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NiQ Lai, chief talent and financial officer and co-owner at Hong Kong Broadband Network Limited (HKBN) demonstrates how the bank practices the art of co-ownership with its employees to ensure they are consistently engaged and passionate about their jobs.
VITAL STATS: “Don’t expect to get rich working for an entrepreneur, rather expect to do well with the entrepreneur”: With this thought in mind, NiQ Lai left his investment banking job at Credit Suisse, took an 80% pay cut, and sold his home to purchase a 2% stake in City Telecom (predecessor to HKBN) in 2004.
Coming from a non-HR background, how did you adjust to the role of chief talent officer at HKBN?
I was put on the spot when the CEO told me the seasoned HR professional that we had hired was a no-show and I was tasked to act as the interim head of HR. That was 10 years ago and we’re still counting today.
Coming in fresh to HR, I had a lot to learn, but at the same time not coming from an HR background meant that I had no legacy thinking and was able to bring a different perspective into how talent engagement can be done. I am able to challenge the system and think out of the box – as I had no box.
Legacy HR has a tendency to be rule-based, but I wanted talent engagement to align with business goals instead of rules – that is, more alignment and less rules.
For example, it is common HR policy to penalise staff for showing up to work late. However, I wanted our talent to want to come to work on time because they are passionate about what they we do.
Most legacy HR policies penalise 99% of the good people just to prevent the 1% from abusing the system; at HKBN, we prefer less rules and just fire those abusers instead.
How has the co-ownership model transformed the company?
I can explain it with a simple metaphor of the difference between renting a home and owning a home.
When you rent a temporary holiday home, the landlord will put up lots of rules such as please take off your shoes when indoors, no smoking inside the house, etc, but many renters break these rules anyway because it is not their property. This is the mentality of most working-class individuals.
When you are one of our co-owners, the company is your home. I don’t have to make up rules for our talent as they automatically will do everything they can to benefit the company. Think about it, you don’t have rules stuck on the walls in the home that you own.
True alignment via ownership must be by proactive choice. Our talent must opt in to become co-owners and commit their family savings to do so.
Once they become co-owners, they then have the opportunity to do well if the company does well, but they suffer if the company suffers; this is what we mean by true alignment of interest.
Initially, at our management buy out in 2012, the co-ownership plan only invited the very top 10 executives to join, but CEO William Yeung and I wanted to share the wealth creation opportunity and invited all manager-grade colleagues to become co-owners.
As such, we invited 90 managers who invested HK$180 million to become co-owners.
On average, this represented about two years of salary for each manager, which assuming a 20% savings rate, equates to 10 years of family savings – it was an enormous commitment. With this much vested interest in the company, our performance drastically changed overnight as if a massive spotlight had been turned on our operational efficiency darkness.
During the initial public offering (IPO) in 2015, just two years and 10 months after the management buy out, the value of the co-owners shares increased by about six times to around HK$1.2 billion shared by the 90 families.
After the IPO, a new co-ownership Plan II was introduced. This time, we expanded the pool and invited around 400 supervisors to participate, of which over 270 took up the invitation. I think it is really cool to tell people our company has so many co-owners.
Legacy HR has a tendency to be rule-based, but I wanted talent engagement to align with business goals instead of rules.
The management trainee role at HKBN is highly competitive. How do you select your future leaders?
Our selection process for elite young talent is one of the most demanding, but also rewarding in Hong Kong. In the selection process of our possible CTO of the future last year, we hired seven out of 1200 applicants. The starting salary is HK$24,000, pretty good for a first job out of university, as we intentionally set this at around twice the industry norm to attract the very best.
Knowing that in business, failure is inevitable and that strong leaders need to know how to react under adversity, we put our candidates through impossible tasks.
We knew they will fail, and we wanted to see their reaction to failure.
We took them to Ocean Park, gave them a pen and a ruler and asked them to measure the height of a ride. It is something that cannot be done. I want to see them fail and how they react when they are out of their comfort zone.
Besides strong leadership and communication, rising up to the challenge during adversity is also a key quality we look for in our talent. We will invest a huge amount in senior mentorship to develop these elite graduate hires, which is why we wanted to ensure we had the best raw talent to work with.
