China Longyuan Power: Benefits Improvement Boosted by First-class Performance Management

  The monthly performance assessment results are released, causing discussion of China Longyuan Power employees. Someone said “I over-fulfilled my task this month”, and the other one said “the assessment results are released really fast. We shall speed up the work tempo later.” The comprehensive and sub-item assessment ranking, assessment score, index fulfillment situation, and items with bonus points and point deduction are clear in the notification, touching the hearts of entire company and gaining high attention.

  In recent years, the new energy business of China Longyuan Power develops fast. As of the end of September, 2014, the wind power installed capacity is 11934 MW. China Longyuan Power’s becoming the largest wind power operator in the world is just around the corner. In 2013, the company sized up the situation, and accelerated building the internationally first-class new energy listed company. Exploration and innovation of internationally first-class management method and innovation of performance management mechanism becomes an important link for the company to build the first-class listed company. China Longyuan Power, with strategic objective of “” as assessment orientation, brings forth the new from the old, establishes the “target decomposition, dynamic tracking, assessment evaluation, communication & feedback, and results application” full-process closed-loop performance management mechanism, greatly improves the subjective initiative and concern degree of all cadres and employees, and effectively promotes benefits improvement. Recently, in the national power industry enterprise management innovative achievements comparison carried out by China Electricity Council, the performance management case of China Longyuan Power stood out from 113 candidate achievements, and won the first prize.


  Establishing performance management system

  Management system is the foundation to implement performance assessment. China Longyuan Power establishes a performance management system of “one subject, four supports, vertical to bottom and horizontal to edge”, and realizes the combination of long-term and real-time incentive and general and key incentive.

  The “one subject” refers to the annual objective responsibility assessment. The overall work performance will be measured by comprehensively inspecting the fulfillment situations of various objectives. In accordance with the annual operating objective and work deployment, the assessment objectives will be decomposed and implemented layer by layer by signing annual objective responsibility in the work meeting held in the beginning of every year.

  “Four supports” mean to promote the supporting guarantee of annual objective fulfillment, and set up carrier from four aspects of monthly performance assessment, special performance assessment, head office performance assessment and key performance assessment. The monthly performance assessment decomposes the annual objective and responsibility to each month, emphasizes on the process control and timeliness of incentive. The assessment objects are the subsidiary companies. The special performance assessment sets three assessment aspects of earlier development, engineering construction and production & operation according to industrial characteristics of new energy power generation. It is the incentive policy to finish special annual work objective. The head office performance assessment strengthens responsibility implementation in the head office. The assessment highlights strategic leading and basic level service and guides all departments of the head office to jointly undertake responsibilities by decomposing the strategic development objective and key missions. The key performance assessment is the one-time award assessment for persons of subsidiary companies and head office departments who have made special contribution and gained outstanding performance in aspects of enterprise transformation development, scientific innovation, safety production, benefits improvement, EVA improvement and management improvement. 

  Thus, China Longyuan Power established the perfect performance management system. One manager of China Longyuan Power Mengdong Branch said “the assessment is systematic and comprehensive. We dare not take any level easy. We feel pressure and power at the same time”.


  Decomposing and detailing assessment indexes

  In specific practices, the company applies the “strategic map” tool to decompose company strategies, designs the “723” strategic framework centered as balanced score card’s four level objective of finance, clients, inside company, and learning & growth, and establishes strategic element constitution on consensus. Meanwhile, pursuant to the SMART principle, the company mainly extracts a series of specific objectives and KPI indexes (library) to be managed, and builds the foundation of current performance index system.

  The perfect index system lays foundation of scientific performance assessment. During the assessment for subsidiary companies, the subsidiary companies are divided into five classes including wind power, thermal power, solar power, tidal and geothermal power and technology enterprises according to the business characteristics. Take wind power operating enterprises as example. The four objective responsibilities of assets operation, safety production, engineering construction and early work will be assessed annually. Each objective responsibility contains several index groups, and assigns different assessment weights for each index. In order to reflect the overall contribution of subsidiary company to the enterprise, the company sets contribution coefficient, which is comprised of profit contribution, power generation contribution and profitability contribution with different proportions, in annual assessment. The annual contribution of subsidiary company will be measured from the aspect of performance results.

