Original link: https://www.latepost.com/news/dj_detail?id=1769
“LatePost” exclusively learned that Tencent, ByteDance’s Douyin Group, and Alibaba’s Taotian Group are all planning to make adjustments to the current rank system and management system this year.
- Tencent will reduce the level of cadres, reduce the management roles of the business, and promote the company’s organizational hierarchy to be flatter. Xi Dan, senior vice president and head of human resources of Tencent, said at the group strategy meeting that it will be more radical to implement the “ability to go up, down, and active” for cadres to create promotion opportunities for young employees.
- Douyin Group is considering adjusting the “5-level 10-level” employee rank system that has been implemented for more than five years, but the plan is undecided. ByteDance has set up a special rank and salary reform project team.
- Taotian Group is considering increasing the ranks of grassroots employees (the P sequence is changed to 14-28) and simplifying the way of promotion. It is also planned to adjust the OKR assessment system to a KPI-based assessment system with parallel OKR and KPI. In addition, teams with more than ten people will be eliminated at the end.
Tencent, Alibaba, and ByteDance are the top three Internet companies in China, established in 1998, 1999, and 2012, respectively. The market capitalizations of Tencent and Ali are around US$400 billion and US$240 billion respectively. Byte has not yet been listed. According to public information, its latest round of financing was in 2020, when it was valued at US$100 billion. In the first half of this year, Byte’s old stock transactions were valued at approximately US$220 billion. In terms of the number of employees, by the end of 2022, they will have 100,000, 230,000, and 160,000 employees respectively.
All three companies have reached maturity. In 2022, Tencent’s revenue will exceed 550 billion yuan, a year-on-year decrease of 1%; Alibaba’s revenue in the last fiscal year was close to 870 billion yuan, a year-on-year increase of only 1.8%; ByteDance still maintained a relatively high growth rate, and its advertising revenue in China reached 330 billion yuan, a year-on-year increase of 15%, but it still fell sharply compared with previous years.
Adjusting the background is similar. After experiencing the golden decade of high-speed growth from 2012 to 2022, companies have continued to expand their businesses horizontally and vertically during this period. However, as the growth rate of the main business slows down, all companies have higher requirements for efficiency, and have started stricter performance appraisal and personnel optimization.
How organizations adapt to the new cycle is a common proposition for Internet companies today.
The rank system is an effective management tool for medium and large organizations. It can identify the ability of employees, provide employees with relatively certain development expectations, increase their sense of security, and ensure the stability of the organization.
As the size of the company grows, employees will increasingly focus on promotion rather than business development-in most companies, employee promotion requires a long time to prepare report materials and participate in defense. “The ideal rank system should be to encourage everyone to take military exploits, rather than to encourage everyone to waste time climbing the ladder.” An HR director of an Internet company said.
In recent years, many large companies have made adjustments to the current rank system. The core of the adjustment is to compress the hierarchy and reduce the difficulty of the promotion process for grassroots employees. At the same time, the relationship between salary and promotion is weakened, that is, promotion does not necessarily increase salary.
In 2021, Meituan will reduce the 8-tier rank to 6-tier. At the same time, Meituan changed “annual salary adjustment + two promotions in spring and autumn” to “annual salary adjustment + special autumn salary adjustment + one promotion and salary adjustment”. In terms of promotion, it is encouraged to cancel the review process, and the two-level supervisors make decisions based on employee performance.
In the second year, Tencent made similar adjustments , delegating the promotion rights of 9-11 (basic) employees to departments and business lines, and encouraged the simplification of the review method and advocated no face-to-face review and defense. At the same time, strengthen the relationship between employees’ daily work and performance appraisal.
The key point of Taotian Group’s adjustment this time is that if the performance reaches 3.75, it can be promoted directly, omitting other procedures. This is similar to the previous reform directions of Meituan and Tencent.
