The secret of Huawei's success is to decentralize power and put employees in charge

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Introduction: In 1979, chief architect Deng Xiaoping drew a circle on the edge of the South China Sea, which marked a test field for the market economy. The planned economic system characterized by "big pot meals", "iron rice bowl" and "equal distribution" was broken, and replaced by a market economic operation mechanism representing advanced productive forces, which emphasizes distribution according to work and more work, more pay.

In 1979, chief architect Deng Xiaoping drew a circle on the edge of the South China Sea, which was a test field for the market economy. The planned economic system characterized by "big pot meals", "iron rice bowls" and "equal distribution" was broken, and replaced by a market economic operation mechanism representing advanced productivity, which emphasizes distribution according to work and more work, more pay. It seems to be just a change in the distribution method, but the subjective initiative of people inspired by the latter has attracted the attention of the world here-the Shenzhen miracle. For society, this is a liberation of productivity; and for many companies that have grown up in Shenzhen, this is a revolution in management concepts. Efficiency, responsibility and interests have replaced tasks, contributions and hard work as topics of common concern for companies and employees, giving companies sufficient cohesion and competitiveness, thereby creating more miracles belonging to Shenzhen and China.

The division of rights, responsibilities and interests is a commonplace for corporate management, but in the past 12 years of consulting services, I have never stopped calling for companies to clarify the rights, responsibilities and interests of each position. Although Shenzhen has the indecent title of "Money City" and "Capital of Benefits", there is still a steady influx of talents, batches of entrepreneurs settle here, and one excellent company after another emerges. Because the rules have been set here for a long time. In this game that no one can escape, what should be done, what to pay, what to get, and to what extent to go further, every link is very clear. People here exert their greatest energy, and companies here get the greatest motivation. As for those "nicknames", the best understanding of Shenzhen people is "jealousy". Everyone understands the truth, but few really put it into practice. Let's put aside the theoretical preaching for the time being, and take Huawei as an example to look at the unique art of "division" of Shenzhen companies.

Checks and balances help Huawei succeed

In traditional Chinese culture, the concept of "rule by man" is deeply rooted. This is also true in the field of corporate management. Nepotism and high centralization are two important characteristics of rule-by-man enterprises. This leads to a great deal of secrecy, randomness and unpredictability in the management of such enterprises. The operation of enterprises depends on personal connections, relationships and favors, management depends on experience and feelings, and control depends on randomness and consciousness. With the world economy becoming more harmonious, Eastern traditions and Western concepts are confronting each other head-on, and the debate between rule by man and rule of law, centralization and decentralization is becoming more intense. My answer to this question is: there is no best model, only the most suitable model. Enterprises should explore and establish the most suitable model and path for themselves according to the actual situation of the industry and themselves. But generally speaking, to move towards standardization, specialization and internationalization, and say goodbye to the boss's "one-man show", reasonable decentralization and authorization are the inevitable path to take. It's just a matter of specific methods and methods and the grasp of "degree" in different occasions and situations.

The power that one person enjoys alone is invalid power, because power is not a pet kept at home, nor is it a treasure to be admired alone, but a resource for doing things. Power must be shared among subordinates in order to mobilize their enthusiasm and accomplish great things together. Most emperors in history were good at monopolizing power but not good at decentralization, which greatly reduced the efficiency of governance and became a burden on social development. We must learn from this. Taking Huawei as an example, it has always pursued centralization, but on this basis, it has carried out orderly decentralization layer by layer. Over the years, Huawei has had many vice presidents, but the authority of each vice president has been strictly limited, forming a horn-shaped situation, which is somewhat like Guiguzi's "flying pliers", but after calculating, there is really no "high merit to the master", Ren Zhengfei's military tactics and political strategies are really powerful. Establish a matrix structure and implement orderly decentralization

In the early days of Huawei, due to the small number of employees, relatively simple departments and production lines, and relatively concentrated product research and development types, the organizational structure was relatively simple. During this period, Huawei has always adopted a linear management structure that is more common in small and medium-sized enterprises. Ren Zhengfei directly led the company's general office, which was under the five major systems: the Central Research Headquarters, the Marketing Headquarters, the Manufacturing System, the Financial System, and the Administrative Management System. Supervisors have absolute authority or full authority within their jurisdiction; managers of any department in each system only have direct management rights over their direct subordinates; similarly, all work matters of employees in each department can only be reported to their direct superiors. This concise and fast linear organizational structure enabled Huawei to quickly complete its original accumulation tasks in the early days of its establishment, and it was easier for Ren Zhengfei, the company's top leader, to implement the company's internal orders and related strategic deployments.

