How high is the salary of the "overpaid" Huawei?

Author | Li Jiaman

Ren Zhengfei said: On the chip issue, it is not enough to throw money alone, it is necessary to smash mathematicians and physicists, that is, if China wants to improve its competitiveness, it cannot rely on money, it must rely on talents.

Therefore, Huawei is very willing to pay talents, and it can even be said that Huawei is a typical overpayment for "Huawei people": in the talent market, talents who could have been hired with a salary of 20,000 a month, Huawei insisted on paying 30,000 or 40,000 to employees.

Now it seems that Huawei's high salary has brought hope and dignity to "Huawei people". Most of Huawei's employees come from small towns and rural areas, starting from poverty and ambition, and through hard work, they live a dignified and quality life.

Some experts said: from the perspective of pure employment relationship, this is irrational and unnecessary, ordinary companies will definitely not do this, but Huawei has done it. This is also the reason why some of Huawei's qualified experts and executives are difficult to be poached by other companies, because ordinary companies act according to market laws and cannot pay this salary.

So, how high is the salary of the so-called "overpaid" Huawei?

01 How high Huawei's salary is

In the three years from 2013 to 2015, Huawei's revenue increased by a total of 65%, with a compound growth rate of 27%. At the same time, Huawei's compensation package increased by a total of 79%, with a compound growth rate of 34%, and a per capita salary increase of 58%, with a compound growth rate of 26% per capita salary.

It can be said that these three years are the three years of Huawei's business development, but also the three years of significant increase in the salary of Huawei employees.

As early as 2016, Wenjie Taolou published the article "Posting Huawei's salary stub, Shenzhen's high housing prices are not a matter at all, don't worry about it" flooded the circle of friends. The article listed the astronomical salaries of Huawei's top executives, with more than 1,000 people earning more than 5 million yuan a year and more than 10,000 people earning more than one million a year. Huawei has 170,000 employees and an average annual income of 800,000.

The article pointed out that Huawei's total expenditure on wages, salaries, benefits, time unit plans, and post-employment plans in 2015 was close to 100.8 billion yuan. Together with a net profit of 36.9 billion yuan (most of the dividends + stock appreciation to employees), Huawei spends 137.7 billion yuan on employees. In other words, if calculated according to the down payment of 40%, in 2015, 137.7 billion yuan can buy real estate worth 344.2 billion yuan, and the new house transaction in Shenzhen in 2015 was only 222.58 billion yuan, and the income of Huawei employees is enough to buy 1.5 Shenzhen.

By 2017, Huawei had spent a lot of money on recruiting outstanding talents in Japan, offering a monthly salary of 400,000 yen (about 24,000 yuan) for undergraduate graduates, gaining an overwhelming advantage in the competition for talent with local employer Sony.

In 2019, Huawei said that it would recruit 20-30 talented teenagers from all over the world to expand Huawei's team. Among the 8 employees with doctoral degrees, the annual salary reached 1.82 million to 2.01 million yuan.

In 2021, Huawei will take out 61.4 billion yuan to pay dividends to the "strivers".

02 Huawei's intrinsic motivation for high salary

Mr. Ren Zhengfei is also this attitude, which is roughly that if you divide the money well, you can get things done well.

A blogger said: The average salary of Huawei employees is about 600,000 a year, and the employees with high salaries are millions or even tens of millions, and the low ones are not very low, all have 200,000 or 300,000. Huawei pays employees such a high salary because he is a high-tech company and a "high-efficiency" manufacturing enterprise. But how many manufacturing companies can pay their employees an average of 600,000 a year? Huawei is indeed rare.

Behind Huawei's high salaries to employees is Huawei's ultra-high profits, which can still earn tens of billions of net profits a year. In the traditional manufacturing industry, what balances high profits? It is balanced by the high efficiency of the salary. Huawei's ultra-high average annual salary of 600,000 yuan is to buy employees "high efficiency, high loyalty, high education, and a lot of experience points".

For Ren Zhengfei, he believes that what enterprises need to do is three highs, high wages, high output, and high incentives. To give high wages, because high wages can retain people, if it is not high wages, it is impossible to retain talents, but behind high salaries must bring high performance and create high output, without these "three highs", it is difficult for Huawei to achieve this high-level balance.

Regrettably, many companies are still hovering at a low level. What low-level? Low wages, low output, low efficiency, enterprises do not make money, the whole company complains, this is the biggest feature of many small and medium-sized private enterprises, and then the boss is unwilling to increase the salary of employees, the salary is fixed, these are the most common situations.

The most important thing is that Huawei has taken the "top balance" at the beginning, and most enterprises have lost their choice at the beginning, so it is difficult to turn around after "step by step".

To sum up, Huawei's high salary is to solve the problem of how to "striver-oriented", and Ren Zhengfei is willing to take money and equity for distribution, but how to divide it and how much to divide is another. In part, it is the latter that determines the success or failure of the company. The basic jurisprudence talks about the principle of treatment, and when it mentions treatment, it thinks of money, which is a one-sided view, and treatment includes opportunities, status, rights and responsibilities to deal with problems.

