Peng Yongdong personally took action to implement the Shell Reform

The reporter for 每经: Chen Mengyu  The editor for 每经: Wei Guanhong

“In this reform, I am fully responsible.”

On March 29, Peng Yongdong, co-founder, Chairman and CEO (Chief Executive Officer) of KE Holdings Group, released an all-staff letter titled “KE’s Next Stage: Consumer-Centric Rebuild of the Organization,” formally announcing a large-scale strategic transformation.

A reporter from The Economic Daily News (hereinafter referred to as the 每经 reporter) learned that, in internal meetings about this reform, Peng Yongdong’s stance was very firm. He wants “this to be a complete transformation of the way services are delivered.” During the first 100 days of the Beijing reform in the company’s headquarters, Peng Yongdong’s requirement was that, even if it is only one thing, managers must all go to the front line. From Chief Customer Officer, Chief Customer General Manager, Regional Customer Director, to Community Customer Manager, everyone must go to the front line to serve consumers, including Peng Yongdong himself.

“Internally, we also found it extremely shocking—the intensity is very high.” An insider at KE Holdings Group remarked that Peng Yongdong personally stepped in to lead a systematic reform, reflecting the company’s determination to change amid a period of intense disruption in the housing industry.

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Image source: Provided by the interviewee

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The 每经 reporter learned that, for this reform, KE Holdings Group has consecutively issued eight notice documents to officially announce the organizational structure adjustments for this initiative.

Specifically, at the group level, it will establish a Transformation Committee and five specialized management committees. It will adjust the former business lines into a product affairs line and a R&D affairs line. It will newly set up a General Cadre Department, establish an anti-corruption discipline and conduct affairs line, and establish a public affairs line. In terms of city organizational structure, it will adjust to include the Chengdu region, Chongqing region, Guangzhou region, Hangzhou region, Nanjing region, Shenzhen region, Suzhou region, Tianjin region, Wuhan region, and Xi’an region under its purview.

At the business level, it will adjust the organizational structure and personnel for integrated home improvement business lines, Behaojia business lines, Huiju business lines, Beijing Lianjia, Shanghai Lianjia, and others.

In the all-staff letter, Peng Yongdong admitted that over the past 24 years, KE has inevitably been “infected with big-organization disease”: department walls have become thicker, processes outweigh common sense, and complex KPIs and metrics pile up to obscure real value creation. It looks like management, but in practice it is internal friction; it appears to pursue efficiency, but actually it is for the organization to operate itself—growing ever farther from consumers.

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Image source: Provided by the interviewee

The aforementioned insider at KE Holdings Group told the 每经 reporter that Peng Yongdong has been considering transformation for some time. He has been continuously thinking about new ways to serve consumers. The clearer he becomes, the less he can tolerate and accept the current service model, and he believes reform is necessary.

The 每经 reporter learned that the overarching direction of this reform is to upgrade the community living services model. Beijing will take the lead in implementing it: establish the Beijing Lianjia Strategic Committee, coordinate and advance the integration of the brokerage, Huiju, and integrated home improvement businesses, and reposition stores as community service stations. For the first time, Beijing Lianjia appointed three Chief Customer Officers, who report directly to Peng Yongdong. Under the Chief Customer Officers are three-level management roles such as Chief Customer General Manager, Regional Customer Director, and Community Customer Manager. KE stated that all management position titles will put the customer in the “C position” (center position). It aims to remind management leaders that they “manage not metrics, but customer service.”

According to information revealed in the all-staff letter, outside Beijing, cities will advance business according to their respective development stages, and for a long period of time going forward, there will not be major changes in organizational form.

For example, in Shanghai, the 每经 reporter learned that after this reform, Wang Yongqun is no longer serving as General Manager of Shanghai Lianjia, but has continued as Executive Vice President of KE Holdings Group and CEO of the Huiju business line, focusing on upgrading the leasing business. Huang Yueping, the former General Manager of the Suzhou region of KE, will become General Manager of Shanghai Lianjia. She joined Lianjia in 2004 and has served in core cities such as Beijing Lianjia and Nanjing Lianjia. She is an old hand at Lianjia. Both individuals report to Peng Yongdong.

