MANAGEMENT MANAGEMENT PERFORMANCE AT HAIERPERFORMANCE AT HAIER

Submitted by

GROUP 8

ABHISHEK JHA 10PGHR04ANNESHA PRAMANIK

10PGHR08ANKITA BAGCHI 10PGHR24KUNAL DAYANI 10PGHR21KUNAL KASHYAP 10PGHR22SWETHA M. 10PGHR50

Managing Performance Managing Performance CEO Zhang Ruimi

gathered all factory personnel

outside the factory and

destroyed 76 refrigerators

Emphasis on Quality

Ailing socialist enterprise

Multinational company

Multinational company

Unique performanc

e management system

Qingdao Haier Qingdao Haier RefrigeratorRefrigerator

• In 2002

– it produced a wide range of household electrical appliances

– Ranked 5th worldwide in white goods industry

– 3.7 percent global share

– Exported 445$ million worth of goods

– 5th largest exporter overall

• In 1985

– Debt of 1.47 million

– Virtually bankrupt

• Between 1984 and 2002

• Revenues from RMB 3.48 million to RMB 71.1 billion

• PBT from RMB 2.98 million to RMB 4.47 billion

Key Success FactorsKey Success FactorsProduct diversification

◦1 refrigerator to 86 different product categories

Product innovation to create niche markets

Marketing initiatives that emphasized product quality and market research

GlobalizationInnovative human Resource

management practices

Management PhilosophiesManagement PhilosophiesIntegration of

◦Japanese management philosophy,◦ American innovation, and ◦Chinese culture

Chinese cultural values◦Harmony◦Face◦Relationships◦Hierarchy

Sense of UrgencySense of UrgencyHeightened by internal +

external competitionEach employee is a customer of

his fellow workersDivisions ranked across Group by

Quality, Cost and OutputAvoided problems of

◦Hierarchy◦Interpersonal networks

OECOECOverall

◦All performance dimensions considered

Every◦Everyone, everyday, everything

Control and Clearance◦Each employee finishes planned

tasks before leavingSystem had breadth and depth

80: 20 Principle80: 20 Principle20% of employees(managers)

held responsible for 80% of company results

Onus of responsibility is on the managers

Racetrack ModelRacetrack ModelSystem of performance evaluation

(Promotions/ Demotions) All employees compete in work-

related “races”◦E.g. Job openings and promotions

Winners have to keep defending title – No permanent promotion

Every employee to undergo frequent and transparent performance appraisals

Tracking Individual Profit Tracking Individual Profit and Lossand Loss• Monthly measures were used to track performance• Based on the revenue and profits the managers earned for the company• Although, the unit’s income was attributed to the unit manager, he also had his income-expenditure details in his “bankbook”• Each manager’s division could function as a miniature company (MMC), with its own Profit and Loss account•Increasing revenues resulted in increments in the account in the “bankbook” also the account was valid, till the moment, manager worked in the company

Managing PerformanceManaging PerformanceSeveral Performance Management &

Motivational tools:◦Colored footprints:

Yellow(warning/reflection),Green ( encouragement)

◦Boards on factory workshop to record work performance daily

◦ Self Management: meeting with supervisor to set targets for the day colored faces at the end of shift as informal

grade: red(excellent), green( average) & yellow( below average)

Managing Performance Managing Performance Contd..Contd..

Three phase policy for lowest performing 10% of employees:

Emphasis on recognizing and rewarding successes and creativity

Appraising ManagersAppraising Managers• System of weekly review based on partly

on achieving quantifiable results and the degree of innovation and process improvement

• Performance grades - A,B,C• Every 8th day of month, announced in a

meeting• Results displayed at entrance of the

cafeteria with a green and red arrow• Promotions and demotions were also

published

Responsibility Indicators

Domestic or overseas business development

Volume of sales, selling speed, share of local market and share of global market

Division head Number of product orders, quality, cost, time for delivery

Senior manager Strategic business unit results, profit and loss

Training and DevelopmentTraining and Development• 80 mid and upper level managers

were identified in the Group• Courses at Haier University every

Saturday morning were conducted• Interactive Learning sessions -

developing action plan, implementing improvements in operations

• Grades in these courses accounted for 40% of performance evaluation

Developing TalentDeveloping TalentNew positions – ensured a wide pool

of candidates competedJob Rotation – critical, promote

employees development and to avoid territorialism

Average length of stay in a position was 3 years(max 6 years)

New recruits – tried out different jobs before being assigned to a position

Haier Talent PoolHaier Talent Pool• Monthly management evaluation

meeting identified top performers with most potential

• Selections were drawn from every scratch every quarter

• Point system – assess performance standards; score <10 for several months->out of talent pool–5 points for monthly performance–5 for accumulative performance–5 for current project reviews

Dealing with low Dealing with low performanceperformance

Pressure to perform was relentlessLow performers classified into 3

categories:◦Put on medication ◦IV users◦Hospitalised

In 2000, 13 of 58 senior managers were penalised- not performing to ever increasing Haier standards

GOING GLOBALGOING GLOBAL 2002 – only major Chinese

manufacturer to have established manufacturing bases internationally

The ground breaking philosophies when adapted at another countries like U.S.A will give rise to a cultural shock

We need to adopt our Human resource practices according to the local culture and importantly to ensure accordance with local labour laws

Changes in the PracticesChanges in the Practices“Footprints”

◦ American employees regard asking the lowest performer to stand on the footprints a human rights violation

◦ Instead, according to the American culture, they love to show off

◦ Its best to ask best employees stand and speak

◦ This will motivate the lower performers to come and analyze their mistake

Changes in the PracticesChanges in the Practices “Smiling Face” Chart –

◦ In U.S, this practice is also considered as violation of human rights

◦ So, we can instead of displaying the smilies, we can give something like a toy which they like the most to the best performer

◦ Something which they don’t like to the poor performer

Standard Management evaluation should be followed to give the final ranking

Formal and Informal meetings between employee and managers to set action plan/goal plan

Differences in Practices..Differences in Practices.. In China, disciplinary action is taken

against the employee as a warranted action◦ Direct counseling and may result in

dismissal or suspension from work place In U.S, by law the employer is not

allowed to with hold the wages◦ So, they can with hold the opportunity

to come to work and earn money