MANAGEMENT PERFORMANCE AT HAIER

Submitted by

GROUP 8
ABHISHEK JHA 10PGHR04 ANNESHA PRAMANIK 10PGHR08 ANKITA BAGCHI 10PGHR24 KUNAL DAYANI 10PGHR21 KUNAL KASHYAP 10PGHR22

Managing Performance
CEO Zhang Ruimi gathered all factory personnel outside the factory and destroyed 76 refrigerators
Unique performance management system

Emphasis on Quality

Ailing socialist enterprise

Multinational company

Qingdao Haier Refrigerator

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 Factors

Product diversification
1 refrigerator to 86 different product categories

Product innovation to create niche markets Marketing initiatives that emphasized product quality and market research Globalization Innovative human Resource management practices

Management Philosophies

Integration of
Japanese management philosophy, American innovation, and Chinese culture

Chinese cultural values

Harmony Face Relationships Hierarchy

Sense of Urgency
Heightened by internal + external competition Each employee is a customer of his fellow workers Divisions ranked across Group by Quality, Cost and Output Avoided problems of

Hierarchy Interpersonal networks

OEC

Overall
All performance dimensions considered

Every
Everyone, everyday, everything

Control and Clearance

Each employee finishes planned tasks before leaving

System had breadth and depth

80: 20 Principle

20% of employees(managers) held responsible for 80% of company results

Onus of responsibility is on the managers

Racetrack Model
System of performance evaluation (Promotions/ Demotions) All employees compete in workrelated 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 and Loss

Monthly measures were used to track performance Based on the revenue and profits the managers earned for the company Although, the units income was attributed to the unit manager, he also had his incomeexpenditure details in his bankbook Each managers 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 Performance

Several 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 Contd..

Three phase policy for lowest performing 10% of employees:

Emphasis on recognizing and rewarding successes and creativity

Appraising 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

Responsibility
Domestic or overseas business development Division head

Indicators
Volume of sales, selling speed, share of local market and share of global market Number of product orders, quality, cost, time for delivery Strategic business unit results, profit and loss

Senior manager

Training 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 Talent
New positions ensured a wide pool of candidates competed Job 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 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 performance

Pressure to perform was relentless Low 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 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 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 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 dont 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..

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