However, with the successful development of Huawei's high-end routers and their successful sales in the rural market, the company gradually embarked on a path of rapid development. Not only did it begin to expand from a single switch to other data communication products and mobile communication products in the product field, and the market scope spread across provinces and cities across the country, but the number of employees in the company also increased exponentially. In this case, simple line management increasingly exposed its shortcomings: as the organization expanded, the business became more complex, and all management functions were concentrated on one person. When the "all-round" manager left, it was difficult to find a replacement, resulting in poor coordination between departments.

Ren Zhengfei soon realized the drawbacks of this management and believed that Huawei's development should be closer to the market. This approach should not only rely on advanced technology and reliable quality, but also use thoughtful services to win the market. The management system should be further subdivided on the basis of this linear management structure. In 1998, Huawei abolished the previous departmental structure management model in which power was mainly concentrated in the hands of a few senior executives. After learning and understanding a lot of advanced management experience in the West, combined with its own actual situation, it introduced the business unit mechanism to improve management efficiency, create more new growth points, and "mobilize the work enthusiasm of every Huawei person." That is, according to the business operated by the enterprise, including products, regions, customers (markets), etc., departments are divided and several business units are established.

Once there are strategically significant key businesses and new business growth points, Huawei will establish a series of clearly responsible departments in the organizational structure. These departments are the basic components of the company's organization. Once new opportunities arise, these corresponding departments will quickly take action to seize the opportunities without the need for the entire company to take action. Under the influence of these departments, the company's organizational structure will inevitably undergo a certain deformation. In this process, the interrelated elements (processes) have not changed, but the number and content of the connections have changed. When the phased tasks are completed, they will return to normal. From balance to imbalance, and from imbalance back to a new balance, this is an evolving dynamic process, and it has the natural characteristics of checks and balances of power.

Since then, Huawei has actually begun to turn to a matrix structure (two-dimensional organizational structure), with both business units divided by strategic business and regional companies divided by regional strategies.

In the Huawei Constitution, which was finalized in 1998, Article 44 clearly states that the company's basic organizational structure will be a two-dimensional structure, namely, divisions divided by strategic businesses and regional companies divided by regions. Divisions are responsible for development, production, sales and user services within the scope of business specified by the company; regional companies effectively use the company's resources to operate in the regional markets specified by the company. Divisions and regional companies are both profit centers and bear actual profit responsibilities.

At the same time, Article 46 makes a clearer explanation and provision of the principles and functions of establishing a business unit: The principle of object specialization is the basic principle for establishing a new business unit. The division of a business unit can be based on one of the following two principles, namely the product field principle and the process principle. A business unit established according to the product field principle is an expansionary business unit, and a business unit established according to the process principle is a service-oriented business unit. An expansionary business unit is a profit center that implements a centralized policy and decentralized management. Under the principle of effective control, it should be equipped with the necessary functions required for independent operation, with full authorization and strengthened supervision. For products or business areas that have relatively independent markets and have reached a certain scale of operation, and relatively independent operation is more conducive to expansion and strengthening the responsibility for final results, an organizational form that is more conducive to its development should be selected immediately.

In order to maximize the market share in various regions and provide good product sales and service, Huawei also attaches great importance to the establishment of regional companies. In 1997, Ren Zhengfei first proposed the establishment of a joint venture, and then established Northern Huawei in a joint venture with Tietong, and acquired the original 102 Factory to establish Sichuan Huawei, which opened the curtain of Huawei's market strategy layout. In 2002, Shanghai Huawei was restructured and became the real East China branch of Huawei's marketing department (that is, Huawei's regional company). Subsequently, other joint ventures were gradually restructured, and Huawei's joint ventures finally completed their historical mission and evolved into the later regional companies.

