The CEO who gave away his $3.7m bonus

Lenovo boss rewards staff to thank them for contribution to PC maker’s good showing

Executive secretary Zaibunnisa Hamid, 49, was surprised about two weeks ago when she received a bonus of $400 from her employer Lenovo.

“I thought that I had been given a special award in recognition of some work I had done,” she said, recalling the day.

“But what did I do?”

It was only later that she learnt the unexpected windfall was a gift from Lenovo chief executive Yang Yuanqing, 48.

He had received a one-time bonus of US$3 million (S$3.7 million) for leading the company to a record-setting year, and decided to distribute the money among about 10,000 employees in non-management positions, about a third of the company’s 27,000-strong workforce.

Said Ms Zaibunnisa, who works in the PC maker’s global logistics department in Singapore: “It’s a surprise to me when you get money for doing nothing. No other company CEO would have done what he did.”

She is one of nine employees in Singapore who received the payout, out of about 220 staff.

Senior executive secretary Patrina Lim, in her 40s, was equally delighted with her bonus. She said: “I feel appreciated and recognised.”

Singapore-based Mr Howie Lau, vice-president of marketing and communications for Asia-Pacific and Latin America, said: “As a Lenovo employee, I feel proud for having a leader who cares for his employees. Everyone I meet has this ‘wow’ expression that speaks so favourably of our big boss.”

Mr Yang explained that he wanted to make the point that all his staff had contributed to the company’s stellar growth.

He told The Sunday Times by e-mail: “We delivered a record year. I couldn’t have done it alone and so I want to celebrate it with employees everywhere.

“Everyone came together from various departments such as logistics, manufacturing and administration to push for a record performance. So this is my gesture to them, my way of saying ‘thank you’, especially to the people who work behind the scenes.”

Often referred to as “Y.Y.”, Mr Yang is China’s highest-paid CEO, earning about US$12 million last year. With Lenovo valued at about HK$59 billion (S$9.4 billion), his 9.3 per cent stake in the company is worth about HK$5 billion.

Lenovo is China’s best-known global brand and the world’s second-largest PC maker. Last year, profit jumped 73 per cent year on year, with revenue hitting nearly US$30 billion, a 37 per cent growth year on year.

It has come a long way from its roots in 1984 when it was founded by Chinese researcher Liu Chuanzhi. Then, it built Chinese- character cards that made foreign PCs accessible to Chinese language users before it got into PC distribution and manufacturing.

Mr Yang was a 25-year-old computer science graduate when he joined the company and became a travelling salesman. His job took him across China, selling PCs and delivering them on a bicycle.

Along the way he got to know local businessmen well, and worked with them to establish PC distributorships.

Said Mr Lau: “When I travel through the Chinese cities, the Lenovo distributors remember Y.Y. and how he helped them set up their businesses. They admire him for turning Lenovo into a global brand.”

Mr Yang’s efforts were noticed. At 29, he was handpicked by the company founder to head Lenovo’s PC business. By 1997, Lenovo became China’s top-selling PC maker, a position it maintains today.

In 2001, he became CEO when Mr Liu retired. Just 37 years old, Mr Yang was named that year by Business Week magazine as one of Asia’s rising stars.

That year too, he led a team of senior executives on a visit to Silicon Valley to see how American companies did business. Out of that trip emerged a goal to make Lenovo a global company within 10 years.

In 2004, he became chairman. That December, he stunned the industry by buying IBM’s loss-making PC division for US$1.75 billion, achieving his global dream six years early.

IBM’s PC unit was the Goliath with revenue of more than US$10 billion while Lenovo had revenues of barely a third that amount.

Overnight, Lenovo became the third-largest PC maker globally, behind Hewlett-Packard and Dell. It also became a global company with many complexities, not least of which was that it now had employees of different nationalities and cultures.

With no experience running a global company, Mr Yang stepped down, preferring to let IBM veteran Steve Ward and then former Dell executive Gil Amelio run the show.

But the Americans failed to integrate the company and grow it. Low morale followed a number of cost-cutting measures. Then came the 2008 financial crisis which devastated Lenovo’s enterprise business. That year, it posted a US$226 million loss, its biggest ever.

In 2009, Mr Yang and Mr Liu reclaimed their roles as CEO and chairman, respectively. Mr Yang stepped up as chairman once more when Mr Liu retired again last year.

In the last four years, Mr Yang has led Lenovo onto a growth path using a strategy of “protect and attack”.

At home, he ensured that Lenovo continue to get key government and private sector business. Globally, he expanded into emerging markets including South America, Russia and India.

The strategy worked. In the last 12 quarters, its PC revenue rose 5 per cent year on year, faster than the industry’s 4.6 per cent year on year. Its global PC market share between April and June was 14.7 per cent, a smidgen away from the 14.9 per cent held by market leader Hewlett-Packard (HP).

Market researchers believe it is only a matter of time before Lenovo overtakes HP to become the world’s largest PC company.

Mr Yang keeps a low profile. Little is known of his personal life except that he is married with children and they stay out of the public eye.

People who work with him say he is focused and committed to the company. He has managed to integrate the company’s Chinese roots with IBM’s Western management practices and business processes.

After acquiring IBM’s PC unit, he uprooted his family from Beijing to live in New York and said that this was so he could understand American lifestyle and business better.

He sent his children to school there so that they would become bicultural. He had English tuition lessons and watched television to learn the language and speak it comfortably. He went from speaking little English to becoming confident enough to be interviewed on major US TV networks.

Since returning to the helm in 2009, he has travelled incessantly.

Appointments to see him are made months in advance because he shuttles between the company’s two key offices in Beijing and Raleigh, New York, to show that he is equally at home in China and the US and committed to building Lenovo into a global organisation.

A hands-on executive, he expects the same from his staff. He wants to find out for himself what is happening on the ground, and on his travels, he makes it a point to meet three groups – business partners, customers and staff.

He is also a strong proponent of the Lenovo Way, which is “we do what we say, we own what we do”, which encourages everyone to take responsibility.

Said a former employee: “If he says he’ll be in Sao Paulo in Brazil next Friday, he’ll be there. If he says he’ll get someone to help you, he’ll do it. He means what he says.

How much of Lenovo’s success is due to Mr Yang’s leadership?

Mr Bryan Ma, of the US-based research firm IDC, said Lenovo gained from being in the right place at the right time.

“Success, in part, was through its own merit, it had a good strategy. But external factors also helped. China is still a growth engine although it is not quite insulated from the global economic slowdown. (Lenovo’s) two biggest competitors, HP and Dell, are having troubles of their own which have impacted their performance,” said Mr Ma, who is associate vice-president of client devices at IDC Asia-Pacific.

Lenovo was also able to participate in large projects in developing countries where profit margins were slim, something that competitors such as Dell did not want to do, he added.

“It won a big education notebook project in India. A state government wanted to equip all students with notebooks. Lenovo was able to win the project at that low price, meeting all the specifications asked for.

“It was able to do this because, as a large PC maker, it had the volume to get a much lower price for the components needed,” said Mr Ma.

But Lenovo is not all about business. It is also a warm and caring place. Employees describe a corporate culture which allows junior staff and managers to communicate openly, and a family-oriented outlook which means staff can take time out if they have to attend to urgent family matters.

Secretary Alice Lee, 36, of the Singapore office, said the company trusts staff to do the right thing. “My bosses don’t look over my shoulder, they give me freedom to do what it takes to get my job done.”

By Grace Chng Senior Correspondent,
Published on Aug 05, 2012, StraitsTimes


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