ITOSHI-H---Ren-Zhengfei-Leadership-Essay-ClassI1-Group6.doc

A Review on Ren Zhengfeis Leadership Behavior(2011 Class I1 Group 6: Zhang TingYuan, Wang Yi, Dong Li, Hitoshi Kono, Dolan Hsu Ming Pu, Cathy Poon Yeuk Lan)1. Introduction The background information about Huawei and Ren Zhengfei are based on resources from Wikipedia and other business magazines.Ren Zhengfei is the president of Huawei Technologies Co., Ltd., and its headquarter is in Shenzhen, China. Huawei is one of the most competitive multinational company in high technology filed, it is also the only company from Mainland China that is considered to be globally competitive in this field. Road to successRen founded Huawei Technologies Co., Ltd. in 1998 and had been the CEO of Huawei since then. At that time Huawei was a company specialized in the development, production, and sales of telecom equipment. Its startup capital was only RMB21,000. In 1997, Huawei won the first overseas contract in Hong Kong. And from 1998, Huawei hired IBM to provide consultancy service for Huawei to undergo major transformation on its management structure and product development structure. Since 2000, Huawei has increased its speed of expansion into overseas markets and by July 2010, Huawei was already included in the Global Fortune 500 list, with annual sales of US$21.8 billion, net profit of US$2.67 billion and over 110,000 employees around the world. Currently, Huawei is a multinational company. It serves 48 of the worlds 50 largest telecoms operators, covering more than 140 countries and areas. The employees are from 150 countries and areas, the number of foreign employees is more than 21.7 thousands. It is the largest networking and telecommunications equipment supplier in China and the second-largest supplier of mobile telecommunications infrastructure equipment in the world.Personal backgroundRen Zhengfei was born in 1944, he studied Civil Engineering and Architecture in Chongqing University, and then joined PLA research institute and worked as a military technologist. Ren retired from the army in 1982, and then he moved to Shenzhen and worked in the electronics field.Ren Zhengfei has a mission that he will help China to develop its own telecom technology. In order to achieve this, he used Chairman Maos theory when managing Huawei. One of the most famous market strategy of Huawei was to occupy the countryside market first and then expanded the market back to cities. By offering technically advanced but cheaper equipment, and deploying armies of salespeople, the firm quickly managed to persuade local operators to buy its products, this make Huawei to grow very quickly. 2. Behavior of Ren Zhengfei - A review on his Leadership StyleRen Zhengfei is well-known in China for his low-profile character. Unlike other high-profile leaders in China, Ren seldom attends public events or conferences. He nearly never accepts any invitation for interview by TV programs or magazines. Despite of his low-profile character, his leadership is influential in Huawei. Four major leadership behavior of Ren are selected below to show how Ren leads Huawei.2.1Wolf Culture of HuaweiIn 1998, Huawei was 10 years old and had already become the leader of telecom products in Chinese local market. As the organization and business grew larger and larger, the passion of Huawei employees to further expand the business market was decreasing, and Huawei culture and management policy was becoming unclear. Hence in 1998, Ren published a passage How long can Huawei lead to his employees, and in the passage he made the following statement:Enterprise needs to develop a team of wolves. Wolves have three characteristics first is acute sense of smell, second is persist to attack regardless of personal safety, third is work as a team to battle. If enterprise wants to extend its business, it must require these 3 characteristics.Until today, Huawei employees, especially salespeople, still give people an impression that they are like wolves. They are aggressive, effective and work as a team in order to achieve their goal. Rens idea of developing a team of wolves has significant influence on Huawei.Analysis of Ren based on the above caseThe idea on Wolf Culture is important for Huawei to grow during to past 10 years, and Ren has successfully built a high-performance culture. It can be observed that the wolf culture has been implanted to the employees minds, this made them very aggressive on getting business. When we review how Ren has managed to build such a high-performance culture, he has actually taken a number of actions to build this culture besides disseminating the above message to employees through newsletters. For example, he always emphasized that within the 3 characteristics of wolves, working as a team to attack is the most important, he also emphasized that when they win, they should celebrate together and when they lose, they need to help and save each other as a team. Ren had actually tried to strengthen the wolf culture by encouraging the team to celebrate achievement. In addition, it is observed that the HR policies and the reward system of Huawei is closely linked to the wolf culture. Wolf culture emphasizes that employees should be aggressive and strive for success, and Huawei does provide rewards for those who performs well and they will promote those who have high achievement.On negative side, the Wolf culture has led to high working pressure of Huawei staff. Because of the Wolf Culture, the working environment in Huawei is very tense, it is very demanding on every staff in order for them to deliver the best results. Many staff work 7 days a week without any holiday and most of them do not care about work-life balance as they are quite influenced by the Wolf Culture. The high-working pressure alarm rose when the sudden death of Huawei employee Hu Sanyu because of karoshi happened in 2006. Many people blamed