Both Ali and Byte had similar opinions, that is, “fighting” is the best promotion channel, and employees should be self-driven, make contributions beyond the rank standards, and get richer returns from it.
When the number of new businesses decreases, the probability of promotion based on military exploits also decreases accordingly. The distress of most employees has increased because they will be suspected of their ability to work when they look for a new job in the existing company if they have not been promoted for many years. Therefore, one type of company’s solution to this is to lengthen or split ranks. The current reform plan of Taotian Group and the current discussion plan of Byte are in this direction.
When managing change, more and more companies are adopting Tencent’s “old TCM approach” rather than a more radical approach. Because their size and influence are large enough, every move is public. Whether it is layoffs or management changes, they are relatively cautious.
Even more so in the US. When large companies use their employees’ performance rankings for stack ranking, they face the risk of litigation. In 2000, Ford was sued for allegedly discriminating against old employees; companies such as Microsoft, Accenture, and Adobe have successively abandoned tail-elimination; Amazon is still using this system, but it has been widely criticized. A strong trade union system also guarantees the rights and interests of employees. For example, when Google laid off employees in France and Germany, local laws required them to negotiate with labor councils in advance. In the process, the committee will do a lot of investigation and information gathering to prove the legitimacy of layoffs, and help employees negotiate and obtain reasonable claims-this will be a long process.
But there are exceptions. A person from Pinduoduo said that he feels that Pinduoduo does not have this trouble at this stage.
The third largest e-commerce company in China, established in 2015, has not yet established a rank system for its employees, nor does it have any advanced management concepts and tools. The super brain makes decisions, and the management decomposes and communicates. With salaries that are superior to those of their peers, employees focus on work in one position like screws. The only salary increase standard is work performance. Of course, they also don’t have an intranet to complain about all this.
From the perspective of human efficiency, Pinduoduo earns an average annual income of about 10 million yuan per employee; Tencent earns around 5.5 million yuan; Alibaba and ByteDance earn 3.77 million yuan and 3.44 million yuan respectively.
Someone joked that when Ali employees are working hard for promotion, Pinduoduo employees are working hard for business. There are many similar jokes. For example, when the employees of Meituanyou are working hard to hold meetings, the employees of Duoduomaicai are working hard to do business. These jokes point to a helpless reality: when there is no innovation in the business, efficiency seems to be the only magic weapon for victory.
Tencent: “Ability to go up” is available, but “Ability to go down” has not been fully implemented
Tencent made a talent management system adjustment in 2022 to simplify the promotion process for grassroots employees, and at the same time strengthen the connection between employees’ daily work and performance appraisal.
“LatePost” learned that at the group strategy meeting in the first half of this year, Tencent’s chairman and CEO Ma Huateng and president Liu Chiping once again expressed concern about the phenomenon of organizational overstaffing, believing that various business departments used to turn adding people into inertia, which caused inefficiency.
They believe that there should be “less management roles and more practical (employees) to make the organization flatter.” A participant quoted Liu Chiping’s speech at the meeting, “It is the leader who decides the business. If he is not good enough, he will not be able to have any ideas and input.”
Ma Huateng suggested that each business team should “loosen the soil” more. The so-called “loose soil” refers to the rotation among management cadres, as well as the transfer or demotion of managers who are not qualified for their posts. This process may have a certain negative impact on the business, but the “soil” of a team that does not move for a long time will harden. “Many people are very worried that they will lose their position after moving, but the general environment is such that if you don’t want to move, someone will come to help you move.”
Tencent carried out a group-level organizational change in 2018. At that time, it proposed that management cadres should be “able to go up and down” to create opportunities for young people. But for a long period of time, “‘can be uploaded’ has been available, but ‘can be downloaded’ has not been fully implemented.” A Tencent source said.
It is understood that Tencent’s current management levels include: Senior Executive Vice President – Senior Vice President – Vice President – General Manager – Deputy General Manager – Assistant General Manager – Senior Director – Director – Deputy Director – Team Leader – Deputy Team Leader.
