Managing Performance at Haier(a) Case Review Situation Analysis

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In 2006 Haier was ranked the 6th largest maker of large kitchen appliance. Haier had 4% global market share and strong positions in the production of washing machine and refrigerators. Haier became successful after the arrival of Zhang as a CEO in 1985. After that Haier increased its revenue from RMB 3.48 million to RMB 104 million. Haier transformed into a group of 240 plants and companies, having more than 50,000 employs. Haier has moved to this position in just two decades and the average age of five global players in the household electrical market was 95 years. Zhang make sure that any product which is not up to its standard will not be produced. Haier evolved from one refrigerator to 86 different product categories with over 13,000 specifications. Haier innovated to create their niche markets. Another main reason for the success of Haier was their marketing initiative which emphasized quality. Performance management system at Haier

Performance management system at Haier was a variant of forced distribution system. In this type of performance appraisal system the top 10% were promoted and bottom 10% were sent back to the training at the expense of the company. After this training if they again come under the bottom 10% then they were again given leave and this time they went to training but on their own expense. In the third review if they again come in to the bottom 10% then they were fired. According to many surveys these types of performance appraisal systems are said to be harsh on employees but in this variant as they were also providing the training on their own expense and were giving three chances to improve so the method was employee friendly. Another tool used by the Haier was a set of coloured footprints on factory floor. These footprints were yellow, green and red coloured. Any employee who has not performed well has to stand up on the yellow footprint and tell the employee why they have not performed well and how they will improve their...
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