Recently, ByteDance has made further adjustments to its salary and incentive policies. ByteDance stated that the main direction of these changes is to accelerate the pace of stock option vesting, increase the intensity of incentives, and provide better rewards for high-performing employees. Among them, there has been a salary adjustment in the product line at ByteDance, changing from 18 monthly salaries to 15 monthly salaries while keeping the total package unchanged. As a result, the monthly base salary has effectively increased by approximately 20%.
However, on various social media platforms, ByteDance employees are expressing their grievances. Many of them have found that their salary income has decreased to varying degrees compared to before.
A ByteDance employee said, ‘It’s actually a disguised pay cut in a different form.’ This is because the stock options cannot be sold immediately, and even after leaving the company, selling them would require an 80% discount.
According to the understanding, ByteDance’s annual bonus cycle is from March 1st of the current year to the end of February of the following year. All employees who are still employed during this period will receive an annual bonus. Typically, the bonus for research and development staff is 3 months, while for product managers it is 6 months. Therefore, with this adjustment in ByteDance’s salary structure, the employees most affected are those in the product manager series.
He said that many people, especially high-performing employees, are angry about the idea of having their 15th month salary delayed. The large year-end bonus that used to be received immediately now has to be distributed over two years through stock options. ‘It’s like being tied to the company. If you want all your stock options to belong to you, you can only stay and continue working hard.’
But some ByteDance employees also expressed that ‘a high base salary is a good thing, it is more practical to receive it quickly and directly. There are not many companies left that still provide incentives, so we should cherish the current situation.’
ByteDance has repeatedly implemented disguised ‘salary reductions’
‘If you want a salary increase, just make the adjustment within the existing system. Why make it so complicated?’
‘I am not motivated, but rather want to lie down and do nothing.’
On January 18th, ByteDance sent out a company-wide email updating performance and incentive policies. However, on various social media platforms, many employees expressed their complaints and dissatisfaction. Many employees discovered that it was not as easy for them to obtain the promised future stock options from the company, and even the amount of money they received in the end was reduced to varying degrees.
This disguised ‘pay cut’ has happened more than once at ByteDance.
In July 2021, ByteDance announced internally that the alternating work schedule (commonly known as ‘big week’ and ‘small week’) will be abolished starting from August 1st. Starting from August, teams and individuals with work demands can submit overtime applications through the system.
The alternating work schedule is a working schedule commonly used by internet companies, either publicly or secretly. It involves having one day off in the first week and two days off in the following week, repeating this cycle. By doing so, it adds up to 20 extra workdays per year compared to a normal work schedule, which is almost equivalent to working an additional month each year.
There were polarized opinions within ByteDance regarding the cancellation of the alternating work schedule.
One side believes that this is a challenge to the culture of overtime work and a way to reduce the burden on young people. Even with their youthful bodies, they are unable to cope with high-intensity work. For example, in January 2021, the sudden death of an employee from Pinduoduo‘s grocery business after working late into the night drew widespread attention. The employee was born in 1998.
But in the research results announced at ByteDance’s routine OpenDay in June of that year, one-third of the employees supported the cancellation of alternating workweeks, while another one-third did not support it. The numbers were roughly equal.
The reason why these employees are opposing is also very simple, they hope to work overtime and earn more money.
At that time, ByteDance employees were lamenting on various social media platforms. Some netizens posted saying, ‘Without the alternating work schedule, how can we cope with a monthly salary reduction of 6,000 yuan and still have to pay the mortgage?’ Others said, ‘Finally, after waiting for so long, we got the company-wide performance evaluation at ByteDance. The overall evaluation was reduced by 17% for all employees.’ There were even employees who calculated that canceling the alternating work schedule would result in a loss of nearly 100,000 yuan in annual income.
The key is that after the cancellation of the alternating work schedule, the original workload remains the same, or even increases due to the rapid development of technology in recent years. As a result, overtime culture has become more prevalent.
‘The average time to get off work is 11 o’clock, working until 12 o’clock or even one or two in the morning is also normal. The most intense time was when we were told about an urgent project at noon that day, and we immediately closed ourselves in a meeting room to work on it. When we came out, it was already daylight.’
A former employee of ByteDance said, ‘The workload is truly overwhelming, and it’s difficult to get overtime approval. This kind of overtime is a result of actively improving business skills and self-motivation, so it doesn’t fall under the category of overtime. Therefore, we work silently but don’t receive any overtime pay.’
