Unique and innovative HR policies of Haier -- Which are-
1-race track model of recruiting and promotion.
2-Ways to apppraise high performance manager and how to deal with low performance managers.
3-Daily OEC management evaluation of factories workers.
4- 6 S footprints on factory floor.
5- 80-20 management responsibility principles.
6- Individuality monthly SBU profit and loss statement for each employee.
7- SST market chain based compensation system
Haier's performance-management system consists of:
* Daily OEC management evaluation of factory workers,
* 6S footprints on the factory floor,
* Racetrack model of recruiting and promotion,
* 80-20 management responsibility principle,
* SST market-chain-based compensation system,
* Ways to appraise high-performance managers and how to deal with low-performance managers, and
* Individual monthly SBU profit and loss statements for each employee.
Evaluating Factory Workers
Haier's incentive policies are openness and fairness. It adopts a point system for production workers using the OEC management 3E card. Haier's Human Resources Management Director Wang Yingmin explains the OEC acronym: "O stands for Overall; E stands for Everyone, Everything, and Everyday; C stands for Control and Clear. OEC means that every employee has to accomplish the target work every day. The OEC management-control system aims at overall control of everything that every employee finishes on his or her job every day, with a 1% increase over what was done the previous day." Employees are required to fill out an OEC 3E Card daily. This is a Microsoft Excel file with items of production quantity, quality, defective product material used, technology level, equipment evaluation, safe operation, and labor discipline evaluation.
If an employee earns more points on the 3E 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.
The firm also uses quality-check coupons to provide an additional incentive mechanism.
Each employee has a quality-check coupon booklet that contains red coupons for rewards and yellow coupons for penalties. The booklet lists all quality problems the firm has detected and provides guidelines for checking each defect. If an employee failed to find and check a quality problem that was later found by his or her team member during a cross-check or by the superior during a managerial check, the employee will lose a red coupon and receive a yellow coupon that will count against that day's wage and bonus.
As further motivation, each employee earns a daily grade for actual performance and progress toward achieving his or her target. Workers see the daily evaluation results the next day on the factory's bulletin boards. The employees who are acknowledged as the best workers for three consecutive days have the honor of telling their experiences to fellow workers. The employees who become the best workers most frequently in one month are considered the best workers of the month. They have more opportunities to attend job training and enjoy social benefits, while employees who become the worst workers most frequently in one month are demoted to probation workers. Each month, both the best and the worst employees have their names publicized on the firm's bulletin board. Each employee also receives a red smiling face (excellent), green face with neutral expression (average performance), or a blue sad face (poor performance) monthly.
Beyond acknowledging the best and worst employees, Haier implements the 10-10 principle. In a team, 10% of the members are the best, and 10% are the worst, so to improve the team's overall performance Haier encourages the 10% best to help the 10% worst.
6S Footprints on the Factory Floor
Haier's workers in China and in U.S. factories are imbued with the disciplines of a 6S daily routine, as Figure 2 shows. 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 order of use), seisoh (keep the worksite clean), seiketsu (keep yourself clean), and shitsuke (follow workshop disciplines). Haier added a sixth, the English word "safety."
To promote the 6S routine, small yellow 6S squares are painted on every factory floor. At the beginning of each workday, team leaders stand inside the squares to give a briefing on that day's work and relay any news to the employees. At the end of each workday, some workers 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 offer insights on their good work.
Racetrack Model of Recruiting and Promotion
Haier has a job-rotation policy for management positions in which the average stay in a management position is three years and the maximum is six. The firm uses a job system that's based on the racetrack concept for new job openings and promotions. All employees can apply and compete for work-related races such as job openings and promotions, but winners have to keep racing to defend their current jobs. The company keeps a talent pool of managers based on monthly performance results. These talent pool managers have a higher chance of being promoted, but some managers may be eliminated from the talent pool during each quarter's review. Every month, the Human Resources department publicizes the job openings and the requirements and conducts strict performance reviews, written examinations, and interviews. As a result, a number of motivated and experienced line workers keep moving into management positions, and a number of young college graduates obtain managerial positions after being trained in the low-level line positions.
80-20 Management Responsibility Principle
Approximately 20% of Haier's employees are in managerial positions. The 80-20 management responsibility principle says the 20% of employees who are managers are responsible for 80% of the company's performance results. But it doesn't necessarily directly translate to an 80:20 ratio of fines or bonuses. For example, one employee in the washing machine division made a mistake that produced a defective product. After the investigation, this worker was fined $6.25 while the manager in charge was fined $37.50.