---
title: "Former Alibaba CEO Wei Zhe: Rewards and Punishments Must Be Clear, Use Heavy Penalties in Troubled Times"
description: "Management is definitely a science, and the core of management science is based on understanding human nature. Many people ask, after being with Ma Yun for so many years, what is Ma Yun's greatest strength? First, human nature. Second, the essence of business. Third, a feel for the internet. From historical military reforms to organizational change, Alibaba's biggest product is its ability to produce cadres."
author: "卫哲"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2019-09-02"
categories: "Management & Methods"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/9rcXMl7TzaTlpaWioncPpw"
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citation: "卫哲. “Former Alibaba CEO Wei Zhe: Rewards and Punishments Must Be Clear, Use Heavy Penalties in Troubled Times.” New Distribution, 2019-09-02. https://xinjignxiao.com/en/articles/former-alibaba-ceo-wei-zhe-rewards-and-punishments-must-be-clear-use-hea-738d2098/"
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# Former Alibaba CEO Wei Zhe: Rewards and Punishments Must Be Clear, Use Heavy Penalties in Troubled Times

> Management is definitely a science, and the core of management science is based on understanding human nature. Many people ask, after being with Ma Yun for so many years, what is Ma Yun's greatest strength? First, human nature. Second, the essence of business. Third, a feel for the internet. From historical military reforms to organizational change, Alibaba's biggest product is its ability to produce cadres.

Management is definitely a science, and the core of management science is based on understanding human nature.
Many people ask, after being with Ma Yun for so many years, what is Ma Yun's greatest strength?
**First, human nature.**
**Second, the essence of business.**
**Third, a feel for the internet.**
**From Historical Military Reforms to Organizational Change**
**1. Alibaba's biggest product is its ability to produce cadres**
Chinese history has seen many military reforms, and the Beiyang Fleet is the best case of embracing technology. When the Eight-Power Allied Forces invaded, the Qing army's weapons were no worse than theirs; the Beiyang Fleet was technologically advanced, with weapons ranking first in Asia and among the top in the world. The failure of the Beiyang Fleet educated a man named Yuan Shikai. Yuan proposed "Xiaozhan Military Training," which produced the "Beiyang Army," the strongest fighting force in China at the time. It was a new organization that embraced not only technology but also the organization of the German army. Beyond technology lies organization, and beyond organization lies infusing the enterprise with culture. Ma Yun said, "Alibaba's biggest product is its ability to produce cadres." You see, when I left Alibaba, it had no impact on Alibaba; it even developed better. So many people have come out of Alibaba, and Alibaba is still awesome. So it's not that Alibaba's strategy is so powerful or Ma Yun's ideas are so brilliant; the most important thing is that Alibaba can continuously produce cadres.
**2. What changes and what doesn't in organizations**
With the internet, what needs to change and what doesn't? Or what business essences has the internet changed, and what hasn't it changed? In a new era organization, you can't say that when something new comes, everything changes. If you were walking fine before, and you imitate others awkwardly, you might end up unable to walk at all.
**3. What needs to change in organizations today?**
**First, the demographic has changed.** The team now includes post-95s; the new demographic is a crucial factor driving organizational change.
**Second, new technology.** The new demographic forces us to think about what needs to change. The most important basic skills, like the horse stance, must be solid. Even if the team is not yet 100 people, as long as there is a team, you must consider these three basic skills: "recruitment, training, and assessment"—the three axes. Additionally, corporate culture, mission, vision, and values are essential for any organization.
**Human-Machine Integration 2.0**
The internet has moved to mobile internet, from human-machine separation to human-machine integration. During the PC internet era, even if everyone had a computer, it wasn't available anytime, anywhere; human and machine were separated. Taobao's sales curve is exactly opposite to retail sales; when offline retail is good, Taobao is not. Mobile internet truly achieves human-machine integration; the phone follows us like a new organ.
