Executive Summary
Leadership and worker motivation are two important factors in the survival and growth of any organization. A study with regard to how motivation can be improved in the Thai Lay Fashion Company has been conducted here. The organization is a successful garment manufacturer based in Hong Kong with its production facility located in China. The company has been exporting garments to many European markets for the past twenty years.
The study was conducted mainly because a study of the same has not been done yet. It was found inevitable that such a study be done so that necessary management changes can be done to improve worker productivity especially in its factory. A survey was conducted along with a review of relevant literature. Certain issues like dissatisfaction with pay, lack of employee motivation and employee recognition, bonus and incentive schemes etc were found to exist after the study. As a result necessary recommendations and steps to correct the same have been given at the end of the study. The management can definitely improve productivity if these recommendations are carried out correctly.
Company Background
The Thai Lay Fashion Company Ltd is a well known garment exporter with more than twenty years of experience in the field of garment exporting. The main market of the company is countries in Europe. Thai Lay fashion Company was started in 1991 in a small way. Through hard work and manufacturing of quality products the company has grown to its present size and fame. The number of employees in the company was only 100 in the early days of the company.
Now the company gives meaningful employment to nearly 320 employees. The company currently operates in two locations. Its corporate office and administrative office is located in Hong Kong and its factory where all the manufacturing is done is located in mainland China. In Hong Kong its office are located in the Kowloon region of the island. Te factory in China employees nearly 300 people and the rest of the employees are located in the head and administrative offices in Hong Kong.
Products
Thai Lay Fashion Company Ltd is engaged in the manufacture of a wide variety of garments. The product portfolio of the company is given below. The products are manufactured for men, women and children. In the men and women section the company manufactures T- Shirts and full sweaters. The children’s section has a wide range of garments. They include denims, dresses, knitted sweaters and other apparels, sportswear for both boy’s and girls and general dresses for boys. According to the trade website, the most sought after product of the company is the quality sweaters manufactured by the company. (Business information, Thai Lay fashion Company Ltd., Esourceapparel ™ – Revolutionizing the business of fashion).
Locations
As mentioned earlier, the factory is situated in China and its administrative, and other divisions (including sales and marketing) is situated in Hong Kong. The company follows a simple logic behind this setup. Real estate is prohibitively expensive in Hong Kong and since garment manufacturing requires a factory of reasonably size, it was set up in mainland China where investment will be much lower. It is also easier to find cheap and quality labor in China when compared to Hong Kong. It should be remembered that the company was set up in 1991 when the globalization and free trade was not common especially in China.
This was the reason why its administrative offices were situated in Hong Kong which is known as a trading capital of Asia. It would be much easier to contact customers and conduct business from Hong Kong rather than China. Things have changed a lot in that country and had the company been set up now, all operations probably would have been in China only. The manufacturing unit approximately 3500 square meters in size.
Operations
Thai Lay Fashion is a garment manufacturer and engages itself in the process of making products starting from yarn. The company sources its yarn (both cotton and wool) from sources in China itself. The quality of the raw material is good and the prices are very competitive. This also enables the company to price its finished goods very competitively. Coupled with good quality and a competitive price, the company has been able to grow rapidly in the European market.
Once the yarn is received, the first step is to dye the yarn according to requirements. A dyeing master is in charge of operations and he works according to the directions given by the design department. The design department makes its own designs as well as receives them from overseas customers. The company has well-motivated design team in China. Once a design is received, a meeting with the production manager is arranged and the modalities worked out. The marketing department will also inform both the above departments as to size, quality, quantity, and the number of days within which the order has to be completed.
Once this process is completed, the production department will see to it that the work is completed according to schedule. Once production is completed, all orders are packed and sent to the customer directly as per instructions from the head office. The goods can either be shipped or airlifted as per customer requirement. The minimum order for a product must be 1500 units and the average lead time to complete an order (from receiving the order till manufacture) is approximately ninety days. The monthly capacity is 100,000 units (all products combined) and the current turnover is approximately 15 million USD.
