Evolving nature of human resource devisions in apparel industry

Evolving nature of Human Resource decisions in Apparel industry

Title- Evolving nature of Human Resource decisions in Apparel industry

Introduction

Thomas Friedman`s popular book, The World Is Flat, had as one of its pivotal argument that “geography might soon become history”.[1] The argument is based on the proliferation of Information Technology in the day to day usage of businesses as well as individuals leading to a much more connected world than ever before. While on one hand this has led to a spurt in innovations and sharing leading to a larger population more aware of their environment, on the other hand, it has led to a highly unpredictable business environment where decisions have to be made faster than ever before. How organizations behave to the changes in their environment has been a matter of detailed study by various authors. Paul Lawrence and Jay Lorsch (Harvard Business School)[3] proved that flat organizations with a more decentralized decision making tend to do better in an uncertain business environment requiring more agile and collaborative decision making. The Apparel industry has characteristics which align themselves very closely to this changing environment where supply networks, collaborative planning, vendor managed inventory and fast fashion have been the buzz words in the past decade.

This changing environment of firms, puts pressure on the strategic thinking with respect to the firm`s short and long term decisions. These decisions are focused on the usage of their resources like Materials, Finances, Manpower, Technology , space etc. and the decisions define the nature, quality, competitiveness and in fact , the very survival of firms. Many firms are adopting IT-driven processes as well as productivity enhancing techniques to remain competitive. Higher focus on retaining and training skilled workforce; procurement by firms of quality, labor and compliance certifications like WRAP, ISO 14000 and SA 8000 are a few other differentiating factors for the firms from their competitors. According to Singh, Khan and Grover (2011)[5], there are various factors that affect the Quality of Firms . prominent among these being the Human resource factor which relates to the planning of Human resources, their training, Supervision, Education, Motivation and attitudes

The changing competitive and low profit scenario in the businesses across all sectors had created a mindset in the manufacturers who, operating in an environment where labor is plentiful and employee turnover is high, tend to not invest in their workers. Investment in human resources is usually perceived as a cost with few associated benefits. On the contrary, studies have indicated that the presence of more advanced human resource management systems has a tangible and positive effect on production efficiency and quality performance outcomes. This can positively affect the competitiveness of a firm in a frequently changing scenario that represents the current apparel business. A study conducted on garment manufacturers (Lake. H,2006)[2] found that Garment manufacturers for the South Indian market are incorporating best practice on human resource management and work organization because it delivers business benefits from product quality and production efficiency to enhance brand value and reputation.

The data for this paper has been derived from the doctoral research work undertaken by the author [4] which focused on the different parameters affecting strategic decisions of 58 apparel firms in Chennai influenced by the identified flatteners(The World Is Flat, Freidman,T,2005)[1]of Outsourcing, In-sourcing, Off-Shoring and Supply chaining over two time. Part of the research work concentrated on the behavior of the firms with respect to certain human resource decisions. This paper throws light on some of these issues with respect to the recruitment process and criterion and also the training provided to the employees.

Human resource decisions

That the Human resource is one of the most valuable assets for a labor intensive industry like apparel export manufacturing is evident from the various policy level and strategic changes that firms are employing to retain and invest in them. To explore how the decisions of firms have been affected due to the change in the environment of business over the decade for human resource related decisions, a series of hypotheses were construed, data collected from the survey and tested for validity

H1: There is no significant difference on the recruitment criterion for potential employees at different levels of employment with respect to their educational qualifications in the two time periods considered.

The differences in the criterion of recruitment over the time periods can reflect the response of firms where the changing supply chain networks and off-shoring trends put pressure on the firms to recruit employees who can understand the requirements of their global partners and remain competitive. To test the null hypothesis, Student t test was administered. The results of the test are given in Table 2

Employment level

Units

t value

P value
 

Year 2000

Year 2010
 

Mean

SD

Mean

SD
 

Senior Management level

1.98

0.131

1.74

0.442

4.259

.000
 

Middle Management Level

2.00

0.000

1.86

0.348

3.020

.004
 

Lower Management Level

3.43

1.748

3.17

1.558

1.234

.222
 

Front Line Manager Level

4.14

.736

4.12

2.103

0.067

.947
 

Operators

4.97

.184

5.40

.528

-6.153

.000
 

Helpers/ Others

6.28

.643

6.14

.687

1.134

.261

      

Table 1 – Change in recruitment criterion of different levels of potential employees with respect to Educational qualifications Source: Satyan,D,2013[4]

Since P value is less than 0.05 for the Senior Management, Middle Management and Operator level of Employees, the null hypothesis is rejected at 5 % level. Hence, it may be concluded that there is significant change in the recruitment criterion with respect to educational levels of potential employees at the Senior and Middle management and at the Operator level.

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Fig 1-recruitment criteria with respect to educationSource- Satyan,D,2013[4]

 

H2: There is no significant difference in the recruitment process for potential employees at different levels of employment in the two time periods considered.

