Business and Management Research Project Higher Level “Should Shanta Garments Ltd change its motivational strategies to increase labour productivity? !ord "ounts# $%ecutive Summary# &'( !ritten Report# &'') Research Research Proposal* +ction Plan# ,&+c.no/ledgements 0 /ould li.e to than. the 1ollo/ing people# My business and management teachers2 Mr3 Robson Robson and Mr3 Rao 1or their invaluable guidelines 4he board o1 directors o1 the 1actory especially Mr3 Mr3 5hondo.er 6amil 7ddin 1or providing and trusting me /ith the company 8gures and ta.ing time o9 1rom his busy schedule to ans/er my intervie/ :uestions2 /ithout /hich my research /ould have been invalid3 Ruma 1rom the management department 1or gathering the data o1 the 1actory 4he /or.ers o1 the 1actory 1or ta.ing their time o9 to 8ll the surveys 4able 4able o1 "ontents &3 Research Proposal ; +ction plan <3 $%ecutive Summary ,3 0ntroduction ,3&3 +bout the "ompany ,3<3 =igure =alling labour productivity ,3,3 "urrent Motivation strategies# Lac. o1 non>8nancial incentives ,3-3 0nvestigation +im -3 Results and =indings 3 +nalysis and @iscussion 3&3 S3!3A34 +nalysis 3<3 Motivational 4heories 3,3 Pro8tability +nalysis 3-3 Arganiational Structure +nalysis )3 "onclusion C3 Recommendations Recommendations C3&3 Don>8nancial Motivational Strategies C3<3 =inancial Motivational Strategies C3,3 Matri% Structures C3-3 Ather incentives (3 Limitations
'3 Bibliography &E3 +ppendi% &3 Research Proposal and +ction plan Shanta Garments Ltd is an e%port oriented ready>made garment manu1acturing company in Bangladesh that has recently been 1acing a decline in labour productivity3 +s a labour>intensive 1actory2 labour productivity and e9ective motivational strategies have a signi8cant impact on companyFs production and pro8ts3 4he research e%amines ho/ the 1actory could use a combination o1 8nancial and non>8nancial motivational strategies to increase labour productivity3 Motivational theories used include 4aylorFs scienti8c management2 Mc GregorFs theory F2 Maslo/Fs hierarchy o1 needs2 MayoFs Ha/thorne e9ect and HerbergFs motivators3 S!A4 and pro8tability analyses provide insight on the companyFs capability to employ motivational strategies and to investigate e%ternal inIuences that may a9ect motivation3 =urthermore2 the companyFs organiational structure is analysed to assess its a9ect on motivation3 4he methodology includes primary research through intervie/s /ith the board o1 directors o1 the 1actory to obtain in1ormation on its current motivational strategies and statistical data on 1actory per1ormance andsecond2 surveying /or.ers regarding their opinions o1 the company and incentives provided3 Secondary research includes bac.ground in1ormation on the company and the garment sector3 4he method provides both :ualitative and :uantitative data analyses to assess the limitations o1 the companyFs strategies and its 8nancial capability in order to devise ne/ motivational strategies3& 4he limitations o1 the research include the reliability o1 the data provided by the 1actory2 as directors and survey participants may be involved in /indo/ dressing and e%ternal 1actors inIuencing 1actory per1ormance such as inIation causing lac. o1 motivation3 +ction Plan <3 $%ecutive Summary 4he introduction provides bac.ground in1ormation o1 Shanta Garments Ltd and illustrates the problem o1 1alling labour productivity3 0t lists the current motivational strategies used and the aim o1 the investigation to change them to increase labour productivity3 4he 8ndings section discusses the companyFs per1ormance in providing incentives to /or.ers and its 8nancial capability to develop convenient motivational strategies
