The CEO and chairman of the personal computer company, who was paid $14.6 million last year and holds about 7 percent of the company’s shares, will be giving the largesse to 10,000 of his employees, most of them hourly manufacturing workers in China not eligible for other bonuses or sales commissions, Bloomberg reports. And while that only works out to about $325 a person, that goes a long way in China, where it reportedly equals roughly a month’s pay.
By doing it two years in a row, Yang is attempting more than a PR stunt. He’s setting a precedent, one that appears to say, at the very least, that he recognizes the role the company’s frontline employees play when the company performs well. Lenovo’s recent gains in market share have led it past Hewlett Packard to become the world’s largest maker of personal computers.
Yang’s move is a rare one that deserves the applause it’s getting. A scan of press reports finds only two other CEOs–and neither of them from the United States–who have done the same since Yang’s generous gift last year. The chief executive of a U.K. department store chain gave his entire $3.6 million bonus to the company’s nearly 20,000 employees in April, while a Russian aluminum magnate declined his $3 million bonus in July to buy company shares for a handful of his workers.
But I’m curious: If this is becoming a repeat practice for Lenovo, why not simply extend any profit-sharing programs or bonus systems to hourly employees? An increased sense of ownership among workers, after all, seems to be what Yang is trying to achieve. A company memo stated that Yang wants “to ensure all of our employees understand the impact they have on building Lenovo.”
I’d guess one reason is that a gift from the boss goes farther than a gift from the company. While profit sharing from the corporation may have an impact on worker productivity or their commitment to the company, some research has shown that it doesn’t have much impact on trust in management. When a leader elects to give his own money–and so much of it–it probably feels more like a magnanimous gesture than a corporate program designed to improve productivity, even if the goals in the long term are the same. As a result, I’d guess it has far more of a positive effect.
The big question, of course, is what happens if workers come to expect Yang to fork over his bonus and the CEO decides not to do so one year. Will they see it the same way they would if the company decided not to give out bonuses? Or will it have a negative effect on their view of Yang himself?
Jena McGregor is a columnist for On Leadership.