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Human Resources Management: Haiers Global Success

Introduction and Background

Haier Group (Haier) is the greatest home device brand in China and one of the world's leading manufacturers in white goods home machine. Haier was founded in Qingdao, Shandong Province, China in 1984.

In 1985, Zhang Ruimin was appointed as director to perform the lackluster state-owned refrigerator manufacturer now known as Haier Group Co. He asked the employee to smash 76 defective types of the 400 into pieces with a sledgehammer in order to awaken his employees' quality consciousness.

In 1986, Haier's RECRUITING Management first executed the "OEC Procedure" to entail clear and thorough control total company functions. The goal of OEC Way is to attain each day's plan, assess that plan, and improve upon those daily achievements by all employees 1% much better than your day before.

Their HR management beliefs is a mixture of international management key points and Chinese wisdom, with creativity and brilliance as its cornerstones. Haier's "OEC", "Market-chain" and "Individual-goal combination" management shows have been known worldwide. Haier's activities are also introduced into circumstance studies of business mergers, and also to financial management and commercial cultures of many overseas educational institutes, including Harvard University or college, University of Southern California, Lausanne Management College, the Western Business College and Kobe School. Haier's Market-Chain Management practice in addition has been advised to the EU for Case Studies and "Individual-goal blend" management principle has been identified by worldwide management research workers as a possible solution of commercial over securities and accounts overdue.


The objective of the paper is to observe how human resources management tools, namely the HR scorecard system, on-the-job training and the advertising process, deciding on Haier in order to attain better tactical planning and general decision-making as well as efficiency.

All the info is dependant on the references and bibliography as the following.

Literature Review

In order to achieve success, Haier's HR developed its commercial ethnicities, business strategy and some management system which enforce the business's work guidelines and self-discipline. It includes:

Daily OEC management system,

6S footprints,

Recruiting and campaign,

SST market-chain-based payment system,

Appraising professionals, and

Individual regular monthly SBU profit and loss claims for each staff.

OEC management system

Haier's RECRUITING Management created the OEC management-control system (O means Overall; E means Everyone, Everything, and Everyday; C means Control and Clear) which aims at overall control of everything that every employee finishes on his / her job every day, with a 1% increase over that which was done the prior day. Production employees must fill out an OEC 3E Card daily with components of production number, quality, faulty product material used, technology level, equipment analysis, safe procedure, and labor discipline evaluation. If a worker earns more points on the 3E greeting card than required, he or she makes a higher wage and bonus, and both management and the employee know his or her daily wage and why not achieving target. The business also uses quality-check coupons to offer an additional incentive mechanism. Each employee has a quality-check voucher booklet which has red coupons for rewards and yellowish coupons for penalties. The booklet lists all quality problems the company has detected and guidelines for verifying each defect. If a worker failed to find and check a quality problem that was later found by his / her team member during a cross-check or by the superior during a managerial check, the employee will eventually lose a red promotion and receive a yellow coupon code that will matter against that day's wage and extra. As further inspiration, each employee makes a daily level for genuine performance and improvement toward achieving his or her target. Workers see the daily analysis results the next day on the factory's bulletin planks. The employees who are known as the best employees for three consecutive days hold the honor of revealing their experiences to fellow personnel. The employees who end up being the best workers most frequently in a single month are the best personnel of the month. They have more opportunities to attend job training and enjoy cultural benefits, while employees who become the worst workers most frequently in one month are demoted to probational personnel. Each month, both best and the most severe employees have their brands publicized on the firm's bulletin table. Each staff also gets a red smiling face (excellent), renewable face with natural appearance (average performance), or a blue miserable face (poor performance) monthly.

Beyond acknowledging the best and most detrimental employees, Haier implements the 10-10 process. In the team, 10% of the people will be the best, and 10% will be the worst, to increase the team's efficiency Haier promotes the 10% better to help the 10% worst type of.

6S Footprints

Haier's personnel in China and in U. S. factories are imbued with the disciplines of an 6S daily routine. An adaptation of the 5S quality-control movement from Japan, 6S takes its name from the initials of five Japanese words: seiri (discard the unnecessary), seiton (arrange tools in the region of use), seisoh (keep the worksite clean), seiketsu (remain clean), and shitsuke (follow workshop disciplines). Haier added a 6th, the English phrase "safety. " To promote the 6S regimen, small yellow 6S squares are colored on every factory floor. At the start of every workday, team leaders stand inside the squares to provide a briefing on that day's work and relay any news to the employees. By the end of each workday, some employees will be called to stand on the footprints to criticize themselves for making some errors during the day, and the best employees will stand inside the squares to provide insights on the good work.