to implement accordingly3 4he 8ndings o1 the companyFs current per1ormance and motivational strategies are analysed in the analysis section using tools such as S!A4 analysis2 motivational theories2 pro8tability analysis and organiational structure3 4he provision o1 8nancial motivation and the companyFs centralied structure is analysed to identi1y reasons 1or lac. o1 motivation such as inade:uacy and loss o1 control as o/ners have shi1ted priorities to/ards real estate business3 Subse:uently2 the conclusion section summaries the research and deduces /hether Shanta Garments Ltd should change their motivational strategies3 =inally2 the recommendation section uses the analysis o1 the companyFs current motivational strategies2 8nancial ability and organiational structure to derive possible motivational strategies and solutions the company could implement to increase labour productivity such as provision o1 cheaper non>8nancial motivation to 1ul8l Maslo/Fs Love and Belonging and esteem needs and adopting matri% structure to increase interaction3 !ord "ount# &'( ,3 0ntroduction ,3& +bout the company# Shanta Garments is part o1 Shanta Group2 /hich is a 1orerunner in Readymade Garment industry in Bangladesh since &'((3 0t has a global client base and serves international brands such as 4ommy Hil8ger and Ralph Lauren<3 "urrent Problem# ,3< =igure =alling Labour Productivity =igure & sho/s Shanta Garments e%periencing 1alling labour productivity, over the 8ve years J8nancial incentives =inancial Motivation# 4he 1actory primarily uses the 1ollo/ing 8nancial motivational strategies-# Per1ormance Related Pay JPRPK#
Per1ormance bonus# /hen /or.ers e%ceed the set target2 all /or.ers receive &EE per1ormance bonus in cash Loyalty Bonus# 4. &E2EEE paid to /or.ers completing &E /or.ing years in Shanta Garments +ttendance bonus> 1ullattendance receives &E o1 salary Provident 1und# i1 someone puts in &EEt. per month2 company puts another &EEt. Per 1estival bonus# @uring the annual $id2 government regulations demands 1ull basic salary to be given to /or.ers J)E o1 salaryK /hilst Shanta Garments gives &EE bonus3 =ringe Bene8ts# =ree 4reatment 1or /or.ers a1ter &E /or.ing years in Shanta Garments2 /hich includes injuries during /or. and e%ternal health problems3 =ree lunch Don>8nancial# +nnual Picnic ,3- 0nvestigation +im# 0ntervie/s /ith the board o1 director suggests that the companyFs motivational strategies are 1ailing /ith increasing /or.er complaints especially due to 1alling disposable incomes aggravated by rising inIation level)3 !ith 1alling sales revenue and increases in cost o1 productionC2 an increase in /ages /ould aggravate the situation3 Hence2 e9ective motivational strategies instead2 should increase productivity by satis1ying the needs o1 the /or.ers3 4hus2 my investigation is on Should Shanta Garments Ltd change its motivational strategies to increase labour productivity?F -3 Results and =indings "urrent Position o1 Shanta Garments -3& =igure <# =alling Sales revenue 1rom
its 8%ed and indirect costs2 have adversely a9ected 1eelings o1 recognition and appreciation o1 /or.ers2 leading to lac. o1 motivation and lo/er productivity3 3 +nalysis and @iscussion 3& S/ot +nalysis 4he 1actory has sound .no/ledge o1 the RMG sector2 there1ore has the ability to ma.e e9ective decisions on implementing motivational strategies3 4he shi1t o1 investment to/ards the real estate industry is causing the budget constraints /ith less money retained to spend on incentives 1or garment /or.ers causing dissatis1action amongst /or.ers3 4o increase productivity2 pro8ts generated 1rom Real $state 8rm could 1und to/ards recovery o1 garment 1actory through e%penditure on labour research and motivational strategies3 4he comparative advantage and easy access to resources enables the 8rm to gain potential economies o1 scale3 0nIation rates have le1t garment /or.ers /ith less disposable income causing labour stri.es and damaging the reputation o1 the 1actory to 1oreign buyers3 4he inelastic demand&E 1or garment /or.ers may increase cost o1 production i1 8rms are