SCHOOL OF Business

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Student ID
Student name: Ma Thị Ngân Hà number: 21000368

UNIT AND TUTORIAL DETAILS

Unit name: HUMAN RESOURCE MANAGEMENT Unit number: HRM-T222WSB-3

Tutorial group: Individual Report Tutorial day and time: Mon, 12:00 pm
Lecturer or Tutor name: Trương Nữ Tô Giang

ASSIGNMENT DETAILS

Title: Employee Compensation

Length: 3477 WORDS Due date: 21/8/2022 Date submitted: 21/8/2022
Home campus (where you are enrolled): 196 Trần Quang Khải

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 MINISTRY OF EDUCATION AND TRAINING

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

INTERNATIONAL SCHOOL OF BUSINESS

HUMAN RESOURCE MANAGEMENT

EMPLOYEE COMPENSATION

STUDENT NAME: Ma Thị Ngân Hà

STUDENT ID: 21000368
LECTURER: DR. TRƯƠNG NỮ TÔ GIANG

HO CHI MINH CITY, 2022

Haidilao is a Chinese hotpot restaurant chain owned by Haidilao International
Holding Ltd. In 1994 in Sichuan, China, Haidilao was only a small hot pot shop. After
more than two decades, Haidilao now has nearly 1,300 stores worldwide (Textor,
2022) and is ranked among the top nine global restaurants by Brand Finance in 2021
and 2022. Haidilao’s brand philosophy is devoted to the objective of creating joyful
hot pot time and spreading healthy hot pot culture to foodies all over the world via
carefully selected goods and creative services (Haidilao). Although its nature is a
restaurant chain, the key success of this brand is not in the food but in the customer
satisfaction and employee satisfaction. Mr. Zhang Yong, the founder of Haidilao
International, soon discovered that the workforce, particularly the front-line waiters
and waitresses, is the most important factor in achieving customer satisfaction (Cai,
2015). Thoughtful service to customers and care for employees' wellbeing have
always been the secret of Haidilao's success that has been widely spread in various
news reports. Behind this secret lies the profound influence of its distinctive
remuneration structure.

Waiters/waitresses at Haidilao are in charge of greeting customers, directing them to

their seats, taking orders, and serving food and drinks. They are also responsible for
answering customer questions about the menu, ingredients, and so on. In addition,
service staff in Haidilao must coordinate with cashiers, managers, restaurant
supervisors, and kitchen staff when customers order, request cancellation, merge/split
tables, or complain about the restaurant's service. Because of their direct contact with
customers, they are regarded as the most crucial component in achieving a high level
of customer satisfaction. In the service process, front-line stewards play a decisive
role in customer satisfaction, which is a famous feature of Haidilao. Hence, the
servicer needs to be present on time and ready to respond quickly to customers'
requests and questions during mealtime. The fundamental requirements for working
at Haidilao can be segmented into knowledge, skills, and physical capabilities.
Anyone between the ages of 18 and 35 who does not use illegal substances or
narcotics is eligible to apply. Health issues are another factor to take into account.
Working as a waiter at Haidilao places them under extreme strain due to the

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restaurant's high volume of patrons. As a result, wait staff at Haidilao must maintain
a healthy mental state in order to keep a positive attitude while on the job. In terms
of education, Haidilao requires its waiters to achieve a high school certificate as a
way to demonstrate their knowledge and comprehension. Additionally, the job
requires a variety of transferrable skills, such as teamwork, time management, and
the ability to analyze and solve problems. Furthemore, they should be able to
communicate in basic English or Chinese.

