Succession, a headache at Alibaba Group(2)

Xie Wen, who briefly worked at Alibaba as president of Yahoo China, agreed.

"A strong cohesion inside Alibaba helped it to stand out in its early days but this will also lead to an exclusion of newcomers," he said. Xie added that Alibaba should embrace more people with different backgrounds to better standardize its management processes.

Around 2007, Alibaba introduced a number of professional managers from the retail industry but most of them left after a short time in the company.

"I don't think it (the introduction of professional management) can be called a failure but it was indeed not quite successful," said Lucy Peng, Alibaba's chief people officer.

"Any company will come across the problem that new blood cannot acclimatize to its environment, and it's especially true for those who have higher positions."

In fact, embracing new blood in general has been a challenge for Alibaba. The company expanded particularly quickly in recent years, with a total workforce now exceeding 23,000. From 2009 to 2011, the company enrolled 4,000 to 5,000 people annually.

"To maintain the corporate culture is the next big challenge," said Zeng. "We are expanding too fast, and something is getting out of control."

To allow corporate values and culture to permeate from the top leader to tens of thousands of employees below has become very difficult, said a former employee at Alibaba who doesn't want to be named.

"At first employees will put their customers first and try to solve any problems they have. Later, some of them just don't want to help and you may need to resort to money or personal relationships to get things done," the former employee said.

Alibaba lists "customers first" as one of its core values. However, some of the employees pursued growth to the detriment of values as a side effect of Alibaba's quick expansion. An example is the fraud scandal related to its group-buying business, which eventually led former head of the business, Yan Limin, to gaol.

"We gave too much power but didn't have a good system to prevent fraud," said Zeng, adding that the company will incorporate more market-oriented rather than people-oriented rules and at the same time strengthen its value-based culture to prevent such cases from happening again.

This year, Alibaba's headcount saw an increase of 200 people.

Too rapid an expansion is a problem shared by other "hot" companies. Pony Ma, chairman and chief executive officer of Tencent Holdings Ltd, China's biggest Internet company, in April also expressed concern over the risk of diluting corporate culture and management. The number of Tencent's employees grew by 60 percent last year and they now exceed 20,000.

There is more the e-commerce giant has to change as it gallops along China's online retail market, which is expected to be the world's biggest by 2013.

Alibaba started with its online website that enables businesses to trade with each other. Salespeople in this business, who are responsible for attracting companies to use the website, account for almost half of Alibaba's total headcount.

However, the way to manage a sales team, which is very clear and quantified, is completely different from managing its other business groups, said Chang, the vice-president of human resources. "It's from top to bottom. In other business you cannot manage in such a strict way."

It is easy to be result-oriented and to try to quantify everything when taking charge of the sales team but it doesn't work in the business groups that encourage innovation, said the former employee of Alibaba.

"The same rule may not be suitable in every phase of a company's development, even though it managed to make Alibaba what it is today," the former employee said.

Chang said the management in some business functions need to be accurate, while others can be vague, something the company is working on.