That is: a subsidiary company with legal personality that is wholly owned or controlled by the head office and is divided by region. In the specified regional market and business field, the regional company fully utilizes the resources assigned by the company and tries to mobilize the company's public resources to seek development and bears full responsibility for profits. In the regional market that the regional company is responsible for, the head office and its business units will not compete with it in the same business. If the business units need to expand their business, they can do so in conjunction with or in support of the regional company.

In the view of Ren Zhengfei, the founder of Huawei, the key to the success of business units and regional companies lies in whether the organizational decentralization system is appropriate. "Business units cannot be divided into warlords and set up their own camps. If you lose control of the business unit, the purpose of establishing the business unit will be lost. It is even more ridiculous for a subsidiary to swallow up the parent company, which is a complete reversal of the control relationship." Ren Zhengfei noticed this problem when he first established the matrix structure. "We must be clear that only organizations with effective control are the organizations we should build. If there is no effective control, there is no need to decentralize." The new protagonist of power, the iron triangle of the front line

In the course of its development over the past 20 years, Huawei has continuously adapted to changes in the environment and itself, and although it has been "cautious", it has been exploring a way of decentralization and authorization that suits it. In 2009, Ren Zhengfei began to plan new reforms.

This year, Huawei successfully withstood the test under extremely difficult external conditions, and its performance was strong against the market trend. Its annual sales exceeded US$30 billion, sales revenue reached US$21.5 billion, and customer relationships were further improved. Internally, it also carried out reforms in the organizational structure and human resources mechanism, and determined the "marine-land combat-style combat formation based on the iron triangle of the representative office system department, with light equipment and integrated capabilities" to cultivate opportunities, discover opportunities and seize opportunities, and complete the combat organization of contract acquisition and contract delivery in a small range, as well as the planning and request for support for medium and large projects.

It turns out that as time went by and the organization expanded, Huawei's decision-making bodies, which had too much power and resources, moved away from the battlefield. At the same time, in order to control operational risks, they naturally set up many process control points and were unwilling to delegate authority, which bred serious bureaucracy and dogmatism. As a result, the frontline combat troops spent less than one-third of their time on finding targets, opportunities, and converting opportunities into results, and a large amount of time was spent on frequent communication and coordination with the rear platform. Faced with an increasingly large market, the battle line was constantly being stretched, and the fleeting opportunities left Huawei with less and less time to mobilize resources. The front line must have more decision-making power to adapt to timely decision-making in the ever-changing world.

How to solve this problem? Conventional thinking, since the front and rear are too far apart and there is insufficient coordination in the middle, then the rear should be streamlined, the staff should be reduced, and the process should be simplified, so that the efficiency of communication and resource allocation between the front and rear can be improved. However, Huawei's EMT (operation and management team) does not agree with this approach. They believe that simply streamlining the organization cannot fundamentally solve the problem. When the cadres and employees of the organs are pressed to the front line, it will increase the burden and cost of the front line. More importantly, they can't help much and can't generate additional benefits. Moreover, after the cadres of the organs go down, they regard themselves as the headquarters, but interfere with the normal work of the front line, which is not worth the loss. Since conventional methods don't work, it is not easy to innovate. It seems that it is about to fall into a deadlock. A report from Huawei's North Africa region gave Ren Zhengfei a hint of inspiration.

In the North African branch of Huawei, employees set up a working group consisting of account managers, solution experts, and delivery experts to strengthen the customer interface, forming a customer-oriented "iron triangle" combat unit. The essence of the iron triangle is to break down functional barriers for the purpose of the goal and form a project-centered team operation model. Huawei's advanced equipment and high-quality resources should be able to play a role in time and provide effective support as soon as the front line finds goals and opportunities, rather than those who have resources commanding the war and holding their own troops. This provides a way of thinking for Huawei's organizational change and decentralization, that is, to grant decision-making power to the front-line team according to the authorization rules, and the rear only plays a guarantee role. The corresponding process sorting and optimization should be done in reverse, that is, to determine the purpose based on demand, to drive the guarantee with the purpose, to consider everything for the front line, and to work together to control the setting of effective process points, so as to streamline unnecessary processes and unnecessary personnel, improve operating efficiency, and lay a good foundation for survival.

