reinforce the desired skills, competences and qualifications desired by the company through the provision of high salary, good benefits and other treatments to encourage the inflow and defer and eliminate the outflow of the relative people with the desired competencies; and the last but not least remuneration objective is to contribute to the cost competitiveness of the business operations so that it helps to achieve the strategic business objective to achieve higher operating efficiency.

 

6.4    Job analysis

 

A job analysis is a systematic procedure for gathering, documenting, and analyzing information associated with the performance of a particular line of work (Bemis, Belenky & Soder 1983). One of the main purposes of conducting job analysis is to prepare job description and job specification which in turn helps to hire the right quality of workforce into the organization. Job and task analysis is performed as a basis for later improvements, including: definition of a job domain; describing a job; developing performance appraisals, selection systems, promotion criteria, training needs assessment, and compensation plans. Hence job analysis is often used to gather information for use in personnel selection, training, classification, and/or compensation (Cascio & Aguinis 2005).

 

Based on the earlier literature review of the knowledge, experiences, skills, qualification and personality traits required of a food researcher, we can conclude about the nature of the work. Food scientists work in the food processing industry or closely relative industries. Educated in nutrition, biology, and chemistry, food scientists use their knowledge to improve methods of processing, canning, freezing, storing, packaging, and distributing food. Most food scientists work in the research and development departments of food processing companies. Some work in processing plants as quality control inspectors or production supervisors. Food scientists who work in research and development study the chemical changes that take place in stored or processed foods. For instance, canning or cooking food can reduce the vitamin and protein content. Food scientists try to find ways to process food so that more nutrients are maintained. They also dedicated the effects to the research of the food additives. They are also concerned with making tasty food to better serve the customer needs (Stateuniversity.com 2010).

 

6.5    Job evaluation

 

According to Michael Armstrong (1998, p. 226) the definition of Job evaluation is a systematic process for establishing the relative worth or size of jobs within an organization. The purposes of job evaluation are to provide a rational basis for the design and maintenance of a pay structure, enable consistent decision to be made on grading and therefore the rates of pay, and also establish the extent to which there is comparable worth between jobs. Job evaluations are not intended to address the appraisal of individuals completing the work or predict employee accomplishments. Instead, use performance management and appraisal techniques to assess employee work habits and the ability to complete work reliably and effectively that align to the company’s strategic business goals.

 

In Dongguan Huamei Food Co., ltd, the principle of the job evaluation is to ensure the employees are receiving equal pay for equal work and to address race, gender, age or other discriminatory inequalities. And in term of the selection of the job evaluation types, it is recommended that the company could use a job matching by implementing a Point Factor Analysis (PFA) is the old-school (but fair) bureaucratic method for determining a score for each job. Jobs are broken down into factors such as “knowledge required”. A set of closed questions in each factor break down to detail such as “level of education”. The responses to these questions are given a score, and totaled for each factor. Each factor is given a weight, and this effects the contribution made to the overall total score by that factor. Factors can be weighted according to their significance to the organization, and this allows the pay scheme to be linked to the organization’s strategy (Rees & Porter 2008). In the beginning of this study, in the proportion of the literature review, we have list out the key knowledge, experiences, skills, qualification and personality traits required of a food researcher, based on these required factors the company could weight them differently and for a pay scheme to evaluate them respectively and to forester the fulfillment of the strategic business objectives.

 

6.6    Pay survey

 

Salary surveys obtain information on the rates of pay in comparable companies for similar jobs. The purpose is to obtain data on market rates so that a competitive salary structure can be maintained (Armstrong 2006, p. 477). As analyzed above in the original questionnaire, a total 28 out of the 43 surveyed staffs are not satisfied with the current salary and benefits level, in order word, as a result, we can conclude that a competitive salary structure is not provide by Dongguan Huamei Food Co., ltd. As mentioned earlier, the labor market regarding the R&D in the food industry Donguan city is not attractive to the new researchers and related high end talents, in this regarding it is advisable that Dongguan Huamei Food Co., ltd could be working closely with the major large food manufacturers in Dongguan to perform pay survey that could take into account of the regional variations, sector differences and fluctuations in salary levels within and outside the Guangdong Province and better position the research work pay in these companies to on one hand provide competitive pay but on the other hand avoid paying too much.

