Hu Feijun

  On June 1, the Securities Times Securities China reporter learned that Tencent issued a notice of salary review and adjustment to employees on May 31. There are two main points: First, in the future, Tencent will no longer make instant compensation for rank promotions alone. Second, the annual salary review will be changed from June to July and will be implemented immediately.

  According to Tencent's official caliber, the adjustment does not mean that promotion has nothing to do with salary, but will comprehensively evaluate whether to adjust salary during the annual salary review, combining multiple factors such as "performance contribution, ability improvement and salary competitiveness", and there will be more complete perspective.

  This means that Tencent's adjustment has changed the existing impression of "promotion = salary increase" in the past, and further strengthened the direct connection between salary increase incentives and performance and performance evaluation.

  In fact, like other Internet technology companies, Tencent's performance has continued to be under pressure since 2021. In the first quarter of this year, its revenue was 135.5 billion yuan, a year-on-year increase of almost zero. According to non-international accounting standards, its net profit was 25.55 billion yuan, a year-on-year decrease. 23%. At the same time, news of layoffs in related business lines has also been reported.

Salary reform: promotion does not equal direct salary increase

  On May 31, Tencent's "Remuneration and Welfare Department" released an email "Notice on Remuneration Review and Adjustment", which attracted internal and external attention and made it onto the hot search list.

  The email stated that the company will conduct an overall review of the current salary level of employees according to its own business plan and external market conditions every year, and the specific review time will be planned according to the actual situation of the year.

There are two main changes this year, please understand:

  1. The 2022 annual salary review will be launched in July.

This adjustment is mainly to ensure that the remuneration review matches the performance evaluation of the first half of the year more closely, to solve the problem that the latest performance results were not available during the annual remuneration review in the past six months, so as to strengthen the link between incentives and performance evaluation, and to ensure that students who have contributed will receive due return.

  2. There is no longer any immediate salary adjustment for rank promotion alone, and the relevant salary adjustment resources are integrated with the annual salary review resources.

This adjustment does not mean that promotion has nothing to do with compensation, nor does it cancel the corresponding resources, but to allow managers to have a more complete perspective when doing annual compensation reviews.

  The above email stated that the company recognizes the ability improvement and higher responsibilities represented by the promotion, and also requires the use of "martial arts" to make "combat achievements" to convert ability improvement into performance contribution. Therefore, in the annual salary review, it will combine performance contribution, Comprehensive evaluation of factors such as ability improvement and salary competitiveness.

(Note: The promotion of the 2021 H2 cycle has taken effect in April. If there is any adjustment to the promotion salary in this cycle, the relevant adjustment will remain effective in April).

  Regarding this round of salary adjustment, a Tencent insider told reporters that the salary adjustment was immediately after a direct promotion. This time, the salary adjustment will be made immediately after the promotion of the rank. The follow-up will be integrated into the incentive resource package of the annual review. It does not mean that promotion is decoupled from salary incentives. Behind the adjustment, it is to help managers have a more comprehensive perspective when doing annual salary review incentives.

  At the same time, this year's annual salary review (that is, the annual general salary adjustment opportunity for all Tencent employees) is adjusted to start in July, in order to ensure that the salary review is more compatible with the performance evaluation of the first half of this year, so as to solve the problem of performance in the first half of the year during the annual review in June in the past. Assess outstanding issues.

  A number of Tencent employees confirmed to the Securities Times Securities China reporter that they received the above-mentioned salary review and adjustment email, "Promotion does not necessarily mean a salary increase, and whether a salary increase is more closely related to performance and performance." A Tencent employee told reporters express.

  Some netizens said, "The big Internet companies are also rolling up?"

Performance is under pressure, seeking to reduce costs and increase efficiency

  Affected by various factors such as the epidemic, Internet technology companies have also sought to reduce expenses, reduce costs and increase efficiency, and layoffs are also reported from time to time.

  Tencent's revenue in the first quarter of this year was 135.5 billion yuan, a year-on-year increase of almost zero. According to non-international accounting standards, the net profit was 25.55 billion yuan, a year-on-year decrease of 23%. If you look at the profit attributable to Tencent's equity holders, the decline is even greater. It achieved a net profit of 23.4 billion yuan, a year-on-year decrease of 51%, showing a "half cut".

  For the decline in net profit, Tencent explained that it was mainly due to the overall increase in costs and expenses faster than revenue, and the change in net contribution from associates from profit to loss.

  It is worth mentioning that the decline in Tencent's net profit in the first quarter was also closely related to the substantial increase in expenses.

  Data shows that in the first quarter of this year, Tencent’s general and administrative expenses reached 26.7 billion yuan, an increase of 41% year-on-year. The financial report explained that this was mainly due to the increase in share-based compensation expenses, R&D expenses and employee costs, and overseas subsidiaries. Increased expenses, etc.

  Ma Huateng said in the financial report that during the challenging first quarter of 2022, "we implemented cost control measures and adjusted some non-core businesses, which will help us achieve a more optimized cost structure in the future."

  As of March 31, 2022, Tencent had 116,213 employees, a year-on-year increase of 30.2%, and the total remuneration in the first quarter of 2022 was 29.229 billion yuan, a year-on-year increase of 43.2%.

  At the same time, in the first half of this year, Tencent also revealed that there were layoffs in Tencent Cloud, game business, advertising business, and content business lines.

  At Tencent's first-quarter earnings conference call, Tencent executives said that the more staff, the higher the cost, so structural changes are needed to focus on more profitable businesses.

With the current structural changes in the industry, companies may optimize personnel, but temporary factors such as the epidemic will not be the reason for optimization.

Therefore, on the whole, cost reduction and efficiency increase is a comprehensive consideration.

(Broker China)