The differences in the method of recruitment over the time periods can reflect the changes occurring in the supply of the Human resources and the impact that the flat world trends have on other manufacturing industries that are competing for the same resources. To test the null hypothesis, Student t test was administered. The results of the test are given in Table 3

Employee levels

Units

t value

P value
 

Year 2000

Year 2010
 

Mean

SD

Mean

SD
 

Senior Management level

2.71

1.510

2.90

1.564

-1.846

.070
 

Middle Management Level

2.90

1.564

2.41

1.579

-3.076

.003
 

Lower Management Level

2.79

2.041

3.67

2.357

-3.099

.003
 

Front Line Manager Level

2.36

.742

2.57

1.156

-1.763

.083
 

Operators

2.16

.670

2.52

.960

-3.602

.001
 

Helpers/ Others

2.09

.657

2.29

.749

-3.856

.000

      

Table 2 : Changes in the recruitment process for potential employees at different levels of employment

Source: Satyan,D,2013[4]

Since P value is less than 0.05 for the Middle Management, Lower Management, Operators and helper level of employees, the null hypothesis is rejected at 5 % level. Hence, it may be concluded that there is significant change in the recruitment method of firms for the Middle Management, Lower Management, Operators and helper level of employees,

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Fig.-2 Recruitment process changes of different levels of employeesSource: Satyan,D,2013[4]

 

H3: There is no significant change in the facilities provided to the employees in the year 2000 to the year 2010 with the purpose of retaining them.

The changes in the facilities extended to the employees reflect on the efforts the firms may be putting in recruiting and retaining the human resource essential for the manufacturing setups that they operate. To test the null hypothesis, Student t test was administered. The results of the test are given in Table 4

Facilities provided to employees

Units

t value

P value
 

Year 2000

Year 2010
 

Mean

SD

Mean

SD
 

Transport facility/allowance

.76

.432

.93

.256

-3.446

.001
 

Medical facility/allowance

1.00

.000

1.00

.000

T value could not be computed as the standard error of the difference is zero
 

Food allowance/subsidy

.57

.500

.83

.381

-4.105

.000
 

Crèche/child care facility

.12

.329

.19

.395

-2.055

.044
 

Uniform Allowance

1.00

.000

1.00

.000

T value could not be computed as the standard error of the difference is zero
 

Financial assistance for special occasions like Marriage

.03

.184

.09

.283

-1.763

.083

      

Table 3: Change in the facilities provided to employees Source: Satyan,D,2013[4]

Since P value is less than 0.05 for the Transport facility, Food allowance and child care facility, null hypothesis is rejected at 5 % level. Hence, it may be concluded that there is significant change in the facilities provided in areas of transport, Food allowance and child care/crèche by the firms under survey.

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Fig. 3- Facilities being provided to employeesSource: Satyan,D,2013[4]

H4a: There is no significant change in the training policy of the firm in providing training to the employees in the year 2000 to the year 2010 .

The changes in the training policy, frequency of training and the beneficiaries of the training programs –all reflect on the efforts the firms may be putting in retaining the human resource as well as discovering ways to remain competitive by equipping their employees at different levels with required skills and knowledge. To test the null hypothesis, Student t test was administered. The results of the test are given in Table 5

Training Policy of the firm

Units

t value

P value
 

Year 2000

Year 2010
 

Mean

SD

Mean

SD
 

Training on a regular basis

.43

.500

.62

.489

-3.035

.004
 

Training provided only based on need

.52

.504

.38

.489

1.929

.059
 

No training Provided

.05

.223

.00

.000

1.763

.083

      

Table 4: Change in the Training policy of firms with regard to frequency of training

Source: Satyan, D,2013[4]

Since P value is less than 0.05 for the Training on regular basis, the null hypothesis is rejected at 5 % level. Hence, it may be concluded that there is significant change in the training provided on regular basis to employees as a policy decision of firms.

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Fig.4- Training Policy of firms Source: Satyan,D,2013[4]

 

H4b: There is no significant change in the beneficiaries of the training programs provided by the firm in training the different levels of employees in the year 2000 to the year 2010 .

To test the null hypothesis, Student t test was administered. The results of the test are given in Table 6

Beneficiaries of training programs

Units

t value

P value
 

Year 2000

Year 2010
 

Mean

SD

Mean

SD
 

Production Staff-Operators

1.00

.000

1.00

.000

T value could not be computed as the standard error of the difference is zero
 

Production Staff- Helpers

.93

.256

1.00

.000

-2.055

.044
 

FrontLine Managers/Supervisors

.22

.421

.69

.467

-7.046

.000
 

Management Executives/Asst. Managers

.21

.409

.21

.409

T value could not be computed as the standard error of the difference is zero
 

Manager Level

.10

.307

.10

.307

T value could not be computed as the standard error of the difference is zero
 

Senior Manager-(G.M ) level

.03

.184

.05

.223

-.574

.568

      

Table 5: Changes in the Beneficiaries of the training programs Source: Satyan,D,2013[4]

Since P value is less than 0.05 for the Training provided to the helpers and supervisor level employees, the null hypothesis is rejected at 5 % level. Hence, it may be concluded that there is significant change in the training provided to helpers and supervisors. Further since the P value is more than 0.05 for the training provided to senior management level employees, it can be concluded that there is no change in training provided to this level of people. At the operator and at other managerial levels the t-value could not be computed since there was no difference observed in the two time period readings leading to conclude that at these levels, there was no training change observed.

