The Practice And Its Theoretical Research Of Haier's "Inverted Pyramid" Management Model

With the acceleration of global economic integration and the rapid development of information and technology, the traditional "pyramid" organizational structure no longer meet the increasingly complex market changes. Organizational structure of modern enterprise has developed toward the trends of flat, flexible, network and virtualization. In many types of modern organizational structure, the "inverted pyramid" organization structure is particularly prominent.To well understand the structure of the inverted pyramid organization, the article first introduces the background, purpose and meaning of the inverted pyramid management method. Then it shows the detailed description of the traditional, modern types of organizational structure and several factions'theories of the organizational structure. Both of the business research literatures for the design of incentives and the domestic innovative practice are reviewed. In the following part, the article builds two dynamic game models- a customer with a front-line staff and a front-line staff with a manager. In both models, the players'benefit has Pareto improvement from the pyramid management to inverted pyramid management. Thus the effectiveness of the "inverted pyramid" management method is demonstrated. The article points out that there are two conditions that autonomous body directly meets the client under Haier Group's "inverted pyramid" management: the incentive-compatible mechanisms and transaction costs'reduction.In the following the article starts to present the on the practices of Haier Group's "inverted pyramid" management. Firstly it introduces the overview of Haier Group's development; secondly taking the county network management body and the line management body for example, it clarifies the design of the Haier "inverted pyramid" management mechanism. Finally it presets the detailed descriptions of the "seven decisions" and "eight mechanism". Taking the example of electric water heater, the article shows the structure of the line management body in "inverted pyramid" and the TEAM autonomous management body. The inverted pyramid management makes front-line staff understand the characteristics of consumer demand, and brings a huge sales and rises staff's salaries.The theoretical and empirical analysis proves Haier's inverted pyramid organizational structure is practical and effective. The staff have their own market goals; staff and companies'value are both achieved; staff personally hunt users; staff share their accomplishments. The above concept and Haier's advanced corporate culture has an important educational significance for companies with the Big Company symptoms.