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The Globalization and Ihrm of Lenovo

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The Globalization and IHRM of Lenovo
Lenovo Group Limited is a Chinese multinational personal technology company that develops, manufactures and markets desktop and notebook computers, workstations, servers, storage drives, IT management software, and other related products and services. Lenovo was incorporated in Hong Kong in 1988 under its previous name, Legend.[1] Lenovo's principal operations are located in Morrisville, North Carolina, Beijing, China and Singapore.

(Global Headquarters : The United States Raleigh ( North Carolina Research Triangle Park )
(The main R & D centers: Beijing, China, Japan and Japan, Shanghai, Shenzhen and the United States, North Carolina, Raleigh
(Production base and assembly facilities: Beijing, Shanghai, Huiyang and Shenzhen; India's Pontiac Lee (Pondicherry,); Monterrey, Mexico (Monterrey,); the United States Greensboro (in Greensboro); and in the global contract manufacturing and OEM

Lenovo is the world's second largest PC maker and markets the ThinkPad line of notebook PCs and ThinkCentre line of desktops. These brands became part of Lenovo's offerings after its 2005 acquisition of IBM's personal computer business. Lenovo also sells the IdeaPad line of notebook computers. Lenovo markets its products directly to consumers, small to medium size businesses, and large enterprises, as well as through online sales, company-owned stores, chain retailers, and major technology distributors and vendors.

1.Joint ventures, mergers and acquisitions
Lenovo made its acquisition of IBM's personal computer business amid a backlash in Congress against Chinese companies trying to purchase American businesses. Chinese oil company CNOOC abandoned its attempt to buy Unocal and appliance maker Haier Group ended its efforts to acquire Maytag. Lenovo has moved its global headquarters to Purchase, New York and kept most of its former IBM development staff in North Carolina.

1.1Lenovo Mobile
Lenovo sold its mobile phone division in 2008 in order to focus on its personal computer business and then paid $200 million to buy it back in November 2009. Lenovo re-acquired its mobile division in order to focus on mobile internet devices such as smart phones and tablet computers.[2] Lenovo Mobile now ranks third in terms of unit share in China’s mobile handset market.[3]

Lenovo invested 100 million yuan in a fund dedicated to providing seed funding for mobile application development for its LeGarden online app store. As of 2010, LeGarden had more than 1,000 programs available for download to users of the LePhone. At the same time, LeGarden counted 2,774 individual developers and 542 developer companies as members.[4]

On January 27, 2011, Lenovo formed a PC joint venture with Japanese PC maker NEC. As part of the deal, the companies said in a statement they will establish a new company called Lenovo NEC Holdings B.V., which will be registered in the Netherlands. NEC will receive US$175 million from Lenovo through the issuance of Lenovo's shares. Lenovo, through a unit, will own a 51% stake in the joint venture, while NEC will hold a 49% stake. Lenovo has a five-year option to expand its stake in the joint venture.[5]

This joint venture with NEC is intended to boost Lenovo's worldwide sales by expanding its presence in Japan, a key market for personal computers. NEC is spinning off its personal computer business to the joint venture. As of 2010, NEC controlled about 20% of Japan's market for personal computers while Lenovo had a 5% share. Lenovo and NEC have also agreed to explore cooperating in other area such as servers and tablet computers.[6]

Lenovo announced in June 2011 that it planned to take control of Medion, a German electronics-maker. Lenovo said the acquisition would double its share of the German computer market, making it the third-largest company by sales after Acer and Hewlett-Packard. The deal, expected to close in the third quarter of the same year, would be the first time a Chinese company has bought a well-known German company. This acquisition will give Lenovo 14 percent of the German computer market. Gerd Brachmann, chairman of Medion, agreed to sell two-thirds of his 60 percent stake in the company. He will be paid in cash for 80 percent of the shares he and receive 20 percent in Lenovo stock. That would give him about 1 percent of Lenovo.[7]

ⅡCorporate Culture
1.Early History
Based in Beijing, Lenovo Group Limited is the largest manufacturer of personal computers (PCs) in China with annual sales of more than $24 billion in U.S. dollars (USD) in 2004, and a market share of 30 percent. Its sales for first quarter of fiscal year 2004-2005 have risen by more than twenty-one percent. It remains one of China’s powerhouses in its bourgeoning and fast growing high-technology industries.