It can be understood more vividly. Huawei used to be a centralized system. The organization and operation mechanism were the powerful engine of the central authority "pushing". In the process of pushing, some useless processes and unproductive positions were invisible. Now Huawei distributes power to the front-line teams and gradually forms a "pull" mechanism. To be more precise, it is a mechanism that combines "push" and "pull" and is mainly "pull". When pulling, if you see a rope that is not under force, cut it off. Cut off the departments and personnel connected to this rope at the same time, and the organizational efficiency will be greatly improved. The redistribution of power has led to a thorough transformation of Huawei's organizational structure, operation mechanism and process. Each chain can operate quickly and flexibly, and the key interaction nodes are controlled, so there will naturally be no bloated organization and bureaucracy.

The redistribution of power does not negate the achievements Huawei has made in the past 20 years. In the past, the high degree of centralization prevented the loss of control caused by the dispersion of power and avoided the premature death of Huawei. However, there is no unchanging truth in the world. Today, Huawei has transformed the back office into a supporting force for the system through global process integration. Through authorization, exercise of power, and supervision along the process, power is decentralized to get rid of the inefficiency and bloated organization of centralization.

Winning a war requires overall planning, while winning a battle depends on the strength and adaptability of the combat troops. In the foreseeable future, Huawei's frontline will truly have the active decision-making power of "generals are not subject to military orders when they are away from the front line", and the backend will be separated from the headquarters and completely become a supporting role, providing resources and supporting facilities for every battle on the front line. Without the bossy attitude, the improvement of operational efficiency is inevitable. The headquarters relies on the strategic orientation initiative and monitoring power to ensure that the power of the front line is not abused or used ineffectively. This is not a traditional decomposition of power from top to bottom, but a recasting of power from bottom to top, from the front line to the rear.

In the first half of 2012, Huawei's revenue was RMB 102.7 billion, a year-on-year increase of 5.1%. This data shows that Huawei has maintained a steady growth trend despite the dual crises of the global financial crisis and the European debt crisis, and has surpassed its largest competitor, Sweden's Ericsson, to become the world's largest communications industry leader. Although Huawei's impressive performance is inseparable from the successful transformation of its business strategy and breakthroughs in the terminal market, the reasonable distribution of power and the improvement of organizational operational efficiency have also played a great role. Ren Zhengfei once lamented: "Even if the efficiency is improved by one thousandth every year, it is gratifying." The distribution of power will be continuously optimized as we move forward, and the accumulated deep internal strength will enable Huawei to face more complex market changes in the future with ease, vitality and confidence.

Strange Situations Witnessed in the Past Twenty Years

After Liu Bang became emperor, he said a famous saying: "In terms of planning and winning battles thousands of miles away, I am not as good as Zifang; in terms of stabilizing the country, comforting the people, providing food and supplies, and ensuring the supply of food, I am not as good as Xiao He; in terms of leading millions of troops, winning battles and conquering cities, I am not as good as Han Xin. All three are outstanding people, and I can use them, which is why I can conquer the world. Xiang Yu had Fan Zeng but could not use him, which is why I captured him." It should be said that Liu Bang revealed the true meaning of his success in seizing power. He was a person who was good at organizing all forces for his own use. It was the three horses of Zhang, Xiao, and Han that helped Liu Bang to the throne of emperor. In terms of modern military organization, Zhang Liang was the chief of staff, Xiao He was the chief of logistics, and Han Xin was the commander-in-chief. These are the three indispensable forces in any large-scale power struggle. The importance of reasonable decentralization is beyond doubt.

