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Executive Summary

This report addresses the employee loyalty and related issues in Timex Garments Private Limited. Timex is one of the leading apparel manufacturing companies in Sri Lanka. It has employed more than 10,000 employees in its seventeen manufacturing facilities.

These employees include, young and talented employees, less educated but more experienced employees, foreign employees and old and less productive employees. Their perceptions and behaviours also vary and they pay loyalty to the company in diverse ways.

However, several loyalty related issues can be observed in the company, which have negatively resulted in the brand image and performances of the company. Thus, this report analyzes the loyalty related issues in Timex and afterwards, it consists with several suggestions to enhance loyalty of employees. Further, it discusses the impact of those suggestions on the company and the way it links with overall competitive advantage of the company.

Introduction to the Organization

Timex and Fergasam Group (T & FG) Timex Garments is one of the leading garment manufacturing companies in Sri Lanka, which basically focuses on manufacturing ladies high end fashion garments. It consists with seventeen manufacturing facilities in Sri Lanka and in Bangladesh, having nearly 10,000 employees. In addition to the above mentioned facilities in different locations, there are foreign offices which are established for making the processes easier and those offices include, fashion design center in UK, garment sourcing office in Hong Kong, buying office in German etc (Timex 2017).

Timex carries the vision “To be the undisputed leader in the line of the business ventures, delivering continued growth for all the stakeholders” (Timex 2017). The product portfolio of the company comprises of manufacturing Dresses, Blouses, Lingerie, Shorts, Skirts, Pants, and Ensembles; other value addition operations include Digital Printing, Hand Embroidery, In House Pleating, Hand Beading, Heat Seal Transferring, Bra Cup Molding, Laser Cutting, Raw Material Sourcing and E- Fit, while the main aim of Timex is to satisfy its customers with the focus of providing “garments without guilt” (Timex 2017).

All the products are mainly exported for European and USA markets, where the world famous brand leaders are located in; including, POLO, Nasty Girl, Maggy London, Marks & Spencer, Donna Morgan, Calvin Klein, Wallis Redcats, etc. Besides these well known foreign brands, Timex has its own local brands, which are targeted the customer in Asian region and those brands include, ‘Avirate’ and ‘A dress’ (Timex 2017).

Timex is awarded with several certifications due to its excellent operations such as ETI (Ethical Trading Initiative), WRAP (Worldwide Responsible Accredited Production), C – TPAT (Customer – Trade Partnership Against Terrorism), BSCI (Business Social Compliance Initiative) etc (Timex 2017).

However, Sri Lankan apparel manufacturing industry consists with a number of more or less strong competitors to Timex including Brandix and MAS Holdings (as the industry and market leaders), Hirdaramani, Winterquilts, Omega Line, Hela Clothing, Smart Shirts, Star Garments etc.

The core challenge that all these companies face is the attraction of most suitable employees as a competitive advantage. Beyond the attraction, employee retention is also critical (which is basically determined by their loyalty), due to lower switching cost for employees among competitive companies.

This report focuses on assessing the employee factor of Timex, along with their loyalty. The focus will be paid for prevailing loyalty related issues of the company, as well as loyalty enhancing methods.

Why Employee Loyalty Matters

About Employee Loyalty

Napoleon Hill, in his book of ‘Think and Grow Rich’, states that “Lack of loyalty is one of the major causes of failure in every work of life” (Keiningham & Aksoy 2009, p. xii). For companies, it is inevitable that its success and survival depends on the talents and loyalty of its employees (Keiningham & Aksoy 2009). As Boltanski and Chiapello express (as cited in Nasiri, Najafbagy & Nasiripour 2015), the economic performance of any company (regardless of the industry) is reliant on the participation, commitment and loyalty of the employee. However, it is ever challenging to gain loyalty of employees, as it has proved by the largest research on loyalty, (Ipsos Loyalty Study in USA) concluding less than 30% of US employees are loyal to their companies (Keiningham & Aksoy 2009).

As Kaisiarz defines (as cited in Preko & Adjetey 2013), loyalty refers to the commitment of employees to the success of the organization while believing that his/her organization is their best alternative. Bettencourt, Gwinner, &Meuter (as cited in Preko & Adjetey 2013), it can be referred as an organizational citizenship behaviour, where the employees ultimately become strong customers and brand ambassador as well.

According to Sravani (2016), employee loyalty can be identified in two dimensions; as internal loyalty (i.e. the emotional attachment to work which lead for positive behaviour, caring, commitment and love towards the company) and external loyalty (i.e. the commitment of employee for driving the organization towards the best position). Loyalty includes eight aspects as loyalty towards profession, loyalty towards co-workers, loyalty towards organization, maintaining confidentiality for the company, completing projects effectively, following orders, ethical usage of company properties and assist co-workers for overcoming what they struggle (Sravani 2016).

