Managing Performance at Haier Harvard Case Solution & Analysis

¶        A guiding Principle:

OEC (Overall, Every, and Control and Clearance) was the guiding principle for the management system of Haier. In this guiding principle, all the performances under various dimensions were considered. Every employee of the company had to perform they were asked to do on a daily basis. Another part of the guiding principle of the Haier’s management system was the work clearance at the end of the day that meant that all the employees had to perform the assigned tasks on a daily basis before leaving the work station. The final part of the guiding principle was the reporting of the employees to their respective supervisors about the completed tasks assigned to them and getting the feedback on it regarding their performance.

In this, all the employees were accountable for their performances; these performances were recorded and rewards were given to employees on the basis of their performance and the training was also given to them on their performance. These performances also helped the company to set the target for employees according to their performances and every employee was responsible for their tasks. At the end of the day, every employee knew what was expected from him by the company; hence, they were focused on performing well as their performances were closely monitored, evaluated and rewarded accordingly.

¶        Deposit Book

Haier also maintained the deposit book for managers as a reward of their department’s performances and it was giving them a small portion of the overall profit as these mangers were accountable for their respective department’s revenue generation for the company. This made the managers to stay with the Haier for a longer period of time and during their job they were accountable for generating revenues and maintaining these departments’ revenues. These departments were called as the Haier miniature company MMC. As long as the managers were employed by the Haier, the account existed no matter if managers were transferred to different departments.

The President of Haier University, Xiwen Zhou explained that Haier set the basic goals for mangers and when they meet these goals so they get the reward as their savings into their account but when these managers do not perform well then their account balance gets subtracted and by doing this, these managers actively work for their performances as they know that their poor performances will be deducted from their accounts and this also keeps them motivated as well.

¶        Racetrack Model:

Haier also used the Racetrack Model for the performance evaluations of employees and promotions of employees. Those employees who performed well were rewarded and those who did not do so got demoted. The evaluation of employees was motivating them to race with other employees regarding their work. In this model, those employees who performed well were racing for keeping the winning position and other employees were racing to attain the winning position. This Racetrack Model was based on daily performances as there was not any permanent promotion and keeping this working philosophy of the Haier almost every employee went through it and got promoted on the basis of the transparent performance and gained the appraisal reward as well. This philosophy was a contradictory philosophy against the Chinese culture. The Chinese culture was giving the importance to the face and not to the performance of the work.

¶        Sense of Urgency:

Another aspect of the Haier’s culture was the sense of urgency as all of its employees were customers to each other. It was because of the fact that one department of employee was working on the product that was the input to another employee and to satisfy its customers; employees were putting the effort to produce the product accordingly to their customers’ need. To better understand this sense of urgency an example is taken from the case as follows:

Haier’s environmental testing laboratory was responsible to satisfy it customers as these customers were the employees, who were working in the design department and the satisfaction was provided by the testing laboratory under meeting the deadlines and producing the excellent and useful test results. The design department was responsible to provide innovative and colorful designs to the production department as the employees who were working in the production department were the customers of design department..................................

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