Recruiting and Promotion

Haier has a job-rotation plan for management positions in which the average stay static in a management position is three years and the maximum is six. The company runs on the job system that is dependant on the racetrack strategy for new job openings and offers. All employees can apply and compete for work-related races such as job opportunities and campaigns, but winners have to keep rushing to guard their current jobs. The company retains a talent pool of professionals based on monthly performance results. These talent pool professionals have a higher potential for being promoted, however, many professionals may be taken out from the ability pool during each quarter's review. Every month, the Human Resources department publicizes the job openings and certain requirements and conducts demanding performance reviews, written examinations, and interviews. Because of this, lots of motivated and experienced brand workers excersice into management positions, and a number of young college or university graduates obtain managerial positions after being trained in the low-level lines positions.

Compensation System

In 2001, Haier created a unique purchase job-recording system between two of the activities in the market string called SST: Lay claim Compensation, Claim Payment, and prevent!

*S (Suo Chou): Case to the downstream activity party for payment. If an upstream activity staff can perform his / her activity or job well, she or he should claim compensation from the worker (i. e. , his or her inner customer) downstream in the market chain. For instance, the logistics office follows something division's every month and weekly development plans to provide materials to various production workstations and makes a regular or regular "claim" to the merchandise section for the service provided according to the agreement price.

*S (Suo Pei): Say to the upstream activity for payment. If an upstream activity staff does not perform his or her activity or job well, his or her next downstream activity employee (i. e. , his or her internal customer) should lay claim payment from him or her. For instance, if the logistics team postponed the delivery of materials, then that product department can make a claim for its loss.

*T (Tiao Zha): Stop. If there is neither a case for settlement nor a state for repayment, the computer system will stop the procedure. The responsible party should pay the promises. The final decision on whether or not to pay for any job is up to the downstream activity customer because at Haier the customer is usually right! For instance, whether there is a production delay or material delivery wait, the responsible party should pay the boasts.

Appraising Managers

Each manager's performance is evaluated weekly according to several quantifiable goals and qualitative standards such as process improvement and advancement. At month end, managers receive a grade of your, B, or C. These grades are openly displayed at the company cafeteria access, with a green or red arrow indicating that a manager's performance improved upon or regressed that month. All campaigns and/or demotions are also published in the regular publication called Haier Ren Bao.

High-performance managers are put in the talent pool for future campaigns and receive opportunities for considerable training. The 80 best mid- to upper-level managers are delivered to circumstance- and brainstorming-based classes at Haier College or university every Saturday morning hours conducted either by CEO Zhang Ruimin or Leader Yang Mianmian.

How does Haier deal with low performers? Haier classifies low performers into three categories. First, when a person must make minor advancements, the staff or director is devote a web pool for training. Second, unqualified people get demoted if they cannot accomplish the production duties or if indeed they significantly break the restrictions while being reviewed. Third, the business can flame the most detrimental performers. In Haier, a large number of employees are fired on a monthly basis because they do not meet the company's requirements: "Whoever tarnishes the brand of the business will be dismissed by the business. "

In addition, mediocre people get moved around in the company. Haier encourages older employees whose knowledge and abilities do not enable them to meet the requirements with their positions to transfer to the firm's managerial positions in the service sector. The business then gives them enough training for these positions, which do not call for much skills or skills. Alternatively, this enriches the job of the transferred employees, motivates them, and increases the efficiency of human resources utilization.

Individual Monthly SBU Earnings and Loss Statements

Every worker is a proper business product (SBU), which means that each employee is an independent profit centre with the duty to make a profit. Each employee generates his / her revenue by providing the best service to the worker who works at the next phase downstream and incurs expenses or costs by receiving services or resources from the worker who works at the prior step upstream. The following January 2003 data is from the Complex Equipment Business Division's Information Plastic Subdivision's Painting Flower:

"Mr. Liu, a painting employee, kept up to date an SBU earnings and loss assertion catted a "resource passbook" in his place of work every day. On December 29, 2002, he used 11. 96 kilograms of color to paint TV boxes as the budgeted level was 11. 87 kilograms. When the paint were convened to money, it designed he lost $0. 84. According to the 10% percentage, he owed $0. 08 to his company. On January 5, 2003, however, he used 13. 91 kilograms for painting while the budgeted quantity was 18. 78 kilograms, and he attained $14. 88 that day.

