10 Questions About Haier’s RenDanHeYi Model—Answered
For the past few weeks, I’ve been analyzing around 10 Q&A sessions with team members from Haier, the Chinese multinational that has reinvented corporate management at scale. These sessions were part of a six-week Masterclass where practitioners got the chance to ask direct, unfiltered questions about how Haier runs a company with over 80,000 employees—without a traditional hierarchy.
Haier operates on the RenDanHeYi model, which breaks the company into thousands of micro-enterprises (MEs) that function like independent startups. No bureaucratic layers. No command-and-control managers. Just small, autonomous teams directly accountable for their own success.
Haier’s way of working clearly highlights the advantages of flat organizational structures, especially when autonomy and accountability are pushed to the edges of the organization.
If this sounds radical, that’s because it is. Haier has grown from a nearly bankrupt refrigerator maker in the 1980s to a global leader in home appliances—all while dismantling traditional corporate structures. But does it actually work in practice? Here are the 10 most common and toughest questions that practitioners ask about Haier’s model—answered by the people living it every day.
1. No managers? No hierarchy? How does anything get done?
"We don’t eliminate leadership—we distribute it. People don’t wait for orders; they take ownership."
Haier runs on thousands of MEs, each with:
✔ Full decision-making power over products, strategy, and budgets.
✔ Direct accountability for profit and loss.
✔ A focus on customers, not pleasing bosses.
The key? No one waits for approval from higher-ups, because there are no higher-ups.
This kind of distributed leadership is a defining element of a well-functioning flat management structure, where decisions are made by those closest to the work.
2. Who makes strategic decisions?
"There is no top-down strategy. Each micro-enterprise sets its own direction based on customer needs."
Instead of a centralized strategy, Haier’s approach is:
✔ Customer-driven—each team identifies real needs and builds solutions.
✔ Fast and adaptable—no bureaucracy slowing things down.
✔ Coordinated through ecosystems—MEs form alliances to achieve bigger goals.
3. What happens if an ME fails?
"If a MEs consistently underperforms, it is either restructured or shut down. There’s no artificial protection."
Failure isn’t punished—but it’s not ignored either:
✔ MEs get time to improve but must show progress.
✔ If an ME can’t sustain itself, it dissolves—and employees can join other MEs.
✔ Only the best ideas survive—which keeps Haier innovative.
4. How do people get paid?
"Salaries are linked to performance, and profits are shared among team members. If an ME thrives, its employees earn more."
Haier’s pay structure is unique:
✔ No standardized salary bands—compensation is based on value creation.
✔ Profit-sharing at the ME level—employees directly benefit from their results.
✔ No artificial pay ceilings—top performers can out-earn traditional executives.
5. Doesn’t this system create internal competition?
"Yes, but in a healthy way. Competition isn’t about beating colleagues—it’s about delivering the best value to customers."
Haier encourages:
✔ Multiple MEs working on similar problems—the best solutions win.
✔ Collaboration within ‘ecosystem micro-communities’ (EMCs) to share knowledge.
✔ A focus on external competition—instead of internal politics.
6. How do MEs share resources without a central HQ?
"Instead of departments, we have HR, Finance and Support MEs. These are independent MEs that provide HR, finance, and legal support—like a marketplace."
Instead of top-down functions, Haier uses:
✔ Internal service providers—MEs pay for support only when needed.
✔ A free-market approach—if an internal service is bad, teams can outsource.
✔ No bureaucratic bottlenecks—support teams compete for business.
7. How do employees handle job security in this system?
"If an ME shuts down, employees aren’t left behind. They return to the ‘talent pool’ and find new roles within Haier."
Instead of job security through hierarchy, Haier offers:
✔ Job security through opportunity—employees can join new projects.
✔ Internal mobility—if an ME dissolves, talent is reabsorbed.
✔ A culture of entrepreneurship—employees expect to adapt.
8. What about long-term innovation? Doesn’t this short-term focus kill big ideas?
"Some projects take years to pay off. We solve this by having a Science & Technology Committee that funds high-risk, long-term bets."
Haier supports innovation through:
✔ Short-term goals for MEs—ensuring immediate accountability.
✔ Long-term investment teams—funding deep-tech and future bets.
✔ A mix of immediate execution and future thinking.
9. Can this work outside of China?
"Yes. We’ve implemented this model at GE Appliances in the U.S. The principles are universal, but we adapt the details."
Haier has globalized its model by:
✔ Respecting local cultures—not forcing a one-size-fits-all approach.
✔ Adapting structures—balancing autonomy with coordination.
✔ Proving the model works across industries and continents.
10. What’s the hardest part of transitioning to this model?
"Unlearning old habits. Most people are trained to follow orders. Here, you must take ownership and act like an entrepreneur."
The biggest challenges:
✔ Employees hesitate to make decisions at first.
✔ Former managers struggle to let go of control.
✔ It takes time to fully embrace the new mindset.
These challenges of flat organizational structures are common when organizations move toward self-management.
The good news? Once people adjust, they never want to go back.
Final Thought: Haier Proves Self-Management Works—At Scale
Haier isn’t just an experiment—it’s a $40 billion company that has thrived under self-management. It proves that even massive organizations can be agile, decentralized, and customer-driven.
Want to learn more? Join our Corporate Rebels Masterclass, where we dive into real-world transformations like Haier.