 

 

 

6.7    Job pricing

 

Job pricing involves the establishment of wage rates for jobs within an organization, by using a job evaluation method. Job evaluation methods include Market Pricing, Internal Job Evaluation Methods, Pay Philosophy and Strategy and Reasonable Pay Levels setting (auxillium.com 2010). Here the in the case of Dongguan Huamei Food Co., ltd, the job evaluation method of market pricing would be recommended which is the process of assessing rules of pay by reference to market rate – what similar organizations pay for comparable jobs, it takes two forms: it could establish external relativities and can act as a form of job evaluation in itself rates for comparable jobs as the logic for defining internal relativities or differentials and secondly it provides information on the movement in market rates so that adjustments can be made to the organizations’ pay structure or job rates to make sure that they are still competitive (Armstrong & Baron 2002, p. 123). And it is advisable that the company proactively participates in the salary surveys and also makes sure that the HR managers are aware of the prevailing wage rates in the external market place which is critical to the success of an organization. But wage rates become too high relative to the market, the organization may become less cost competitive than its competitors. If wage rates become too low relative to the market, the company may experience the loss of employees to companies which pay a higher rate. To the Dongguan Huamei Food Co., ltd, it is again recommended that the company gives a little higher rate of salary to the current employees and the new candidates than the market average ratio to ensure that it attracts a larger pool of labor talents. But such higher pay in the R&D center should be confined to the senior researchers and team leaders who are the core personnel of the center and what is more an average market price the company should be able to attract enough of candidates in the research assistant position. And this differential treatment will help avoid the following problems:

 

  1. Employees, who are paid high relative to the market, may be less willing to do the necessary, but more menial tasks of the job function.
  2. If all employees are paid high relative to the market, then there’s less room for salary differentiation between the best performers and the average performers.
  3. If a highly paid employee performs poorly and termination becomes necessary, it can become a problem for the organization.
  4. Labor costs will be higher than competitors (auxillium.com 2010).

 

6.8    Implementation

 

In the final step of the eight steps approach to strategic remuneration and compensation, the implementation stage, the company needs to make the strategic remuneration plan known to all the employees and use the employee social relationship to attract new qualified talents. And also another key task in this stage will be the feedback collection by monitoring which the company would be able to access the effectiveness of the process of the strategic remuneration.

 

 

 

 

List of reference

 

Andrews, Y. 1988, The Personnel Function. Pretoria: Kagiso Tertiary. p. 20

 

Apec-smeic.org 2008. Chinese SMEs Technological Innovation Policy. June 26, 2008 [online] http://www.apec-smeic.org/newsletter/newsletter_read.jsp?SEQ=566

 

Armstrong, M. 1998, Managing people: a practical guide for line managers. London, NJ: Kogan Page Limited. p. 226

 

Armstrong, M. & Baron, A. 2002, The job evaluation handbook. London: The Cromwell Wiltshire. p. 123

 

Armstrong, M. 2006, A handbook of management techniques: a comprehensive guide to achieving managerial excellence and improved decision making. 3rd edn, London, NJ: Kogan Page Limited. p. 477

 

Autier, F. & Picq, T. Is the resource-based view a useful perspective for SHRM research? The case of the video Game Industry. International Journal of Technology management. 31, 197 – 203

 

Auxillium.com 2010. Job pricing. visited on 19 November 2011. [online] http://www.auxillium.com/jobprice.shtml

 

Bach, S. 2005, Managing human resources: personnel management in transition. 4th edition, Oxford OX: Blackwell Publishing, Inc. p. 317

 

Bemis, S. E., Belenky, A. H. & Soder, D. A. 1983. Job analysis: an effective management tool. Washington, D. C.: Bureau of national affairs.

 

Bmpcoe.org 2007. McDonnell Douglas Aerospace-West (Boeing Space Systems) – Huntington Beach, CA: Information : Strategic Business Objectives. Revision Date: 01 / 19 / 2007 [online]: http://www.bmpcoe.org/bestpractices/internal/mdwes/mdwes_22.html

 

Boutellier, R., Gassmann, O. & Zedtwitz, M. V. 2008, Managing global innovation: uncovering the secrets of future competitiveness. Verlag Berlin Heidelberg: Springer. p. 720

 

Bower, J. 2009. Statistical methods for food science: introductory procedures for the food practitioner. West Sussex: Blackwell Publishing Ltd.

 

Brown, A. 2011, Understanding Food: Principles and Preparation. Belmont, CA: Wadsworth. p. 483

 

Bohlander, G. & Snell, S. 2010, Managing Human Resources. Natorp Boulevard Mason: South – Western Cengage Learning. p. 93, 413

 

Cascio, W. F. & Aguinis, H. 2005. 6th Edition, Applied Psychology in Human Resource Management Upper Saddle River: Prentice-Hall.

