Employee Ownership at Huawei

The June 11 article Huawei's Culture is the Key to Its Success in the Harvard Business Review traces much of the telecommunication firm Huawei's culture to its employee ownership. Huawei, based in mainland China, had revenues of $46 billion in 2014 and, unlike any other Chinese firm on the Fortune Global 500 list, a majority of that revenue comes from outside China. The company founder, Ren Zhengfei, now owns 1.4% of the company, and over 82,000 employees own the rest through performance awards.

The authors, David De Cremer and Tian Tao, argue that four factors created Huawei's growth: its customer focus, employee dedication, long-term thinking, and gradual decision-making. The ownership awards create what the company calls "silver handcuffs," increasing employee retention and recruitment, and encouraging long work hours. In its early years, the company issued a blanket and pillow to each new employee. Huawei is run by a series of CEOs who rotate through the job for six months each, a process designed to slow down decision-making in order to ensure careful consideration. The company says that an IPO is incompatible with its dedication to long-term planning.