MANAGING PERFORMANCE AT

HAIER (A)

Group-AO2
Avinash Singh-14S752
Hitesh.T-14S716
Jagannath.A-14705
Meghna Chore-14S721
Raunak.B.Rao-14S732

Problem Statement- Developing a Global performance management

system which could be applied to other regions of the world.
SWOT Analysis
Strength

Timely evaluation employees and constructive feedback training

through Haier University
Increasing productivity and competency of the employees through Job
rotation
Under the 80:20 principle, employee accountability is created
Intense competition of employees through Race track model
Encouraging selection of employees through talent pool and not relying
on internal employees

Weakness

The system puts a very high pressure on the employees to perform.

Non-performance may lead to dismissal

There is no permanent position in the company.
Features such as Colored footprint could damage the morale of the

companies
Dividing employees on three categories due to low performance could
be discriminating

Opportunities
One of the first major Chinese companies to establish its presence in
the world which could provide tremendous opportunities
The system could be replicated at other parts of the world due to
marginal error in the product operations
Those areas where cost is rising, this system could be implement
where compensation is given according to performance
It could bring in efficiency in the employees and productivity.
Threats

The system may not be applicable to other regions due difference in

cultures
Difference in labor laws may delay the operations of the company

High chance of attrition if the performance system is followed as

employees may not take the pressure
Higher wage cost may add to increase in production cost of the
company

PEST Analysis
Political
China is a communist country. Haier may have to deal with multiple
stake holders in other countries where Democracy exist
Haier may have to tweak it performance system in other countries in
order to adopt government policies.
Also it is the Chinese government which monitors the private
companies in China.
Economical

Low cost of production in China due to cheap unemployment

Global share of Haier increased from 2.5%(2001) to 4% (2007)which
shows a positive sign for the organization

Social

The Asian Culture is different from the western culture

Haiers performance management system stresses on selfmanagement system which could be difficult to replicate in other parts
of the country
The Chinese as a whole follow hierarchical structure and countries in
which they plan to have a set up might have an Individualistic culture.

Technology

The company was relentlessly focused on growth, innovation and

quality. It diversified its product range and focused on innovation to
create niche markets.
Electronics industry is highly dependent on technology with companies
placing huge investments on developing the R & D
There was intense competition worldwide in the household electronic
appliances segment. Some of the major players in the market were
Whirlpool, LG group Bosch and Electrolux.

German technology was considered superior.

The perception globally was that Chinese products are of inferior
quality.

Factors

Unfair comparison when it came to 80:20 principle with managers

being responsible for 80% of company results. It also did not translate

directly to fines and bonuses

The racetrack model made sure that there were no permanent
promotions and employees had to defend their position from time to
time. This may not be accepted in other countries. This also leads to
increased competition and pressure between employees. This can also

lead to demoralization which is bad for innovation

Employees were allowed to set goals for themselves which were
evaluated by supervisors. Low performers were dismissed and were
asked to be on leave whereas high performers were rewarded with

recognition
Managers were made to rotate every three years with the permission
of being in a position for a maximum of six years. Though this ensured
that managers understood different areas within the organization, it

affected their stability in the organization.

Anonymity was not followed with low faring managers given titles such
as put on medication,IV users and hospitalized. Grading was

done relatively and managers were put under pressure always

Difference in the cultural background The difference in the cultural
background of the people from different countries can be a major
reason for failure of this performance management system. The
managers in China are having a risk averse nature and they follow the
paternalistic and coalitional approach. Similar attitude cannot be
expected from an American manager, who might value merit over
seniority. Hence this system of publically evaluating managers will not
work in the American context.

This kind of performance management system might give rise to

interdepartmental conflicts in the long run because of passive job
performance evaluation system. There is also a scope for rise in
internal rivalry among the employees because of the policy of
developing talent.

Chances of high attrition rate and increase in the HR cost There

might be professionally qualified and well educated managers around
the globe, who might not prefer such kind of evaluation. This will lead
to a high attrition rate amongst employees and will eventually lead to
an increase in the HR cost.

Critical Factors

The OEC management: This management style focuses on each

employee achieving the targets set on a day to day basis and helps in
assessing each employees contribution to the organization in a fair
and unbiased manner. However, the chief drawback is that each
employee would know the performance of other leading to loss of
morale and face, in case of poor performer.
The reaction of people from different cultures to the work culture at
Haier: The reaction of individualistic cultures to lack of anonymity in
appraisal systems might give raise to potential legal implications to the
company.

List of possible solutions:

Apply the same standardized performance management system

across the globe.
Change the system as per the national as well as cultural
differences of the differences of the various regions.

Plan of Action
The Company can alter its performance evaluation policies as per the
cultural background of the region they are operating in. They can maintain
similar standards of evaluating the performance but can change the methods
used so that the sentiments of the employees are not hurt in any way.
Short Run Policy: In the short run the Company can assess the local
sentiments and study the culture of the region they are planning to expand
to. They can accordingly alter the existing policies for that region.

Long Run Policy: The Company can come up with better evaluation plans
which may differ from country to country. Also it can involve its employees
by giving them better incentive schemes and device means of reducing the
possible chances of conflict among departments.