Yet, Lenovo today is confronted with numerous strategic challenges as the firm considers its future not only in newer generations of PCs, but also in other electronic gadgets and information technology services. In some ways, how well Lenovo manages its own growth and strategic direction may be a bellwether for the transition and integration of the entire Chinese economy into the global economy.[8]

Lenovo (originally known as Legend Group) began as a spin-off of the Chinese Academy of Sciences’ (CAS) new technology unit in 1984. Initially, Lenovo was a reseller/distributor for AST computers in China and Hong Kong and then expanded to resell other foreign brands like Hewlett-Packard and IBM. Lenovo started making its own brand PC in 1990. Lenovo became the first Chinese brand to outsell any foreign brand (not just PCs) in China in 1996. By 1997, it had become the country’s best-selling PC. In 2003, it had a market share in China of approximately 30 percent, according to International Data Corporation. Lenovo is the number-one PC brand in the Asia Pacific market (excluding Japan) with a market share of 12.4 percent. Besides the manufacturing and sale of PCs, Lenovo has recently begun manufacturing motherboards in Hong Kong, mobile handsets, and hand-held devices. It provides IT (information technology) consulting services. Overall, Lenovo is the largest computer company and the second largest electronics manufacturer in China. The major shareholder of Lenovo is the Chinese Academy of Sciences, providing Lenovo with strong technological support and broad connections (guanxi) in the PRC. This is strategically important because Liu Chuanzhi, Lenovo’s founder and chairman, is able to maintain close working relationships with the Chinese Institute of Technology, where he has established strong relationships with the government.[9]

2.Multi-Stage Management of Corporate Culture in Lenovo
2.1Chinese Traditional Enterprise Culture during the Initial Period
In the initial stage the corporate culture mainly embodied four aspects: as for the Lenovo's business operation, "practical and enterprising spirits" were required. Lenovo took the high-tech computers products as the main target. The business leaders, technical personnel, marketing personnel and management decisions, rules, and so on were required to have a thoroughly "practical and enterprising spirit" in this endless field of technical updates. As for staff,they were required with the view of "smaller companies only do things, but larger companies cultivate men". This idea followed old and famous Chinese business tradition, and it is also widely recognized as the same goal by modern companies. As for sale, the goal is "the customer is Queen." The importance of customers is self-evident.

2.2Innovative Corporate Culture at the Growth Stage
First, core value and its elements of innovative enterprise culture were established.The innovative corporate culture system that focuses on innovation is divided into four levels by four coordinates which include internal operations, external development, flexibility, and control process.

Second, innovative corporate culture was defined by hierarchical management. According to inheritance of the core of corporate culture at the initial stage, Lenovo group put forward the contents of the four specific dimensions: service culture, strict culture, family culture, entrepreneurial culture. [10]

Thus, the internal and external customers can be satisfactorily served beyond their expectations. What is the customers need is the innovative technology, products and programs in science and technology enterprises, especially for external customers.

Finally, the management practice of innovative enterprise culture was constructed. As for Chinese high-tech enterprise, innovation and transformation of high-tech industrialization are the most fundamental tasks, in which transformation is the first subject and innovation the more difficult task.

2.3The Supporting Enterprise Culture of Mature Stage
The New Lenovo inherited the older excellent culture and strengthened each employee’s ability training, such as how to respect each other frankly, how to share the management, and how to compromise collaborative work.First of all, he needs to translate orders into goals and talk it to staff by encouraging and counseling them.

In conclusion, we state that Lenovo cultures have been built step by step and changed with basic stability under the concept of Lenovo spirit of "Lenovo services, high-tech association, international association ". The purpose is to realize the career goals of staff, quality of life, and the pursuit of business objectives at all stages through the realization of Lenovo ideas—"make applications, find markets, research and develop, establish industry with the pace of the modern world".

ⅢInternational Strategy
In the process of lenovo's development, there are two international strategies.
1 investment strategy.
After the IBM acquisition, lenovo and IBM formed long-term strategic alliances. IBM become the first choice of lenovo's services and customer financing providers, and lenovo also become the first supplier of the IBM PC, so IBM can provide a variety of personal computer solutions to its enterprise clients.

2brand strategy.
The orientation of lenovo's brand strategic is to provide its customers value-added products, and match with excellent service. After the m&a of the IBM PC, lenovo firstly useed the double brand strategy to promote its brand. The awareness of LENOVO is low in the foreign countries, but most foreigners know the brand of THINK. So the strategy of LENOVO is to promote the popularity and start the international market with the help of the brand of IBM, and the key point of the development of the brand of THINK is to improve the reputation. Then the trademark of IBM will be weakened. To make the LENOVO become a famous international brand is the final goal of lenovo.

ⅣRecruitment and Selection
1.The challenge of recruitment and selection of international Lenove
Since Lenove was a local enterprise, the level of ability of international management was not very high. Although Lenovo developed rapidly through the incorporation with IBM PC division, it was just the first time of multinational operation. In other words, in order to carefully plan and execute strategies to maintain its business stable growth and strengthen its competitiveness both locally and internationally, recruitment and selection were one of the most important factors for achieving these organizational goals.

