Late Exclusive丨Tencent Talent Management System Major Adjustment

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“LatePost” exclusively learned that Tencent is reforming the talent management system of the whole group. The reform directions include: simplifying performance appraisal, decentralizing promotion power and strengthening cadre management.

This is another adjustment made by Tencent for talent management after the adjustment of the “professional rank system” in 2019.

In the performance evaluation of all employees, Tencent simplified the five-star (1-5 star) evaluation system previously adopted into three grades: Outstanding (outstanding), Good (good) and Underperform (poor). In addition, the “peer feedback/subordinate feedback” for employees and managers twice a year has also been simplified to once a year.

As for management cadres, in addition to examining their team management capabilities, Tencent also added two new evaluation dimensions: cost reduction and efficiency improvement and compliance risk management.

Tencent will gradually delegate the promotion rights of 9-11-level (basic-level) employees to departments and business lines, encourage simplified review methods, and advocate non-face-to-face review and defense. The promotion of employees at level 12 and above has been adjusted from self-declaration to department-nominated declaration, and the rest of the process remains unchanged. The new regulations also cancel the original rule of “suspending application for promotion to level 11 and above if the evaluation fails”, which means that employees can continue to participate in the application for the second year after failing the interview.

The pay adjustment mechanism has also changed. It is understood that in the future, Tencent will not make immediate salary adjustments for rank promotions (including management rank promotions) alone, but will make unified adjustments during the employee salary review at the end of the year.

Tencent’s management reform this time coincides with the company’s consecutive quarterly decline in performance and the company’s efforts to reduce costs and increase efficiency. As of the first quarter of 2022, Tencent has experienced a decline in net profit growth for three consecutive quarters. Among them, in the first quarter of 2022, Tencent’s revenue growth basically stopped, and its net profit (Non-IFRS) fell by 23% year-on-year.

A Tencent person analyzed that this adjustment is to decompress and pressure employees and managers at the same time.

The so-called decompression means that the new plan reduces the burden on employees to a certain extent, strengthens the relationship between daily work, performance appraisal and promotion, and encourages employees not to work for short-term performance, but to have the courage to focus on those who are more productive. In the business of creating value; on the other hand, Tencent canceled the immediate salary adjustment after promotion. Whether the salary adjustment is more depends on comprehensive factors such as performance contribution, ability improvement and salary competitiveness in a certain period after promotion.

Tencent is trying to sort out the complicated process and vague standards of talent development in the past.

In the performance appraisal of employees, Tencent used a five-star (1-5 star) evaluation system in the past, and each grade has a clear requirement for the proportion of the number of people. The number of 4-star and 5-star places is extremely limited, and many employees with excellent performance may be forced. Pull down the echelon.

It is precisely because there are too few places that for some employees who are determined to be promoted and raised, some managers will release the 4-star or 5-star places that should belong to the above-mentioned employees to others. At this point the employee will see that a 3-star employee gets a promotion and a raise.

At the same time, in the old evaluation system, both 1 star and 2 stars belong to the “low performance” range, so managers tend to give employees 2 stars, and 1 star is useless.

Therefore, Tencent decided to change the five-level assessment system to a clearer three-level, which not only reduces the invalid evaluation level, but also reduces the gray space of some human operation performance.

Alibaba and Pinduoduo also use a similar three-level evaluation system. In Alibaba, 30% of employees get excellent grades every year, 60% of employees are in the middle range, and 10% of employees get poor performance. The proportion of each level of Pinduoduo is 20%, 70% and 10% respectively.

Tencent turned the number range into definite descriptions—Outstanding, Good, and Underperform. This reduces the number of intermediate steps the human brain takes to think about the meaning behind the numbers, increasing effectiveness. Tencent also does not force the three-level assessment according to the proportion of the number of people. “Don’t think about what level of performance you’ll get every time you do something, and the end result is a deformed movement,” said one person involved in the change.

The new system also entrusts the promotion rights of 9-11 grass-roots employees, who account for the largest proportion of the company, to their departments, and encourages simplified review methods and advocates no face-to-face review and defense.

While gradually delegating power to business managers, Tencent is also strengthening their assessment. The assessment has added dimensions such as cost reduction and efficiency enhancement, compliance risk management, etc., and it is emphasized internally that unqualified cadres will be replaced in a timely manner.

“LatePost” learned that in April 2022, Tencent CEO Ma Huateng, president Liu Chiping and the group held a strategic management meeting. Ma Huateng proposed at the meeting that every GM (general manager) should be a small CEO of the company and should manage the business like a company.

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