Raising Haier

Zhang Ruimin's leadership of the renowned Haier Group began before the Chinese company even carried that name. More than 20 years ago, Zhang was appointed director of the Qingdao Refrigerator Factory, which faced enormous debt and didn't seem likely to survive, let alone prosper. The main challenge in those early days was boosting the morale of his workers, who had gone unpaid for months and grown deeply dispirited. Zhang borrowed money so he could catch up on payroll and make other improvements--and his employees took heart. Once he had won their goodwill, Zhang explains in this first-person account, he started demanding good work. There was very little discipline in the factory at that point. Rules and regulations existed in writing but had never been seriously upheld. Zhang guaranteed the payment of salaries, but only on the condition that people obeyed the policies he established--some as simple as "Stealing company property is prohibited." Those who violated factory rules could be given demerits or even deprived of factory membership (that is, no longer allowed to be part of the company's collective ownership). Far from intimidating employees, this boost in discipline gave people a sense of security and hope. Now that Haier is a world-class operation competing in global markets, Zhang's focus as chief executive has shifted from setting a strong example to giving employees room to make their own decisions and realize their goals. To that end, he is striving to create an organizational structure that is as flat and has as few boundaries as possible. He is also emphasizing what will serve the market, not what will please someone further up in the company hierarchy. Employees, he believes, should feel that they have a customer to answer to, more so than a superior.

• Operations strategy
• Personal purpose and values
• Morale
• Human resource management
• Organizational structure and design