In addition, according to internal notices, KE also appointed Xu Gangang as Deputy Chairman of the group and CEO of the integrated home improvement business line, responsible for overall business management of the integrated home improvement business line. It appointed Li Fengyan as Senior Vice President of the group and KE’s City Chief Operating Officer, responsible for overall business management of KE’s cities. It appointed the company’s co-founder Dan Yigang as head of the organization culture and sustainable development line, Zuo Donghua as head of the public affairs line, Qi Shizhao as head of the quality affairs line, and others. All of these personnel report to Peng Yongdong.

At the same time, Peng Yongdong also took the lead in establishing KE Holdings Group’s Transformation Management Committee, which will fully rewrite the business structure, assessment and incentives, and the flow of resources around meeting consumer needs. According to the all-staff letter, KE needs to gradually embed “serving consumers” into the primary responsibilities of each role. Management leaders “what they should do most is to help the team serve consumers well—not to blindly create pressure and do data. Free frontline service providers from being tied down by ineffective assessment metrics so they can focus on providing service.”

“We have no choice”

In fact, over the past few years, Peng Yongdong has mostly led KE from the strategic level. But now he appears in the front-line business view more and more often.

At the beginning of January this year, KE launched a month-long action called “Three Necessities and Six Prohibitions,” reaffirming a “neutral market perspective,” and nearly 100,000 agents signed pledges. Starting March 1, KE’s platform officially loosened rules related to talent mobility. Agents can, based on their own career development needs, resign from their original store on the platform and hand over their job-related resources and platform rights and interests from the original store, then take up a role at the new store.

At KE’s 2025 annual results meeting on March 16, Peng Yongdong said, “For our direct-operated Lianjia business, last year we proactively optimized Lianjia’s store network and agent structure, focusing on efficient capacity generation and in-depth operations in core city areas. After optimization, productivity efficiency levels in core cities improved. Between scale control and efficiency enhancement, we are forming a more balanced and healthy structure.”

According to figures disclosed in the annual report, as of the end of 2025, KE had a total of 119,200 employees, net decreasing by 15,800 from 135,100 at the end of 2024, a decline of 12%. Among them, the number of agents and supporting staff decreased from 106,500 to 95,900.

KE has faced a great deal of criticism in recent years. Regarding confidence in this transformation, Peng Yongdong stated in the all-staff letter, “What people call confidence often appears when there is still a choice in front of them. Because there are different paths available, people hesitate and worry about uncertainty. But for KE today, this is no longer just a confidence issue—it is a choice issue. More precisely, we have no choice.”

From the financial data, in 2025, KE’s net revenue was 94.6 billion yuan, up 1.2% year over year. Net profit was 2.99 billion yuan, down 26.7% year over year. Adjusted net profit was 5.02 billion yuan, down 30.4% year over year. In the real estate transaction business, the number of second-hand listings grew 11%. The home decoration business revenue reached a historical high of 15.4 billion yuan. The leasing business achieved full-year profitability for the first time.

In the past, KE focused more on large-scale operations of “ten thousand homes, ten thousand clients, and ten thousand people.” Going forward, it will focus on “one home, one client, one person” in services—moving service scenarios from spreadsheets and reporting chains to fulfilling the needs of specific customers and uncovering the value of available listings. KE has clearly stated that managers should be able to explain the district well and the property well—this is more valuable than simply reporting numbers.

At this year’s results meeting, an analyst asked Peng Yongdong what he thought about real estate self-media. In this all-staff letter, he mentioned the matter again: self-media is actually a signal. It reminds us that when today’s consumers make decisions about settling down, they increasingly need someone who can explain the home clearly, explain the area clearly, and explain clearly “why it’s worth buying.” What consumers want is decision support.

This helps explain the fundamental reason KE determined the overall direction of this reform.

The first 100 days in Beijing, starting from March 29, are the first 100 days in Peng Yongdong’s words. What he wants to do is far more than simply having managers all go to the front line to participate in specific businesses. Matching mechanism changes, product innovation, talent upgrading, and ecosystem changes are all a series of longer-term tests.

The Economic Daily News