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Fig.5- Beneficiaries of training programs for different employee levels Source: Satyan,D,2013[4]

Findings

The survey of fifty eight apparel manufacturing firms based in Chennai with established operations since the year 2000 or before, and in operation in the year 2012 with regard to the human resource decisions was collected and tested for validity. The findings were as below
•The differences in the criterion of recruitment - The responses reveal that for senior and middle management levels the criterion has changed slightly from more firms insisting on a post graduate qualification for these posts in 2010 as compared to a graduate with experience in 2000.For the lower management levels, more firms are insisting on graduation as the minimum educational qualification. For the frontline managers, the change has been massive with firms insisting that the frontline managers be minimum 12th pass and also some firms need them to be trained additionally in some technical training. This is indicative of the fact that more firms are relying on the frontline managers to be able to control the manufacturing process at the core level and also be able to use the various production control tools like charts and tables intelligently. Another major change observed is that firms insist that the operators need to be able to read and write and do basic mathematics as part of their jobs. Hence the education criterion has changed from uneducated and 5th pass to 5th and 8th pass minimum for different firms in 2010.
•The differences in the method of recruitment – The evaluation of the responses indicate that while for the senior management levels ,more number of firms are using the means of HR consulting agencies to recruit ;for lower management levels recruitment method shows change to internet based job sites like Naukri.com and also through direct recruitment from campus placements of training colleges. Also emerging are the training centres run by government or aided by government for operator training from where recruitment happen.
•The differences in the facilities extended to the employees – The responses show that the firms are increasingly providing more facilities to their employees like transport and food subsidy and also to retain female employees, more firms are providing crèche facilities. Some firms are also providing financial assistance to the employees in times of their need like on occasion of marriages, births deaths etc .
•The differences in the training of employees-. Vastly differing from the year 2000 belief that training needs to be only need based, all firms reported that they have a training policy in place. The firms are conducting training programs for different levels of employees. The employees who are benefitting the most are the operators and the helpers as all firms were conducting training for them in both time periods. There has been a slight increase in specific training being provided to the helper level employees. The training being given to the managerial staff level from lower management to the general manager level have not shown much change. The biggest change has been noted in the training of the supervisors for better management and new production techniques to achieve the competitiveness in costs desired. The supervisor training is also seen as the firm`s way of dealing with the increasing labor turnover rate where the supervisor is able to prove more effective in retaining the operators and helpers at the shop floor level.

Conclusion

The changes observed in the decisions that firms have taken over a time period of ten years, provide a valuable clue to the changes occurring in the thinking of firms and hence their decisions with respect to their most valuable asset, the human resource. The recruitment methods and policies of the firm relating to the employees training and retention indicate a shift in the strategic thinking to cope with its environmental changes. The firms are becoming more aware of the competitive nature of the business requiring employees to deal with off-shore clients and suppliers. Also the changes may point to the effect of flattening where better education levels, more access to information and competitive hiring by other manufacturing industries may lead to a more aware workforce. Also the best global practices in manufacturing and compliance may require a workforce that can understand the requirements and respond positively. An increase in awareness amongst the employees about the employment avenues available in other industries could also be concluded. Also it may reflect on the awareness to the social and ethical compliances that the firms have to adhere to in order to garner off-shore business. While decisions on the training being provided may point to change in the strategic thinking of firms in recognizing the skill gaps in their employees and fulfilling them, the changes observed in the beneficiaries of training programs could point to either the frequent movement of employees at these levels to other firms leading to a need for training them or it could also point at the significance of enhanced training requirement for these levels which were previously ignored but in the new, more competitive business environment becomes important for firms to remain viable by equipping their employees at different levels with required skills and knowledge.

References:

1. Friedman, T., “The World is Flat: A Brief History of the Twenty-first Century”, Farrar, Straus and Giroux, 2005.

2. Lake H. , “Steering towards the High Road: A Study of Human Resource Management in

Two Indian Garment Factories”, IZA Discussion Paper No. 3227 December 2007 3. Lawrence, Paul R., and J. W. Lorsch.“Organization and Environment”,Boston, MA:Harvard Business School, Division of Research,1967.

4. Satyan, Divya, “Flattening of the World and the Indian Garment Industry- a study of the changing scenario with special emphasis on the Chennai Garment Industry”; Doctoral thesis, 2013.

5. Singh, Mohit, Khan I.A, and Grover Sandeep ,”Application of AHP in Measuring and Comparing Quality of Manufacturing Industries”, International Journal Of Multidisciplinary Sciences And Engineering, Vol. 2, No. 3, June 2011.