What works well in Thai Lay Fashion Company Ltd
The company has a well established manufacturing setup in China with over twenty years of experience. The company has so far managed to obtain quality yarn from suppliers in China itself and they are regular in supplying the product. The design department which is the creative unit of the company is motivated and is able to create good designs as well as help production department replicate designs sent by customers. The work schedule has two eight hour shifts with approximately 100 employees each. The availability of dyes is also as per requirements of the company. Power supply (electricity) is also quite regular recently. This was not the case about five years back. In case of failure, the company has in house power backup (through generators).
Things needing improvement in the company
The main problem faced by the company is delayed orders. It has been found that workers sometimes slow up the production process mainly due to lack of motivation. One of the reasons they say is that the salary and bonus scheme by the company is not enough to cover the amount of work they do. But one advantage is that the workers consistently produce the required quality in spite of going slow on work.
The customer in Europe obliges the delay due to the quality maintained by the company. But in rare instances, orders have been cancelled due to the delay resulting in losses. In such a case the products are sold at cheap rates in the local market. The administrative office in Hong Kong is well run. The main problem is the high turnover of the sales and marketing staff. These are the two main areas of concern for Thai Lay Fashion Company Ltd. The company is looking to expand its customer base and these two problems have to be solved before doing so.
Research Analysis
Managers are being encouraged to implement people strategies that support the organisation’s business objectives and increase accountability and transparency around people management and reporting.” (Managing People. 2005-2008).
The main aspect or pre-condition that would impinge upon becoming a successful management and leader would be in terms of motivating and managing people in the organisation. In this particular research analysis, it is seen that the people’s strategies are well defined and formulated with the result that motivation is strong and pervades throughout the organisation. Motivation could be defined to be the moving force that guides individuals and groups towards achieving goals and objectives, either individually or collectively. It is important because in the absence of motivation, there would be no incentive to work or contribute towards the well being of individual, or the institution.
Therefore robust motivation is necessary for success.” Others like to accomplish goals and feel as if they are contributing to something larger than themselves, something important. Some people have personal missions they accomplish through meaningful work. (Susan M. Heathfield: About.com: HR: What people want from work: Motivation success:
In this case study, it is also seen that motivation is linked with productivity, since stronger degree of motivation could lead to higher productivity. The main impacts of motivation are:
- High level of job satisfaction
- Recommend for better work procedures and processes
- Salary levels would increase
- Company would benefit if I worked better and harder
- At peace with working environment
- Harmonious working with people
- Better planned career advancements
- Overall growth and development of company
The results of the survey analyses were seen in terms of the years of experience and also the age groups of the individual employees (in terms of age seniority)
The results for years of experiences as compared to proportion of motivation were 24% between 0-5 years, 27% between 6-10 years, 28% between 11-15 years, and 38% with 16+ years of service. These results are close to the ideal distribution of around average 27% motivation level. When the ages of the executives are considered, it is seen as follows:
- In the age group 18-25years: training levels: Perceived levels of motivation 57%
- In the age group 26-33 years: Junior management levels: Perceived levels of motivation 59%
- In the age group 34-41years: Middle management levels Perceived levels of motivation 65%
- In the age group 42-49years: Senior management levels Perceived levels of motivation 55%
- In the age group 50-58years: Top Strategists levels Perceived levels of motivation 58%
Thus it is seen that the level of motivation in any reputed organisation could be seen to be increasing through the number of years of service put in by the employee over a period of time.