obliged to increase /ages3 3< Motivational theories "urrently2 the company believes that moneyF and 8nancial re/ards are the .ey incentives to /or.ers&&2 as the o/ner believes that /or.ers do not need the “e%clusives /hich is re:uired in the more developed nations3 3<3&3 "urrent =inancial Motivation&< +nalysis# =ailing 4he advantages o1 the PRP are it provides an incentive 1or /or.ers to strive to e%ceed targets3 Hard /or. is re/arded /hich is 1airF and satis8es +damFs $:uity theory3 Ho/ever2 targets maybe unachievable2 /hich /ill create resentment and hinder job per1ormance3 Loyalty bonuses and 1ringe bene8ts o1 1ree treatment 1or /or.ers are given once /or.ers complete &E years2 /hich is a very lengthy period and may cause /or.ers to give up3 Moreover2 the stress caused by the pressure to meet targets can hamper motivation3 4aylorFs Scienti8c Management# Shanta Garments 1ollo/s the principles o1 Scienti8c ManagementF proposed by =rederic. ! 4aylor3 4he company implements 4aylorFs di9erentiated piece/or.F and sets output and eNciency targets related to pay to increase productivity3 Ho/ever2 the division o1 labour ma.es job repetitive and leads to boredom causing lac. o1
motivation and lo/er productivity3 4heory F +pproach 4he theory F approach proposes the idea that /or.ers are lay and need 8nancial motivation or the strict approachF to be productive3 4his correlates /ith the o/nerFs autocratic leadership style&, approach3 4he board o1 directors carry out the decision>ma.ing only&- due to lac. o1 education o1 /or.ers&3 Ho/ever2 this may have caused /or.ers to 1eel unappreciatedF resulting lac. o1 motivation and lo/ productivity3 Survey Results# !ages higher than Minimum !age 4he survey indicates <8nancial motivation strategies Maslo/Fs Hierarchy o1 Deeds and HerbergFs Hygiene =actor Shanta Garment provides /or.ers necessities and a good /or.ing environment J<( /or.ers rated -O 1or /or.ing environmentK&(3 4his means they are 1ul8lling the bottom < levels o1 Maslo/Fs Hierarchy o1 needs# physiological&' and sa1ety needs 8nancial motivation to 1ul8l Maslo/Fs “sa1ety needs3 Ho/ever2 there is lac. o1 delegation2 communication2 team/or. and appreciation causing dissatis1action adversely a9ecting esteem needsF3 Moreover2 /or.ers are not suNciently s.illed<, to achieve the sel1>actualiationF level3 4he limitations o1 Maslo/Fs theory are the levels o1 needs are diNcult to measure and in a developing country2 /or.ers lac.ing education and /ith lo/ living standards are not motivated to achieve top levels3 MayoFs Ha/thorne $9ect# $lton Mayo believed human relations at /or. are .ey motivators3 Shanta Garments produces in batches and organies only annual picnics 1or colleagues to interact<-3
Hence2 there is lac. o1 team/or. and interaction2 /hich is causing dissatis1action o1 job3 4he theory proposes that /or.ers per1orm better2 /hen management ta.e an interest in the /el1are o1 /or.ers3 A/ners giving less attention and only providing good /or.ing condition are causing discontentment3 3, Pro8tability analysis# @ecreasing Det pro8t Shanta Garments 1aces a 1all in net pro8t leading to a loss in ma.ingma.ing and better sense o1 direction and control /ith board o1 directors /ell e%perienced and :uali8ed<(3 Ho/ever2 since the board o1 directors have shi1ted their interest to/ards real estate2 there is delay in decision>ma.ing and loss o1 control3 4his has caused lac. o1 motivation2 as /or.ers 1eel less valued adversely a9ecting Maslo/Fs Love and Belonging and $steem needs and HerbergFs motivators3 )3 "onclusion Shanta Garments should change their motivational strategies because o1 the 1ollo/ing# )3& 4he 8nancial motivational strategies o1 4aylorFs Scienti8c Management and 4heory F approach are 1ailing3 !or.ers are still not satis8ed /ith their pay even though it is -C more than the national minimum /age3 4heir disposable income has become