Since human resource is one of the most valuable and critical assets of an
organization, it is vital for a company to keep its employees engaged, satisfied, and
motivated at work through compensation methods. Employee compensation is one of
the 8 functions of human resources management and plays a key role in a company's
further success as it significantly impacts the business. According to Mars Discovery
District (2021), compensation is "the cash rewards paid to employees in exchange for
the services they provide." It is much more complex than that definition. Not only
does compensation consist of monetary wages but also other benefits such as social
insurance, group health insurance, retirement, supplemental pay benefits, and family-
friendly policies like parental leave and child care that even have more meaning to
both employees and businesses (Raymond et al., 2018). Hence, employee
compensation can help create, improve, and maintain employees' satisfaction,
engagement, and motivation in their jobs. Compensation, among other things, could
certainly assist with the hiring, performance outcomes, and job involvement. Indeed,
Cascio (2016, pp. 413-414) claims that because remuneration is extremely crucial to
individuals’ life choices and consciousness, people are rather concerned regarding
their income ─ an equitable and reasonable wage, while organizations are likewise
cautious about their compensation since it influences critical decisions by workers
such as whether or not to take a job, leave a job, and how well they perform on the
job To further interpret the significance of compensation, this paper would use the
position of waiter/waitress at Haidilao as an instance for assessing features of a pay
structure; with four main sections including the application of theories to determine
the pay for this job, the comparison of the salary structure with rival companies to

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reflect the quality of the pay structure, the recommendations of other forms of
compensation according to the specified position; and the viable and practical
approaches that the firm could use to communicate with employees about the change
of the compensation system as a result of COVID-19’s severe effects.

Pay practices may vary significantly across employing units on several dimensions
such as level, degree, experience, and job characteristics (Gerhart & Milkovich, 1990,
1992; Gerhart, Milkovich, & Murray, 1992). In the following paragraphs, firstly, four
theories for pay structure development will be analyzed as well as the implementation
of the theory considered as best suited for Haidilao. Compensation objectives could
be divided into four categories ─ equity, efficiency, reinforcement, and expectancy
theories.

To begin, equity theory suggests that employees frequently make internal and
external comparisons, which leads to varying degrees of appraisal of employees'
compensation. Internal equity refers to the fairness or equity in compensation for all
equivalent employment within the organization. In terms of external equity, each firm
has its unique payment structure based on its business and revenue-generating
capabilities. Generally, people make comparisons based on the ratio of perceived
outputs, such as pay, benefits, or working circumstances, to effort, attitude, or
experience, which are considered perceived inputs.

Further, as per the efficiency wage concept, a firm must pay their workers quite
enough to maintain them encouraged to be efficient as well as ensure that extremely
qualified personnel would not quit (Hayes, 2022). According to Noe et al. (2013, pp.
407–410), the efficiency wage theory might have had a significant impact on
employee performance. Furthermore, salary influences employee recruitment,
engagement, and workplace satisfaction. This theory is also relevant when
technology is readily available or firms have systems that rely on competent
individuals. Workers in industries requiring a high level of trust, such as precious
metals, jewelry, or banking, may be compensated efficiently to encourage them to

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stay loyal. As a result, it reveals why firms overpay for workers by claiming that
higher compensation significantly enhances organizational performance over time.

Thirdly, reinforcement concept predicts that interactions that are accompanied by

incentives are much more probable to appear repeatedly (Noe et al., 2013, pp. 407–
410). Furthermore, this method focuses on the significance of an individual's actual
incentive compensation experience. If the monetary incentive is earned as a
consequence of excellent work efficiency, the workers are more likely to accomplish
well in the future. On the other hand, high efficiency would be less certain to
eventuate if it is not rewarded.

The expectation theory is the fourth approach used in the pay structure process. In
this methodology, employees are driven by the expected rewards, and employers
adopt appealing policies to urge employees to work harder for the expected benefits.
Especially, expectancy, instrumentality, and valence assessments are among the
motivating characteristics (Noe et al., 2013, pp. 407–410). This theory is aimed at
the impact that incentives will have on internal employees, and it uses intrinsic
motivation (such as self-satisfaction; self-beneficial; and so on) and extrinsic
motivation (such as promotions; avoidance of punishment; and so on) as the
instrument to create and strengthen the link between the greater the devotion, the
better the incentives.

