Home News Alibaba Initiates Radical Revamp of Employee Ranking System amid Ongoing Restructuring Efforts

Alibaba Initiates Radical Revamp of Employee Ranking System amid Ongoing Restructuring Efforts

Alibaba Initiates Radical Revamp of Employee Ranking System amid Ongoing Restructuring Efforts
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Alibaba Group Holding, which is restructuring its US$257 billion empire, is looking to overhaul its internal employee ranking system – widely copied by Chinese tech start-ups – by adding more layers, prolonging the promotion timeline of mid-level personnel and removing the P9 and above categories for senior roles, according to multiple sources.

A job ranked P9 within Alibaba, or other mainland technology companies with a different code but on the same compensation level, has become the career target for millions of young Chinese professionals in the industry. Alibaba, which owns the South China Morning Post, does not disclose how many of its employees are ranked P9 and above, but two sources in the firm said that number made up 1 to 2 per cent of its total workforce.

A P9-level employee at Alibaba is typically referred to as a “senior expert”, with an annual salary package plus stock options that could reach 3 million yuan (US$418,000) – a high figure in a country where the per capital average income in 2022 was 36,883 yuan.

Plans to remove that ranking and to implement other changes in the Chinese tech conglomerate’s employee grading system could send shock waves across other organisations in its industry, which Beijing sees as essential to creating jobs and fuelling the country’s economic growth.

The planned overhaul in employee rankings is expected to motivate senior employees to continue contributing, instead of resting on their laurels, according to Max Xiao Mafeng, co-founder and partner at recruitment agency TTC Consultancy. He said the changes could provide more incentives for lower-ranked employees to get promoted.

Employees at the Taobao Tmall Commerce Group, which will the only one of six business units to remain wholly owned by Hangzhou-based Alibaba after the restructuring, have widely discussed the plans to remove the organisation’s P-ranking system, according to sources.

The group, which is responsible for Alibaba’s domestic e-commerce platforms, said in a statement that it has not yet finalised such reform, a plan that has been leaked to various local media outlets and fanned speculation.

Its previous ranking for entry to mid-level employees will be replaced by grades of 14 to 28, a total of 15 layers, according to sources. Employees that would rank above P8 under the existing system would be appointed directly by the company without any designated level.

The pyramidlike employee grading system – Alibaba founder Jack Ma was once ensconced at the top with a P14 ranking – has become more rigid as the e-commerce giant’s business growth has slowed, according to sources.

As such, the planned new employee structure would make the promotion timeline longer for people between the existing P5, P6 and P7 rankings, according to a source familiar with the matter. At present, it takes about a year for a P5 employee to get promoted to P6.

The source said the planned new ranking system has more layers, which means an employee would need to hit better performance marks to quickly climb up the organisational ladder during the same period.

The planned longer promotion period, according to another source, would mean fewer people would get stuck in the existing P7 level before they reach higher levels in the organisation. Still, this would make it harder for employees to rise through the ranks, the source said.

Alibaba has been undergoing rapid internal changes since announcing in March a sweeping restructuring that would create six independently run entities, each free to raise funds through an initial public offering. The move is meant to inject new competitive pep into the company.

Daniel Zhang Yong will step down as Alibaba’s chairman and chief executive on September 10 to focus on Alibaba Cloud, the group’s digital technology and intelligence backbone.

Alibaba co-founder Joseph Tsai, currently executive vice-chairman of the group, last month was named to replace Zhang as chairman. Eddie Wu Yongming, chairman of Taobao Tmall Commerce Group, will become the new chief executive.