inade:uate because o1 increasing inIation<'3 )3< !or.ers are not 1ul8lling top levels o1 Maslo/Fs Hierarchy o1 needs Jlove and belonging and esteem needsK due to lac. o1 recognition and appreciation3 )3, 4he company is 1acing budget constraints and there is lo/ pro8tability because o1 shi1t o1 investment to/ards Real $state 8rm3 4he lo/ salesrevenue has led to decreases in provision o1 incentives greatly causing lac. o1 labour motivation3 4here1ore2 cheaper intangible incentives Jnon>8nancial motivationK could be a solution3 )3- Shi1t o1 priority o1 board o1 directors has caused communication gaps2 lac. o1
recognition as the company has a centralied structure3 4his has caused /or.ers to be laier2 dissatis8ed and hence less productive3 )3 !ith a centralied structure2 /or.ers 1eel lost and underappreciated as employers are not present to give directions3 4his adversely a9ects /or.ers esteemF and love and belongingF needs3 )3) 4he company2 /ith many branches and high pro8t margins in the real estate business2 could shi1t investment and pro8ts to garment 1actory to increase number o1 incentives and employ ne/ motivational strategies3 More investment could go to/ards labour research3 C3 Recommendations C3& Because o1 the budget constraint2 the company should employ more non> 8nancial motivation Jcheaper to implementK3 HerbergFs motivators# 6ob $nlargement# @epending on the s.ills o1 the /or.ers2 providing a variety o1 tas.s /ould ma.e /or. more interesting and /or.ers more Ie%ible3 4he drag o1 repetitive and monotonous tas.s o1 producing in batches is improved3 @ue to lac. o1 education and training2 job enrichment and job empo/erment is not appropriate,E3 MayoFs Ha/thorne $9ect# More picnics or other social gatherings /ould improve team/or. and interaction bet/een colleagues2 /hich /ould increase productivity and motivation2 as /or.ers 1eel recognied and have a sense o1 belonging3 4hereshould be team spirit and group dynamics through sharing o1 s.ills and e%pertise3 Recognition and praise# Henry =ordFs theories o1 providing /or.er o1 the monthF schemes could increase productivity3 More training /ould increase loyalty and productivity2 as /or.ers are more s.illed to carry out delegations and re:uire less direction3 C3< More =inancial Motivation# 0ncrease spending on incentives such as bonuses and 1ringe bene8ts 4his /ill increase costs in the short run but potentially increase eNciency and
productivity leading to eventual lo/er average costs and higher revenue3 C3, =igure )# Matri% structures 4eam/or.2 sharing o1 s.ills and communication is achieved through matri% structure3 4his /ill 1ul8l MayoFs Ha/thorne e9ect2 HerbergFs motivators and Maslo/Fs top levels2 as it provides a sense o1 belonging and recognition2 /hich /ould increase productivity3 4he limitations include loss o1 control as authority is shared and the reliance o1 communication3 !or.ers /ith less e%perience can ma.e more mista.es /ith decision>ma.ing2 adversely a9ecting productivity3 C3- a.atF +s Bangladesh is a Muslim country2 the a.atF,& could go to/ards /or.ers3 4he o/ners being religious /ould not consider this as a cost3 (3 Limitations Reliability o1 the data provided by the o/ner and the /or.ers as the validity o1 the data depends on the ans/ers that the company decided to provide /hich includes their honesty3 Solution# !or.ers can be :uestioned by other /or.ers /ho they are more com1ortable /ith to share in1ormation 4he e%ternal 1actor o1 0nIation o1 '3& in <'&3 > > >3 “Arganiational Structure3 +1ter/ord3 Business and Management3 By Paul Hoang3 ictoria2 +ustralia# 0B0@ Press2 <&'3 > > >3 “Ratio +nalysis3 =ore/ord3 Business and Management3 By Paul Hoang3 ictoria2 +ustralia# 0B0@ Press2 <<3 0nde% Mundi3 “Bangladesh 0nIation rate Jconsumer pricesK3 0nde% Mundi3
Source# @irectly 1rom the Shanta Garment Ltd =actory +ppendi% 0tem ,# Minimum !age Structure 1or /or.ers Jlabour communityK Minimum /age 1or /or.er 1rom
