Institutional Reform Improves SOEs' Vitality

Institutional reform of labor and human resources allocation has been a key part of the Three-Year Action Program of State-owned Enterprise (SOE) Reform (2020-22).

More than 90 percent of central SOEs have established tenure and contractual systems for managers and over 5,600 SOEs have launched a medium- and long-term incentive system, benefiting over 450,000 employees. In addition, market-oriented recruitment systems like open recruitment, competition for positions and all-member performance assessments have been widely promoted.

This year is the last year of the action plan and industrial insiders said that deepening the institutional reform will benefit market-oriented operation of the SOEs and is of great significance in strengthening competitiveness, innovation, controlling force, impact and anti-risk capacity of the state-owned economy.

Promoting tenure and contractual systems to improve market-oriented management level

China Mobile Communications Group Co., Ltd. (China Mobile) has provided service for a large number of users via mesh management, which applies the tenure and contractual system management to frontline service. Based on the management, the frontline employees focus on user service and all departments do their best to support the frontline employees.

So far the company has built 18,800 meshes, covering nearly all areas throughout the country.

By the end of October 2021, the tenure and contractual systems were established in all subsidiaries of China Mobile and all those companies had signed contracts or covenants with managers.

China Three Gorges Corporation (CTG) has established an institutional reform oriented by company strategy, teams and enterprise value, which has accelerated improvement of market-oriented operation. By the end of 2021, the company had realized tenure and contractual systems for 919 managers of its offline subsidiaries.

Promoting tenure and contractual systems for managers has also been a highlight in improving market-oriented operation, building highly-qualified and professional teams and realizing high-quality development by China North Industries Group Corporation Limited (NORINCO Group). By the end of 2021, the systems were set up in all 471 subsidiaries.

MCC Capital Engineering & Research Incorporation Limited, a subsidiary of China Minmetals Corporation (China Minmetals), has also adopted a contractual system in their subsidiaries' managerial level and functional headquarter departments as well as their secondary operating departments.

Innovating recruitment system to inspire employees' vitality

In December 2021, a piece of spillway maintenance equipment was used at the Xiangjiaba Hydropower Station. The equipment was developed by a research team led by Wan Gang, director of the production and management department of CTG's Yangtze River power service depot.

The equipment shortens spillway inspection to one week and reduces costs of crest outlet inspection at the station by nearly 10 million yuan ($1.57 million) annually.

More than 70 professional technicians like Wan were recruited by the company in recent years, inspiring employees to research professional technical skills. The company also set up a classified talent introduction mode and hired over 1,100 people with various education backgrounds in the last five years.

MCC Capital Engineering & Research Incorporation Limited also promoted 35 young employees to medium and higher managerial positions through competitions in 2021. The mode has also been promoted in some other China Minmetals' subsidiaries. In 2021, the company realized 100 percent open recruitment.

Launch medium-and long-term incentive system to promote high-quality development

Various incentive methods like sharing of bonuses have been promoted in many SOEs.

For example, NORINCO Group's two subsidiaries, Inner Mongolia North Heavy Industries Group Corp. Ltd launched a project bonus to encourage breakthroughs in 26 technical issues and Jiangshan Heavy Industries Research Institute Co., Ltd has gained an annual profit growth of 33.6 percent since it launched a position bonus system in 2020.

An incentive mode based on stock rights has been implemented in four listed companies affiliated to NORINCO Group. So far, a total of nearly 58.31 million shares have been rewarded to 447 employees, which effectively improved the companies' operating revenue and encouraged technological innovation, product research and development and market development.

A bonus incentive system launched in CTG's listed companies has promoted a leapfrog development of its new energy business. The company also established a market-oriented, differentiated and diversified salary system based on the incentive-restraint mechanism to improve vitality and the company's high-quality development.

According to Lei, the company realized a overall labor productivity of 4.06 million yuan per capita in 2021.

MCC Capital Engineering & Research Incorporation Limited and China Mobile also benefited from the incentive mechanism and realized encouraging revenues.

(Executive editor: Niu Yilin)