that a number of Huawei employees died and committed suicide because of the high working pressure and the Wolf Culture of Huawei. Hence, the Wolf-Culture brought negative impact to Huaweis image, it also cost loss to the company because it indirectly led to the loss of their employees, which they have spent lots of resources to develop. We will discuss more about the crisis management of Ren Zhengfei when handling the suicide issue in later section.Despite of the negative impact brought by Wolf Culture, it is still believed that without Rens idea on Wolf Culture, Huawei wouldnt have developed so quickly and successfully during the past 10 years. However, based on the latest conditions of Huawei, Ren may have to think about the effectiveness of Wolf Culture for the next 10 years.2.2Risk Management of HuaweiThe belief that risk is always hiding behind the prosperity pushes Ren Zhengfei think deeply about the underlying crisis, he transferred this thinking and pressure to his subordinates and followers. When others were happy about the fantastic growth of Huawei, Ren didnt care much about the success but continued to analyze and develop risk management policies for the company. He also taught his followers to keep calm no matter there were flowers and claps, or adversity and failure. In an era that PR and advertisement went viral, Ren paid little attention on these things but put emphasis on products, innovation and customer service the root of their success.In 1998, Huawei became the top seller of domestic phone and Internet industry for the first time. The sales revenue showed a jump of 6 times compared with the 1995, with a total gaining of RMB 8.9 billion. Ren showed little joy and proud about these flattering records but instead he threw out a motto:Shrinkage and bankruptcy of our business will become true for some day.Ren initiated the reform of work flow, organizational hierarchy, supply chain and so on. As the reform happened in a period when everything seemed to be perfect, it created misunderstanding and worries, and it annoyed some enterprise-founders and employees. However, Ren insisted his reform and made Huawei well prepared for the “winter”. In 2001, a downturn of the industry came, and Huawei suffered to first setback. However, because Ren had well-prepared for the downturn by proper risk management, Huawei had successfully survived during its hard time. Analysis of Ren based on the above caseBased on the behavior of Ren on how he pushed out the risk management policy, it is observed that he is quite autocratic when he believes that something has to be done. In the above example, we see that although this action had led to some discontent of his employees, it was somehow an effective way to lead at that critical moment. When we try to use the Normative Leadership Model (Development-Driven Model) suggested by Vroom and Yetton to access this case, the autocratic action of Ren did not match with the result suggested by the Model. According to the Model, this decision was important because it was related to whether the company could survive (Decision Significance = High), it required high commitment of staff while the likelihood of commitment is low. And from the data available, it also seems that the group did not support this very well, hence the leader should in turn use the Consult (Group) method instead of Decide. The question then comes. Why Ren was successful on this issue even though he didnt follow what the Model suggests? Does it imply that the Model is not reliable? From our point of view, Ren was successful on this case not because his leadership style was good, but because the risk management was a right action to take. Ren might have done even better if he tried to consult his team more before he made a final decision and explained more his underlying thinking. Actually, many people consider Ren is a mysterious person and it is difficult to understand his underlying thoughts. Taking this risk management issue as an example, someone defines Ren as a leader who always worries, goes into deep depression and is not willing to take risk. If Ren was able to consult his staff more and share more, the situation might be different. We could say that carrying out risk management policy is a right action, but the way of Ren to lead his employees to carry out the action might not be absolutely effectively. It is especially true when Huawei grows global and more employees come from different countries, more efforts should be made to let employees understand what the leaders think and to let employees express their concerns such that the leaders can address the concerns. This would become a more effective way to lead when the Corporation grows larger. 2.3Innovation of HuaweiThe innovation emphasized by Ren Zhengfei is quite different from what we normally expect, Rens idea on innovation is closely related to customer. It is because Ren believes that the core competitiveness of Huawei is not technological innovations which could lead to a Nobel Prize, but should be innovations that could satisfy customers needs. Ren once spoke to his staff:“Huawei does not need academicians and if someone would like to be an academician, Huawei should not be his place. Engineers in Huawei should not put emphasis and focus only on technology, instead they should be more business-oriented, the reason is that technology is used to sell to customers and to make a profit for the company. Only those technology that could be sold to customers are valuable to Huawei.In addition, Ren Zhengfei emphasized on a systematic approach when carrying out development and researching works. Instead of relying on just several key staff, Ren brought the idea that every step of the development work must be standardized and recorded so that experience on development works can benefit all the development staff. In fact, this arrangement was a lesson learnt