,,C =or motivational strategy analysis Dote# 4he survey :uestions /ere translated in Bengali via verbal communication by the researcher JmeK so /or.ers understand the :uestions3 Survey 1or Shanta Garments JGulshanK !or.ers &3 Please indicate Jvia circleK the salary you receive <3 Please circle your opinions regarding the 1ollo/ing areas3 -K Please tic. the 1ollo/ing you have completed during your education li1e
School Jclass &>K School Jclass &>&EK "ollege Jclass &&>&
"omment JoptionalK Tes Do )K Please tic. the 1ollo/ing that motivates you to /or. in the company Higher !ages Bonuses Promotion "ommitment to o/ner Ather bene8ts
Source# "onducted by garment /or.ers o1 Shanta Garments +ppendi% item )# 4allying o1 Survey o1 ,E /or.ers 1or convenience Averall satis1action o1 job 4ally 4otal 4ally & 00 < < 0 & , 00000JK00000JK &E 00000JK00000JK00000JK0 &) 0 & Averall satis1action o1 salary received 4ally 4otal 4ally
& E < 00000JK0000 ' , 00000JK00000JK00000JK000 &( 000 , E Averall satis1action /ith the company JShanta garmentsK 4ally 4otal 4ally & E < E , 0 & 00000JK00000JK00000JK00000JK
00000JK00000JK00000JK0 &) 00000JK00000JK00 &< $ducation li1e 4ally School Jclass &>K 0000 , School Jclass )>&EK 00000JK00000JK00000JK000 &( "ollege Jclass &&>&&< Satis8ed /ith Salary Received 4ally $nough to 1ull>8ll needs? Jonly those /ho said yesK 4ally 4otal 4ally Tes 00000JK00 >C Tes E Do 00000JK00000JK00000JK00000JK000 > <, Do 00000JK00 C !hat motivates you to /or. in the company? Motivation 4ally 4otal 4ally Higher !ages 0Jhighest paidK0000JK0 )
Bonuses 00000JK00000JK00000JK00000JK00000JK000 <( Promotion 00000JK00000JK00 &< "ommitment to o/ner 00000JK00000JK00000JK00000JK00000JK00 E&2 @ha.a2 Bangladesh 4he intervie/ /as recorded in /riting3 Short 0ntervie/ /ith Mr3 5hondo.er 6amil 7ddin U# !hat .ind o1 incentives or motivational strategies does the company use to motivate its /or.ers? +# !e primarily use 8nancial motivation because in a developing country2 /or.ers do not need the e%clusives that /or.ers in developed countries need3 Money is the main motivator because /ithout money they cannot even 1eed their 1amilies3 =irst2 the necessities must be given then /hen Bangladesh reaches a point /here /e are all endo/ed /ith necessities2 then /or.ers /ill thin. about job satis1action3 U# !hat .inds o1 8nancial motivators are given to /or.ers? +# !e give all the necessities that the government as.s companies to provide3 Ather includes# =inancial Motivation# &E2EEE 4. JV &-K a1ter completing &E /or.ing years in Shanta Garments +ttendance Bonus# 1ull attendance receives &E o1 salary =ree 4reatment Provident 1un# i1 someone puts &EEt. per month2 the company provides 4. &EE &EE bonus Iat basic 1or 1estival bonus instead o1 )E bonus as.ed by the government U# @oes the company provide any non>8nancial motivation? +# !e have annual picnics and 1ree lunches to /or.ers U# 4o /hat e%tent are the motivational strategies success1ul in motivating /or.ers? +# !ell2 comparatively to many 1actories2 our /or.ers cause less stri.es3 Ho/ever2
there are 1re:uent /or.er complaints about salaries and /ages even though /e give them &EE bonus3 4his is more than enough 1or the countryFs /or.ing class3 Ho/ever2 because o1 rising inIation in this country2 /hich /e have no hands in controlling2 /or.ers are very unsatis8ed3 U# 0 have heard o1 Shanta Group investing in the Real $state business3 @oes that help the garment 1actory? +# Do/ in Bangladesh2 there are high pro8t margins in the Real $state business3 !e have made the real estate business a 1ocus n o/ so /e are hoping to gain more pro8t2 /hich /e can easily use /ithin the garment 1actory3 +ppendi% item (# Arganiational Structure Jchain o1 commandK 4his e%cludes the Uuality department2 as it is separate 1rom the hierarchy /ith only board o1 directors above them3 +bbreviations# GM# General Manager +GM# +ssistance General Manager MM# Maintenance Manager =M# =inishing Manager PM# +PM# +ssistance production Manager "M# "utting Manager SM# Sample Manager "+@ M# "+@ Manager Source# @irectly 1rom the Shanta Garment Ltd =actory +ppendi% item '# Pro8tability +nalysis Det pro8t Margin JDMPK DPM JDet pro8tO Sales RevenueKQ &EE E3(E Det pro8t margin sho/s the percentage o1 the sales revenue that is turned into net pro8t3 4here1ore2 1or every 4. &EE o1 sales2 4. E3( is only net pro8t3 4his pro8t is le1t a1ter all the costs o1 production Jboth direct and indirect costsK are accounted 1or3 0 have chosen to calculate DMP ratio because it is a better measure o1 a 8rmFs pro8tability because it accounts 1or the cost o1 sales and the e%penses2 the higher the DMP2 the better 1or the 8rm3 4he results indicate that there is less pro8t to distribute to the shareholders to invest in the business3 4here1ore2 there is less
money to be spent on incentives and motivational strategies leading to lo/er motivation o1 /or.ers and hence lo/er productivity3 +s there is less pro8t made in the garment 1actory2 the directors have decided to shi1t investment to/ards their business in the Real $state3 Source# Re1er to +ppendi% < 1or data Wcollected directly 1rom Shanta Garment Ltd +ppendi% item &E# Persistent increase in inIation and consumer prices Bangladesh 0nIation rate Jconsumer pricesK Source# 0nternational Monetary =und > depth research to recommend you some solutions 1rom my .no/ledge o1 business3 4he purpose o1 this letter is to en:uire your permission and to re:uest your assistance in allo/ing me to gather the necessary in1ormation 0 need 1rom your 1actory3 + 1e/ e%amples o1 the type o1 data 0 need are motivational strategies2 sales revenue2 cost o1 production2 pro8ts etc o1 the company over >&E years3 01 it is possible2 0 /as hoping to intervie/ you in your time o1 convenience 1or this project3 01 0 am given the permission2 0 can ensure that your con8dentiality rights /ill be retained and the data /ill only be used 1or educational purposes3 0 loo. 1or/ard to hearing 1rom you 4han. you2 ahia 5hondo.er Grade &< 0nternational School @ha.a +ppendi% 0tem &<# =eedbac. on the research project 1rom the o/ner o1 ShantaGarments via $mail
@ear ahia2 =irstly2 0 really appreciate your interest in my company and conducting an in>depth research to help the company per1orm better3 Tour research covers everything that the company is 1acing and has provided a great insight on the limitations o1 our strategies3 0 1ound it very use1ul to see that our 8nancial motivation strategies /ere not suNcient 1or the /or.ers and especially because o1 the rising inIation in our country3 4he survey results /ere a great help to me to understand my /or.ers3 Tour recommendations are very comprehensive and 0 agree /ith you that the 1actory due to increasing cost o1 production and tight budget constraints is unable to provide e9ective 8nancial motivation3 0n our country2 /e are o1ten too led by the idea that everyone is motivated by money only3 0 /ill try to arrange more picnics and invest in training so the /or.ers can carry out some decisions3 4he idea o1 giving a.at /as an e%cellent idea3 Reading this research2 0 have come to realie that more attention needs to be to/ards the garment 1actory3 4he reason /hy /e have shi1ted priorities as 0 have told you in the intervie/ is that 8rstly higher pro8t margins in the real estate business and secondly because /e have just begun developing this business3 Ho/ever2 1rom the survey results and your research2 0 1eel that the directors should give more recognition and appreciation to the /or.ers3 4han. Tou again 1or helping my company2 its /or.ers and me3 0 /ish you best o1 luc. /ith the research3 5hondo.er 6amil 7ddin @irector Shanta Group S4S Group @ha.a Ban. Limited "hairman 6a "oncerns Ltd + ; + accessories Ltd