A quail is a meek bird typically eaten by other birds. We look for talent that prefer to be eagles who feed on quails – which is why our boardroom is named “Eagle’s Nest”.
What makes HKBN’s HR policies and philosophies unique?
We don’t have HR, we only practise talent engagement. We don’t have staff, we only have talent. We will invest hugely in our talent to unleash their full potential, to achieve more as a team than what we can achieve as individuals.
It is common practice to require HR to explain to the CFO the ROI of their plan. The CFO will then block it if the numbers don’t add up, which is often the case when it comes to investing in talent development.
99% of how we evaluate things at HKBN is standard MBA methodology, but 1% of what we do is because we think it is the right thing to do. Funny how other companies spend 99% talking about the 1% of things that we do differently.
For example, every year we invest HK$2 million on our annual experiential trip to build our management teamwork. In the past few years, we have been to the US, South Africa, Taiwan as a team building activity for typically around 80 executives at a time.
If you ask me to quantify the ROI on these trips on a excel spread sheet, I can’t do it. Instead, I believe if it is able to help the company, let’s do it, if not then don’t do it. At the end of the day, businesses are run by people, not spread sheets.
HK$2 million seems like a lot of money, but it is actually less than 0.1% of our annual HK$2.3 billion revenue base, so if you think a stronger team can improve revenue by more than 0.1%, than we should go on the trip, but if you don’t, than we shouldn’t go on the trip.
Another investment we have made in our talent is Next Station: University, a programme that helps mature-aged HKBN talent pursue their dreams of achieving a bachelor’s degree.
Most of our 2500 colleagues are non-university degree holders, and had missed their chance the first time around. NSU is a programme that gives our colleagues a second chance at their dream of getting a university degree later in life, typically in their mid 30s to 40s.
When we started the programme, we really had no idea what the outcome would be, and certainly, we had no idea on the ROI, but it was obvious this was the right thing to do.
Over the past five years, we have seen amazing good come from this programme that has spilled beyond the students involved. We have seen how teams have stepped up to allow the students to manage their schedules. We have seen how the students themselves have stepped up to overcome personal and career challenges, and in turn inspire the rest of our whole company of 2,900-plus talent.
I believe by doing the right thing, the right results will come and I hope other organisations will follow us after seeing our success.
We don’t have HR, we only practise talent engagement. We don’t have staff, we only have talent.
HKBN pitches a “life-work priority” to employees. How does that work?
There is no work-life balance at HKBN, “life” always comes before “work” which is why we run with “life-work priority”.
To begin with, we shortened office working hours from 9am-6pm to 9am-5pm without lowering pay. 5pm is when we ask our talent to leave the office and 3pm is when they leave for our once-per-month early off Friday.
We are serious about letting our talent leave on time; we discourage meetings that may run past 5pm and prohibit meetings in the afternoon on early off Fridays so that people can leave on time. We execute on the shorter work day policy rather than just display it.
We want our talent to work smart, to be productive, but not to work long hours; we work to live, not live to work.
Most companies offer compassionate leave when employees have to deal with a death in the family, but we prefer to provide family care leave so that you can celebrate with your family when they are still healthy.
HKBNers can take a day off to celebrate their mother’s birthday, for example, help their children study for a big exam, etc; we don’t care what you do as we trust our colleagues to make the most of the leave.
We look for talent that prefer to be eagles who feed on quails, which is why our boardroom is named “Eagle’s Nest”.
How would you describe the culture of HKBN?
It is very distinct. We want you to either love us or hate us, but don’t feel indifferent towards us. There is no right or wrong, that is, it is like saying we like the colour blue, but that is our colour, and if you don’t like it, don’t join us.
We have a policy to terminate the bottom 5% of our talent salary base every year. Some may think this is too harsh, but I think it is the right thing to do because the bottom 5% slows down our entire ship by acting as an anchor and without this anchor, we actually move faster. We consider ourselves to be an elite sports team with a strong common desire to win, rather than a family with unconditional love.
We have 1200 talent in Hong Kong, out of millions of workers in the city; that is, we only need a small elite group to join us in our crusade to “Make our Hong Kong a better place to live”.
We will continue to focus in Hong Kong only, where the goal is to become the city’s largest broadband provider by 2018.