  The individual and professional characteristics of special assessment method are more highlighted. Take special assessment for power generation volume as instance. In order to urge the subsidiary wind power companies to strengthen electricity marketing, operating management and equipment management, the company establishes the assessment method centered at “average utilization hours” and “unavailable hours”, lists the units which daily power restriction proportion is higher than certain standard into key tracking lists, and supervises the key matters affecting the electric quantity by the mechanism of “daily supervision, weekly notification and monthly assessment”; in each week, mainly traces and analyze the units ranking lower for monthly power generation level, and reports the events affecting electric quantity; in each month, assesses the laggard units, and stipulate specific improvement measures and schedule to fully mobilize the enthusiasm, initiative and creativity of each company to strive for higher power generation volume.

  Different from the former ones, the head office department assessment is more complex and difficult. Therefore, the company divides the head office department assessment index system into necessary index, special index and assessment index. The necessary indexes are company level performance indexes, and special indexes are department level performance indexes, which value different aspects according to functions of each business department. For instance, the Planning & Development Department mainly concerns approval capacity index, and encourages early layout expansion, and speed and quality of development; the Safety Production Department pays more attention to indexes such as WTG optimization and benefit improvement electric quantity, and wind farm unavailable hours, and encourages improvement of equipment operating efficiency. The assessment indexes are department efficiency indexes, and assess the monthly work plan, functional management and daily work. The company divides the 15 departments in the head office into business department and functional department. The former emphasizes on operating results assessment, and all the three kinds of indexes; the latter emphasizes on work efficiency and service quality assessment without special index assessment. In his way, the rigorous index system setting provides scientificity and fairness of head office performance assessment.


  Implementing dynamic incentive mechanism

  The assessment evaluation can truly come into play only combining with motivation and restriction. China Longyuan Power, on the one hand, values the innovation and perfection of assessment mechanism, and on the other hand emphasizes the effective application of assessment results, and truly implements the guiding role of assessment into practice.

  Link up with remuneration. The company always insists on linking the assessment results with remuneration incentive closely, establishes the remuneration decision making mechanism of “benefits improves and remuneration rises, benefits drops and remuneration reduces”, increases performance linkage strengthen, strictly confirm assessment results according to assessment standards and procedure, bases on assessment data and insists on “with distinct award and punishment”. The assessment results of head office link up with monthly performance pay. The award (deduction by punishment) amount will be around 20% of monthly performance pay of personnel in the head office; the annual assessment results of subsidiary companies link up with year-end bonus of leaders, and monthly assessment links up with total wages of each company. The award (deduction by punishment) amount will be around 20% of monthly wage base of the enterprise in current month. Meanwhile, the assessment period is shortened from year to month. The rewards and punishments will be fulfilled as soon as the assessment results are gained to keep timeliness of incentive and constraint, sufficiently mobilize concern, participation and enthusiasm of all employees.

  Link up with post adjustment, promotion and demotion. The assessment results also link up with post adjustment except as the important basis of distribution and awards, and closely relate to personnel occupation development. The management personnel and employees with outstanding performance shall be comprehensively cultivated from quality and capacity by job rotation and targeted training, and be promoted preferentially. The performance will be used as important basis for advance selection and excellent example establishment, and honor commendation.

  For over a year after the performance management innovation is promoted, the ideas and behaviors of performance management are changed basically. The improvement of production and operation performance is realized. The relevant person in charge said “employees are changed from carelessness to tension strengthening, and from fussing about assessment results to emphasizing working process. Through innovating the performance assessment, the units and departments ranking higher dare not to treat the work lightly, and those ranking lower actively find out insufficient parts, and strive hard to catch up. The sense of crisis and sense of pressure increased obviously. The positive factors in each level are fully brought into full play, effectively motivating the vitality.” From January to November, the utilization hours of the company are far higher than the average value of new energy companies of other four major power groups, and stabilized at the first place continuously. All indexes such as profitability and benefit level area in the leading position of the industry.


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