Research Proposal and Action plan
Shanta Garments Ltd is an export oriented ready-made garment manufacturing company in Bangladesh that has recently been facing a decline in labour productivity. As a labour-intensive factory, labour productivity and effective motivational strategies have a significant impact on company’s production and profits.
The research examines how the factory could use a combination of financial and non-financial motivational strategies to increase labour productivity. Motivational theories used include Taylor’s scientific management, Mc Gregor’s theory ‘X’, Maslow’s hierarchy of needs, Mayo’s Hawthorne effect and Herzberg’s motivators. SWOT and profitability analyses provide insight on the company’s capability to employ motivational strategies and to investigate external influences that may affect motivation. Furthermore, the company’s organizational structure is analysed to assess its affect on motivation.
The methodology includes primary research through interviews with the board of directors of the factory to obtain information on its current motivational strategies and statistical data on factory performance and second, surveying workers regarding their opinions of the company and incentives provided. Secondary research includes background information on the company and the garment sector. The method provides both qualitative and quantitative data analyses to assess the limitations of the company’s strategies and its financial capability in order to devise new motivational strategies.
The limitations of the research include the reliability of the data provided by the factory, as directors and survey participants may be involved in window dressing and external factors influencing factory performance such as inflation causing lack of motivation.
The introduction provides background information of Shanta Garments Ltd and illustrates the problem of falling labour productivity. It lists the current motivational strategies used and the aim of the investigation to change them to increase labour productivity.
The findings section discusses the company’s performance in providing incentives to workers and its financial capability to develop convenient motivational strategies to implement accordingly.
The findings of the company’s current performance and motivational strategies are analysed in the analysis section using tools such as SWOT analysis, motivational theories, profitability analysis and organizational structure. The provision of financial motivation and the company’s centralized structure is analysed to identify reasons for lack of motivation such as inadequacy and loss of control as owners have shifted priorities towards real estate business.
Subsequently, the conclusion section summarizes the research and deduces whether Shanta Garments Ltd should change their motivational strategies.
Finally, the recommendation section uses the analysis of the company’s current motivational strategies, financial ability and organizational structure to derive possible motivational strategies and solutions the company could implement to increase labour productivity such as provision of cheaper non-financial motivation to fulfil Maslow’s Love and Belonging and esteem needs and adopting matrix structure to increase interaction.
About the company: Shanta Garments is part of Shanta Group, which is a forerunner in Readymade Garment industry in Bangladesh since 1988. It has a global client base and serves international brands such as Tommy Hilfiger and Ralph Lauren2.
Investigation Aim: Interviews with the board of director suggests that the company’s motivational strategies are failing with increasing worker complaints5 especially due to falling disposable incomes aggravated by rising inflation level6. With falling sales revenue and increases in cost of production7, an increase in wages would aggravate the situation. Hence, effective motivational strategies instead, should increase productivity by satisfying the needs of the workers. Thus, my investigation is on ‘Should Shanta Garments Ltd change its motivational strategies to increase labour productivity?’
Analysis and Discussion
The factory has sound knowledge of the RMG sector, therefore has the ability to make effective decisions on implementing motivational strategies. The shift of investment towards the real estate industry is causing the budget constraints with less money retained to spend on incentives for garment workers causing dissatisfaction amongst workers.
To increase productivity, profits generated from Real Estate firm could fund towards recovery of garment factory through expenditure on labour research and motivational strategies. The comparative advantage and easy access to resources enables the firm to gain potential economies of scale.
Inflation rates have left garment workers with less disposable income causing labour strikes and damaging the reputation of the factory to foreign buyers. The inelastic demand10 for garment workers may increase cost of production if firms are obliged to increase wages. Currently, the company believes that ‘money’ and financial rewards are the key incentives to workers11, as the owner believes that workers do not need the “exclusives” which is required in the more developed nations.
The advantages of the PRP are it provides an incentive for workers to strive to exceed targets. Hard work is rewarded which is ‘fair’ and satisfies Adam’s Equity theory. However, targets maybe unachievable, which will create resentment and hinder job performance. Loyalty bonuses and fringe benefits of free treatment for workers are given once workers complete 10 years, which is a very lengthy period and may cause workers to give up. Moreover, the stress caused by the pressure to meet targets can hamper motivation.
Shanta Garments follows the principles of ‘Scientific Management’ proposed by Frederick W Taylor. The company implements Taylor’s ‘differentiated piecework’ and sets output and efficiency targets related to pay to increase productivity. However, the division of labour makes job repetitive and leads to boredom causing lack of motivation and lower productivity.
