Raising Haier

Case 1: Raising Haier

The article ‘Raising Haier’ is published in Harvard Business Review. This article is adapted from the interview with Mr. Zhang that appeared in the January 2007 issue of Harvard Business Review China. This article explains the world’s one of the most successful companies in China, ‘Haier’ and the leadership of the Zhang Ruimin. In those days, the main key challenge for Zhang was to improve the morale of the employees and pay some salary to them so that that they can be motivated towards the factory. So, it focuses Zhang Ruimin’s leadership of Hair Group initially consisted of improving morale and establishing discipline-an appropriate focus for a small business in severe disarray. It also explains how that small ‘Qingdao Refrigerator Factory’ now has become a global competing company ‘The Haier Group’ in the world and how those unpaid employees are now rewarded in a large part according to the performance of their teams.

This article states and describes different theories form different aspects. The article is not only based on different leadership styles, leadership theories and organization culture but also influenced form other theories such as motivation, reward management, power etc.

Within the article, it states that the Zhang borrowed some money to buy each worker a New Year’s gift of five catties of fish. This is a concept of ‘Motivation’. Employee motivation affects productivity, and part of manager’s job is to channel motivation toward the accomplishment of organizational goals (Steers and Porters, 1983). In article, it is pointed that when Zhang had won some good will, then he stated demanding the good work from the employees. There was very little discipline in the factory. People tended to do things as they saw fit. The rules and regulations were not followed as they were only on paper. So Zhang spelled out the terms for people that he would guarantee payment of their salaries every month but only on the condition that they strictly obeyed the working disciplines he established. According to (Shea, 1988) ethics is the code of moral principles and values that governs the behaviors of a person or group with respect to what is right or wrong.

Kurt Lewin et. al. (1939) explains ‘autocratic leaders centralize all decision-making power in the leader. They give direct orders and directives. Communication is often one way, and the leaders don not seek any suggestions from subordinates.” In the starting time of Zhang, the company was small so he knew most of the employees by name and he could make a decision in the morning and approach to the workers at noon. His leadership then was task oriented and authoritative- he made the decisions and expected the rank and file to carry them out strictly. He was following an autocratic leadership style at that time because the enterprise was in disorder and no one was following the rules and regulations and even the workers wanted him to lead in that way.

Article states that ‘Haier employees are rewarded in large part according to the performance of their teams. If they meet the target then every member of the team gets a bonus in line with his or her respective contributions.’ Mondy et al. (2002:58) define performance appraisal as a system of review and evaluation of an individual’s (or team’s) performance and the process of appraising performance with in organization. This emphasis on the organizations signals a further evolution in the nature of performance appraisal.

The article also states that Zhang wants his each employee coming to work for Haier to have the sense that he or she can find a place in a company to realize his or her own values as well as creating value for the enterprise. Zhang is also giving a room for his employees to make their own decisions and realize their goals. He is also trying to create a flat organizational structure, which has less boundaries and short communication gap between the levels of management. He believes that the employees should feel that they have a customer to answer, more so than expecting a superior. This means, Zhang is now using Lassies-Faire leadership style in the organization. According to Kurt Lewin et. al. (1939) ‘Lasses-Faire leadership gives the group complete freedom to make decisions and complete the work in whatever way they see fit.

The good example of performance-based reward is at DIY Stores, UK. It is a chain of large warehouse style stores selling DIY equipment, self-assembly furniture, plumbing appliances and garden tools. It is a wholly owned subsidiary of a larger retail group and is ranked in the top five in its UK market share. Store managers are rewarded with a standard package of terms and conditions, which are noticeably more generous than that, offered to others managers and staff. (Courtesy: Julie Beardwell and Tim Claydon Human Resource Management, 6th ed., pg. 486-87)

I have had a good experience with performance based reward system. I used to work as a Marketing Representative in a medicine distributor of Time Pharmaceuticals , a medicine manufacturer in Nepal. My task was to deal with different Pharmacies and sell the medicine produced by our company. My basic salary was fixed and I used to get 5% bonuses of my total sales to the parties. This means if I were able to make more customers and sale medicine then my bonuses would have got ore bonuses. It didn’t matter how many customers I met and have discussion, it also didn’t matter how many time I spend to deal with the parties. It only mattered how much I was able to sell the medicines.

I have also had an example of transformational leader. That time (about 25 years ago) when we had monarchy system in Nepal, the king used to be more autocratic. No one could discuss in groups. People were not granted to demonstrate and give speech freely. But later on, when we had democracy after a long people’s revolution; the king changed him self as a Lassies-Faire from an autocratic leader. He gave all his power to the people, so that people could decide their leader by general election. The king acted as a ceremonial king.

Word count: 1028

References

Books:

o Richard M. Steers and Lyman W. Porter, eds, Motivation and Work Behavior, 3rd ed. (New York: McGraw-Hill, 1983).

o Gordon F. Shea, Practical Ethics (New York: American Management Association, 1988).

o Julie Beardwell and Tim Claydon Human Resource Management, 6th ed. (Financial Times: Prentice Hall, 2010).

o Daft, R. L., Kendrik, M., & Vershinina, N., Management, International Edition (Cengage Learning: South-Western, 2010).

Web:

o Lewin et al.(1939) ‘Kurt

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