Yuanqing’s Shrewd Investment

A couple of weeks ago, Levovo CEO Yang Yuanqing made a somewhat unique move and divided his $3M bonus into 10,000 smaller bonuses and distributed it among the lower-level employees of the computer manufacturing giant.  The distribution was obviously quite newsworthy, and has been covered extensively (most often cited ZDNet), so I won’t provide much more of the details here.  What I’d like to focus on is the amazing lesson in leadership it provides to me.  I had been gearing-up to write another post on leadership, but put that on hold until my next post – in favor of more current events.

Much of the news around the bonus distribution has been either neutral or focused on the generosity of the gift.  While I in no way want to infer that the gift was not incredibly generous, or take anything away from that aspect of it, I also believe that there is an incredibly shrewd aspect to it as well.  $3M is a lot of money, but Yuanqing made a total of $14M for the year, and so for him its not enormously impactful.  For the recipients, who are all lower-level manufacturing and administrative workers, the bonus amounts to approximately one month’s salary – a nice bonus, and impactful, but not a game-changer.  What I find most important about the distribution is the meaning behind it, and why it was earmarked.  The bonus was given to Yuanqing specifically for the record profits and shipments generated under his watch.  By giving it to his employees, particularly the lower-level ones, Yuanqing made it clear that the success was not his alone, but driven by all employees of the firm.  The bonus means more than the money – its a significant recognition of a job well done, and of the employees’ impact on the organization – an enormous motivator.

It reminded me a lot of company we visited when I was at IGC.  It was a tech company, although located outside of silicon valley, and in many ways beyond that (but likely tied to it), not your typical Silicon Valley startup.  There was a tradition at the company that upon a significant achievement, employees were given a new rolex.  While the bonus was a nice gift, that’s not what made it incredibly meaningful to the recipient – it was the recognition of a job well done and of one’s important role within the organization.  I remember speaking with a few of the employees who had them, and each person wore theirs like a trophy.  Those without watches wanted to be recognized in the same way, those with watches felt that they were already invaluable contributors to the organization and wanted to maintain that status, and overall everyone in the company felt that they were working towards a singular goal of making that company successful.

The common thread here is a tangible recognition of an important accomplishment and contribution to the company.  Lower level employees don’t always get that sort of recognition and feedback and don’t always directly see the fruits of their labor. In fact, a friend from an investment bank recently shared a similar sentiment with me.  This friend has been promoted on-schedule (maybe even ahead), and makes good money, but said he often feels like a cog in a machine – like an insignificant component, easily replaceable and having no impact on the overall success of the organization. Even though he’s at a large firm, I think that for lower-level employees across the board, its not hard to see how discouragement can set-in with situations like these.

Some companies combat that feeling with constant feedback – Phin Barnes (@phineasb) recently wrote a great post on “Honoring the Assist” and how recognition drives a great culture.  Others do it in more one-off fashions like Lenovo and the company I mention above.  Anyway its handled – monetarily or just with a pat-on-the-back, recognition is very important.  Bonuses like the Lenovo one send a very strong, and motivating signal about one’s achievement and role within the company.  Even though each lower-level employee at Lenovo was awarded the bonus – it had a lot of meaning behind it, due to where it came from, and what it was for.  With a bonus like that, I’d be surprised if motivation didn’t propel Lenovo even further in the coming quarters, much like the employees at that tech company pushed even harder – it was a constant reminder of a job well done – and thats why I’ve titled this post “Yuanqing’s Shrewd Investment.” While generous, it was also incredibly smart.  I wish him and the entire company continued success going forward.

02. August 2012 by Jonathan Drillings
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