This is because corporate’s loyalty rises over number of years employee has put in; again in the case of seniority of professional skills, it is seen that it rises from apprenticeship to middle management and then tapers down, the main reason being that the trend being toward outsourcing and use of outside consultants for senior positions in order to gain better mileage. The BPO and KPO industries, especially favour consultants at senior levels who could add dimensional thrust to strategic thinking and decision making at high levels
Coming to the analysis part of the survey, it is seen that this Survey was conducted to test the main aspect of motivation among the sample population of around 25 employees, 50% of whom were male and 50% females. It had become necessary to have equal representation from both genders to avoid the occurrence of bias in selecting and assessing data. The break-up of this was in terms of
- 45% being trading business consultants
- 25% being supervisory levels
- 15% being in the middle management levels
- 15 % being in the top management levels
This representation has been made appropriate because the present trend could be in terms of employing business consultants, especially in the areas of internet, and global business prospects.
It could also be seen in terms of knowing the impact of such aspects upon the business conduct. and its implications in future years.
In the realm of motivation it would be necessary to speak about Maslows Hierarchy Need Theory which spells out the importance attached to different levels of need satisfaction for humans.
The five point programme of Maslow’s Hierarchy Needs is as follows:
- Basic physiological needs- food, water,
- Safety, security needs – house and its privacy
- Belonging and affection needs
- Esteem or ego nourishment needs
- Self actualisation needs.
While its classification has been right, it needs to be mentioned that the chain of occurrence of Maslow hierarchy of needs, which is a major ingredient in motivational studies,
In the context of this Company, it is seen that an internal survey was carried out among the respondents using the Likert Scale to judge their reactions to various queries.
Productivity issues.
Motivation driven questions.
It is seen that these questionnaires form part of the methodology for assessing the reactions of respondents in this study. The answers to these questionnaires shall assess the levels of motivational assessment for judging present, and how these positive and reinforced motivations could be used for betterment of their performance based on this questionnaire and the responses it has evoked.
It is now necessary that this analysis concentrates on the findings of this study in terms of the scores.
The scoring rates are accumulated with lowest Point 1 each for every answer in disagreement and progressively adding up to Point 5, for every agreeable answer.
Methodology
In a closed door environment, the respondents were requested to answer the questionnaire and place it in the ballot. The respondents were required to honour the Code of Conduct and ethics with respect to such surveys in terms of fair play and avoidance of duplicity or unfair means. Moreover, respondents were not permitted to discuss the answers among themselves, in order to preserve confidentiality and privacy of such surveys. (Confidentiality and Data Access Issues among Federal Agencies: P.2: Confidentiality protection and the need for data.
All the respondents co-operated fully to the methodology and the collected questionnaires were collected and processed for finalizing the results.
Analysis of primary research and Methodology adopted
When the analysis of these figures derived from the Methodology of questionnaire sampling is done, it is seen that a clear signal has been sent down; in as far as productivity and motivation are concerned.
Productivity aspects
The frequency of productivity measuring techniques have found recognition in that it is now accepted practice, with great deal of confidence being placed on its promoters. It is widely believed as a result of this survey that productivity and motivation are inter-related and underpin each other. However this survey has sent strong overtures that coercion does not beget productivity and is a negative aspect, in most cases.
The last aspect could be seen in terms of whether increases and decreases in pay scales contribute to productivity and it is seen that they are contributory factors all the way.
Coming to the aspects of motivation theory, it could be said that positive factors like good and temperate influence, favourable working environment, and the need to treat employees as business partners, positive employee empowerment, etc, are all high motivational factors for bringing the enterprise forward and has been put forth by the respondents in no uncertain terms.
The negative aspects regarding motivation that drew flak were in terms of high stress levels that could ensure early burnout, staff being constantly wired up and controlled by the management without flexibility of operational
In which areas does it work?
In this case it is seen that the trading office of the export garment unit is in Hong Kong, employing around 20 workers while the manufacturing is carried out in China employing around 200 employees.
Use of methodology
Thus it is seen that the methodology adopted is best after taking into consideration the fact that in a qualitative study such as this, it is imperative that critical study through interactions with respondents be applied in order to arrive at the crux of motivational and productivity liked issues and derive plausible and acceptable results.
