An empirical analysis of incentive management of a mining company

The goal of the study was to investigate incentive systems of a state owned mining company operating in Mongolia. The company’s current incentive system was devel-oped during the centralized planning economic era of Mongolia and fallen behind the modern human resource practice. The present incentive system of the company was in-vestigated and a possibility of introducing a performance based incentive system that complements the mining company’s competitive advantage was sought. The study in-volved sample survey, secondary data analysis and interviews with representatives of different levels of the organization. The results of the survey and interviews revealed that the current incentive system was a non-performance based one. The company allo-cated incentives from the consolidated remuneration fund on the basis of labor partici-pation factor in production lines. Moreover, the corporate policy on increasing basic salary and decreasing incentives resulted in de-motivation of the employees. The study concluded that an application of key performance indicators (KPIs) and merit based evaluation system is necessary for the company. To address the existing challenges in the corporate human resource evaluation, the team developed a tailor-made evaluation sheet that is robust to the company’s characteristics. The empirical study provided an opportunity to address unique human resource management challenges in the mining business. The originality of the study was a development of the evaluation sheet which is robust to the state-owned mining company and the methodology of incentive systems. The new system enabled the company not only review human resource management is-sues, but also strategic planning matters.