 

Cascio, W. F. & Awad, E. M. 1981. Human resource management: an information systems approach. Virginia: Reston Publishing Company

 

Cntv.cn 2011. China encourages fresh graduates to go grassroots by reforming civil service policy. Updated 10th Dec 2011. Accessed 9th Nov 2011 [online]: http://english.cntv.cn/20111012/112065.shtml

 

Crosby, R. A., DiClemente, R. J. & Salazar, L. F. 2006, Research methods in health promotion. Danvers, MA: John Wiley & Sons, Inc. p.77

 

Deb, T. 2006, Strategic Approach to Human Resource Management. New Delhi, India: Nice Printing Press. p. 300

 

Dgut.edu.cn 2010. The University in Brief.  Accessed 9th Nov 2011 [online]: http://www.dgut.edu.cn/publish/units/englishweb/brief/200607/20060730-1135.html

 

Durai, P. 2010, Human Resource Management. New Delhi: Dorling Kindersley (India) Pvt. Ltd. p. 4

 

Echaore-McDavid, S. 2008, Career opportunities in science. New York: Infobase Publishing. p. 157

 

Erasmus, B. & Schenk, H. 2008, South African human resource management: theory and practice, Cape Town: Juta & Co Ltd. p. 478

 

Hodgson, S. 2010, A-Z of Careers and Jobs. seventeenth edition. London: Kogan Page Limited. p. 228

 

Huameifood.com 2011. Product. Viewed 8th Nov 2011 [online] http://www.huameifood.com/products.php

 

Jolly, D. R. 2005. Editorial: Human Resource Management in High-Tech Companies. International Journal of technology Management. 31, 197 – 203

 

Mathur, D. C. 1993, Personnel Problems and Labour Welfare: A Study of Cotton Textile Industry. New Delhi: K. M. Rai Mittal, Mittal Publications. p.136

 

Ncsu.edu 2007. Food Science: Description of Major. [online] http://www.ncsu.edu/majors-careers/do_with_major_in/showmajor.php?id=15

 

Novacovici, A. & Woofter, J. 2008, Sustainability 101: A Toolkit for Your Business New York: Strategic Sustainability Consulting and Eco – Coach, Inc, p. 9

 

O’Neill, G. L. 1955. Framework for developing a total reward strategy. Asia Pacific Journal of Human Resources, 35(2), p p. 103 – 17

 

Peopledaily.com.cn 2010. China home to 1,200 foreign R&D centers. March 16, 2010 [online] http://english.peopledaily.com.cn/90001/90778/90861/6921243.html

 

Preker, A. S. 2007, Public ends, private means: strategic purchasing of health services. Winshington, DC: The International Bank for Reconstruction and Development. p. 151

 

Rees, W. D. & Porter, C. 2008. The skills of management. London: Cengage Learning EMEA.

 

Stateuniversity.com 2010. Definition and Nature of the Work. [online]: http://careers.stateuniversity.com/pages/60/Food-Scientist.html

 

Stone, R. J. 2010, Human Resource Management. seventh edition, McDougall Street, Milton Qld: John Wiley & Sons Australia, Ltd. p. 453

 

Stone, R. J. 2011, Human Resource Management, 7th edition, Milton Old: John Wiley & Sons Austraila, Ltd, p. 452

 

Appendix Questionnaire on the researchers in R&D center in Dongguan Huamei Food Co., ltd

Thank you for participating in this survey. The information you provide will assist the human resource management department to identify areas for improvement, build on achievements, and set new directions regarding the topic of researcher recruitment, motivation and retention. The results will be analyzed by the related departments and specialists and will be adopted for internal use only.

 

Please take note that by returning your completed survey you consent to the information being used for reporting purposes. If you have any questions about the survey please email

to or direct contact the human resource department.

 

This questionnaire is anonymous and your answers and personal details will be kept anonymous and will not be released to any conflicting parties and personnel unrelated to this study.

 

Question No. 1 What is your gender?

 

a). Male

b). Female

 

Question No.2 What is your age?

a). less than 20

b). 20 – 25

c) 26 – 30

d) 31 – 35

e) 36 – 40

f) 41 – 50

g) 51 – 60

h) 61 and above

 

Question No. 3 Where are you from?

a). Dongguan city

b). Other cities and areas in Guangdong province

c) Other provinces

d) I am a foreigner

 

Question No. 4 What is your major in your education background?

a) Chemistry & engineering

b) Food science & engineering

c) Nutriology

d) Business management

e) Physics

f) Biology

g) Food hygiene

h) Other majors, please write down your major:


 

Question No. 5 How many years have you worked for Dongguan Huamei Food Co

a) Less than one year

b) one year to two years

c) two years to four years

d) four years to six years

e) six years to ten years

f) ten years and above

 

Question No. 6 What were your key reasons to take the current job in Dongguan Huamei Food Co., ltd? (please select up to two reasons)

a) To gain the working experience in food research?

b) Because of the good reputation of Dongguan Huamei Food Co., ltd

c) To support my personal and family life financially

d) To enjoy the benefits of the job (such as the insurance, compensations, provision of local hukou and so on)

e) Personal interest in the food science study

f) If other reasons, please write down your reasons below:



 

Question No. 7 Do you agree that the current job satisfy your career and personal needs?

