group 5 _ haier case analysis
DESCRIPTION
Analysis of PMS Case at HAIERTRANSCRIPT
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