Yongye Group: Trust‐Based Management

Title – Yongye Group: trust‐based management. Subject area – Leadership. Study level/applicability – The case is suitable for MBA, Executive level courses. Case overview – Yongye Group is a biotechnological enterprise in Inner Mongolia, China. In China, people lack trust in economic transactions due to the transitional state of the economy, especially regarding food safety. To respond to this situation, Wu Zishen, the chairman of the Board of Directors of Yongye Group, was determined to build trust among employees, distributors, farmers, and consumers towards the company. To this end, he started using a creative incentive system with employees and stakeholders: the pay‐before‐performance incentive system. According to this system, the reward is delivered in advance, contrary to be paid after the fulfillment of the task. This practice is meant to transform employees' work attitude from a passive “being told to work” to a more proactive “I want to work” mentality. When such an incentive system is practiced with customers and external distributors, it sends a message that the company is “treating customers as company employees”, which means that they are trusted as if they were part of the company itself. Wu Zishen also introduced a coherent series of leadership practices that generate a truly proactive culture in the organization. Expected learning outcomes – From this case, students will learn how to create a proactive culture in business organizations and the effect of pay‐before‐performance on employees' work motivation. Supplementary materials – Teaching notes and an exercise for class‐based discussion are available.