Recommendations
A study of the situation with regard to employee motivation in Thai Lay Fashion Company Ltd has been completed. The recommendations that the management need to follow to correct the problems found are listed here. One of the problem areas especially at the manufacturing plant in China is employee motivation. Before the beginning of the study the management was aware that there was a motivation problem, but attributed the cause to dissatisfaction with salaries, wages and other benefits. But the study has revealed that there are other issues that are the cause of low level of motivation.
They will be listed and recommendations for correcting the same will be given. The management should take the matter of employee motivation seriously. Unless the employees are motivated, even the survival of the company will be at stake in the long run. A review of management literature will show that motivation of employees is a very serious matter. There are many theories with regard to employee motivation and the prominent ones are given below for the information of the management.
They are studies and theories by “Douglas McGregor (theory x and theory y), Frederick Herzberg (two factor motivation hygiene theory), Abraham Maslow (theory z, hierarchy of needs), Elton Mayo (Hawthorne Experiments) Chris Argyris Rensis Likert and David McClelland (achievement motivation.)” (Employee motivation: Theory and practice, Employee motivation, the organizational environment and productivity, Accel Team). Room’s self expectancy theory and Adam’s equity theory are also important. A brief overview of some of the theories is given below:
Douglas McGregor (theory x and theory y)
Douglas McGregor has formulated this theory during the 1960’s in his book ‘The Human Side of Enterprise’. He states that there are two sets off factors (opposite) that affect motivation. Theory X gives the factors that are favored by the management and supervisors during the olden days. Theory Y gives factors that are mainly held by the employees and the modern day managers. According to Theory X, employees do not generally like work, they are not ambitious, they do not have the aptitude for problem solving, motivation is purely physical and not psychological, they need close supervision for effective productivity, they resist change and have low levels of intelligence (and hence can be tricked).
Theory Y gives the opposite view. Here work is enjoyable if certain other conditions are favorable and they are motivated and do not need close supervision in many cases. They have problem solving abilities and are willing to handle responsibility. (Motivation Theory X – Y( McGregor ), Envision).
It can be seen that most organizations will take the Theory Y in most cases. In the case of Thai Lay fashion, some factors in Theory X should not be ignored. Factory workers are at the bottom level of the hierarchy and are doing repetitive work. They may not have the higher levels of thinking like middle or top management level workers. Hence supervision is quite necessary here. If not they may not give full work productively.
Frederick Herzberg two factor motivation hygiene theory
This theory states that employees have five levels of needs and the importance of each need will depend on the satisfaction of the previous need. The five needs are physiological needs, safety needs, social needs, ego satisfaction, and self- actualizing needs. So only if safety needs are satisfied that the social needs will be given importance and so on. The higher needs like ego, and self actualization are usually found in higher level jobs. For workers, safety, social and satisfaction needs will be more important and the management should see that these needs are satisfied.
Elton Mayo (Hawthorne Experiments)
This was one of the earliest experiments which resulted in the recognition of social and psychological aspect of motivation. The study of workers at Hawthorne factory initially showed that productivity increased with better lighting and more rest time. But productively did not significantly decrease when the conditions were reverted to the earlier state. It was later found that workers were actually responding to the caring supervision of managers plus the added interaction (socialization) they got with increased rest time. So supervision should be more humane and caring at the factory in China and this will improve productivity to a great extent.
Vroom’s expectancy theory
This theory states that employees are motivated by different reasons and are dependent of their skills, attitude, personality, experience etc. but what is common is the employees will be motivated (for whatever reason) only if they feel that their performance and rewards are positively related, that performing in the right way will actually bring in the wanted reward, the resulting reward will an important need of the employee and the need be strong enough to make the employee perform. The management need to see that the workers be made sure that these four factors given above will be met by the company. (Expectancy Theory – Victor Vroom, Motivation and Management – Vroom’s Expectancy Theory, Value Based management.net).