As stated in Lenovo's corporate website, the corporation and its employees are committed to four company values that are the foundation for all levels of activities. First of all, customer service, in which it implies the dedication to the satisfaction and success of every customer. Innovative and entrepreneurial spirit as the second value seeks for innovations that deliver efficiency to customers and the company. Accuracy and truth-seeking is the third value of the company that seeks to manage the business and make decisions based on carefully understood facts. Trustworthiness and integrity as the final value addresses trust and personal responsibility in all relationships. The four company values can be seen as the requirement of the employee‟s personal quality. These personalities could significantly influence the corporate performance and the organizational cultural since employees are the ones generate and create values for the company. It is easy to teach the knowledge, but it is very difficult to change a person from what he used to be, to what you want him to be. Find the right personality people is the most important for a company.

So the challenge in recruitment and selection of international Lenove is the lack of international human talents. In the process of globalization, experienced persons are needed to lead the enterprise. But international CEO s are accustomed to completing the task instead of consider corporate strategy. They tend to standing on the point of view of professional managers to consider how to build corporate culture. Before the incorporation with IBM PC division, Lenovo Group has actually formed a relatively complete corporate culture foundation. So the collision of two cultures will give rise to confusion. How to establish an international efficient team is the first thing to be solved.

2.Recruitment and selection decisions of international Lenove
After the acquisition of IBM, Lenove made international strategy while recruiting international talents. The integration of Lenove was divided into three steps. [11]

In the first year, not only the original IBM channels, processes, sales are reserved by new Lenovo, and even the management structure has been largely maintained. IBM Steve Ward was appointed the new Lenovo's first CEO, and five IBM old unit and Ward go into management with key positions. This year, Lenove realized that the new managers are in urgent need of international management ability, and there are plans to absorb, reserves and culture talents.

In December 2005, William J. Amelio from Dell replaced Ward, which indicates the beginning of the Lenovo business integration and strategic internationalization of the second phase. Global sales and market is divided into four marketing departments, management and evaluation. Amelio restructure the organizational structure, and the 18 regional managers and headquarters functional managers report directly to him, most of which are the backbone of the original Lenovo. The figures prove successful.

In April 2008, Lenovo conducted a low-key and a wide range of internal business operations and personnel changes. At this point the internationalization of talents in Lenove is finished.

2.1Recruitment Process
In consistent to what have been discussed above, Lenovo promotes managers mainly through internal recruitment and fills other job positions through external recruitments. Lenovo posts vacancies on company website and other HR websites such as, China; preliminary screening of CVs, follow by first interviews, job knowledge tests, second interview. Offers are made if candidates match the job criteria. However, the recruitment process in Lenovo is not sophisticated. This is because normally the first stage in the recruitment process is to adopt a systematic review of the organization’s requirements. For instance, Lenovo launched “Lenovo 2006 Campus Program” in order to recruit more talents, so that the job vacancies that are originally accompanied by former IBM employees can be refilled. Moreover, in order to increase the reliability of recruitment and selection it is important that a company has thorough job analysis and ensure the questions asks and judgments make in interviews are job-related.

2.2Recruitment Method
In today’s recruitment market in China the most popular methods are searching from the websites or newspaper, those published resources, or going to a job fair. Lenovo has its own recruitment websites from job vacancies. However, unlike many other multinational companies such as HSBC from which the candidate can apply direct from the website, the recruitment website of Lenovo only provides job vacancy information and job descriptions . Most of the job applications are recruited through external recruitment agents and job fair. With the increasing demand of talents in recent years, Lenovo has started university recruitment fair programs as well in order to improve the efficiency in recruitment and get more talent graduates at the first place[12].

2.3Selection Process
The personnel requirement standard in Lenovo is that who are in line with the core value of the corporation and who are performance fitted to specific jobs. The selection of candidates in Lenovo is not to select the top qualities but to select those who are best-fit to the job, which has always been an emphasis in Lenovo . Moreover, Lenovo distinguish graduates and job applicants with working experience by applying different selection techniques. As for graduates, Lenovo uses a range of techniques to assess candidates‟ basic competencies, such as personality questionnaire to test the personal qualities; group testing to test the personal ability, leadership. In contrast, they emphasis more on experience rather than personality when selecting personnel from the society

2.4Selection Methods
Interview has been the dominant selection method in Lenovo, which is typically coupled with CV analysis. Along with interview, Lenovo also use other selection techniques such as group discussion and tests of job knowledge to assess some competencies of candidates. For instance, Lenovo uses a test of analyzing five different persons with different personality, where candidates rearrange these five persons in line with who are most likely to success in their work. Since there are no standard answers, candidates will have to pursue others candidates based on their assumptions and opinions. From this test, Lenovo may assess the potential leadership skills of each candidate, as well as verbal communication skills. Lenovo also use three months of probation period to inspect the fit of the employees within the organization.