The theory ‘X’ approach proposes the idea that workers are lazy and need financial motivation or the ‘strict approach’ to be productive. This correlates with the owner’s autocratic leadership style13 approach. The board of directors carry out the decision-making only14 due to lack of education of workers15. However, this may have caused workers to feel ‘unappreciated’ resulting lack of motivation and low productivity.
The survey indicates 22/30 workers receive wages of 47% or more than the national minimum wage16. However, 23/30 workers answered “no” to whether satisfied with salary received17 and the other seven workers who answered “yes” claimed, “It does not fulfil needs”. This indicates failure of financial motivation due to inadequacy.
Shanta Garment provides workers necessities and a good working environment (28 workers rated 4/5 for working environment)18. This means they are fulfilling the bottom 2 levels of Maslow’s Hierarchy of needs: physiological19 and safety needs20, as well as Herzberg’s hygiene factor21. However, although workers are committed to their owner, the owners are not giving their full attention and have shifted priorities. Hence, there is a lack of ‘love and belonging’ and ‘esteem needs’ i.e. top levels of Maslow’s Hierarchy.
The annual picnics22 and a good working environment attempts to provide non-financial motivation to fulfil Maslow’s “safety needs”. However, there is lack of delegation, communication, teamwork and appreciation causing dissatisfaction adversely affecting ‘esteem needs’. Moreover, workers are not sufficiently skilled23 to achieve ‘the self-actualization’ level.
The limitations of Maslow’s theory are the levels of needs are difficult to measure and in a developing country, workers lacking education and with low living standards are not motivated to achieve top levels. Mayo’s Hawthorne Effect:
Elton Mayo believed human relations at work are key motivators. Shanta Garments produces in batches and organizes only annual picnics for colleagues to interact24. Hence, there is lack of teamwork and interaction, which is causing dissatisfaction of job. The theory proposes that workers perform better, when management take an interest in the welfare of workers. Owners giving less attention and only providing good working condition are causing discontentment.
Profitability analysis: Decreasing Net profit
Shanta Garments faces a fall in net profit leading to a loss in 2007 (68% decrease from year 2006)25. The profitability ratio (net profit margin) in 2008 is 0.8%. There is little profit to distribute to the shareholders to invest in the business26. Therefore, less money retained for incentives and motivational strategies is leading to lower motivation of workers and hence lower productivity.
With a short chain of command and a wide span of control, the board of directors performs all the decision-making27. Decisions simply pass to the supervisors then to the workers. The advantages are rapid decision-making and better sense of direction and control with board of directors well experienced and qualified28. However, since the board of directors have shifted their interest towards real estate, there is delay in decision-making and loss of control. This has caused lack of motivation, as workers feel less valued adversely affecting Maslow’s Love and Belonging and Esteem needs and Herzberg’s motivators.
Shanta Garments should change their motivational strategies because of the following:
- The financial motivational strategies of Taylor’s Scientific Management and Theory ‘X’ approach are failing. Workers are still not satisfied with their pay even though it is 47% more than the national minimum wage. Their disposable income has become inadequate because of increasing inflation.
- Workers are not fulfilling top levels of Maslow’s Hierarchy of needs (love and belonging and esteem needs) due to lack of recognition and appreciation.
- The company is facing budget constraints and there is low profitability because of shift of investment towards Real Estate firm. The low sales
revenue has led to decreases in provision of incentives greatly causing lack of labour motivation. Therefore, cheaper intangible incentives (non-financial motivation) could be a solution.
- Shift of priority of board of directors has caused communication gaps, lack of recognition as the company has a centralized structure. This has caused workers to be lazier, dissatisfied and hence less productive.
- With a centralized structure, workers feel lost and underappreciated as employers are not present to give directions. This adversely affects workers ‘esteem’ and ‘love and belonging’ needs.
- The company, with many branches and high profit margins in the real estate business, could shift investment and profits to garment factory to increase number of incentives and employ new motivational strategies. More investment could go towards labour research.
Reliability of the data provided by the owner and the workers as the validity of the data depends on the answers that the company decided to provide which includes their honesty. Solution: Workers can be questioned by other workers who they are more comfortable with to share information The external factor of Inflation of 9.1% in 2008 greatly affected the motivation of workers as their disposable incomes decreased. This could have led to decreasing labour productivity. Inflation also increased production costs causing budget constraints for the business.