Académique Documents
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Culture Documents
SECTION 5
Problem Statement:
PESTCL Analysis:
Factor
Political
1) China, being a
communist country
2) Stringent Labor Laws
Economic
SocioCultural
Technologic
al
Legal
1) Technological Innovation
2) Technologically
advancement
New Labor Contract
Laws effective from
January 2008
Impact
1) Can influence the
operations of the
company
2) If the stringent labor
laws of China are
applied to other
countries, it can lead to
wage cuts, demotions
which will further spoil
the brand image of the
company
1) Good factor for global
expansion
2) Tendency for company
to gain profit increases
as the purchasing power
of consumers increases.
1) Not acceptable in other
countries
2) Difficult to replicate
Chinese unique culture
to other countries
1) Only a niche segment
was targeted by this
technological innovation
2) Diversified the product
portfolio
These laws gave more
rights to the workers
and the open contact
laws will bring difficulty
in firing workers without
cause.
SWOT Analysis:
Strengths:
1)
2)
3)
4)
5)
6)
Weakness:
1) Huge amount of work pressure on employees and in case the
performance is not upto the mark, the dismal of the employees can too
take place
2) Competition and race among the employees was seen to be adversely
affecting the atmosphere of the company.High internal competition
3) The trend of displaying the ranks of employees can sometimes lead to
insult and demotivation among the employees
4) Giving no permanent position can be a source of demotivation among
the employees.
Opportunities:
1) Successful implementation would help the company in improving its
performance and reduce the attrition rate
2) Continuous technological advancement and innovation will help during
global expansion
Threats:
1) High probability of high attrition rate if the demotivation and
dissatisfaction among the employees continued like this on account of
work pressure, not giving permanent position and trend of displaying of
ranks of employees.
2) On account of the cultural differences, the same system cannot be
applied across different regions.That is the sustainability of the present
PMS system needs to considered
3) Managers were not happy with the 80-20 Principle which can be a
threat to the company in the future.
4) The difference in labor laws can cause a delay in the companys
operations.
5) Role of unions in other countries
FACTORS
Haier practiced a very unique performance management system and the
following factors are important for the success or adoption of the system in
other countries
CRITICAL FACTORS
Sustainability and Adaptability of the existing performance system
Employee management and motivation techniques
Identification, training and retention of the right employees worldwide
Identification,
worldwide
training
and
retention
of
the
right
employees
Haier currently has talented workforce at the moment which was acquired
through careful selection among several candidates. The talent pool was revised
every quarter and evaluations were conducted for each position. It was required that the employee
should constantly strive for continuous excellence. They were provided sufficient training
and were have been groomed to be highly efficient through constant
performance monitoring.so, one of the main requirements of the company is
that they get similarly talented employees in other countries. The new
recruits need to fit in with the work culture of Haier. Also Haier devoted significant
resources to training and development to increase the performance of the low performing
employees. But constant training will lead to increasing costs, when PMS is implemented in other
countries.
Role of Union
Many of the western countries have strong presence of unions. These unions will impact
the major decision policies of the company. Now the unions in other countries might have
an entirely different perspective towards termination policy or the motivation tools used.
They might not accept the 3 phase process of employee termination or the mandatory
rotation of the jobs internally. The process of dealing with low performing managers at
Haier, by classifying them into different levels of sickness could be ineffective and
degrading. So the presence or absence of union affects the policies needed to form the
performance management system.
OPTIONS
1. Apply the current performance management system (that is
prevalent in China) in all the countries
The current performance management system functioning in all the
manufacturing plants of China has earned great success. This
performance management system has not only raised the performance
of the employees but also emphasizes on recognizing and rewarding the
Advantages:
Easier planning and implementation of policies
A unique root is maintained
Low cost of implementation
Less time consuming
Standardized process will simplify the system
Disadvantages:
Might not be accepted by all the employees in all the countries
Underperformance of employees due to the fear of strict policies
Strict policies may lead to high attrition rate
Does not consider the cultural differences
Can create legal issues in other countries
2. Different performance management system for different
countries that suits their cultures and interests
The performance management system has to be designed considering
the organizational needs of different countries. This will help follow a
HR framework that tallies with the country specific cultural
requirements.
Advantages
Considers the work culture and respects the culture of every country
Performance management system is more acceptable to the
employees
Disadvantages
High cost of implementation
Very complex process to handle and coordinate
Very time consuming
Lack of uniformity of policies
Difficulty in aligning a particular countrys policy with the global
policy
Advantages:
Culture specific changes will be well considered
Since the core policies are retained this policy will earn success as it
has in China
Similar core practices and philosophies are followed in all the
manufacturing bases
Employees will be motivated to perform better
Greater productivity and good results
Uniform global identity
Disadvantages:
Complex to implement
Costly process
Implementation in China will be difficult compared to other countries
RECOMMENDATIONS
Considering all the advantages and disadvantages of the above options, we
recommend the third option - Adopt a standardized performance
management system globally.
The performance management system followed in China was considered
groundbreaking not only in China but also for any firm anywhere. We must
also remember that the countries where Haier is planning to expand have
different work culture and so the practices followed in China might not be
acceptable in other countries.
Hence all the core philosophies and positive aspects of this system will be
retained. Only a few changes are required so that all the cultural differences
are considered and thus there is no employee dissatisfaction and high level
of employee performance and productivity.
Again this has to be kept in mind that a sudden change in the Chinese
practices is not easy. The management needs to forecast the long term
implications of the change. The change has to be implemented in different
phases with proper review to ensure smooth progress.
ACTION PLAN
Step
s
1
2
3
4
Action
Timeframe
In two weeks
In a month
In a month
In a month
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