3.The Effectiveness of Recruitment and Selection the effectiveness of recruitment and selection processes in an organization cannot be easily evaluated as it is difficult to measure to what extent these processes contribute to the overall organizational performance. However, it is possible to measure the effectiveness by considering an organization's satisfactory level at work, organization performance, and so on. In addition, the effectiveness of an organization's recruitment and selection can be reflected by its adoption of cost-benefit analysis[13].

3.1Satisfactory Level at work Recruitment and selection can be assessed by satisfactory level of managers to the new recruited staff and also new staff to their jobs and organization. It implies not only the new staff's fit to the job but also their fir to the organization. As a matter of fact in China, a lot of new staff leave their job shortly after they join an organization either because of disqualification to do the job or maladjustment to the organization culture. Accordingly to the report conducted by, the employee, department management team, top management and job applicants' satisfactory level in Lenovo have been surveyed. As reported, the satisfactory level in Lenovo is 3.15 out of 5, which indicates 63% of satisfactory level. However, as a leading company in China, the satisfactory level is not high enough. This is why the company has set to achieve a target of 75% satisfactory level, and one way to achieve the target is to implement more effective recruitment and selection processes.

3.2Organizational and Individual Performance
The turnover in Lenovo in 2002 was 20233 million Hong Kong dollars, which is approximately 2529 million US dollars (Lenovo Annual Report 2003). By that time, the total number of employee in Lenovo is 12376. In other words, the average sale per employee was about 200 thousands US dollars. However the number increased by 18% in 2003. Accordingly to the former CEO of Lenovo, such improvement was partly because of the introduction of semi-structured interview jointly attended by line managers and HR staff, which has significantly increased the validity of the interview as before the interview is only attended by HR staff .

3.3Cost-Benefit cost-benefit analysis is useful in analyzing the cost of recruitment and selection. As addressed, cost-benefit analysis is also practical in saving money that could be used for other purposes, such as adopting additional selection methods and trainings. An organization that conducts cost-benefit analysis normally has comparatively effective recruitment and selection processes. However, there is no cost-benefit analysis of selection process in Lenovo, which may imply to some extent the recruitment and selection processes in Lenovo is not effective. This might be because HR staff in Lenovo by this time still have weak sense of cost-effective and subsequently cost-benefit analysis has never been considered yet.

4.Recruitment and selection standards of international Lenove
Compared with the previous, international Lenove value ability instead of degree, and performance instead of qualification. International Lenove welcome all the talents who have Genuine talent and specialized skill. Specifically, the following tips are the most important. Honesty and plainness. It's the primary standard of recruitment and selection. Perseverance.The personnels in Lenove can't be afraid of failure and temptation.Once setting a goal, they must go ahead straightly and don't give up. Learning ability.The new Lenovo is facing competition from all around the world, and the IT industry is in a dramatic change and development.They must have a strong sense of crisis in the work of the new Lenovo, and actively absorb the advanced working methods and experience of the former and the people around, and humbly learn from the practices of other companies. Customer awareness. Not only to the customers, they should have a very good customer awareness to colleagues, superiors, subordinates and co-operation departments. Sense of teamwork. The new Lenovo is a well-organized, flexible operation company. All the personnels must cooperate with other personnels and teams when finishing work. Communication skills.Team-based work especially needs good communication skills,to cultivate a strong sense of communication, and master effective communication methods. Multicultural background.Now the new Lenove focus on the background of working overseas ,studying abroad, or a large TNC, which previously were quite different. In a word, the business background of the new Lenove has expanded to the whole world.In order to introduce these high-end international talents, the new Lenovo is not only cooperate with the world's leading executive search firm , also recruit talents overseas regularly.

ⅤTraining and Development
ⅤTraining and Development
1. The challenge of Training and Development of international Lenove
Lenovo’s International strategy gives the company and the employees many challenges, such as cultural conflict and integration、employees’ psychological pressure、the difficulties of human resources policy integration and so on.

2. Training of international Lenove
2.1Training Process
Lenovo's training philosophy is: for company: to enhance the positions of full competence and learning ability, to support the company's current business goals and corporate long-term development strategy; for staff: the concept of work, study and career development needs, ideas, methods and tools to enhance staff performance and core competitiveness. Continuing develop "into the mold" training.

At present, the new Lenovo’s “into the mold” is generally a closed course of four days, including associative learning of history, culture, strategy, operations, products, and development in association with company executives to talk about. Orientation will not only allow new employees understand the association in the shortest time to show the association style, passing Lenovo culture, ignite the passion to create the future.