03 "Cultivate integrity", "cultivate leisure" or "cultivate talent"

Is Huawei's high salary "cultivating integrity", "leisure" or "cultivating talent"?

But in 2023, Huawei carried out "self-criticism" under the Blue Army mechanism, and the Blue Army advised that "excessive high salary" raised a group of idlers. The reason is that on January 14, Huawei's internal forum "Voice Community" announced dividend data: the dividend of the union's virtual restricted stock in 2022 is expected to be RMB 1.61 per share, which is a significant increase compared with 2021.

However, Mr. Ren Zhengfei, who emphasizes "self-criticism", believes that "self-criticism is advocated, but mutual criticism is not advocated, because criticism is not easy to grasp moderation, and if criticism is excessive, it is easy to cause contradictions between teams." ”

So, should Huawei's high salary be "self-criticized"?

Some experts said:

Huawei's high salary can change the economic status quo of ordinary employees. At the same time, high salaries are also the result of Huawei's long-term profitable development. By giving employees good personal returns, it is transformed into a strong potential energy to promote the company's development.

From the perspective of "drawbacks", Huawei's high salary is mainly reflected in the following aspects: small-scale, labor-intensive business, and sharp increase in operating pressure. Internal rigid costs, resulting in lower customer service levels. The increasing rigidity of operation makes Huawei "can only succeed, not fail". The distorted compensation structure leads to rigidity at the top, loss of the grassroots, and loss of the organization's ability to function normally. From luxury to thrift, the change of mentality of some employees has led to the loss of the spirit of struggle.

Some people analyzed that the essence of Huawei's high salary is: Huawei employees are really busy, overtime is normalized, Huawei is 3 people doing 5 people's work, and then, taking 4 people's money.

But with such a controversial ultra-high salary, can it be "honest"?

Some people say that Huawei's high salary has cultivated a "rich atmosphere", Huawei's internal office and overseas employees' living conditions have improved significantly, and the canteens of many overseas representative offices are almost the highest level of local Chinese food. There are also some problems of internal waste, and there are many internal contacts. The Blues believe that these are not a big deal, and it is objectively difficult to ask everyone to cut back on food and clothing when the year is good.

But the Blues believe the bigger problem lies in the changing mindset and mindset of some employees:

"In the case of the company's material incentives are very sufficient and the rank is rapidly inflationary, at present, some senior management has no sense of mission, some middle levels do not have a sense of crisis and hunger, and there are more or less overpay, incentive fatigue, comparison, etc., and the work has become slack."

Some experts also said: Although the high-salary policy has not been successful, the strategy of high-salary talent maintenance has been successful in Huawei.

Since 2000, Huawei has entered the international market, posing a certain threat to telecom industry leaders at that time, such as Siemens (Siemens of Germany), Nokia (Nokia of Finland), Lucent (Lucent, USA), Nortel (Nortel Canada), and Alcatel (Alcatel, France).

In 2004, the board of directors of Siemens AG had a special internal analysis of Huawei:

"In 2004, the per capita R&D Personal Cost of Huawei's research and development was 25,000 US dollars per year, while the per capita cost of European enterprise research and development was about 120,000~150,000 US dollars per year, which is six times that of Huawei (this cost includes not only salary, bonuses, benefits, etc., but also business expenses such as business trips and instrumentation).

The average annual working hours of Huawei's R&D personnel are about 2,750 hours, while the average annual working hours of European R&D personnel are about 1,360 hours (an average of 35 hours per week, but there are many holidays), and the ratio of per capita investment time is 2:1. According to 2004 data, Huawei has 13,000 software and hardware developers, and 13,000×6×2×0.8 (20% off the development efficiency of Western companies) = 124,800 (personnel). ”

In other words, Huawei is equivalent to the ability of 125,000 developers of similar Western companies, so it responds quickly in terms of product response speed and customization characteristics, and the R&D input-output ratio is close to 10 times that of most Western companies.

In other words: Huawei's high salary has made great achievements, and it is also because of the positive cycle of dividing money and doing good things at the beginning, Huawei can make great miracles.

04 Conclusion

Ren Zhengfei said: "High salary cannot support corruption, we must rely on the system to maintain integrity", he said that "high salary is also a crisis".

Looking at it carefully, there are two major problems in the specific implementation of high salaries:

First, how much salary is considered a "high salary"?

Second, it is a characteristic of human nature to want more, and there is no end to wanting more.

Therefore, enterprises can give high salaries, but the main thing is to have systems and processes to restrain management cadres and employees and form a deterrent. That is, "high salary is simple", how to divide the money? How to divide the money fairly and incentively? How to divide the money well? That's the key.

Bibliography:

Who did Huawei's high wages hurt? 》

"Huawei's internal criticism: "excessive high salary" raised a group of idlers"

""High salary cannot support integrity", Ren Zhengfei: If employees are positive for a lifetime, they are really positive"