after Huawei experienced a difficult period when some key staff like Li Yinan left the company, Ren then realized that a systemic and standardized framework was necessary in order to ensure that innovative process would not be severely affected by the departure of key staff.Analysis of Ren based on the above caseThe way that Ren leads in innovative related works is very effective. He made very clear instruction about the definition of innovation of Huawei and setup up a good framework on how to achieve innovation, this is a Facilitate leadership style where he defines the goal and sets the limits of what is meant by innovation. When we try to apply Normative Leadership Model (Development-Driven Model) on this case, this decision is significant, requires high commitment of staff, then the staff is likely to commit and support this work, but they might not understand what Ren means about innovation (i.e. Team competence is Low), the result is that a Facilitate style should be used. Hence, Rens behavior matches with the result derived from the Model. The application of this kind of leadership style is important and effective in this particular case because the idea of innovation by Ren is quite different from others. If he did not explain his idea clearly and gave some limitation to his staff who carried out innovative work, Ren would not be able to get the result that he wanted. This is a very good example on how to lead a team in order to achieve the goal. Sometimes leaders tend to delegate more power to staff in order for them to work out more creative solutions, but if a leader do not set some limitation/check points and explain in more detail on what he wants, in many cases the results that he gets will not be as good as he expects. It is believed that Ren has made a good balance on how much power he should delegate to his staff on innovative works and at which stage he should step in order that the works will be following the direction of Huawei. 2.4Staff Motivation in HuaweiRen Zhengfei is very good at motivating staff to achieve the company goal. Effective motivation on staff is one of the core-competitiveness of Huawei. Ren used several ways to motivate his staff. First, he provides good salary, monetary rewards and good welfare to his employees. Huawei is an employee-owned company. 98.5 % of the companys share is held by an employee union, while Ren Zhengfei personally controls less than 1.5 percent of company shares. It is very useful to simulate the employees enthusiasm. It is an effective policy that can encourage most of employees to achieve the common goal because staffs believe that if the company develop better, they will also get more rewards, in turn they would like to contribute more to the company. Secondly, he motivated his staff by providing good promotion opportunities and career plan. Most of employees in Huawei are well-educated, they would like to be treated with more respects. Hence, the promotion is very useful in motivating them. The company also helps staffs plan their career development in the company. The above motivation measures work well and make great contributions to the companys success.Analysis of Ren based on the above caseBased on the above examples, Ren is good at motivating people. According to the Hierarchy of Needs Theory, Masclow proposed that people has low-level needs and high-level needs. People will be motivated when their needs are satisfied, but people will be motivated by high-level needs satisfaction only when their low-level needs have already been satisfied. In the example of Huawei, Ren provides good salary to satisfy the physiological needs of staff, he then provides good welfare (e.g. retirement scheme) to satisfy their safety needs. It is not clear if Huawei provides some means to satisfy employees social needs (e.g. establishment of interest groups within the company), but esteem needs of the employees are satisfied by Huaweis merit pay rise, recognition and challenging tasks like the innovative works. Finally, many of the employees needs on self-actualization are satisfied through promotion according to their achievements. Hence, based on his way to motivate his employees, Ren Zhengfei is an effective leader.3. Further Analysis on Ren Zhengfeis Leadership StyleCrisis Management Skills of Ren ZhengfeiBesides Foxcoon, Huawei is another company which catches the attention of the media when anything happens on Huawei employees. Many people blamed that a number of Huawei employees died, committed suicide or suffered from melancholia because of the high working pressure and the Wolf Culture of Huawei. In 2007, there were a number of suicides in Huawei, so Ren responded to this crisis by writing to his employees, he said:There are number of suicides in Huawei and the number of employees who suffered from melancholia keep increasing, this made me worry and I am thinking of how I can encourage my employees to be positive.I would suggest my management team to facilitate their subordinates to understand that one could be more positive, enjoy their live and enjoy the process when they are striving for success in their career.While Huawei encourages staff to find ways to release their pressure, the company will not sponsor or organize events just for releasing employees pressure.All in all, there are many methods for employees to release their pressure, only relying on the organization to do something is not effective.I was suffering from melancholia too, but after the help from doctor and because I was optimistic, I am now recovered. I believe everyone who suffered from melancholia can step out from this problem.It is hard to find any evidence to show whether Huawei has a mechanism to respond to possible crisis. However, from the above writings of Ren, it is apparent that he is not effective in handling the suicide crisis. The writing was made while the condition of suicide