Reserve International personnel actively
When Lenovo in the global mergers and acquisitions, it found it lacks of international talent pool. Simply to say, when Lenovo to go abroad, only to find there is not a new managers with international management capabilities, not to mention other aspects of the lack of international talent. Therefore, the human resources department of Lenovo has planned to target global recruitment, not only the introduction of cross-border talent to absorb a large number of returnees, but also from competitors to explore the talent to meet their own needs, the rapid association of international talent accumulation.

Focus on training local staff
Although Lenovo focus on international talent as recruitment key point in the past two years, but did not ignore the cultivation of local talent in China, because China and the world's people will have only local talent in China proper and timely guidance, in order to let them know what difference. Let them correctly deal with Lenovo's new changes and new requirements, a better understanding of association, trust, association, in accordance with Lenovo's new ability to model and requirements.

2.2 Training Method
Language training from the start
There are plans to put a lot of talent assignment out, not only to enhance the employees' operational capacity, but also to exercise their English proficiency. And then reach the double harvest both in business and English. Lenovo hopes according to the language training, lets the employees better integrate into the enterprise internationalization process, and through the effective communication achieve enterprise employees’ enterprise. Regularly organize cultural cocktail party, let the local staff have the opportunity to ask questions to experts and overseas colleagues in the process of internationalization in a relaxed atmosphere. In addition, through a special language training program to promote the language training of local staff, in order to enhance high-level leadership, Lenovo also launched in China in the "Top100" plan.

According to put Lenovo very successful business model and practices in the world, to motivate and train local personnel.
Lenovo thinks whether it is international advanced management method within the local association business model are worthy of the association for the promotion of international good working methods and the model output overseas, and foreign employees to share knowledge, to get all Lenovo sure.

Cultivate international talents
Internationalization began to train people. Group Senior Vice President Zhao Zhongyao and five middle managers were sent to the full-time study of the Massachusetts Institute of Technology.100 young cadres were sent to the United States, the Group will be selected each year cadres to study abroad, will choose the number of cadres to go to work overseas. [14]

2.3 Developing Process
Every Lenovo's new employee from the day into the company will begin the career design, creating a wonderful starting point. Lenovo has set up a dual career development path that the route of professional development and administration route. Two development routes for employees are to enhance competence. Each position sequence has a complete set of office the ability system requirements for the system described must meet the core competencies and consistent with the sequence of work characteristics of the professional competence requirements, each of which requirements are attached to the corresponding typical behavior description. This explained not only the future development of more employees of the clear and precise criteria for the assessment of staff capacity and direction.

Around staff capacity to enhance the ability of this goal evaluation is an important element of career development management, is also a Lenovo employees career development planning guidance and assistance.

Employees based on competency assessment results to determine career development, capacity development plan. Moreover, the company will invest a lot of energy and resources designed to accommodate the needs of various types of professionals and training system and will make full use within external resource development and choice theory, combat both excellent courses. Employees can choose a destination to participate in training according to their specific circumstances.[15]

ⅥPerformance Management
1. Introduction

In the context of a dynamic Lenovo, continuously improving performance has become a critical issue for most suppliers, manufacturers, and the related retailers to gain and sustain competitiveness. In practice, supply chain based companies (e.g., Dell, Wal-Mart, Samsung, Toyota, Lenovo, Gome, etc.) have used different performance management tools to support their supply chain strategies. Monitoring and improvement of performance of a supply chain has become an increasingly complex task. A complex performance management system includes many management processes, such as identifying measures, defining targets, planning, communication, monitoring, reporting and feedback. These processes have been embedded in most information system solutions, such as i2, SAP, Oracle EPM, etc. These system solutions measure and monitor key performance indicators (KPIs) which are crucial for optimizing supply chain performance. Lenovo just has these systems.

2. The challenges of Lenovo performance management

Improving Lenovo performance is a continuous process that requires both an analytic performance measurement system, and a mechanism to initiate steps for realizing KPI goals; herein we call the mechanism to achieve KPI goals as “KPI accomplishment”, which connects planning and execution, and builds steps for realization of performance goals into routine daily work. To measure Lenovo performance, there are a set of variables that capture the impact of actual working of Lenovo on revenues and costs of the whole system [1]. These variables as drivers of Lenovo performance are always derived from Lenovo management practices[16]. After identifying KPIs, managers have to achieve improvement in them, through continuous planning, monitoring and execution. According to the results of selected KPIs' accomplishment, managers may create current reports on KPIs, to compare multiple plans of Lenovo management. In this performance management cycle, there are many challenges, both in performance measurement, and its improvement.