However, in the years of working in marketing management consulting, the most common voice I hear on the issue of "decentralization" is: not daring to delegate power, worried that subordinates will "take over the sky with one hand" and replace their positions. Or, unwilling to delegate power, preferring to be a little tired. What's worse, I have worked hard to establish the company, and I have to have the final say in everything. If you come to ask me for power, I will beat you to death! This inevitably leads to two consequences:

First, they do everything too much by themselves, which makes it difficult for employees to grow. In such companies, affected by organizational culture and insufficient authorization, middle-level managers often lack innovation awareness and remain in a state of fear. They lack crisis awareness and responsibility awareness, lack the motivation of grassroots employees and the promotion of senior leaders. Over time, a vicious cycle has formed, because it is difficult for employees to grow, more and more things have to be done by themselves;

Second, the focus of company management has shifted downward, resulting in low operational efficiency. The reasons for this are that senior leaders are caught up in specific affairs and have no energy to consider strategic work; middle-level cadres have no autonomy and are tired of attending meetings and asking for instructions; grassroots employees have become "old-fashioned" over time, only listening to the boss (the top leader), not taking their direct superiors or leaders in charge seriously, and turning a deaf ear to their words, or even fanning the flames and not distinguishing right from wrong.

Unrestricted power is terrible, it will drag down the enterprise like a wild horse. But too much checks and balances will make decentralization lose its due value and meaning. But if our entrepreneur friends are always unwilling to delegate power, to put it bluntly, they don't even have the space to accommodate one or several people - employees, colleagues, staff, partners who follow and work for them - how can people believe that they have great dreams in their heads! All employees hold shares, and employees are the real bosses of Huawei

Profits are the driving force of the market economy. "When planting trees, explain clearly how to divide the apples," so that everyone does their own thing and finally takes the apples they deserve. Otherwise, when the apples are ripe, it will be impossible to clearly explain which process is most important, such as watering or fertilizing, and the apples will no longer be distinguishable.

The era of primitive accumulation of capital, where the horse is expected to run fast without being fed grass, has long become history. Today, enterprises are facing an unprecedentedly complex market environment. Human resources are no longer just a resource, but an important capital that determines the development strategy of enterprises. An effective distribution mechanism is conducive to the stability of human capital and the stimulation of potential, which in turn constitutes the core capability for the development and growth of modern enterprises. Of course, the distribution of benefits here is not just as simple as dividing money. It includes material "benefits" as well as spiritual "benefits". Spiritual rewards bring employees more than just a certificate or a word of praise. Enterprises are profit-seeking. Blind material incentives will cause cash flow tension and instability of the capital guarantee chain, which will endanger the sustainability of the enterprise. Therefore, how to find a dynamic balance between the interests of the enterprise and the interests of employees is, in layman's terms, to tie the enterprise and employees to the same chariot.

More than 20 years ago, when many Chinese entrepreneurs were still haggling over employee salaries and bonus plans, Ren Zhengfei had already united and motivated employees by sharing company stocks. In 1987, Ren Zhengfei and five partners jointly invested in Huawei, with a registered capital of only 20,000 yuan. At that time, the six shareholders shared the shares equally. In 1990, Huawei first proposed the concept of internal financing and employee stock ownership. At that time, Huawei employees' salaries consisted of wages, bonuses and stock dividends, and the three parts were almost equal in amount. Among them, stocks were distributed one year after the employees joined the company, based on factors such as the employees' positions, quarterly performance, and qualifications, and were generally purchased with the employees' annual bonuses. If the new employees' annual bonuses were not enough for the stock distribution, the company would help the employees obtain bank loans to purchase equity. The way of all employees holding shares, on the one hand, reduced the company's cash flow risk, and on the other hand, enhanced the employees' sense of belonging and stabilized the entrepreneurial team. It was during this period that Huawei completed the strategic task of "surrounding the cities from the countryside". Its sales revenue reached 1.5 billion yuan in 1995, and it expanded its market to major Chinese cities in 1998. In 2000, it established a research and development center in Stockholm, the capital of Sweden, and its overseas market sales reached 100 million US dollars.

