As China's software giants steal each other's territory across the Internet, the war for talent has become a major risk for their businesses.
Luckily, recruiting and retaining tech talent doesn't always have to be a battle. If done right, employees can actually be the company's competitive advantage, and the reason for market-beating returns. Here's one tech giant in China that's beating the rest.
Is Baidu the "Best Company To Work For" in China?
In its annual report, Baidu (NASDAQ:BIDU) says it's concerned about its ability to hire, motivate, and retain skilled workers as Internet competition heats up. In reality, Baidu doesn't seem like it has anything to worry about: Year-to-date, Baidu has returned 64% -- crushing the S&P 500 by almost 40 percentage points.
Last year, Baidu ranked at the top of China's 50 best companies to work for, according to ChinaHR.com. After surveying 100,000 employees and university students, the website found that Baidu was the best software Internet company and No. 3 overall. That's seventeen places ahead of the next U.S.-listed Internet competitor, SINA (NASDAQ:SINA) -- which ranked at No. 20.
You see similar results when you analyze Glassdoor.com's ratings, which summarizes compensation, culture, career opportunities, senior management, and work/life balance reviews into a five-star system.
Now, these rankings aren't perfect -- especially given that Sohu and Qihoo have only a handful of reviewers. But consider that, according to Businessweek, Glassdoor's technology and content reviewing team screens the website for quality. In fact, 15-20% of the reviews submitted are actually rejected.
With this in mind, Glassdoor can provide a glimpse into China's top tech companies. As seen above, Baidu beats out SINA, as well as three other Chinese tech companies -- corroborating ChinaHR.com's ratings. But that's only the beginning of the story.
Digging deeper into culture and management
On the surface, you may find it difficult to understand why there's such a discrepancy in the rankings. Both Baidu and SINA offer similar amenities, including modern fitness centers and nap lounges. In fact, Glassdoor shows that Baidu and SINA are comparable on most fronts. The one area that Baidu seems to handily beat out SINA in is culture and values -- by almost 20 percentage points.
Analyzing each company's management teams, the difference in culture rankings seem to make sense. Since management often sets the tone for a company's culture (and more), some, like General Motor's Bob Lutz, argue that software companies should be run by "software guys."
So, you can see Baidu co-founder and CEO Robin Li as a huge plus. Having worked as an engineer in Silicon Valley, Li has imported that culture to Baidu -- the company has a very flat organization, where "he who hath the greatest tech prowess hath the greatest say." Meanwhile, the SINA CEO, Charles Chao, holds a CPA and degrees in journalism, but doesn't seem to have any software skills -- so, you could argue that he might lack the technical foresight needed to run SINA.
Of course, being an engineer doesn't necessarily mean you know how to create a great culture. Just look at Sohu. Three directors and Sohu founder and CEO Charles Zhang hold Ph.Ds, all in technical fields. While the CEO's education no doubt helped Zhang start the first Chinese Internet company to receive funding from venture capitalists, Glassdoor reviewers gave the company a below-average rating of 2.4 stars.
Qihoo 360 CEO Zhou Hongyi hammers home the point. According to a former employee via Tech In Asia:
There are several dozen people who have followed Zhou for 8 to 10 years. They don't necessarily like Zhou, but they've become accustomed to his style and are well compensated with stock options...The old [Qihoo] 360 team behaves like pirates; they resent each other, but they work together for hopes of stock options and out of fear of the alpha-wolf leader...every time when Zhou cast himself on a project, the team members were all nervous. Teams at Qihoo 360 work under constant fear.
The one Qihoo reviewer on Glassdoor corroborated the sentiments. While he praised the company for its "amazing engineers" and focus on customers, Qihoo seems to randomize teams and give them little autonomy.
Is Baidu the "Best Company To Invest In"?
While Baidu may be the best company to work for in China, that doesn't mean it's the best company for you to invest in right now. Sure, the rankings and anecdotes speak well of Baidu, but employee satisfaction is just one of many fundamental factors you need to consider when investing.
Fool contributor Kevin Chen owns shares of Baidu. The Motley Fool recommends Baidu, SINA, and Sohu.com. The Motley Fool owns shares of Baidu and SINA. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.