3. Intricate performance measures of Lenovo
Many metrics used in Lenovo performance evaluation have been designed to measure operational performance, evaluate improved effectiveness, and examine strategic alignment of the whole Lenovo management[17]. Individual measures of Lenovo performance have usually been classified into four categories: quality , time , cost , and flexibility . Furthermore, they have also been grouped by quality and quantity, cost and non-cost, strategic/operational/tactical focus. However, since many measurement systems lacked strategy alignment, a balanced approach and systemic thinking, and they had difficulty in systematically identifying the most appropriate metrics. To address this problem, some researchers have used Balanced Scorecard (BSC) and Activity Based Costing (ABC) methods to evaluate Lenovo performance[18]. Other researchers have also proposed similar balanced frameworks, such as Performance Measurement Matrix, results-determinants framework, performance pyramid etc. From a process perspective, the Lenovo Operations Reference (SCOR) model has been developed to facilitate construction of a systematic Lenovo performance measurement and improvement tool; it has often been recognized as a systematic approach for identifying, evaluating and monitoring Lenovo performance. In the SCOR model, a balanced performance measurement system at multiple levels, covering five core Lenovo processes (i.e. Plan, Source, Make, Deliver, and Return), was developed .

However, measurement models (i.e. extended BSC and SCOR) for Lenovo performance evaluation have their limitations. First, there are too many individual measures being used in the Lenovo context. For example, Shepherd and Gunter have summarized 39, 22, 35, 28 and 8 single Lenovo performance indicators related to cost, time, quality (or reliability), flexibility and innovativeness respectively. Though these measures offer valuable information for decision-making, selecting and trading off so many measures to obtain effective and crucial improvement strategies is a difficult task for different Lenovo participants. Second, these models do not provide definite cause–effect relationships among numerous (and hierarchical) individual KPIs. Although existing models (e.g., BSC) do illustrate the cause-and-effect relationships between different goal-related KPIs[19], they are inadequate for quantitative analysis of the intricate intertwined relationships. Traditional BSC and SCOR models generally assume that KPIs are uncoupled. These approaches could describe business operations well, and serve as a good communication tool, but they are not effective in improving overall performance by accomplishing the critical KPIs. For many managers, who try to allocate resources efficiently and achieve multiple Lenovo performance goals, this becomes the bottleneck.

ⅦCompensation and Benefit
The international compensation package of Lenovo
1.The basic situation
1.1Building a perfect performance evaluation system
The HR management department develops normative job descriptions and position qualifications through scientific job analysis, which is widely used in Lenovo. This is the foundation of employees' objectives, and helps to clearly state the responsibility of employees, establish compensation and benefits systems, and carry out related policies.

1.2Establishment of an effective preservation mechanism
In order to retain talented employees, Lenovo designs a “conversion cost ” strategy and achieves a positive effect in management practices. It means that employees will reduce turnover behavior because of the “conversion cost ” when they are trying to leave the company, or when they merely have turnover intentions. It needs to fully consider the relationship of short-term, medium-term, and long-term rewards when formulating the compensation policy, especially in order to design a compensation package for special talent such as senior managers, salespersons, technical employees, and workers.

1.3The structure of Lenovo's compensation
The compensation package of Lenovo includes four components, namely Base Pay、Performance-Related Pay、Benefits and Stock Options. The compensation package of Lenovo is general CRG,which is focused on the Fairness, impartiality and openness. The Performance-Related Pay depends on the benefit of the MNEs、the benefit of the department and the performance of the staff. And the Benefits of Lenovo is very good ,in general, the level of Lenovo will be the top of the prescript criterion. For example ,the prescript criterion of the housing fund is 4%~8%,and the Lenovo will be 8%.

There is not enough information of the Base Pay ,while can learn something about the Lenovo Reward Strategy from the following paragraph.

As at March 31, 2005, the Group had a total of 9,682 employees, 9,625 of whom re employed in Chinese mainland and 57 in Hong Kong and overseas.[20]
(Long-term Incentives
Lenovo Group implements remuneration policy, bonus and share options schemes with reference to the performance of the Group and individual employees. Since 25 March 2002, the shareholders of the company approved have been adopting a new share options scheme (the 'New Option Scheme'). Details of the movement of share options of the company for the six months ended 30 September 2004.

(Performance-Related Pay
Lenovo strives to reward employees for their contributions to its financial success. To that end, the company maintains a unique bonus program wherein employees demonstrating exceptional performance may be awarded bonuses during a performance period. The value of the bonus is based on the financial performance of the business unit and the company as a whole, and on the employee's commitment to company values. Lenovo also award profit-sharing and discretionary bonuses, as appropriate, based on individual and overall company performance.