Continuously, numerous situational components, such as the firm's system,

competitive forces, and, most importantly, job requirements, must be considered in
order to determine which appropriate form of concepts was used to construct the pay
structure and the performance of Haidilao. Haidilao's mission is to provide consumers
with more thoughtful services and healthier, safer, and better food with more nutrition
while enhancing the stability and safety of food quality (Haidilao). As a result of all
of these considerations, Haidilao has recognized the need of building a competitive
compensation structure in order to retain individuals who can enable the firm to fulfill
its objectives. As a result, efficiency wage theory and equity theory are most likely
the best solutions for this scenario; all of these theories claim that an appealing

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payment outcome may be an effective approach to motivate individuals to perform
well. Haidilao Vietnam pays the same wage for this position, which is 7 million 700
VND per month for full-time workers and 30k/ hour for part-time workers (See
Appendix 1). Individuals would be more motivated to succeed in the future if they
were compensated equally at the start. When evaluating an employee's performance,
Haidilao Vietnam takes a variety of criteria into account. Individual performance,
efficacy, and teammate involvement are among the most important criteria.
Performance is evaluated on a constant basis for their productivity on a variety of
indicators while at work, and remuneration is supplied based on their overall
behavior. Employees' compensation and benefits will be raised if they accomplish
higher performance at work. Furthermore, the Haidilao manager's subjective
arbitrariness in deciding performance compensation is prohibited, and employee
subjective equity is molded by focusing solely on achievements rather than human
sentiments (David, 2012). As a consequence, this technique supports Haidilao
Vietnam in maintaining consistent and even successful executive effectiveness, as
well as satisfied employees, resulting in company efficiency. With the efficiency
wage theory, Haidilao is willing to pay their employees a higher amount than they
would be paid elsewhere. Surveying recruitment sites, the salary of waiters or
restaurant service staff ranges from 3 to 6 million VND / month. In fact, to have such
a salary, staff must work under pressure. (Joboko, 2022). Haidilao acknowledges that
they demand their employees to work under a lot of pressure and to perform a lot of
tasks. They also require their employees to pay attention to detail so the only way to
keep talented employees is by applying the efficiency wage theory. Zhang Yong once
stated: “In the final analysis, retaining employees is a matter of mechanism. A fair,
just, and reasonable promotion system is a prerequisite for ensuring that employees
are willing to continue. There is no other way." (Minnews,2022)

Haidilao is among one of the most well-known hot pot restaurants in Vietnam, so in
this section, the essay will focus on comparing the compensation structures with some
rivals of this company. Viet Nam is gaining appeal as a tourist destination in South
East Asia due to its numerous attractions and wonderful cuisine. Aside from Haidilao,

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there are several hotpot restaurants in this city that have a solid reputation among
consumers. Many well-known names may be mentioned, including Hotpot Story,
Hutong, Manwah, Kichi Kichi, etc. These restaurants compete not just in terms of
customer service quality, but also in terms of staff reimbursement methods in order
to retain employment satisfaction. Looking at job advertisements in many of
Haidilao's competitors, some basic components of most waiters' compensation
packages can be seen, including base salary, service charge, allowance, commission
or overtime pay, plus numerous benefits such as health insurance, personal accident
insurance, etc. Manwah is considered Haidilao’s biggest rival in Vietnam, wherever
Haidilao opens a restaurant, people can find Manwah’s restaurant in close
proximity. Manwah is a member of the Golden Gate group and is a hot pot buffet
restaurant. Manwah was established in 2017 with only 2 restaurants in Hanoi, now
after 4 years of operation, the brand has expanded to 41 restaurants nationwide.
According to Manwah’s job advertisement, most servers' remuneration packages
include the following fundamental elements: base pay, service fee, incentive, or
overtime pay (See Apendix 2). Manwah employs expectancy theory, which states that
if employees perform well during their work, such as meeting or exceeding that
month's performance, Manwah will praise and reward them by increasing their salary
that month, offering special vouchers for eating at Golden Gate restaurant chains, or
even creating opportunities for them to go on outing trips or Year-end parties.
Manwah promises to pay the workers for the thirteenth month. Primarily, this notion
is no longer uncommon for a multinational company, but it serves a significant part
in motivating employees’ efforts. Furthermore, when a new member joins Manwah,
he or she would have the opportunity to engage in a variety of training courses that
the company has created just for them, all of which are free of charge. The most
notable is the ‘employee of the month’ incentive program, which rewards the best
employee with a retention bonus based on a comparison and evaluation of their
performances. Hence, this sort of remuneration not only encourages the employees
but also fosters healthy rivalry among them in the workplace. As a result of these
characteristics, Manwah has been successful in gaining applicants’ attention.