Mr. Wang, a innovator in Mr. Liu's team, has a learning resource passbook, too. The only difference is the fact he will not use car paint as the criterion. Instead, he runs on the utilization percentage. On Dec 29, 2002, Mr. Wang's team still owed $0. 65 to his company; on January 5, 2003, they already attained $14. 88!

Mr. Zhang Yongxun, a person who is in charge of steel dish purchasing, began to put together his SBU earnings and loss assertion in 2002. He has been performing as a material plate profit unit by growing sales of metallic plates from $112. 5 million in 2002 to $225 million in 2004 and increasing profit from $1. 24 million to $4. 47 million. "

What is the magic that significantly transformed these employees' data? Matching to Wang Yingmin, "We are using an innovative SBU revenue and loss statement, learning resource passbook management system. " An employee resource passbook is similar to a bank passbook since there are debits and credits in both of these. In this case, the credit side is the business, which gives budgeted resources to employees according to operations standards; the debit aspect is the worker, who uses the company's resources. Basically, the company provides fixed amounts of resources, and the staff has the authorization to work with the resources. Over time, it is in the employee's best interests to truly have a resource passbook with an increase of credit than debit. The ultimate result is the bond between the self-managed market impact and the employee's specific income.

Here's how the SBU flowchart works:

The customer manager's superior SBU is the product administrator who provides helping platforms including drive platform/capital-flow platform and customer marriage management (CRM) system of commodity circulation. The client manager's suppliers are the product departments, and his/her markets are clients or customers offered.

The vertical bridges around a customer manager are focus on process flows. Your client manager and his/her superior collection the business strategic target jointly; the item below the client manager is the supporting platform(s) (e. g. , commodity flow, physical stream, quality management, cash flow, and motivation system) provided by the item manager to organize with various supporting departments to support/help this consumer manager to perform his/her strategic focus on.

The horizontal bridges around a client supervisor are order process flows. Customer orders, matching to specific concentrate on value(s), are shown on the right aspect, and product section resources that support purchases are shown on the kept side.

Performance analysis is linked with the mark (total annual) and customer requests (daily information clearance and performance survey).

Finding and Analysis

Haier provides a good, just and available competition platform to its employees for the promotion of mature position. But their HR device and policy is different from the most of HR departments. These are concerning about who should be trained and who should be marketed to the position of authority in three different kinds of career planning: 1) For administrators; 2) For pros; 3) For workers. All of them has one path towards his promotion.

Haier will provide on-the-job training to the cadre to work in related department as an ordinary role in order to get experience. Sometimes they'll allow cadre lower his position and work as a common staff or assign him to certain office to get so-called internship. Though it is rough for a cadre under such high pressure, he's finally trained and cultivated his integrated skills.

Haier also add Market Chain management where there are 2 markets involved in one enterprise, the internal and the external. The internal market is to meet the requirements of the personnel to arouse their initiatives while the external market is to meet up with the requirements of the customers. Each personnel supposes to have no responsibility to his supervisor sometimes, but the most important thing is he will need to have the responsibility to the market on a regular basis. Market chain system, initialized as "SST" based on Chinese language pin yin, that is to say: Firstly, we need to serve our consumer and acquire the related rewards; of course, if we cannot match the market's requirements we must give corresponding reimbursement. Neither rewards, nor reimbursement, it could be a empty in the system which means problem will occur. Therefore, the group is under the mechanism, and there are many people in their position under the nature of "managing yourself" where people treat their own as a host in their department of the Group. They take care of their position as working their own boutique so that they have extraordinary efforts in such as conserving energy, decreasing utilization, enhancing quality etc.

Haier issues Personnel Rewarding Regulation for Innovations to encourage new specialized invention and development, and based on the economical and social effectiveness that achieved, and the enterprise, the administrators and the staff have similar chances to succeed the awards respectively.

Haier Online HR Databases will give a quick reviews to the trained candidates using its HR system on providing huge development space and equitable competition environment, and with its competitive working environment.

Recommendations and Conclusion

Human resources management is the process of acquiring, training, appraising, and compensating employees, and of joining with their labor relations, health and protection, and fairness concerns.

Through the HR scorecard, on-the-job training and a series of promoting process, Haier has come in quite a distance from a practically bankrupt company to an established worldwide brand. Through making employees accountable for meeting OEC standards, Haier will continue steadily to stand out and achieve its short-term goal of becoming one of the world's top three white-goods manufacturers. Within this current competitive market economy, many companies have much to study from Haier's culture and OEC management-control system. (Lin, 2005)

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