Importance of Organizational Culture – Case study on Alibaba.com – 3EA
“Alibaba has a first-mover advantage that makes it very hard for competitors to chip away at their lead in the market” – Dick Wei, Analyst, J.P. Morgan Securities Inc. in 2007
Alibaba.com is one of the leading B2B e-Commerce companies in China as it connects small and medium-sized entrepreneurs around the world. During its rapid growth, the quality of its services and achieving profitability remain extreme challenges. For Alibaba, the key factor behind their success is evolvement of international human resource policies all these years. Alibaba is renowned for its strong brand, providing customers with outstanding value and a superior shopping experience, massive sales volume and realizing economies of scale. The Group focused on some key areas for the better performance and strategic enhancement of the organization while going global. The main focus areas are as follows:
1. Defining Organizational Mission: Alibaba Group’s defined its mission as to make it easy to do business anywhere by operating leading online and mobile marketplaces in retail and wholesale trade, as well as cloud computing and other services. They provide technology and services to enable consumers and merchants to conduct e-commerce in their ecosystem. The Alibaba culture is about championing small businesses. They operate an ecosystem where all contributors – consumers, merchants, third-party service providers have an opportunity to prosper.
2. Defining Organizational Values: Alibaba Group’s defined its values as:
a. Customer First. The interests of community of buyers and sellers is first priority for Alibaba Group.
b. Teamwork. Alibaba Group believes teamwork enables ordinary people to achieve extraordinary things.
c. Embrace Change. In this fast-changing world, Alibaba Group must be flexible, innovative and ready to adapt to new business conditions in order to survive.
d. Integrity. Alibaba Group expects our people to uphold the highest standards of honesty and to deliver on their commitments.
e. Passion. Alibaba Group expects their people to approach everything with fire in their belly and never give up on doing what they believe is right.
f. Commitment. Employees who demonstrate perseverance and excellence are richly rewarded. Nothing should be taken lightly as Alibaba Group encourages their people to “work happily, and live seriously.”
3. Training and Development: Alibaba understood human resource is one of the most important factor for the organization while going globally or operating globally. The employees were given proper training and developed in an effective manner that will help the organization to grow their business in the new market. The employees were made to understand the language preference, cultural diversity, geographical diversity, demographic diversity and other phenomenon to make an effective move to any particular country.
4. Strategic Human Resource Management: While operating globally Alibaba Group identified that there is a great need of strategic human resource management in the organization. Alibaba.com also worked upon their strategic human resource team to develop their team in a strategic manner keeping all the diversity and challenge in their mind.
5. Technological advancement: Technology is essential part for the ecommerce and gives a prime support to the expansion of the ecommerce business. Alibaba.com should adopted updated and effective technologies to make their portal more human friendly and safe to use.
6. Team Synergy: They also concentrated on the team synergy that will help the organization to gain competitive advantage and sustainable development in the new marketplace for the long run of the business. It also helped the organization to cut the competition in the market.
7. Development of IHR policy: Regardless of the corporate business strategy unique to each company that will drive the specifics of its IHR policy, Alibaba Group’s included certain objectives that any effective IHR policy should aim to accomplish. The policy attracted and motivated employees to accept international assignments. To meet these objectives, Alibaba Group ensured proper functioning of its internal or external systems or programs functioning to handle the following six areas.
a. Candidate identification, assessment and selection: In addition to the required technical and business skills, key traits to consider include: cultural sensitivity, interpersonal skills and flexibility.
b. Cost projections: As the average cost of sending an expat family on an overseas assignment is between three and five times the employee’s pre-departure salary, quantifying total costs for a universal assignment is essential in the making of financial arrangements.
c. Assignment letters: Document and formally communicate the assignee’s specific job requirements and associated pay in an assignment letter.
d. Compensation, benefits and tax programs: Identify the compensation, benefits and tax approach that meets company objectives. Some common approaches to pay include: home balance sheet, destination-based, net-to-net, flexible and lump sum. Tax equalization or tax protection also may be incorporated.
e. Relocation assistance: Assist the assignee with disposition or management of home and automobiles, shipment and storage of household goods, visas/work permits and pre-assignment visits.
f. Family support: Provide cultural orientation, language training, spousal support, education assistance, home leave and emergency provisions.
Due to intrinsic complexities of Chinese culture, their business practices remain deprived. By observing a successful company like Alibaba, it might imply that although China has strict political administration, it might have a rich source of strategic ideas for other businesses to learn from. Alibaba’s recent economic success is partially accredited to the adoption of Western style organizational and management practices. The factors such as the level of collectivism and having a long-term oriented culture remain prominent factors in forming the culture aspects of Alibaba. The Group’s focus on organizational culture by using cultural analytical tools created by leading anthropologists such as Hofstede, has uncovered the basis of what the contributing factors have been to the enormous success.
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Article by: HR Advisory, 3EA