But after human-machine integration, if you still use the methods and organization from before, you are definitely wrong. In the 1.0 model, if you didn't take out your phone, your phone number, WeChat ID, or face recognition, you wouldn't know who you are. In the 2.0 model, true human-machine integration is centered on facial recognition; you can know who you are without taking out your phone. Going further, human-machine integration becomes human-machine; in the future, you don't need to carry your phone, just your face, and you can pay by scanning your face. When new technology arrives, how should traditional enterprises transform? With new technology, new retail is "four online," and the core of the new economy is also four online.
How to break through the core of the four online? Start with employee online. **Product online**: Many companies create a mini-program, app, or website, put their products and services there, and can sell online, but after going online, they find no one buys. **Customer online**: How to turn customers into electronic members, so you can interact with them even after they leave—that's customer online. Without starting with "**employee online**," the other online aspects cannot be achieved. Many companies have 1 million or 10 million followers on their official accounts but don't know how to cultivate them.
You must assign them to each person, like dividing the land to households and assigning responsibility to each field. Can each employee cultivate their own land? What tools should be given for "cultivation"? That's management online; you can empower with a knowledge base, and even a human knowledge base. For any new model, customer experience must be good, user experience must be good, and efficiency must be high. I always use two "whenevers" to test: Whenever user experience is not significantly improved, it's not a good model; whenever user experience is improved but it doesn't increase enterprise efficiency, or even industry efficiency, it's not a good model. Human efficiency is how much each person does per day.
Being good to employees, increasing their compensation, if they can't create greater value, how can they get better treatment? So empowering employees must be reflected in their human efficiency.
**Post-95s New Generation: Changes in "Organization" and "Consumption"**
Post-95s have three very important differences.
**First, post-95s are the first generation of "moderately prosperous society"**
Those born after 1993 have no memory of poverty. Post-85s are the first generation of "adequate food and clothing," while post-95s are the first generation of "moderately prosperous society." Why is there a recent discussion about 996? Because we now have post-90s and post-95s. A couple of days ago, when I returned to Alibaba, I asked, "Can we still recruit people who have suffered and have deep grievances?" They said, "There aren't many who have suffered greatly, but there are quite a few with deep grievances." At that time, during recruitment, we couldn't directly ask candidates if they had suffered and had deep grievances; their answers might not be accurate.
We designed many questions, one of which was: "When you were a child, how often did you eat meat?" We particularly liked to recruit people who ate meat once a month. Recently, I asked again: "Do you still use this question in interviews?" They said, "We still use it, but we use it in reverse, because now we are especially afraid of recruiting people who eat meat only once a month. At such a young age, being so Buddhist about not eating meat and focusing on health is a concern."
Now we particularly like to recruit people who love eating meat every meal. Such people are more vigorous and may not mind 996.
**Second, only-child 1.0 vs. only-child 2.0**
There is no concept of only-child 2.0 anywhere else in the world.
Because China's one-child policy began in the mid-to-late 1970s, post-85s have no brothers, sisters, uncles, or aunts in their vocabulary. Post-95s are the same; they also have no uncles, aunts, or cousins. Post-95s will inherit their parents' house, their maternal grandparents' house, and their paternal grandparents' house—three houses in total. After marriage, adding their partner's parents, grandparents, and great-grandparents, that's six houses. Do post-95s' parents, grandparents, and great-grandparents still have mortgages? No, so they inherit pure assets without liabilities. The result is that they are the generation of credit consumption in China.
**Third, internet natives vs. mobile internet natives**
Remember, the internet is divided into natives and immigrants. Post-85s are China's internet natives and mobile internet immigrants. Many post-85s still play PC games, and much of Taobao's PC traffic, when tracking data, is predominantly post-85s. Post-95s are mobile internet natives; when they see a computer, they think, "Wow, a computer is just a phone or a pad; I've never seen such a big computer."