Employee recognition
There are many factors that motivate employees, but recognizing the employee through monetary and non-monetary benefits is very essential. Thinking about the issue, it can be seen that there would be no individual (whether he is an employee or not) who does not like to be recognized for their actions.. It should also be noted that workers are doing a dull and repetitive job, and salary and bonuses may not be enough to motivate them. There are some conditions that have to be taken care of for employee recognition to be effective. They are given here and the management should see that they are practiced while recognizing the employee.
No employee should be left out of this program of recognition. All categories of workers across all departments should be eligible for being recognized. Recognition should be clear and specific. In other words all the employees including the one being recognized should know for what action he is being recognized. The management should also know this. Clear and easily understood performance criteria should be drawn up and every employee who achieves this should be recognized. Most importantly, the recognition must be made very close to the action. Too much time to recognize will result in employees losing interest in the recognition. (The Five Most Important Tips for Effective Recognition, Susan M. Heathfield, Five Tips for Effective Employee Recognition, About.com – Human resources).
For Thai Lay Fashion, outstanding employees can be recognized by giving a citation, a cash reward, and a present (for example TV, microwave) once a year. Monthly recognition can be in the form of a small bonus and appreciation letter. What should be ensured is that the monthly recognition should be in front of all co-workers and other employees and should be presented by someone form the top management. The yearly recognition should be in front of an annual social gathering of all employees and their families and should be presented by the managing director or chairman of the company.
Compensation policy
Salary and wages is one of the primary motivating factors for any employee. There have been many theories on wages that have evolved over the years. The older ones like Subsistence theory (David Ricardo), Wages fund theory (Adam Smith), Surplus value theory (Marx), Residual claimant theory (Walker), Marginal productivity theory (Wickstead and Bates) are no longer relevant. One relevant theory is the Bargaining power theory by John Davidson which states that workers have the power to bargain for their wages (with their own effort and help from trade unions) against the bargaining power of employers. (The Bargaining theory of wages, Page 36, Introduction to the theory of wages, Published by Rai University).
In this regard the behavioral theories by experts like Marsh and Simon, Robert Dubin, Eliot Jacques are more relevant to modern day remuneration practices. Most of them deal with an employees acceptance of the remuneration policy, the value of the employer and the job, the remuneration that exists in similar organizations, demand for qualified and people with special skills etc.
Thai Lay Fashion should see to it that its wages are at par or above what is given in the industry. It should also take into account its bottom line when formulating a policy. It should also be in accordance with the government regulations. It is highly suggested that the wage structure be revised and a higher basic pay be fixed for all the workers since this is one of the issues existing at the factory.
Bonus and allowances
This is another factor that motivates workers to be more productive. It is seen that there is no individual level bonus policy in the company. There is only a group bonus which is paid twice a year. An incentive level bonus scheme for individuals and the group for achieving or exceeding targets must be introduced. Another important factor will be health and life insurance policies for the workers as a group. There should be no favoritism or discrimination of any sort in the scheme. The number of paid holidays to the workers should be increased to thirty days (per year) from the present ten. Other benefits like vacations and travel allowances need not be implemented at this level.
Ownership in the stock of the company
Another motivating factor would be to provide stocks in the company along with dividends and bonus issues (as per normal company policy). This would motivate the workers to increase the profitability of the company thereby increasing their own income. It will also help in employee retention. Employees can be given stocks as bonus, performance incentive, recognition etc. They can also be offered in cash when a new issue is being made by the company. Employees may be given preference to buy the shares over the public if statutes allow it.
Job rotation
Job rotation would be welcome, but difficult to implement in the factory. This is because of the limited variety of jobs available. Moreover a worker will be limited by the type of jobs he can handle due to the lack of educational qualification. This can be done to a certain extent whereby production workers can be transferred to the dyeing unit and vice-versa. Training should be given so that an exchange is possible.
Non-monetary benefits
Apart from employee recognition, there are not too much non-monetary benefits that can be accorded to the workers. A proper system of training can be made available. A crèche for babies is also an option. Promotions to deserving employees to the post of supervisors and supervisors to managers must also be worked out.