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Haidilao Vietnam may get a competitive edge by attracting talent and experienced
workforce members while also retaining current workers through a compensation
structure that is higher than its competitors. Haidilao would be an ideal choice for
those who have prior experience in this role, wish to put their abilities to use and push
themselves to new heights, or prefer working in a competitive environment where
they can press themselves to accomplish a goal. Finally, a pay structure that differs
from that of its rivals is an excellent approach for candidates to choose which
organization is appropriate for them and then strengthen their commitment in the
future.

When looking at job advertisements or negotiating employment offers, one of the first
factors employees assess is the wage range for a role. Employees in a hospitality
business, such as the restaurant sector, are exactly brand ambassadors in the eyes of
the visitors (Zeithaml et al., 2006). As a result, each restaurant strives to offer the
most competitive compensation and benefits packages in order to recruit and retain
top staff, and Haidilao will be no different. However, compensation is only one
component of employee remuneration; there are other options, such as direct and
indirect financial compensation. As a result, the objective of this section is to give
two important types of remuneration that are widely believed to be supplied by the
Haidilao, based on employment characteristics: merit pay and thirteenth-month
payment. The thirteenth-month salary for this position at Haidilao may be the most
tempting compensation strategy. It is a significant boost in an individual's base
income, generally similar to one month's salary. First officially implemented by The
Philippines in 1975, this type of compensation is now extensively used on almost all
continents around the globe (Globalization Partners, 2019). Indeed, numerous nations
have made the thirteenth month's pay a legal necessity, guaranteeing that all workers
are paid on time. This is also a common occurrence in Vietnam. It is ideal for a global
firm such as Watson Vietnam to execute. The date of this incentive payment is
specifically defined by the norms and practices of each organization. Nonetheless, it
is typically prepared near the end of the year or just before significant holidays. Merit
pay, often known as a compensation bonus, is a sort of pay designed to motivate and

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reward employees who excel in their jobs. As a result, this strategy is crucial in
motivating people to boost their productivity. People are considerably more inclined
to exert extra effort when they are aware that there are monetary benefits to
completing a good job. Furthermore, this type of remuneration might foster healthy
competition among customer service representatives by driving them to strive for the
best possible results. A merit-based compensation system is vital in a highly
competitive industry such as retail, among other benefits. Hence, this could assist in
retaining outstanding workers or prospects and preventing talent loss to competitors
(Bhashin, 2021). Admittedly, when given a concrete task list that results in better
value, the organization’s vision and purpose statements may convert thoughts into
reality.

Furthermore, Haidilao has met the needs of its employees. However, based on
Maslow's Hierarchy of Needs (Master Class, 2020), the firm may give more benefits
for this employment in order to boost needs. To begin with, in terms of physiological
necessities, workers receive free meals throughout the day, as well as a free monthly
parking pass.

Second, to address the demands for safety, Haidilao’s employee remuneration could
include health insurance and medical support. Furthermore, Haidilao could provide
health insurance for their employees' families, which means that members of their
families would receive the same health benefits as them. As a result, employees are
happier with the company since they believe the company values them and their
families.

Third, love and belongingness relate to a human emotional desire for interpersonal
connections, affiliation, connectedness, and group membership. Haidilao could create
opportunities for workers to communicate with other coworkers and superiors,
providing the desire for contact and relationship growth. Furthermore, Haidilao could
consider arranging parties for significant events such as Tet, Woman's Day, and
Christmas Eve, with the goal of bringing all employees together.

