Skip to main content
Success Story

Haier accelerates innovation by making everyone a CEO

A case study from The Future Chief People Officer: Imagine. Invent. Ignite.

Future of Work|Talent|Total Rewards
N/A

February 5, 2020

How Haier accelerated innovation by putting human value first and encouraging everyone to be their own CEO.

This case study is an excerpt from The Future Chief People Officer: Imagine. Invent. Ignite. The study reveals the key skills, mindsets and behaviors that will help the chief people officer of the future shape rigorous and innovative human capital solutions.


The challenge


In the early 2000s, Haier Group Corporation, the world’s leading home appliance and consumer electronics brand, faced a twofold challenge. First, it needed to respond more quickly to shifting customer demands in a highly competitive market at a time when changing technology was making possible new types of customization and services. Second, Haier lacked the skilled talent needed to leverage the new technology and create value for its customers.


The approach


This model completely subverted the traditional pyramid model of management. Every employee is empowered to give full play to his or her capabilities, be deeply devoted to his or her work, and create value for users.

As early as the 1990s, Zhang Ruimin, CEO of Haier Group, realized that the traditional bureaucratic management model and the decision-making system was the key issue hindering innovation and problem solving. Thus, he began to explore a model for employee self-management and “self-dependent” innovation. After more than a decade of exploration and practice, he put forward the Rendanheyi model in 2005. According to this notion, “Ren” means employees, “Dan” means users and “Heyi” means making employees create value for users. This model completely subverted the traditional pyramid model of management. Every employee is empowered to give full play to his or her capabilities, be deeply devoted to his or her work, and create value for users. In Haier’s culture, the right to make decisions is delegated to the front line: Everyone is his or her own CEO.

To support this new and radical microenterprise model required a transformation within HR. Specifically, HR leaders needed the ability to attract more quickly the type of skilled entrepreneurial talent that would power innovative solutions at Haier. Doing so necessitated a change in HR’s mindset and approach.

Under the Rendanheyi model, Haier has gradually evolved into an open entrepreneurship platform, where all talent can join and start their own business. Haier also considers the world as its talent pool, so it became a prerequisite for HR leaders to adopt a more open mindset as top talent could come from anywhere. In addition, because Haier didn’t offer defined jobs as much as opportunities for people to make the best use of their skills working on different projects, HR had to develop the ability to match skills to opportunities as opposed to hiring for a specific role.

To power this ongoing process, Haier introduced its entrepreneur attraction platform, an open talent platform that allows Haier to tap more quickly skilled talent from around the world. In this way, HR is driving value at Haier by enabling a steady flow of talent with highly sought-after skills and the entrepreneurial mindset required to thrive in the Haier culture and accelerate innovation on the front lines.

The entrepreneur attraction platform played a key role in the success of Haier’s microenterprise model. In implementing this radical approach to innovation, Haier took the long view. This model wasn’t immediately successful because changing mindsets and culture is difficult. Haier had to start with small pilot programs and then replicate the programs that were successful. Shareholders expressed concern when the stock did not rise significantly in the first few years


The results


In 2014, nine years after this approach was initially implemented, the Haier Group’s profits increased twelvefold, amounting to a 28% compound growth rate over this period.39 In 2016, its stock price doubled, and in 2017, the stock price doubled again.

Behind the rapid growth of profits and stock prices is the achievement of Rendanheyi’s implementation over the past decade. Haier always put human value first and encouraged everyone to be his or her own CEO. This has maximized creativity and promoted enterprise innovation and long-term development. Today Haier doesn’t offer employees jobs — it offers them a platform to become entrepreneurs.

Contact Us
Related content tags, list of links Success Story Future of Work Talent Total Rewards

Related Solutions