---
title: "Unveiling Yonghui Superstores' Partnership System: How to Handle 'Coasting' Employees!"
description: "A major issue in the supermarket industry is that frontline employees do the dirtiest and most tiring work while earning the lowest wages, leading to extremely high employee turnover. Yonghui Superstores' chairman Zhang Xuansong discovered during a store visit that when frontline employees earn only around 2,000 yuan per month, they barely make ends meet and lack motivation, essentially just going through the motions. Customers rarely see smiles on their faces, which is a huge problem for brick-and-mortar retail under the impact of online shopping."
author: "New Distribution"
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published: "2018-09-06"
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# Unveiling Yonghui Superstores' Partnership System: How to Handle 'Coasting' Employees!

> A major issue in the supermarket industry is that frontline employees do the dirtiest and most tiring work while earning the lowest wages, leading to extremely high employee turnover. Yonghui Superstores' chairman Zhang Xuansong discovered during a store visit that when frontline employees earn only around 2,000 yuan per month, they barely make ends meet and lack motivation, essentially just going through the motions. Customers rarely see smiles on their faces, which is a huge problem for brick-and-mortar retail under the impact of online shopping.

A major issue in the supermarket industry is that frontline employees do the dirtiest and most tiring work while earning the lowest wages, leading to extremely high employee turnover.
Yonghui Superstores' chairman Zhang Xuansong discovered during a store visit that when frontline employees earn only around 2,000 yuan per month, they barely make ends meet and lack motivation, essentially just going through the motions.
Customers rarely see smiles on their faces, which is a huge problem for brick-and-mortar retail under the impact of online shopping.
If frontline employees are in a state of 'going through the motions,' when they stack fruits and vegetables, they might 'throw them to one side' or 'drop them,' thinking that sales don't matter to them and losses don't matter either.
Bruised produce typically turns black within a few hours, failing to attract customers and impacting the entire store.
Reasons for employee disengagement:
Intense market competition makes retail companies focus more on acquiring external customers, both retaining old ones and attracting new ones. However, excessive competition makes companies forget their 'internal customers,' i.e., employees, especially frontline ones.
Although internal customers bring 'indirect benefits' to the company, they significantly influence consumers' purchasing behavior: if converted into data, the significance of internal employees is whether they make 80% of customers buy more or buy less.
But the problem is that directly increasing frontline employees' income is unrealistic:
1. Simply raising wages increases cost burden and affects profitability;
2. How much to raise? Too much and owners object; too little and incentives are weak and short-lived.
For example, Yonghui Superstores has over 60,000 employees nationwide. If each employee's monthly income increased by 100 yuan, Yonghui would pay an additional 72 million yuan annually—about 10% of net profit.
Moreover, 100 yuan is a minimal incentive for employees, and the effect is short-lived; they can't just give a 100-yuan raise every few months.
Therefore, to increase employee compensation, save costs (reduce produce loss), and boost operating revenue (attract more customers), Yonghui Superstores, under the direction of Executive Vice President Chai Mingang, initiated an operational mechanism revolution: implementing a 'partnership system' for frontline employees.
Yonghui's Partnership System
Partnerships originated in Italy, England, and other countries around the 10th century. At that time, maritime trade was profitable. Someone said, 'I want to do this, but I don't know navigation; I can provide capital.' Another said, 'I know navigation, but I don't have much money; I can provide effort.'
Thus, they collaborated, splitting profits equally. Naturally, this formed a community of interests with complementary resources.
Currently, there are three popular partnership models:
1. Partners are nominal shareholders (i.e., shares), or actual shareholders are called partners; this is just a change in name.
2. Due to corporate governance needs, limited partnerships are registered as shareholding platforms, with two roles: general partner (GP, company founder or controller) and limited partner (LP, investor). LPs are investors without decision-making or representation rights, sharing investment returns (i.e., profit rights).
3. Value-added partners (OP) who focus on building team operators: OPs contribute money and effort, create incremental value, and share value-added benefits.
Three types of partnership models
Yonghui adopts the [OP Partner Model]: not bearing enterprise risk but taking operational responsibility; multiple profit distributions based on value; flexible exit and promotion systems; usually unrelated to legal risks; focusing on team and individual value contributions; emphasizing self-worth, connections, and resources.