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Finally, how the organization acknowledges and compensates its personnel may
address the highest and last desire, self-actualization. Employees that reach or surpass
the objective of this month’s performance may be eligible for a pay bonus or possibly
advancement in their careers.

COVID-19 had such a considerable influence on certain industries, resulting in many

stores shutting down many industries are affected detrimentally by this pandemic and
Haidilao is no exception. In only three days, Haidilao's market value has lost $4
billion as a result of the government's increasing limitations to contain a recurrence
in Covid-19 cases. Haidilao International Holding fell 7.5% to its lowest level since
March 2019 and the stock now has a 20% week-to-date decrease, making it the worst
performance on Hong Kong's Hang Seng Index (John, 2021). According to the
current study, COVID-19 caused psychological distress among employees, increased
drug and alcohol usage, and career turnover intentions, as well as a desire to work in
different industries as a result of the pandemic (Bufquin et al., 2021). Despite
enormous efforts to avoid the infectious disease, the harm it has caused to each
person, particularly labor employees, demands a much longer recuperation period.
Recognizing the situation's fragility, several HR managers have examined many cost-
effective alternatives, including regulating employee pay planning. Though each
restaurant's reaction to the pay restructuring may differ, the requirement for clear
communication to the employee about how compensation is handled is vital,
regardless of the magnitude of the modifications. According to Clover (2020),
compensation is a highly sensitive topic, especially in the context of an epidemic, and
requires corporations to effectively communicate with their employees to accomplish
the most potential positive outcomes. As a consequence, Haidilao may utilize a
variety of strategies to inform its staff of the compensation drop, including emails,
all-hands meetings, and a website announcement with a FAQ area for further
information. Furthermore, the approaches might be divided into two categories for
better study and evaluation, with different characteristics for each kind.

First and foremost, Haidilao may use direct communications to facilitate two-way
contact with their employees. This aspect is crucial because it helps the company
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improve transparency by incentivizing employees to submit feedback or ask
questions. Employees must be notified of the reasons for wage cutbacks, regardless
of how horrible they are. As a result, strategies like all-hands meetings or online
conferences may help Haidilao demonstrate empathy and communicate the situation
to their employees. Haidilao's leaders may also observe genuine emotions or
emotional reactions to ensure that their team's thoughts, confusion, aggravation, and
fury are not discounted, as well as include workers in active listening throughout this
process.

Continually, with the kinds of indirect communication specified in COVID-19, the

company may gain a significant advantage in the time of social distance since they
can all be conducted in an online format, minimizing face-to-face connection between
persons. Haidilao might notify its workers of pay changes using a reduction-pay
document, online changes, or business email. Another major advantage of this
technique is its versatility, given how difficult and time-consuming it will be for
Haidilao to find a suitable conference date that is convenient for all parties. Therefore,
the communications become more private and intimate, which reduces the sensitivity
of the compensation restructuring issue.

To summarize, compensation and benefits are critical responsibilities for Haidilao in

order to stimulate and promote employee happiness, resulting in greater productivity
and commitment between employees and the organization. Haidilao has succeeded
in appealing to a prospective workforce and keeping well-performed personnel
through their pay structure and practical compensation techniques, which has made
Haidilao a leading hotpot chain not only in Vietnam but also all over the world.
Unfortunately, the COVID-19 outbreak might have affected those incentives or
payment arrangements. As a result, delivering appropriate communication to
employees is a significant priority for Haidilao.

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Appendix:

Appendix 1:

Appendix 2:

Công Ty Cổ Phần Thương Mại Dịch Vụ Cổng Vàng. (n.d.). Nhân Viên Nhà

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Hàng Tại HCM: 5,000,000 - 8,000,000 VNĐ: TP HCM: Công Ty cổ
Phần Thương Mại dịch VỤ Cổng Vàng. Careers - GOLDEN GATE
GROUP TUYỂN DỤNG.
https://ggg.talent.vn/job/nhan-vien-nha-hang-tai-hcm-565

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