a) Strongly disagree;

b) Agree;

c) Disagree;

d) Neither agree nor disagree;

e) Some what agree;

f) Strongly agree;

 

Question No. 8 Do you agree that you are highly motivated to do your current job?

a) Strongly disagree;

b) Agree;

c) Disagree;

d) Neither agree nor disagree;

e) Some what agree;

f) Strongly agree;

 

Question No. 9 What are the key fields you find you have difficulties in and are not satisfied with? (please select up to two reasons)

a) Corporate culture

b) Supervisor relations

c) Training

d) Pay and benefits

e) Work environment

f) Communications

g) Career life advancement

h) If other issues please write down your answer below:



 

Question No. 10 Do you agree that Dongguan Huamei Food Co., ltd has a strong company culture that keeps the staffs motivated to work to their potential?

a) Strongly disagree;

b) Agree;

c) Disagree;

d) Neither agree nor disagree;

e) Some what agree;

f) Strongly agree;

 

Question No. 11 Do you agree that you have a good relationship with your direct reporting senior management?

a) Strongly disagree;

b) Agree;

c) Disagree;

d) Neither agree nor disagree;

e) Some what agree;

f) Strongly agree;

 

Question No. 12 Do you agree that you are receiving enough of training and eduction to enable your to fulfill your job?

a) Strongly disagree;

b) Agree;

c) Disagree;

d) Neither agree nor disagree;

e) Some what agree;

f) Strongly agree;

 

Question No. 13 Do you agree that the salary, benefits and related compensation is sufficient compared to your contribution to the research work in Dongguan Huamei Food Co., ltd?

a) Strongly disagree;

b) Agree;

c) Disagree;

d) Neither agree nor disagree;

e) Some what agree;

f) Strongly agree;

 

Question No. 14 If you desire a salary increase, what is the minimum percentage increase that you expect based on your own opinion that make your more motivated to work?

a) No need for a salary increase

b) 0% to 5%

c) 6% to 10%

d) 11% to 15%

e) 16% to 20%

f) 21 to 30%

g) 31% to 40%

h) 41% to 60%

i) 61% to 80%

j) 81% to 100%

k) 101% to 150%

l) 151% to 200%

m) 201% and above

 

Question No. 15 Do you agree that the current working environment is good enough for you?

a) Strongly disagree;

b) Agree;

c) Disagree;

d) Neither agree nor disagree;

e) Some what agree;

f) Strongly agree;

 

Question No. 16 Do you believe that communication and team work is important in your work?

a) Strongly disagree;

b) Agree;

c) Disagree;

d) Neither agree nor disagree;

e) Some what agree;

f) Strongly agree;

 

Question No. 17 Do you agree that you are having a good relationship with other colleagues and relative departments?

a) Strongly disagree;

b) Agree;

c) Disagree;

d) Neither agree nor disagree;

e) Some what agree;

f) Strongly agree;

 

Question No. 18 Do you agree that there is sufficient room for your career life advancement, in other words, do you agree that you have fair enough of chance to move up the career life ladder?

a) Strongly disagree;

b) Agree;

c) Disagree;

d) Neither agree nor disagree;

e) Some what agree;

f) Strongly agree;

 

Question No. 19 Do you agree that the company is having a high turnover rate in the research and development (R&D) division?

a) Strongly disagree;

b) Agree;

c) Disagree;

d) Neither agree nor disagree;

e) Some what agree;

f) Strongly agree;

 

Question No. 20 Do you have a plan to leave the Dongguan Huamei Food Co., ltd?

a) Yes

b) No

c) Not sure

 

Question No. 20 How many years more are you sure that you will continue to work in Dongguan Huamei Food Co., ltd?

a) Less than 1 year

b) 1 to 2 years

c) 2 to 3 years

d) 3 to 5 years

e) 5 to 7 years

f) 7 years to 10 years

g) 10 years and above

g) Not sure

 

Question No. 21 What will be most fundamental reasons that if you would choose to leave the company except retirement? (Select up to three reasons)

a) Better offer from competitors (salary & compensations)

b) Better offer from competitors (better positions and resources promised for research)

c) Better offer from competitors (in a bigger or more preferred city)

d) Better offer from competitors (better and more suitable corporate culture)

e) Not enough of room for promotion in Dongguan Huamei Food Co., ltd

f) Bad relationships with the boss or colleagues

g) Personal reasons (such as marriage and children’s eduction)

h) The company’s future is not promising

i) Want to change to another job (not in food research)

j) Job is difficult to me and there is too much pressure and stress at work

k) If other reasons, please write down your answer below:





 

Thank you for participating in this survey. The information you provide will be kept confidential and will be adopted for internal use only.

 

Please return the questionnaire paper to the researcher. Thank you for your previous time.