Liu Chiping said that this is because in the past, “I worried too much and didn’t want to be a bad person. The result is the business itself.” In 2022, as the group reduces costs and increases efficiency in an all-round way, “the reduction in manpower will actually increase production capacity and efficiency.” This has strengthened Tencent’s determination to make adjustments to the organizational system this year.
It is understood that Tencent will conduct a one-year performance inspection in 2022, in which 12.5% of senior executives (vice presidents), 6.4% of mid-level managers (general managers, assistant general managers) and 7.8% of key personnel (directors, deputy directors) were demoted or transferred.
Many Tencent employees have felt the change—the promotion of management positions has become difficult. A person from Tencent said that the number of people promoted to the core and mid-level has begun to decrease significantly.
There are also many business departments that implement the rotation system at the middle-level level. Core managers such as Wang Juan, chief editor and head of operations of Tencent Video, Ma Yankun, head of variety show business, and Han Zhijie, head of film and television dramas, exchanged their businesses. Some business departments have even started pilot rotations at the team leader level.
Liu Chiping said at the meeting that Tencent will further increase the requirements for leaders in the future. “Good is not good enough.”
Douyin Group: End the era of entrepreneurship and move closer to maturity and stability
The number of employees of ByteDance has reached 160,000 worldwide, and its business covers short video, e-commerce, games, life services, medical health, consumer hardware, cloud and artificial intelligence. It is a veritable multi-service global company. But today, Byte still implements the “5-level and 10-level” rank system established a few years ago, and there is no dual channel for professional rank and management rank, only a single channel.
Alibaba and Tencent not only have a career level far exceeding 10 grades, but also have a complete dual-channel promotion mechanism. Kuaishou, whose number of employees is much lower than that of ByteDance, has implemented a professional rank (beginning with K) and management rank (beginning with M) system in 2020. There are about 24 professional ranks in the dual channels. At that time, Kuaishou had only 20,000 employees.
In January 2021, ByteDance’s top executives had a discussion on adjusting the rank system . The HR department supports the unified ranks because most businesses have entered a stable period, and clear and unified ranks facilitate the management and evaluation of employees.
The business side reacted violently. They worry that after clarifying the rank standards, employees will use this as an excuse to relax their own requirements, instead of thinking about how to break through their rank standards and do one thing to the extreme.
In recent years, more and more employees of Byte have felt that their business has entered a state of “no battle to fight”, and the upward channels that the company can provide them have also narrowed.
“LatePost” learned that Douyin Group is considering extending the ranks of middle and grassroots employees.
ByteDance remains one of the most profitable Internet companies in China. Its advertising revenue has now surpassed Alibaba and become the largest domestic advertising company, but this is more dependent on a product called Douyin. In 2022, ByteDance’s advertising revenue in China will reach approximately 330 billion yuan, and Douyin’s contribution will exceed 80%. In 2022, ByteDance’s product “Kosong” and the high-end version of Jinri Toutiao “Knowledge Area” will be off the shelves.
Today, the company’s entrepreneurial era is basically over, and the company’s scale will no longer expand. “Focus and pragmatism” will become its new theme in 2023.
Bytedance has become more cautious in launching new businesses. ByteDance CEO Liang Rubo made it clear at the general meeting of the 11th anniversary this year that the company’s resources are limited, and the company’s capabilities and cognition also have boundaries.
This year, ByteDance has adjusted a number of management mechanisms, including canceling the large and small week system that has been implemented for more than 9 years in 2021, and changing the OKR execution cycle from bimonthly to quarterly in early 2023, further slowing down the business rhythm.
“LatePost” learned that ByteDance is still further reducing costs. According to a number of employees, the beverage benefits that were originally provided in multiple work areas that were far below the market price have now ceased to be available.
At the beginning of the year, Micro Motion, the CFO of ByteDance, shared in a meeting that in order to better help the company “lose fat and lose weight”, the financial department and some business departments launched the “Paoding” project to clearly list the cost structure of each business and find room for cost reduction.
