Management Control System In Haeir

By :
Muhammad Dio Viandra
1610531014
Introduction...
 In 1984, Zhang Ruimin took over a nearly bankrupt
refrigerator factory in Qingdao, China.
 In 2003, the company’s global sales hit $9.7 billion with a
growth rate of 70% during the previous 19 years.
 Haier Group is recognized as a worldwide brand. On January
31, 2004, the firm ranked 95th after such household names
as Coca-Cola, McDonald’s, and Nokia, which were the top
three on the World Brand Laboratory’s list of the 100 most
recognizable brands. Haier was the only Chinese brand on
the list.
How Can ?
 OEC is a management control system implemented by China
Haier Group, aimed at controlling all factors that affect the
achievement of each employee's target and is carried out
every day with a 1% increase compared to the previous day's
achievement.
OEC ?
 O mean Overall
 E means Everyday, Everyone, Everything
 C means Control and Clear

 OEC means that every employee must achieve the work

target every day. In this case the target is in any field and for
anything. This system is motivated by the conditions of the
Chinese people, where there are many rules that still occur
several violations in everyday life.
Haier’s OEC Charactersitic
 Focus on and understand customer value, product quality,
operating efficiency, innovation, and speed to market.
 Commit top management and leadership to creating a “new way of
management” and a performance culture.
 Involve management and employees in creating the OEC
management-control system. Allow them to become familiar with
OEC so they feel included and share in ownership of the system.
 Educate management and employees. Use seminars and weekly
company newsletters to explain the firm’s strategy, customer
value, OEC management, and the idea of every employee being a
strategic business unit (SBU) to enable them to understand the
concept and appreciatethe benefits.
 Create desired incentives, and reassure employees that they will be
properly evaluated in accordance with their performance.
Implementation of OCE
 Determination of Job Targets
 Process of Job Control and Evaluation
 Reward System
Determination of Job Targets
 Determination of annual targets at the company level, taking into
account past performance, market estimates, and proposed
development for each division. Targets are specific, measurable
and made every December
 Determination of annual division level targets, specifically
equipped with detailed strategies, schedules, PIC, targets,
processes and evaluation methods. Strategies are also made in
December
 Making a monthly strategy, which is made by each department (on
the 26th), which contains details of actions, targets, values,
methods of evaluation, correction and measurement processes,
PIC and daily control processes
 Employees make or make daily work controls, consisting of
detailed assignments, results, detailed criteria, how to measure
results and the daily review and control process by the boss and
the specified PIC
Process of Job Control and Evaluation
 Based on the strategy, detailed action and a list of tasks that have
been determined, control is carried out every day, measuring and
evaluating the results of meeting or not achieving work targets.
 There are daily briefings by superiors before work, self assessment
by each employee by giving them the opportunity to assess
themselves.
 Employees in the operational section, always provide control
results data about the amount of production, quality, material
consumption, level of technology, equipment maintenance and
conditions, production safety and workplace conditions, and work
discipline.
 Bosses always monitor every two hours to do problem solving.
Every day (before work hours end), employees check in according
to the format provided and report to the supervisor.
 Based on the reward system, the results of the daily work
evaluation are related to the reward value obtained by each
employee with a predetermined formula.
 Principles of reward value are standard wages (based on quantity)
+ rewards (achievement above standard) - penalties (achievement
below standard).
 Each supervisor will provide the results of an evaluation
(correction, evaluation, suggestion) of the employee's report to
the work manager. The evaluation results affect the value of the
reward given.
 Every Manager checks the results of the evaluation, fills out what
is needed and submits it to the factory leader.
 The factory leader checks again, both related to rewards,
problems that have been completed / not yet, and provides
solutions if needed.
 If needed, department heads or divisions gather to provide
solutions to problems that cannot be resolved.
Reward System
 The reward or incentive system that is developed is openness
and fairness, meaning that employees with better
performance will get higher incentives.
 The company also adopts a point system of work results,
where each work results in a point which in turn is assessed
with certain incentives. In this case each employee and
management can find out the development of the amount of
reward to be obtained and the reason for getting the reward.
 The company also provides signs / stickers for quality checks
on each work result. Sticker color shows whether the quality
of work is good or lacking, and each employee can exchange
stickers that are good with incentives and vice versa, certain
stickers mean punishment.
Business Strategy
Thank You...