Health Cares.:Medical coverage is available for all new Lenovo employees on the first day of employment. Dependents are also covered, including an eligible spouse or same-sex domestic partner, and children. On the first day of the third month of employment, employees become eligible for Lenovo Flex, which includes medical, dental, vision, prescription, life insurance and disability insurance coverage.[21]

Vacations.:Lenovo has a very generous paid vacation policy that is based on years of service. Seven days of paid vacation are available to new employees hired beten January 1 and September 1 in the year of hire. As many as 28 days of paid time off are available after 15 years.[22]

2.The challenge faced with Lenovo in the international compensation package
Procurement was a big priority for both sides. Everyone realized that while other aspects of the new business might overlap for a while, the amount of money at stake meant that purchasing needed to be the first team fully integrated by the new Lenovo. But the two original human resource department, IBM's and Lenovo's, requite different. Everything was different, from processes to IT to management systems, key performance indicators, and cultures. Additionally, about three months before the deal was to close, Lenovo met with the board and received an aggressive target: it had about 18 months to bank $150 million in savings from direct materials and to achieve $300 million in annualized run-rate savings.

So the challenge was to do two things in parallel: to really understand the human resource costs involved for each side and to identify savings opportunities that could work on immediately after the deal closed while also successfully integrating the purchasing team, getting the process management right, and so on. Additionally, it was tasked with creating a general-procurement unit to handle spending in nonproduction-related areas, such as airfare and office supplies. In a word, the challenge faced with Lenovo lies in the difference with IBM. And the difference is as follows:
| |Lenovo |IBM |
|the principle of compensation |Performance&ability/encouragement&Punishment |Performance&ability/encouragement culture |
|the level |Domestic first-class/try to catch up with the |World-class |
| |international level | |
|the structure |Mid-pay/performance bonuses and Year-end bonuses take|Emphasize Total compensation/Fixed Pay take a |
| |a large proportion/emphasize Long-term incentive and |large proportion/also has Variable pay and |
| |Share options |Long-term incentive |
|the approach |Closely contacted with |The pay incentive differ with year and |
| |performance/performance-related pay differ from month|performance bonuses differ in cycle |
| |to month | |
|the comprehensive |Except for the State regulations,there are |Comprehensive and systematic benefit |
| |pension,medical insurance,abord leave in supple |system/Supplemental benefits Diversified |

3.The strategy of Lenovo in face with the international compensation package challenge
The strategy of Lenovo in face with the international challenge is trying to realize integration of staff salaries.

There are parts of the package:one is interim measures,which is used in the special period of M & A integration; another is the integration of staff salaries,which is used in the future. There is a transitional period in the two period.

The compensation plan of Lenovo is as follows:to the original staff of Lenovo,the company intends to increase the proportion of fixed salary and reduce the proportion of variable pay;and to the original staff of IBM,the company wants to reduce the proportion of fixed salary and increase the proportion of variable pay,and in the same time increase the whole income of Lenovo staff step by step. Lenovo tries to change the 3P(namely Pay for position,Pay for person,Pay for performance ) into PTheree,namely Priority,Performance and Pay.Lenovo wants to realize integration of staff salaries in that way.

Lenovo chose their own people to manage this challenge, people with credibility within the organization could have gone out and hired experts, but Lenovo think having insider experience proved to be very important. At the same time, wanted to overcome any potential sensitivity by demonstrating the facts about how large the savings opportunities are in these nonproduction areas. So their general approach was to go after commodities that are somewhat sensitive—airfare, for example—but where a lot of money was at stake, so could demonstrate the savings quickly and get a consensus, with their executive team, to fully support what are doing.

There was one moment fairly early on that stands out. The team was on the phone with a senior executive, and everyone was really getting into issues such as changing from this or that airline, and there was a sense of caution. Are we going to do this or that airline, and there was a sense of caution. Are we going to do this or not? Will we lose support if we push too hard? And the executive said, “Let’s settle this; I’m calling the HR head.” And less than an hour later, the executive called back with the HR head's unwavering approval.And less than an hour later, the executive called back with the HR head's unwavering approval. Such support was crucial—particularly since in general procurement, one of your key levers is compliance. The biggest source of leakage is people getting around the rules and doing their own thing. We found that reinforcing travel policies represented a sizable opportunity-perhaps one-third of the savings.

