Is a bold new way to recruit and manage talent at state-owned enterprises being experimented with in Zhuhai? It might be, judging by an announcement today by the city government that it will allow “market-oriented recruitment” to play a greater role in the selection of corporate leaders.
Accordiong to local media, Zhuhai envisages “fully implementing the market-oriented recruitment mechanism and incentive restraint mechanism”. By 2022, state-owned assets supervision will “mainly focus” on management of capital – 1.5 trillion yuan worth of local SOE assets, to be precise – rather than human resources.
It will not all be left to the market, of course. This is China, where the Party’s hand guides all development. Rather, Zhuhai will “combine organizational appointment and market-oriented recruitment” in selecting corporate leaders. However, efforts will be made to increase the level of market-oriented recruitment among management personnel: it will be totally implemented in commercial enterprises and partly in public welfare enterprises.
The biggest change will likely be seen in compensation levels, as Zhuhai says it will benchmark salaries against market indices. Moreover, it appears to be encouraging the use of bonuses in rewarding staff: “Pilot incremental rewards will allow enterprises to extract rewards at a certain rate from incremental contributions beyond the target value to encourage development of enterprises.”
It sounds like stock options might even be on the cards: “At the same time, the evaluation and remuneration mechanism for market-oriented senior managers will be improved, including implementing the performance evaluation of all employees and constructing mid- and long-term incentive mechanisms.”