The Qianmen roast duck restaurant reported an exceptional achievement of a net profit of about 3 million yuan ($454,545) in 2015. (Photo : YouTube)
The Qianmen roast duck restaurant, a branch of Sijiminfu with just 90 square meters of floor space in downtown Beijing, reported an exceptional achievement of a net profit of about 3 million yuan ($454,545) in 2015.
According to Sina English, the restaurant's secret for success does not lie in the spices nor cooking techniques, but a unique management principle that implies key employees included in a profit-sharing program.
The same publication reported that the dividend-sharing mechanism sees employees with management positions part with a share of the profits according to their performance and investment, giving the access to fiscal benefits that were initially set aside for major shareholders only. Such employees share 20 percent of the profits within the annual target, in addition to 60 percent of the profits beyond the annual target.
China Enterprise Reform and Development Society deputy head Zhou Fangsheng said, "The practice of dividend sharing could help the ongoing state-owned enterprise (SOE) reform drive."
SOE reform has not yet achieved its full potential because of systematic issues, conflicts of interest, and other problems like property ownership and management style.
Zhou added that dividend sharing might be exactly what SOE reform requires. The program could enhance performance and boost profits without denting country assets or shifting property ownership.
Conventionally, dividends are shared between shareholders based on their investment, a system Zhou warned caused wealth gaps. He pointed out that allocation of profits based on investment and performance is much fairer.
The system is not new when it comes to China as a country. Over 300 years back in history, a private bank in Shanxi Province effectively put in place a similar practice to manage its bad-performing loans. Therefore, such an arrangement will serve to clean up corruption in SOEs.
Zhang Qiang, a Sijiminfu chef, asked, "Who would steal or take kickbacks from their own business?"
Similarly, Guo Fansheng, board chair of Hc360.com, a leading B2B e-commerce platform, established this program over 20 years ago, with stock benefits causing an increase in profit each year.
Guo said: "You have to establish a mechanism that gives employees a sense of ownership. Motivation is the key."