[1]Company history, (USA). Retrieved 2009-10-22.
[3]Lenovo to Acquire Mobile Handset Business". Lenovo Group.. 2009-11-27.
[4]Lenovo bets on app projects to boost sales. South China Morning Post. 24 November 2010.
[5]UPDATE: NEC Forms PC Joint Venture With Lenovo, Posts Wider Loss". The Wall Street Journal. 2011-01-27.
[6]David Ranii (2 February 2011). "With NEC venture, Lenovo eyes Japan". Cary News (North Carolina).
[7]CHRIS V. NICHOLSON (2 June 2011). "Lenovo to Buy German PC Maker". The New York Times. >
[8]AI DiSi. Corporate Life’s Cycle[M]. Beijing: Press of China Social Sciences,1997:297(In Chinese)
[9]Huang Hetao Tian Limin. The Case Analyze of Enterprise Culture[M]. Beijing: Press of China labor social security, 2008:159(In Chinese)
[10]Wallach, E.J..Individuals and Organizations: the Cultural Match. Training and Development Journal(OTACIT-33), Washington, DC: Office and Technology Assessment[C],1983:29-36
[11] (2006), "Lenovo Campus Recruitment", Retrieved at 13/06/2006
[12] (2006), "Lenovo Campus Recruitment", Retrieved at 13/06/2006
[13]Hui’an CHEN(2006),"Recruitment and Selection in China: an application to the case of Lenovo",MA dissertation
[14]Case studies, “Case Studies of Chinese Companies’ International Incorporation of HR Function”
[15]Industrial & Science Tribune (2008), “Lenovo Group Human Resources Management Model and Its Implications”
[16]K.Ramdas,R.E.Spekman,Chain or shackles: understanding what drives supply-chain performance,Interfaces, 30 (4) (2000), pp. 3–21
[17][23]B.M. Beamon,Measuring supply chain performance,International Journal of Operations & Production Management, 19 (3) (1999), pp. 275–292
[18]M.J. Liberatore, T. Miller,A framework for integrating activity-based costing and the balanced scorecard into the logistics strategy development and monitoring process,Journal of Business Logistics, 19 (2) (1998), pp. 131–154
[19]M. Martinsons, R. Davison, D. Tse,The balanced scorecard: a foundation for the strategic management of information systems,Decision Support Systems, 25 (1) (1999), pp. 71–88
[20]Druker, J., and White, G. (2005). Compensation and benefits', Employee Relations. Emerald Group Publishing Limited, 19(2), p.4.
[21]Lewis, P. (2005). A new reward strategy. Personnel Review. Emerald Group Publishing Limited, 29(1), p.23.
[22]Welsh, P. B. (2005). What motivates employees according to over 40 years of motivation surveys', International Journal of Manpower. Emerald Group Publishing Limited, 18(3), pp.263-280.

[1] Company history, (USA). Retrieved 2009-10-22.
[3] Lenovo to Acquire Mobile Handset Business". Lenovo Group.. 2009-11-27.
[4] Lenovo bets on app projects to boost sales. South China Morning Post. 24 November 2010.
[5] UPDATE: NEC Forms PC Joint Venture With Lenovo, Posts Wider Loss". The Wall Street Journal. 2011-01-27.
[6] David Ranii (2 February 2011). "With NEC venture, Lenovo eyes Japan". Cary News (North Carolina).
[7] CHRIS V. NICHOLSON (2 June 2011). "Lenovo to Buy German PC Maker". The New York Times. >
[8] AI DiSi. Corporate Life’s Cycle[M]. Beijing: Press of China Social Sciences,1997:297(In Chinese)
[9] Huang Hetao Tian Limin. The Case Analyze of Enterprise Culture[M]. Beijing: Press of China labor social security, 2008:159(In Chinese)
[10] Wallach, E.J..Individuals and Organizations: the Cultural Match. Training and Development Journal(OTACIT-33), Washington, DC: Office and Technology Assessment[C],1983:29-36
[11] (2006), "Lenovo Campus Recruitment", Retrieved at 13/06/2006

[12] (2006), "Lenovo Campus Recruitment", Retrieved at 13/06/2006
[13] Hui’an CHEN(2006),"Recruitment and Selection in China: an application to the case of Lenovo",MA dissertation
[14] Case studies, “Case Studies of Chinese Companies’ International Incorporation of HR Function”
[15] Industrial & Science Tribune (2008), “Lenovo Group Human Resources Management Model and Its Implications”
[16]K.Ramdas,R.E.Spekman,Chain or shackles: understanding what drives supply-chain performance,Interfaces, 30 (4) (2000), pp. 3–21
[17] B.M. Beamon,Measuring supply chain performance,International Journal of Operations & Production Management, 19 (3) (1999), pp. 275–292
[18] M.J. Liberatore, T. Miller,A framework for integrating activity-based costing and the balanced scorecard into the logistics strategy development and monitoring process,Journal of Business Logistics, 19 (2) (1998), pp. 131–154
[19] M. Martinsons, R. Davison, D. Tse,The balanced scorecard: a foundation for the strategic management of information systems,Decision Support Systems, 25 (1) (1999), pp. 71–88
[20] Druker, J., and White, G. (2005). Compensation and benefits', Employee Relations. Emerald Group Publishing Limited, 19(2), p.4.
[21] Lewis, P. (2005). A new reward strategy. Personnel Review. Emerald Group Publishing Limited, 29(1), p.23.
[22] Welsh, P. B. (2005). What motivates employees according to over 40 years of motivation surveys', International Journal of Manpower. Emerald Group Publishing Limited, 18(3), pp.263-280.

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