During the dot-com bubble in 2000, the IT industry was devastated and Huawei entered its first winter in its development history. At this time, Huawei began to implement an option reform called "virtual restricted stock". Virtual stock refers to a virtual stock granted by the company to the incentive object, which can enjoy a certain amount of dividend rights and stock price appreciation rights, but has no ownership, no voting rights, cannot be transferred or sold, and automatically expires when leaving the company. The issuance of virtual stock maintains the control of Huawei's management over the company and does not lead to a series of management problems. Huawei has also implemented a series of new equity incentive policies: (1) New employees will no longer be issued stocks with a long-term fixed price of one yuan per share; (2) The stocks of old employees will gradually be converted into stock options; (3) In the future, the majority of employees' income from options will no longer be fixed dividends, but the added value of the company's net assets corresponding to the stock options. Options are more reasonable than stocks. Huawei stipulates that according to the company's evaluation system, employees will receive a certain amount of options. The exercise period of options is 4 years, and the annual redemption amount is 1/4. That is, if someone obtains 1 million shares in 2001 and the stock price is 1 yuan per share, he can choose four ways to exercise options every year after 2002: cash in the difference (assuming that the stock price rises to 2 yuan in 2002, he can make a profit of 250,000 yuan), buy stocks at 1 yuan per share, retain them and redeem them later, and give them up (that is, do nothing). The reform from fixed stock dividends to "virtual restricted shares" is the transformation of Huawei's distribution mechanism from the principle of "universal benefit" to "focused incentives".

In 2003, Huawei, which had not yet survived the bubble economy, was hit hard by the SARS. Its export market was affected, and the property rights lawsuit between Huawei and Cisco directly affected Huawei's global market. Huawei internally called on middle-level and above employees to voluntarily submit "salary reduction applications" in the form of a campaign, and further implemented management buyouts to stabilize the workforce and overcome difficulties together. The 2003 rights issue had three obvious differences from Huawei's previous annual rights issue: first, the rights issue quota was large, close to the total number of employees' existing shares on average; second, the cashing method was different. Even if the rights issue accumulated in previous years did not leave the company, they could choose to cash it out at a certain ratio every year. The maximum annual cashing ratio for general employees did not exceed 1/4 of their total personal share capital, and the annual cashing ratio for core employees with more shares did not exceed 1/10; third, the equity was tilted towards the core layer, that is, the number of rights issue obtained by backbone employees was much higher than that of ordinary employees. This rights issue stipulated a 3-year lock-up period, and cashing was not allowed within 3 years. If an employee left the company within 3 years, the rights issue would be invalid. Huawei also took some supporting measures for employees to purchase virtual equity: employees only need to pay 15% of the required funds, and the company will provide the rest in the form of bank loans. Since this reform, Huawei has achieved a sharp increase in sales performance and net profit.

In 2008, the global economic crisis caused by the US subprime mortgage crisis caused great losses to the development of the world economy. In the face of the impact of this economic crisis and the worsening economic situation, Huawei launched a new round of equity incentive measures. In December 2008, Huawei launched a "rights issue" announcement. The stock price of this rights issue was 4.04 yuan per share, with an annual interest rate of more than 6%. The scope of involvement included almost all employees who had worked at Huawei for more than one year. Since this rights issue was a "saturated rights issue", that is, different job levels were matched with different shareholdings, for example, employees at level 13 had a shareholding limit of 20,000 shares, and employees at level 14 had a shareholding limit of 50,000 shares. Most of the old employees at Huawei headquarters did not participate in this rights issue because their shareholdings had reached the upper limit of their level. Previously, industry insiders estimated that Huawei's internal shares were about 2 billion shares in 2006. According to the above scale, the scale of this rights issue is between 1.6 billion and 1.7 billion shares, so it is a large-scale transformation of Huawei's internal employee shareholding structure. The share allotment method this time is similar to the previous ones. If employees do not have sufficient financial strength to directly purchase stocks from the company with cash, Huawei will provide guarantees to the bank in the name of the company to help employees purchase company shares.

In 2002, Huawei announced that the execution price of virtual restricted shares for that year was 2.62 yuan per share of net assets, 2.74 yuan in 2003, 3.94 yuan per share in 2006, and 4.04 yuan in 2008. The annual rate of return for employees reached 25% to 50%. Huawei uses equity distribution to ensure that employees' efforts are reasonably rewarded, but equity distribution is not equal. Huawei evaluates each person's equity quota every year, and the equity quota is proportional to the contribution. At the same time, Huawei absorbs new employees every year, and new employees with special contributions are rewarded with equity quotas. Because knowledge is capital, Huawei's education, ability, position, title, scientific research ability, etc. are all transformed into valuable capital, and those who hold these "capitals" are naturally shareholders of the company. Of course, the number of years of service in the company and work attitude are also regarded as components of capital, and the relevant personnel obtain corresponding equity through this.

