Why Alibaba Once Fired Two Employees for Having Insanely Good Sales
Jack Ma, founder of the giant Chinese e-commerce site Alibaba, once faced the tough decision of having to fire his top two salespeople who accounted for 60% of his company’s sales.
Today, the 51-year-old self-made billionaire has a net worth of $23.2 billion thanks to his e-commerce platform. He credits his success to maintaining integrity in his business practices and being transparent with his customers, even if it meant losing money at the time.
According to Tech In Asia, Ma founded the site nearly 17 years ago in 1999, but faced obstacles on his way to building an empire. In 2002, the company set a goal of making a dollar in profit. Alibaba was a losing business and would have disintegrated if they didn’t reach that goal of making one dollar.
At the time, the site offered web design services, but had to resort to offering bribes to earn clients. During a speech to the Honour International Symposium in Singapore, Ma said:
“We understood that if we offered bribes, we could survive. But if we didn’t, our company would likely die. We met until 4pm and finally decided: we will never offer bribes. We would rather close down the company than operate without integrity.”
By the end of 2002, the company had survived to live another year. However, Ma had learned during the year-end review that two company employees, who made up 60% of the entire group’s sales, were responsible for paying off clients. Ma explained:
“If we fire them immediately, the company will not have profit. If we do not kick these employees out, then what does this signify about us? It would imply that our words are empty. So we finally decided to let these two employees go.”
Alibaba struggled in its early years, but Ma maintains it was integrity that kept it going. He said:
“When Alibaba was founded, we were in a very difficult situation. We had nothing. Nobody believed in what we did. Everyone said we were lunatics or cheats.”
Alibaba began issuing annual fees to Chinese companies who had overseas orders, but after a year, their profits had not exceed the cost of the fees. Instead of prioritizing money and profit, Ma focused on honesty and transparency with his customers. According to the billionaire, that decision converted people into long-term clients.
“Our staff felt heartbroken and felt like they’ve let their clients down. During the end-of-year visit, the staff spoke to them with honesty: ‘ecommerce will have a great future, but the results may not be instant. Perhaps you can get a refund and not sign up next year.’”
Their honesty elicited a positive response from clients who understood that traction in ecommerce required time to build. Ma continued with his “no bribe” conduct as his company grew. The chairman strictly enforced the rule and prohibited Alibaba employees from accepting or offering bribes.
“Our employees are not allowed to accept free car rides or meals. Small gifts, even a piece of candy, are sent back. If not, the employee’s value score will be very low, and he or she could even be subject to penalties.”
Ma’s integrity extends far beyond bribery too. The chairman once dismissed a sales trainer for teaching questionable practices. He said:
“The training instructor was speaking about how to sell hair combs to monks. After five minutes, I got extremely angry and expelled the instructor. I thought the instructor was a cheat. Monks do not need combs in the first place.”
It’s not difficult to see why Ma is a leader in the industry. To him, money isn’t everything:
“I’ve always believed that a good director of finance would not make a good chairman because a good financial director always thinks about money. People that have money fully occupying their minds have difficulties in doing good things and have difficulty being good friends.”
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