In his opinion, the majority of young people working at ByteDance choose to continue ‘grinding’ here mainly because of the high salary. This is also why every time there is a salary adjustment at ByteDance, the internal reaction is very intense. ‘There is too little happiness among everyone.’
Business contraction, proactively ‘tightening’
In early December 2023, ByteDance was reported to have initiated a new round of stock option buyback plan. It plans to repurchase approximately $5 billion worth of options from investors at a price of $160 per share, the same as the previous employee stock option buyback in November. Based on this buyback price, ByteDance’s valuation is estimated to be around $268 billion.
Keep in mind that this number is only second to Tencent Group and surpasses Pinduoduo, making it undoubtedly the second largest internet company in China. Some calculations suggest that based on the partial financial data disclosed by ByteDance, its profits have actually surpassed those of Tencent and Alibaba.
But ByteDance, which has unlimited potential, has actually been actively ‘tightening’ in the past two years, with significant contraction in various businesses such as gaming, VR, education, and healthcare.
Liang Rubo, in his speech at the online live annual meeting of ByteDance last March, set the tone for ByteDance’s work for the year: cutting unnecessary projects and fully supporting the growth of core businesses. He said, ‘Our lead has not been significant in recent years,’ and emphasized the need to strengthen fundamental skills.
In early February, it was rumored that the online medical consultation platform Xiaohe Health would shut down its app and transfer related functions to Douyin. ByteDance responded by stating that the Xiaohe team did not merge with Douyin, but rather aligned their business line with Douyin and took charge of operating medical content in the vertical category on Douyin. On April 28th, Xiaohe Health terminated all patient group operations and official corporate WeChat account.
In early November, ByteDance set its sights on the VR brand PICO for a major downsizing. On the morning of November 7th at 10 o’clock, PICO announced a large-scale layoff during an all-staff meeting. Regarding the reason for this layoff, PICO CEO Zhou Hongwei stated that there had been a misjudgment of the market earlier and that the VR industry is still in its very early stages with less optimistic prospects for industry and market development.
In August 2021, ByteDance acquired PICO for 9 billion yuan. In 2022, PICO released its consumer-grade VR product, PICO 4, with Zhang Yiming personally attending to support it. At that time, PICO became a P0-level project within ByteDance, with increasing support in terms of funding, content, and talent. However, facing the overall downturn in the VR industry, ByteDance decisively took action towards it.
At the end of November, ByteDance began to downsize its gaming business, laying off approximately 700 employees from the publishing department and some research and development departments of Nuverse.
ByteDance’s education business contracted earlier. On February 18, 2022, ByteDance announced the suspension of its four major online education services under DaLi Education. Chen Lin, the CEO of DaLi Education, previously stated that significant investments were made every year for three years without any profit expectations.
ByteDance does all this with the purpose of focusing and ensuring a strong fighting force for its main business, information platforms and e-commerce.
In 2023, the competition in the e-commerce market is particularly intense, but Douyin’s e-commerce has achieved remarkable results that have attracted attention from the industry. According to Douyin’s e-commerce year-end summary for 2023, ‘the platform’s GMV (Gross Merchandise Volume) increased by over 80% in the past year’ and ‘the mall’s GMV grew by 277% compared to the previous year’.
Need to know, Douyin’s e-commerce brand was officially launched in 2020, and by 2022, its GMV (Gross Merchandise Volume) has exceeded one trillion yuan. If we estimate an 80% growth rate, the GMV of Douyin’s e-commerce may exceed two trillion yuan by 2023, even approaching three trillion yuan, with market share rapidly approaching Pinduoduo and JD.com.
Some voices suggest that the tightening measures taken by ByteDance are due to obstacles faced in its IPO.
In the past few years, there have been continuous news about ByteDance’s IPO, but it has also faced increasing resistance. Some analysts believe that ByteDance’s initial public offering (IPO) plan has encountered obstacles, and increased regulatory scrutiny in overseas markets may be important reasons. The company does not seem to have set a clear deadline for stock buybacks or seeking public listing.
In 2021, ByteDance was valued at $400 billion. However, today, the valuation of ByteDance is approximately $268 billion. In just three years, the valuation has almost halved.
Faced with reality, ByteDance has been intentionally undergoing strategic contraction since last year, which is not surprising.