Broadband provider’s co-ownership model has “supercharged” employee engagement

Author: Liana Cafolla | Date: 9 Nov 2016

Classified Post HR Conference 2016: Throwing out the rule book has paid off for HKBN

At Hong Kong Broadband Network (HKBN), rules are optional. In fact, they’re barely tolerated, explains Niq Lai, its chief talent and financial officer. Fewer rules mean more room for innovation, he says. Rules just box people in.
 
“We believe in Iiving outside the box, rather than within the box”, said the casually dressed former investment banker at the Classified Post HR Conference in Hong Kong.
 
HKBN has done a lot of things differently since launching onto the telecoms scene in 1999, with the stated aim of making the city a better place to live by offering broadband services at an affordable price. In the process, HKBN took on the long-entrenched market leader and has made deep inroads into its customer base. It is now has about 800,000 customers and is Hong Kong’s second-biggest fixed line residential broadband operator, with plans to expand into the mobile market.
 
The organisation began as a start-up by two cousins who launched the business with HK$1 million (about US$780,000), raised from friends and family. Now, it’s listed on the Hong Kong stock exchange and is worth an estimated HK$9 billion.
 
Lai says the growth is due to the organisation’s switch to a co-ownership model, which it calls a “common shareholding scheme”. Ownership of the company was expanded from ten people to 100 by inviting 90 top 100 executives to buy shares to the value of 10 years’ of their savings. “We offered the top executives the chance to co-invest in the company and 87 per cent said yes,” he said. The company now has more than 340 shareholding managers and a total of 3,000 employees.
 
Lai said the culture of HKBN became supercharged overnight after the buy-in and has remained so. “We changed the rules of the game. We move much faster, we move much more accurately than the incumbent. We are by far the most profitable carrier in town. We work less hours, we pay our people better.”
 
He likens the change to the difference between owning a home and renting. “You treat it as something that you care about. If you own the company, you will do the right thing because it’s the right thing to do.”
 
The co-ownership culture does away with the need for a rules-based organisation, he says. “If you think about it, HR rules are designed for the one percent of people who cheat,” with the effect of stifling the other 99 per cent who don’t.
 
Other innovations in the management style include encouraging employees to be headhunted, with special leave to allow employees time to attend interviews at other organisations.
 
“We want to be the most head-hunted company,” explained Lai. “We want them to decide to stay because they want to stay, not because they can’t get another job.”
 
Large bonuses are paid to top performers, with a two-month bonus paid out last year, while the bottom 10 per cent of performers get nothing, and the bottom five per cent get fired. It’s a tough model, which some may consider counter-productive, but it produces the high-performance culture the company makes no apologies for seeking to maintain, according to Lai.
 
“That’s how we move the entire bell-curve to the right, towards high performance,” he said.