Case 4: Haier Performance management (A)
What are the specific practices of Haier’s performance management system? What are the guiding principles behind those practices? Haier, being the world’s sixth largest maker of large kitchen appliances, had 4% global market share and strong positions in the production of washing machine and refrigerators. The key success behind was Zhang, the CEO who brought the company fortunes. Several innovative human resource management practices were introduced. First, there was a set of colored footprints on factory floor. 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 performance. The employee who has performed best has to stand up on the red foot and explain why he had done a good job. One more tool used by the company to measure the performance of the employees on daily basis was to discuss with their supervisor and set clear goals of the employees before beginning of their shift. At the end of the day, they met again for assessment. Then, the employee would receive a colored face in a board showing an informal grade for the day. For managers, their performances were reviewed weekly and the results were openly displayed at the cafeteria. Another tool used by Haier was the 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. Moreover, all the employees were treated as separate company and they have their different accounts and profit and loss statement. If the employees exceeded their goals then they increase savings in their accounts and when they did not reach their goals then they have debt on...
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