Details of Yonghui's Partnership System
After a category, counter, or department reaches the basic gross profit or profit target, the company and employees share the earnings.
For some stores (mainly boutique stores), there may be no basic consumption requirement. 'The profit-sharing ratio is negotiable; in our implementation, we've had 50-50, 40-60, and even 30-70 splits.'
Case Example of Yonghui's Partnership
In this way, employees find their income linked to the performance of their category, department, or counter. Only by providing better service can they get more returns, so the partnership system is an 'income source' for employees.
Additionally, since many employee groups agree on profit or gross profit sharing, employees will also pay attention to avoiding unnecessary cost waste. For example, with produce, employees will at least handle it gently when stacking and pay attention to preservation procedures. This cost saving is the so-called 'cost cutting,' which explains why Yonghui's produce loss rate is only 4-5% when the industry average exceeds 30%.
Partner Bonus Pool
Under the partnership system, Yonghui's delegation goes further: hiring and firing for departments, counters, and categories are decided by all members of the employee group—you can hire 10 employees, but all earnings are shared collectively.
This avoids situations where some have nothing to do while others work to death. Ultimately, this binds frontline employees together as a common team rather than separate individuals, greatly reducing management costs and significantly lowering employee turnover.
OP Partner Profit Distribution
1. Ways partners receive benefits:
- Contributing money—investment: guaranteed returns, investment returns, investment shares, preset value
- Contributing effort—contribution: value-added distribution, value measurement, secondary distribution, contribution value
2. Partner profit rules:
- Part 1: Contribution returns 60%
- Part 2: Investment returns 30%
- Part 3: Secondary distribution 10%
Classify management levels and types, set corresponding preset value scores, and establish basic qualification scores with multiples.
Value Stratification
Using contribution value as the distribution basis, if the actual incremental value is 2.5 million yuan in profit, each share's actual dividend = 5,000 yuan, and the average dividend rate per share = 83.33%, but actual distribution is based on value scores.
Assessment and Evaluation Method
For example: In the first round of partners, the total score is 400 points. The general manager's personal value score is 90 points, while the HR manager's value score is 13 points.
General manager's actual dividend = 750,000/400 x 90 = 168,750 yuan;
Personal return rate = 168,750/(18 x 6,000) = 156.25%;
HR manager's actual dividend = 750,000/400 x 13 = 24,375 yuan;
Personal return rate = 16,250/(6 x 6,000) = 67.71%.
Set special bonus or deduction points, which must be public value points and have significant importance to company development, to strengthen the value exploration and constraints on partners.
What if a partner exits or joins midway?
According to the agreement, the partnership capital is refunded with interest compensation; consider adding new partners to supplement; whether it's the exiting partner's shares or unallocated shares, the returns ultimately belong to the company; new partners joining midway have their dividends calculated based on their joining time.
Significant Results of Yonghui's Partnership
In the 2014 China Fortune 500 list, there were 31 retail companies, with Yonghui Superstores leading the supermarket sector with revenue of 30.543 billion yuan.
Data shows that over the past three years, Yonghui Superstores has been advancing rapidly in this ranking, from 224th in 2012 to 197th in 2013, and now 176th this year. Its revenue growth rate exceeds 20%, and its profit margin increased from 2% in 2013 to 2.3% in 2014. In an industry where the average net profit margin is less than 1%, Yonghui's profit margin almost leads the entire industry.
Execution Effects of Yonghui's Partnership
This growth, which seems incredible to the industry, is inseparable from Yonghui's innovations. These innovations are not only in how it treats consumers but also in its incentive mechanisms and satisfaction of 'internal customers.' In fact, this is the key reason for Yonghui's rapid development.
The success of Yonghui's partnership is highly representative.
Economic pressures force companies to retain talent, stimulate employee motivation, link compensation to performance, and align store interests with personal goals. What the boss wants is also what employees want. When business performance grows, employees get raises. This is the charm of OP partners. The greatest sorrow in life is spending a lifetime of intelligence on tactics. When you look up, the profession or industry you've perfected may be declining, or its social and personal value is low, or the strategic direction is wrong.
Equity incentives are not about making everyone a shareholder, but about giving everyone the opportunity to become one. The core purpose of equity incentives is not just to cultivate a certain number of shareholders, but to create many small bosses and partners who think and act like the boss.
Source: Management Thinking
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