**1. Post-95s trait: Fun is more important than usefulness**
For consumers, we originally pursued cost-effectiveness and "usefulness," but today, being useful is not enough; it's a must, but being fun is also important. Now, consider a post-95s engineer like Xiao Wang who performs well; at year-end, you might consider making him a manager. Xiao Wang's typical reaction is, "I don't want to manage people, and I don't want to be managed. Being a happy coder is fine." So if the company makes you useful, it's boring and not very attractive. What can stimulate post-95s? The company itself must become fun. Once, I took domestic entrepreneurs to Facebook for over an hour, and as we were about to leave, the leader said, "Wait, it's not easy for us to come; why does Wei Zhe always take us to see Facebook's entertainment area?" I said, "What we just saw was not the entertainment area; it was the work area."
**2. Post-95s trait: Love the line, then do the line**
For post-85s, you should love the line you do; "suffering and deep grievances." I don't think post-95s are not hardworking, nor do I think they are unwilling to do 996. The core is whether they love the line. If they love it, they will do it well. Back then, when our company was about to fail, we might not pay salaries for three months, and many left. Today, if post-95s truly love and recognize the boss, it's entirely possible for them to work without pay for three months. We've seen this happen in some companies: the boss is charismatic, employees work without pay, and those who get through the crisis are all post-95s.
**3. Managing "new era employees" requires new mechanisms**
How to play "my level, my decision"? First, Alibaba doesn't talk to employees at year-end about promotion. Instead, at the beginning of the year, they ask everyone who wants to be promoted, and they even allow voluntary applications for a jump in level. This is "you want to be promoted, not I make you." So we ask employees, "Do you want to be promoted? If not, that's your business. If you want, I'll invite you to training and hold you to a higher standard. Then you have no excuse for not doing 996." So, "my level, my decision."
**Unchanging Iron Rule 1: Emphasize Recruitment**
As long as you have a team, it must start with recruitment. "Enlisting soldiers" must start from the source.
**1. Principle 1: Don't easily delegate the recruitment authority**
When Alibaba had 400-500 people, everyone was recruited by Ma Yun. One of the front desk staff Ma Yun recruited was Tong Wenhong. The front desk recruited by Ma Yun could become an executive vice president, while the front desk recruited by an administrative manager would have the best path of becoming an administrative manager. Whoever recruits determines the recruit's vision. CPO Peng Lei told me, "Did you have a great talk with the boss, feel very trusted, and can spend money freely without financial authorization?" She said, "You can't recruit immediately. Your previous recruitment standards are different from Alibaba's. You need to first observe how three old Alibaba employees recruit. After that, if it's still not enough, you need to share your thoughts with me about what you think is different about Alibaba's recruitment compared to your previous experience. Then, you can try recruiting one, and we'll watch. If you do it right, share your thoughts again. Once you're right, you can recruit." So the first common mistake is "easily delegating recruitment authority," especially not letting new hires recruit immediately. Culture is diluted layer by layer like this.
**2. Principle 2: Pay attention to factors beyond professional ability**
Judging recruitment ability is simple: for sales, look at past sales performance; for engineers, look at coding skills. But most companies only focus on ability factors. Do they pay attention to non-ability factors? Alibaba used to recruit people who could endure hardship and take losses. Enduring hardship is important, but we can't directly ask, "Can you endure hardship?" We usually ask an open-ended question: "Can you tell me the hardest thing you've ever endured in your life?" We also periodically check HR for weird answers. One weird answer was: "I can endure hardship. I took a train from Shanghai to Wuxi when there were no bullet trains, and it was a green-skinned carriage without air conditioning, not even a seat. I endured the hardship of standing from Shanghai to Wuxi." That's this person's standard for hardship. Then you judge if this is the person you want.
**3. Principle 3: Don't be superstitious about elites**
In 2007, Alibaba was already a company worth tens of billions of dollars. I went to Tsinghua for campus recruitment, and students mocked us, saying Alibaba looks down on us; why didn't Ma Yun come? Robin Li came yesterday. So we didn't recruit top students at Tsinghua. Then I went to Huazhong University of Science and Technology and Nanjing University of Posts and Telecommunications, where 3,000 people squeezed into a venue for 1,000. What is this? We call it "talent polar difference."
