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OEC ManagementSpring Control System Helps 2005 China Haier Group Achieve Competitive Advantage

VOL.6 NO.3

B Y T H O M A S W. L I N , P H . D .

THE

COMBINATION OF A NEW CORPORATE CULTURE THAT EMPHASIZES EXCELLENCE,

A CHANGED BUSINESS STRATEGY AND A MANAGEMENT-CONTROL SYSTEM OF WORK , RULES AND DISCIPLINE TURNED A NEARLY BANKRUPT COMPANY INTO A SUCCESS.

I

n 1984, CEO Zhang Ruimin took over a nearly bankrupt refrigerator factory in Qingdao, China. In 2003, Haier Group’s global sales hit $9.7 billion with a growth rate of 70% during the previous 19 years. Today, Haier 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 100 most recognizable brands. Haier was the only Chinese brand on the list. According to an October 2003 article in the Harvard Business Review, Haier is one of the five Chinese “National Brands to Watch.” How did it achieve its success? As one of China’s fastest-growing companies, Haier Group fits a 1999 Gallup survey profile for a successful company. Customer service, product quality, operating efficiency, innovation, and speed to market are among the top seven factors for success. Haier excels in all these areas. To achieve success, the company developed its corporate culture, business strategy, and OEC

management-control system, which enforces firm work rules and discipline. Haier’s Human Resource 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.” Why did CEO Zhang choose to implement the OEC system? He says,...