The relevant person in charge of Douyin Group responded that there is currently no rank adjustment plan.
Alibaba Taotian Group: The result is more important than the process
After Alibaba completed the “1+6+n” spin-off, Taotian Group, the largest among them, started a number of management system reforms without stopping.
The direction is as follows: increase the level of P8 and below, from the original five levels of P4-P8 to 14-28 15 levels, in order to increase the promotion opportunities of grassroots employees; the original P8 and above employees are no longer promoted independently, but directly appointed by the organization, so that those in management positions can be “upgraded and mediocre”; in terms of incentive mechanism, employee bonuses and rewards are not related to the level, but to the actual contribution.
The plan is still in the research stage and is expected to take shape and be implemented after December. The performance reform will take the first step and will be implemented after September 30. Some business teams have received specific plans:
- Shorten the assessment cycle, from the original semi-annual assessment and annual year-end bonus to quarterly assessment and annual assessment at the end of the year;
- The “+” and “-” gears are canceled for performance points, and only three gears of 3.25, 3.5, and 3.75 are reserved.
- The OKR system that was fully implemented last year will be changed to a parallel assessment system of OKR and KPI.
In 2022, Zhang Yong, then chairman and CEO of Alibaba Group, set the key word for the group-“fix”. In the face of the fierce offensive of Pinduoduo and Douyin e-commerce, Zhang Yong asked the business to still focus on its own “capacity building” and “value creation”, and each business began to emphasize “user experience”.
Ali fully implemented OKR at that time. Zhang Yong told employees that the change in management tools is to help them change their way of thinking and work habits, so that everyone no longer focuses on the result but on the process.
Today, Taotian Group’s share in China’s e-commerce market continues to decline, and its revenue growth rate has turned from positive to negative. Maintaining the stability of the basic market is an important goal, and the result has become more important than the process, so the assessment mechanism has been adjusted again.
A number of Taotian employees said that the adjustment will have a concrete impact on their work patterns. In the past, they would set a big goal at the beginning of the year. As long as they made efforts in the two major promotions of “618” and “Double 11”, the annual performance will generally not be too bad. Now it is assessed on a quarterly basis, and the requirements for short-term results have become higher.
“It’s like a knockout game. As long as one quarter’s performance fails to meet the standard, it is very likely that you will not get all the year-end bonuses.” He said.
The adjustment clarifies a simpler and crueler promotion principle – employees at grades 14-28 will be directly promoted if their performance reaches 3.75 for two consecutive quarters, or even be promoted at multiple levels within a year.
The hierarchical reform made a relatively clear distinction between the grassroots and the management. The “ladder” at the grassroots level has been dismantled—the original five-level ranks of P8 and below have been expanded to 15 levels. A person close to Ali commented, “It feels like there are more steps for ordinary workers to ‘climb’, but it also clearly tells you that ‘climbing’ above P8 is useless.”
Because of business development, Ali Group once had more than 1,500 P9 employees (senior experts or directors), and many businesses even had multiple P9s. This is a consequence of the regular promotion system in the past, which led directly to rank inflation.
Employees above P8 will adopt an appointment system, and their salary and bonus will be determined according to the business scale and team size. This means that the company encourages the management to expand the business scale and expand the site. “How much money you can get depends on how big the stall is and how big you can make it.”
It is understood that after Taotian, all subsidiaries of Ali are planning to stimulate employee motivation and drive business development through management reforms.
In the past year, China’s major Internet companies have successively adjusted their ranks, promotions, and incentive systems in order to adapt to the new development cycle. Gone are the days when both business diversification and management were flat, and employees were expected to maintain a “Day one” status.
Organizational change can solve part of the problems of employee ability, employee willingness and organizational governance, but it does not solve the problem of whether the company’s strategy is correct or not. It is important, but its role is also limited.
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