**1. How does Alibaba recruit ordinary employees?**
Never think your company should have elites. For a job paying 10,000 yuan a month, recruit from those earning 7,000-8,000. Do you think they should be grateful for a 20% increase? No. They think it's deserved. Wouldn't they get a 20% increase by changing jobs? Alibaba recruits people for 10,000 yuan from those earning 2,000-3,000. This gives them a feeling of turning their life around. If you recruit someone earning 2,000-3,000 and pay them 10,000, they'll feel the company made them. If you recruit someone earning 8,000 and pay them 10,000, they'll feel they made the company.
**2. How does Alibaba recruit executives?**
Alibaba recruits executives in reverse. Take me as an example: In 2005, I had a base salary of $1 million. When I went to Alibaba, it became a total of 1 million RMB before tax, including salary and bonus. Alibaba just asked me if I believed. If I didn't believe, I wouldn't accept the offer. To recruit an executive, you should reduce their salary to basic living expenses and see if they're willing to follow you. Of course, you can't treat them poorly; you should give them equity. Never recruit someone who says, "I can't lose my salary and bonus, I can't lose my medical insurance, and I also want some equity." If they come with a golden parachute and say they want to start a business with you, don't even talk to them.
**3. More important than recruitment is "training requires a lot of time investment"**
Ma Yun taught classes to 4,000 people; he taught every new hire class. I did more than 100 new hire trainings a year. This is the most important job for a CEO and a cadre. Many bosses say they're busy, too busy to recruit, train, or assess. I say, "Do you know why you're so busy? You recruited the wrong people, you didn't use people well. Most bosses are using people below their level because their VPs are unsuitable, their directors are unsuitable. The boss is doing the VP's job, the boss is doing the director's job—a vicious cycle."
So we should ask ourselves: What is your new hire training like?
> 1. Is it close enough to actual combat? 2. Does it even exceed actual combat?
If you can eliminate during training, never delay until after onboarding.
Alibaba engineers have a devilish training during which they write code or fix bugs for 88 hours straight. During those 88 hours, they almost don't sleep; when tired, they nap for 2 hours on a camp bed, then are woken up to continue. Many can't handle it, but those who do find that actual combat is useful. Every Double 11, most engineers can't sleep for 48 hours, some for 72 hours, but they're fine because during training we intensified this; they can go 88 hours without sleep.
**4. Principle 4: Let business backbone be instructors; you have to give to get**
Many companies don't arrange for good cadres to be instructors during training. Such companies are even more hopeless. A first-class instructor might teach second-class soldiers. The best fighter is just one person; are you willing to pull out your best performer and strongest person to be an instructor? These are the mistakes in training I'm talking about.
**Unchanging Iron Rule 2: Rewards and punishments must be clear; use heavy penalties in troubled times**
Assessment, rewards, and punishments must be clear; use heavy penalties in troubled times.
**Principle 1: Low assessment frequency equals meaningless assessment**
**Principle 2: Only assessing performance equals meaningless assessment**
How to assess effectively: Use the 271 rule for ranking.
The so-called 271 means in a team of 10, the top 20% are the 2, and the bottom 10% are the 1. It originates from General Electric. Management only needs to focus on the "2" and the "1." The "2" are promoted and rewarded; promotions come from the "2." Alibaba's money: 20% of the team takes 40%-50% of the team's incentives.
So, as a cadre, you only need to focus on the "2" in your team, and also on the "1." If someone is a "1" for two consecutive quarters, they should leave.
Many managers are "using people below their level." The boss does the VP's job, the VP does the director's job. The things they should do aren't done well—a vicious cycle...
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## Citation metadata

- Publisher: New Distribution
- Author: 卫哲
- Published: 2019-09-02
- Canonical: https://xinjignxiao.com/en/articles/former-alibaba-ceo-wei-zhe-rewards-and-punishments-must-be-clear-use-hea-738d2098/
- Original source: https://mp.weixin.qq.com/s/9rcXMl7TzaTlpaWioncPpw

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