Lucy Peng: How do you

become an outstanding
HR leader?
Curated by Alibaba Business School
From Hupan University

It's a special year. For HR, it may be necessary for them to

streamline, optimize and assist in adjusting the organizational
structure while seizing the opportunities to attract outstanding
talents.
 
However, it should be noted that HR's work should not be limited to
this. In addition to recruitment, employee training and other routine
work, what role should HR play? What should an excellent HR look
like? What is the most important goal of an HR? How should one
choose the right HR partner for a CEO?
 
Here are some excerpts of the lecture records shared in Hupan
University by Lucy Peng, who is the founder of Alibaba Group and
former CEO and Chairman of Ant Financial. Lucy also served as
CPO of Alibaba Group.
HR is not only doing chores, but also promoting high-
quality dialogue

Many CEOs of entrepreneurial teams have a biased understanding of

the role of HR. they often turn the HR into a "Royal Guard". In other
words, when someone is very difficult to handle, HR has to deal with
him or her. When discussing an employee's leaving or to convey the
CEO's ideas in an awkward situation, HR is called in. This is very
common for many  entrepreneurial teams to simply have the HR
serve as the role of helping the CEO to do chores. That is terrible.
 
From my perspective, HR should do what he/she should do, so as to
maximize value. When I was in charge of HR in Alibaba Group and
later in charge of Alipay, I never assessed HR's work by how many
people they had recruited nor how many employees they had trained.
It doesn't make any sense.
 
I think the most important goal for an HR leader is that he/she
must integrate the HR work with the company's strategic business
objectives. If he/she is only responsible for recruitment, training and
performance management rather than to assist in the achievement
of the company's strategic goals, then the HR team is just a
personnel outsourced department, whose jobs can be solved by any
professional company. We don't need to build our own HR team.
 
Even if the HR team cannot do achieve it now, this should be the
goal. When your company is setting business objectives, you should
let HR participate to contribute to or achieve certain business
indicators, and let those business indicators account for 20% of
their KPI or even 50%. It is my expectation for HR that their work
should be combined with the company's strategy.
 
Secondly, I believe that HR should encourage quality engagement
between the CEO and the team itself. A CEO is very lonely. How do
CEOs get to know your front-line team and the situation on the
ground? HR needs to create the opportunity and platform for a CEO
to connect with the front-line teams.
 
How can this platform be created? Should it be a dialogue with the
employees or a training for the new employees? Take new
employees' training as an example, new employees are not all the
same, some are fresh graduates and some are experienced
professionals. To create different scenarios to achieve different
purposes for different new employees is an important capability of a
HR.
 
It’s very important that the CEO and HR have a good sense of
understanding and can collaborate well together. Otherwise,
employees would only hear the talk, but not understand the
substance. It is important to facilitate high quality conversations
within the organization.
HR performance reviews two sides: core staff turnover
rate and talent succession planning

How to measure HR's performance? I believe we should not apply all

the quantitative criteria to measure HR's performance, qualitative
criteria sometimes is more applicable. In 2009, HR adjusted their
approach and changed the detailed KPIs for the business leaders to
"if Jack is happy with the results".
 
I believe HR performance review should be both quantitative and
qualitative. I think we should also look at the employee turnover
rate.
 
As someone has been on the HR position for many years, I never
look at the number of new recruits, because that's not key indicator.
Who is joining the company does not reflect the company's problem.
However, who is leaving the company does reflect the company's
organizational problems.
 
I don't want to look at the overall turnover rate but the turnover rate
of the core staff. In another words, the turnover of the high
performance and high potential staff. If these top staff are leaving
the company, it means that the company or team has big problems,
either in terms of management or business direction. I want to focus
on these problems.
 
We would also want to look at the turnover rate of new staff. This
would reflect the problems in recruitment. If someone chooses to
leave the company in 6 months or 3 months, it means that there is
problem in the soil in which they landed. They were not supported
enough to integrate into the company. This reflects the management
problems in the team.
 
Another quantified indicator for measuring HR work is the "bench
depth" (referring to the second team lineup or the strength of the
team). This is a popular saying. Taking Alibaba as an example, when
doing talent review every year, the leader of each business must
keep asking himself/herself, how many successors you have in a
year? Who among them is already in the company, who is still
outside the company, and whether anyone else could emerge in two
or three years.
 
Many of you here are entrepreneurs, and many times the problem is
actually related to the gap between the senior management and the
middle management. When there are not enough substitutes, you will
be particularly constrained by the problem of people, especially
worried and anxious because of the uncertainty of the candidates
for some key positions.
 
When the company's employment environment is "the younger
generation should exceed the older generation" rather than in the
opposite way, the CEO will not be so anxious, and such talent
structure dynamic will also form a benign competitive atmosphere
within the company.
 
Alibaba has a "433" evaluation system for all directors level and
above, that is, the business-related indicators account for 40% of
the entire assessment; team building indicators account for 30%,
which refers to the team stability and the health of talent structure;
the remaining 30% is whether he/she instructs the team both in
words and by example and how the team members rate him/her.
 
Therefore, the leader of organizational talent development is always
the CEO and the leader of each business. It cannot be said that you
are only responsible for business data, but also responsible for the
growth and development of the organization and the training of the
talent echelon.

A good CPO needs to "fight" with the CEO

If you choose to be the CPO, you may have chosen a particularly

hard job. You need to not only worry about HR and recruitment
issues, but also need to continuously communicate with the CEO. I
often say "when enemies are marching, we retreat, when enemies
are tired, we march". The CPO needs to think about these
communication skills when working with the CEO.
 
Many times, the CEOs are very straightforward, some are naturally
sensitive to others, while others are not.
 
However, sometimes the CEO may not be clear about when to do
what, and the CPO needs to advise him in a very smart way. The
CPO must have the courage to communicate in various ways that
you don't necessarily agree with him. When you have the capacity
and courage to communicate to the CEO like this, then you are
equipped with the first ability to be a CPO. However if you do not
have such ability, it's hard for you to be the CPO next to the CEO.
 
For example, when I was partnering with Jack more than ten years
ago, I held the annual meeting around 2005 or 2006. At that time, to
have an annual meeting was quite easy in Alibaba. However Jack
wanted to grand a prize of RMB 300,000 to the best annual team.
 
At that time, I was the CPO. RMB 300,000 was really a large amount
of money, and I thought it was too much. However Jack was the
boss and I couldn't say no on the spot. So I felt I could let it pass for
the time being. A week later, he still talked about it, and then I said,
"Well, I will go back and work on it."
 
Then Jack mentioned it again for the third time. He said: "I don't
think you have thought about the prize seriously." Then I knew I
couldn't deal with the issue so causally anymore.
 
However, when he insists on it, I needed to know more about what
he really wanted to do. But some of ideas I don't fully agree with.
At that point one could raise potential considerations, but if he has
insisted on it over and over again, I stop and think more deeply
about what his rationale may be. Once I feel comfortable with it
then I follow him and execute as he requests.
 
Every time this kind of confrontation happens, I think it's an
interesting process for CPO and CEO. The process itself is to
exchange each other's views on organization, culture and people.
Such a process should not be avoided for CEOs or CPOs, and it
requires each other's dialogue to be more direct and honest.
 
In my opinion, CEO and CPO should have both business and
people's sense. CPO should have CEO's business sense, and then
develop the right organizational capability system for the
company.

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