Andy Grove knows what makes a successful corporate culture. Avoid complacency; work hard; be dynamic; don’t ever stop for a second in the pursuit of excellence. In 1996 he summarised his thoughts in a book with a catchy title: Only the Paranoid Survive.
It’s a message Ren Zhengfei may have figured out for himself when he founded Huawei in 1988. Like the former Intel boss, Ren thinks that getting to the top – and staying there – requires a hardworking and demanding culture.
As Southern Weekly points out in a recent article on his firm, Ren seeks to fill his employees with a “sense of crisis”. The 66 year-old wrote in the company newsletter that he has no truck with those who want to relax. “We must uphold hard work and arduous struggle for long, otherwise we will go extinct,” he wrote.
Although a former army officer, Ren was at the vanguard in rejecting the ‘iron rice bowl’ culture that permeated corporate China during the command economy era. Instead he built what became known as a ‘mattress culture’ – not because it was soft and comfy, but because Huawei’s engineers were expected to keep something to sleep on under their desk so they could work late into the night.
Ren’s famed for bold management. In 1997 he worried that the marketing department was becoming complacent, so he ordered them to resign en masse and then compete to get their jobs back. This caused a stir in a country where most state firms practiced lifetime employment, but as Ren commented: “For any nation or any organisation, if there is no metabolism it’s life will stop.”
There is no arguing with Ren’s success. He has grown the telecoms equipment maker into one of China’s most competitive multinationals with sales of Rmb149 billion in 2009 and a profit of Rmb18.3 billion (see WiC38).
Founded with just Rmb24,000 in seed capital, the company now employs tens of thousands of engineers on a huge campus in Shenzhen – 70% of whom hold a master’s degree or doctorate. And Southern Weekly reports that Ren has recently instigated a new campaign to get even more out of his staff.
Known as ‘The Striver Declaration’, Huawei managers are asking staff whether they consider themselves to be a “striver” or a “labourer”. Strivers promise to give up paid leave and non-mandatory overtime pay. In return they’ll stand a better chance of promotion, be better assessed and – although there are no guarantees – are more likely get a better bonus and more Huawei stock. Those who opt for labourer status (i.e. the wrong answer) can keep their holiday benefits but their prospects are likely to be viewed more dimly. According to the newspaper, Huawei’s managers have said that opting for ‘striver’ status is voluntary. But peer pressure and the underlying culture make it likely most will select it, especially when – as one employee puts it – “working overtime is as normal as taking meals”. Indeed, working till nine at night is common (although Ren then relents and offers a free evening snack and transport home). As for paid leave, those who’ve worked at Huawei for less than 10 years get just five days off anyway.
Little wonder, then, that one of Ren’s favourite slogans is “One has to sit on a cold bench for 10 years”. Or that one of Huawei’s competitors, Siemens, worked out that Ren’s R&D staff worked double the hours of its own European employees (and for about a fifth of the pay).
But could Huawei face the same sorts of issues as Foxconn, which last year witnessed a series of demoralised staff jump off the factory roof? That’s less likely. Ren has forged a bond between staff and company through a wide stock ownership scheme. He owns just 1.42% of the firm, with staff holding most of the rest. It’s a smart policy that’s bred fanatical loyalty. “Material wealth makes the employees have a tremendous sense of identity with Huawei – including its strange policies,” the Southern Weekly concludes.
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