Oracle’s Severance Compensation Has Taught Chinese Tech Firms a Great Lesson

Over 900 staff members will be laid off by American tech giant Oracle in China. However, the severance package that these employees receive turns out to be a pretty sweet deal.

According to leaked information from the company, Oracle China will reduce its staff number by more than half and will offer its employees N+6 packages to their departure. That is, the number of years working for the company, plus 6 months’ worth of salary.

Such compensation package would seem impossible in the Chinese tech industry. In early rounds of massive layoffs in companies such as DiDi, Meituan, no such packages were given to affected employees. It is an industry norm to offer employees an N+1 package in the case of downsizing, yet such standards were often not respected by Chinese tech businesses.

However, the competitive compensation package did not please all Oracle employees. Protests were seen outside of Oracle’s office in Beijing. Protestors are holding signs to ask for the company to reverse its decision on the China operation: “High Profit，Why Layoff” “Leave job opportunities in China.” “Oracle only wants the Chinese market, but not the Chinese employees.”

According to some senior employees, Oracle has a maximum monthly salary compensation of 25,000 yuan ($3,663) for all employees, yet many senior employees have monthly incomes way higher than this. Oracle has also set up incentivized deadlines for employees to agree to the deal: Only those who sign the contract before May 22 will receive the full N+6 package from the company. The pressured deadline leaves the affected employees with little time to explore and get on new opportunities with other firms.

In addition to the business decision from Oracle in the midst of the US-China Trade War, Oracle’s treatments to its employees are becoming the trending topic. While many headhunters and technology industry recruiters are actively looking to fill their vacancies with former Oracle employees, some argue that Oracle employees are no longer competitive in the Chinese job market. On average, employees who are laid off by Oracle are 37 years old, passing the tricky age of “35” for Chinese employers.

If these workers become unemployed, their future is quite uncertain in the harsh and stringent environment in the Chinese internet industry. With more family obligations, it remains unclear what the best options are for these mid-aged workers: Starting a business might be very risky, but the job market is unlikely to be friendly to them.

Foreign corporations in China that are popular among job seekers, seem to be having a tough year. The global economic growth has been creating new challenges for these corporations, and their daily operations in China. Within the company, they face obstacles from the newly rising domestic firms in talent recruitment, and in business competitions. Chinese unicorn startups, such as Bytedance, are offering appealing packages for talents to get on board. Foreign corporations are becoming less attractive for recent graduates and talents in the country. Their talent pools are consequently starting to drain.

Some argued that better welfare and more favorable labor standards are turning companies into old people’s homes. Absurd as it may sound, these comments showed a very poor understanding of respecting labor laws and respecting the needs for effective management. Different from the 996 model that is becoming more and more prevalent in China, foreign corporations such as LinkedIn and Oracle do not operate in such ways even with their teams in China. When it comes to work-life balance and employees’ equity. Oracle presented a classic example for all companies to learn from. With proper compensation packages and high labor standards, these companies set the industry a high but fair bar to compensate their employees, even in the cases of layoffs or downsizing.

The fate of the downsized staff remains uncertain. Situated in a job market that openly encourages discrimination based on age and family status, they could potentially find their job prospects struggling despite having strong expertise in their respective fields.

Featured photo credit to hksilicon.com