Evolution of Huawei's Equity Incentive
(1) In the early days, Huawei lacked funds, employees lacked investment channels and did not understand equity. Huawei used entity equity incentives to obtain internal financing, which solved financial difficulties, retained employees and stimulated motivation.
(2) In the medium term, employees have a certain trust in Huawei, and equity incentives are gradually changing from physical shares to virtual shares, expanding the scale of equity incentives and helping employees apply for bank loans. The company has received a lot of financial support, employees have received generous benefits, and Huawei's performance has developed rapidly.
(3) Recently, the company has abundant funds, and gradually launched the TUP plan to distribute profits to employees, leave rights for the company, and leave room for future development.
Huawei is the most typical representative of equity incentive in China. Ren only holds 65,438+0.4% of the shares and has no institutional investors. The remaining 98.6% benefits are shared with employees, but the control of shareholders is retained. Under the leadership of the incumbent, the company has achieved rapid development for more than 20 years with the full participation of Huawei employees.
The reasons for Huawei's successful equity incentive are as follows:
First, the two-way promotion channel ensures the development space of employees.
Technology and management belong to two fields. It is impossible for a person to be a management and technical professional at the same time, but the difference in salary and treatment between the two positions will directly affect the efforts of scientific and technological personnel. In order to solve this dilemma, Huawei has designed a two-way promotion channel for job qualifications.
New employees start with grassroots business people and then become the backbone. Employees can choose managers or technical experts as their future career development path according to their own preferences. Before reaching the senior professional title, the salaries of grass-roots managers and core cadres, middle-level managers and experts are the same, and the two positions can be converted to each other. When it comes to the positions of senior managers and experts, the positions of managers and experts cannot be changed. The development direction of managers is professional managers, while the occupation of senior experts is professional and technical personnel.
Huawei's two-way employment channel takes into account employees' personal development preferences, giving employees more choices, and giving equal consideration to technical functions and management functions to help employees grow. In addition to the two-way promotion channel for qualifications, Huawei also has new employee mentors to give care and guidance in work and life. When employees become the backbone of management, they will also be equipped with an experienced mentor to give guidance.
Huawei's perfect career development channel and tailor-made tutor system can effectively help employees grow and reduce the turnover rate of outstanding employees.
Second, pay attention to the value of human capital and dilute the proportion of major shareholders.
Equity incentive is not omnipotent. When the intensity of equity incentive is not strong enough, the effect of equity incentive is quite limited. At first, Huawei's equity incentive was biased towards the core middle and high-level technology and management personnel. With the expansion of the company's scale, Huawei has consciously diluted the equity of major shareholders, expanded the scope and proportion of employees' shareholding, and increased employees' sense of responsibility to the company.
Huawei's respect for human capital is also reflected in Huawei's basic law. The law points out: "We believe that labor, knowledge, entrepreneurs and capital create all the value of the company"; "We reflect and reward the accumulated contribution of labor, knowledge and entrepreneurs' management and risk by converting it into capital; Use the arrangement of equity to form the backbone of the company, maintain effective control over the company, and make the company grow continuously. "This shows that equity incentive is one of the policies for employees to use human capital to participate in dividends.
Huawei's emphasis on human capital is also reflected in its investment in research and development. Huawei spends 10% of its sales revenue on scientific research every year, which is more than twice the average investment of domestic high-tech enterprises. In terms of resource allocation, Huawei believes that the task of management is to let the best people have enough authority and necessary resources to realize the tasks assigned to them.
Third, the salary system is different.
To achieve the purpose of motivation through the salary system, we must first establish a different salary system. Through equity incentive, Huawei has not only become a company for most employees, but also opened the gap between employee salary and income level. With the development of Huawei in recent years, the proportion of dividends has risen sharply, and the impact factor of dividends on employees' income has reached more than 30%, which is very encouraging for employees.
In addition to the salary structure, equity incentives need to be stimulating and performance appraisal needs to be fair. Huawei takes measures to regularly check and update employees' salaries in real time in performance appraisal. Employees don't need to worry that their efforts are not discovered by management, as long as they work hard. This measure of Huawei ensures a relatively simple competitive environment for researchers and is conducive to the development of employees. The basis of Huawei's equity distribution is: sustainable contribution, highlighting talents, ethics and risks. Equity distribution inclines to the core and backbone, which requires equity institutions to maintain dynamic rationality.
While maintaining the rationality of performance appraisal, in order to reduce or prevent office politics, Huawei's inspection of leaders is also conducted from three angles, namely, the personal performance of leaders, the views of superiors and the relationship between leaders and employees at the same level and below. Leaders must pass the employee assessment for half a year before taking office. Good performance only means high salary, not that they will be promoted. This leadership promotion mechanism restricts the personal rights of leaders from the perspective of morality and interests, and further reflects the respect for the opinions of lower-level employees.
Fourth, the future prospects are considerable.
Equity incentive is not empty talk about equity, and the key to the successful implementation of equity incentive is to realize future development and dividends. In the industry, Huawei's leading position and stable sales revenue have become the economic guarantee for the implementation of its internal equity incentives. According to Informa's consulting report, Huawei ranks third in the world in the mobile device market. Huawei's products and solutions have been applied in more than 100 countries around the world, serving 36 of the top 50 operators in the world. In 2008, the performance of several communication industries declined, while Huawei achieved contracted sales of $23.3 billion, up 46% year-on-year, of which 75% came from the international market.
Huawei's past cash dividends and asset appreciation are one of the factors that prompted employees to buy Huawei's equity without hesitation. It is understood that with the rapid expansion of Huawei, Huawei's internal stocks have achieved substantial appreciation in recent years. In 2002, the exercise price of virtual restricted stock announced by Huawei was 2.62 yuan, in 2003 it was 2.74 yuan, in 2006 it was 3.94 yuan, and in 2008 it was 4.04 yuan. The annual return rate of employees has reached 25% ~ 50%. Such a high stock dividend is also an important reason why employees are willing to buy Huawei shares.
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