The equity held by shareholders is a variable. The Human Resources Management Committee will determine the equity quota of each employee every year according to the size of their contribution. Whether it increases or decreases is entirely determined by the size of their contribution. In Huawei's words, only "strugglers" can share in the fruits of their labor. As a result, the shares of shareholders with small contributions have become less and less in the process of continuous dilution. After several years of standardized operation, the basic situation of Huawei's employee shareholding is: 30% of outstanding employees hold shares collectively, 40% of employees hold shares in proportion, and 10%-20% of new employees and low-level employees hold shares appropriately. The employee shareholding mechanism of "everyone is the boss" fully reflects the value of knowledge, takes into account the interests of all parties, closely links the human capital of employees with the future development of the enterprise, and forms a virtuous cycle system. Employees obtain equity and participate in company dividends to achieve the simultaneous appreciation of company development and employee personal wealth. Advocate the spirit of Lei Feng, but never let Lei Feng suffer.

Article 69 of the Huawei Basic Law stipulates: "Huawei Company guarantees that during economic booms and good business development stages, the per capita income of employees is higher than the corresponding highest level in the region and industry." Huawei's high salary allows employees to devote themselves to their work. In the process of enterprise management, in addition to paying salaries, a considerable part of employee costs lies in management input. No matter how much employees produce, the management and communication costs will not change significantly. High salaries become the best way to tap potential, while also avoiding losses caused by talent loss. Huawei's employee mobility is also high, but most of them go out to start their own businesses, and few are poached. High salaries attract outstanding talents to Huawei and also motivate the work enthusiasm of employees.

In June 2011, Huawei disclosed to the media for the first time that "the salary of more than 40,000 mid-level and grassroots employees has increased by 11.4% in the first half of this year, accounting for 36% of the total number of employees. In the second half of the year, the salary of mid-level and senior employees will continue to be adjusted, and the salary increase is expected to be 5%-10%. "The annual report shows that Huawei's sales revenue in 2010 was 185.2 billion, a year-on-year increase of 24%, while the expenditure on employee expenses was 30.6 billion, a year-on-year increase of 23%. Based on Huawei's 110,000 employees, the average annual salary of its employees is nearly 280,000 yuan. In addition, Huawei provided 1.97 billion yuan in security expenses for its employees in 2010, including insurance and medical care.

Inside Huawei, there is a saying circulating among Huawei's president and founder Ren Zhengfei: "We advocate the spirit of Lei Feng, but we will never let Lei Feng suffer." Huawei's remuneration structure consists of salary + bonus + equity dividends. In the past five years, Huawei's performance has achieved an annual growth of more than 24%, with profits reaching more than 50%, and cash flow generated by operating activities increasing by more than 49% each year. This ensures that more than 60,000 shareholding employees can receive extremely high dividends every year. In 2010, Huawei employees received a dividend of 2.98 yuan per share, nearly doubling that of 2009. The income is very generous, and some Huawei employees even said, "After the dividends are distributed every year, there will be a lot more good cars in the garage."

According to the latest statistics, the average annual income of Huawei's grassroots employees is 160,000 yuan, accounting for about 88% of the total employees; the annual salary of the fourth-level manager is 500,000 yuan; the annual salary of the third-level supervisor is 1 million yuan; the annual salary of the second-level director is 3.5 million yuan; and the first-level president is about 15 million yuan. The annual salary of Huawei's second-level director is even more considerable than that of the CEO position of some listed companies. Referring to any of the currently published standards for defining the Chinese middle class, Huawei has undoubtedly become a company with all employees in the middle class, judging from the lower limit of wealth alone. Not only that, Huawei has also created a group of employees and management who can be called wealthy: according to the above data, the number of its millionaires is at least 7,200. These do not include the millionaires among the grassroots employees who account for about 88% of Huawei's total employees - working at Huawei for more than 5 years, this will be a wealth goal that can be achieved step by step. Such competitive remuneration packages not only allow Huawei employees to live a decent life, but are also the most direct way for Huawei to realize its dreams and maintain its competitiveness.

Honorary awards, neglected spiritual food

Although Huawei has implemented employee stock ownership and provided employees with highly competitive economic benefits, in the survey of factors that employees recognized about Huawei, salary only ranked fifth. The factors that ranked first were unexpected but seemingly reasonable personal sense of achievement and company values. When talking about the profit distribution system, many companies often focus on material foundations such as salary and bonuses, thus ignoring the spiritual interests of employees. Once the material interests of employees and the material interests of the company are tilted or not balanced, the company will face two disastrous consequences: the inability to develop sustainably due to excessive labor costs or the inability to retain talents due to unreasonable profit distribution, resulting in the company's lack of motivation to move forward. The satisfaction of spiritual needs is precisely a buffer for the imbalance of material needs. Even the combination of the two can be more conducive to the dynamic optimization of the distribution mechanism.

Huawei's "wolf culture" is well known in the industry. Learn from Lei Feng, be dedicated, and work together; "celebrate with a toast when you win, and sacrifice yourself to save others when you lose." Those who work in R&D must be able to "work on the bench for ten years"; those who work in marketing have to resign en masse. These stories are really thrilling. But if you know Huawei's "honor department", you will no longer be surprised or curious about this, but will have a kind of admiration from the heart.

The Honor Department has no other tasks. They only do three things:

First, award honorary awards. Every business area can apply for an award certificate worth 200 yuan. It may seem ordinary, but it can make employees feel proud and a sense of belonging.

Second, reporting on advanced typical events. Ren Zhengfei said in a speech: "What are Huawei's heroes? Who has pushed Huawei forward? It is not one or two entrepreneurs who have created history, but more than 70% of outstanding employees who have pushed Huawei forward. They are the real heroes... Heroes are around us, living with us every day, and there must be something worth learning from them." The subjects of typical reports are mostly ordinary employees, who are also what Ren Zhengfei calls "Huawei heroes." This most straightforward way of praise makes Huawei employees feel a sense of accomplishment, and they use more hardworking ways to repay this affirmation and recognition.

Third, expert guidance. Huawei invites experts not to teach technology, but to hold discussions with employees. Some experts even come from the Mianyang Missile Base in Sichuan. The old revolutionaries have devoted their entire lives to the aerospace industry. They have very pure thoughts and are very willing to communicate with the younger generation. Communication and exchanges with old experts broaden the minds of young Huawei employees and make them grateful and dedicated.

Employees will receive some of the above rewards without realizing it. As long as you have your own characteristics and have certain achievements in work, you may get an honorary award. For example, there is an "improvement award" for new employees, and there is a "project award" for participating in a project, which benefits a wide range of people. In addition, at Huawei, every honor awarded by the Honor Department is not just a verbal praise, but material rewards and spiritual incentives are closely linked. As long as an employee wins an honorary award, he or she can get a certain material reward. And there is no upper limit for honorary awards. If an employee becomes a "professional" honorary award winner, the material reward he or she gets is also considerable. In this way, Huawei's spiritual incentives are no longer a "false and empty" entrepreneurial means that is resisted and opposed by employees, but a true sense of achieving the dual satisfaction of material wealth and spiritual wealth. Many companies may easily achieve competitive remuneration and motivate employees from the perspective of material interests, but the spiritual interests that are often the most easily overlooked but are more important when the company faces a critical moment are difficult. Spiritual motivation is an in-depth, complex, widely used and far-reaching task. It not only tests the human resource management's grasp of the psychological needs of employees, but more importantly, it guides a collective value and culture that is recognized and tangible by both the company and employees.

Huawei also has a certain percentage of employee turnover every year, but few are poached directly by competitors. Most are eliminated because they cannot maintain their wolf-like vitality or choose to start their own business after receiving assistance from Huawei. The success of the company has grown from tens of thousands of yuan to hundreds of billions of yuan. Behind the success is a huge talent system, and it is Huawei's unique profit distribution system that unites and consolidates these 146,000 people. And this is not the end. In the future, more talents will join Huawei, create Huawei, and participate in sharing Huawei.

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