 

Loyal employees work more productively, efficiently and in higher quality for achieving customer satisfaction (Wan n.d.). Nasiri, Najafbagy and Nasiripour (2015) have demonstrated the way employee loyalty links with customer satisfaction and organizational growth as depicted in figure 2.1.

Figure 2.1: How Loyalty Link with organizational Success

Source: Based on (Nasiri, Najafbagy & Nasiripour 2015).

Sources for Enhancing Loyalty

As MetLife (2011) mentions leadership affect in driving the loyalty of employees; hence people oriented leaders can win the hearts of the employees, by which employee turnover reduces, team work and productivity increase, which finally enhance customer value. Research findings demonstrate several factors for enhancing loyalty as;

  • Open Communication and listening
  • Competitive Pay
  • Sound work atmosphere
  • Stay honest with employees
  • Empowerment
  • Learning environment
  • Advocate employees
  • Inculcating vision, mission and goals within employees
  • Regular constructive feedbacks
  • Creating career plans and personal development opportunities
  • Assisting uncommitted employees’ leaves
  • Create employee partnerships

(Wan n.d.).

According to the model suggested by Smith (2015), employee loyalty determines by their satisfaction of the job, job security, work environment and belief in vision and mission of the company. As Keiningham and Aksoy (2009) interpret, employee loyalty highly depends on the individual perception of the employees regarding the loyalty of the company towards them; as a result, they pay loyalty to the company in return.

Thus, employee loyalty can be identified as a source of motivation, which can be explained through need theories for motivation as presented by Maslow (hierarchy of need theory), Alderfer (ERG theory), Herzberg (two factor theory) and McClelland (learned needs theory).

Impact of Loyalty on Organization

Loyal employees, most of the time can be identified as high performers, who views the bigger picture of the company and work more than they get paid, due to the higher interest on the company (Elegido 2013). Loyal employees demonstrates less absenteeism, more commitment, lesser problems, more productivity and more work, higher stability and higher contribution for business success; but in contrast, higher costs and investments are required for enhancing loyalty, more experience and knowledge will result in low motivation for employees, which in turn lead for lesser productivity (Sravani 2016).

Ensuring loyalty of employees and retaining loyal employees are challenging, yet vital factors for apparel industry.

Challenges & Issues

Timex, as a competitive apparel manufacturer in Sri Lanka, has faced several issued over years, mainly due to the loyalty related problems of the company. Those issues can be identified through individual sources and organizational sources, which can be further categorized as depicted in table 3.1.

Table 3.1: Loyalty Issues in Timex (categorization according to source)

Individual SourcesOrganizational Sources
  • Presenteeism
  • Unsupportive management & leadership
  • Integrity issues
  • Less training & development
  • Inter-role conflicts
  • Short-term individual survival strategies

Individual Sources

Individual sources are considered as the employee related issues and challenges for loyalty at Timex.

3.1.1. Presenteeism

Presenteeism can be defined as a situation of physically being presented in the work place, but not engage in work in a productive manner. It can be observed in many employees of Timex.

Since there are a considerable number of old age employees in the company, who have been working there for a longer time, they seems less productive and lazy, but being presenting and getting their compensation at the end of the month, which reflects lower loyalty towards the company. Even though they are allocated with several administrative related jobs, their work related behaviours seem ineffective.

Correspondingly, several less educated, but high experienced managers have tended to delegate their work to the subordinates (without considering the individual workload of the subordinates) and they involve in informal meetings and personal needs fulfillment during the work hours. It on the other hand, affect on creating poor manager-employee relationships as well as dissatisfied subordinates, whereby these managers try to achieve the good will upon the hard work of the subordinates.

3.1.2. Integrity issues

Integrity is another key issue in the company, which reflects lack of honesty towards the organization.

Integrity issues lead to several thefts, which can be highly observed among some sample machine operators as well as among merchandisers, who are basically handling all the fabrics and accessories (i.e. raw materials). Since, these employees have attempted to take these raw materials in an unauthorized manner, some of the exit and entrance methods have also changed in production units.

Integrity becomes an issue among managerial employees as well, whereby they mislead the company and attempt to recruit their friends/relatives who are not appropriately qualified especially for executive categories. If these managers are loyal enough to the company, they would not involve lower qualified individuals who hinder company performances.

3.1.3. Inter-role conflicts

Inter-role conflicts can be viewed as insubordination in one perspective and non-supportive in another perspective.

Some disloyal employees attempt to obstruct sound performances of some functions, by being non-supportive to their peers and insubordinate to their supervisors. They basically look for their popularity, but without performing and avoiding others’ performances as well.

Moreover, some good performers in the company have discouraged due to non-recognition of their worth of performances, whereby seen poor performers receive all the rewards and recognition. Thus, good performers become demotivated and avoid doing their job roles properly.

3.1.4. Short-term individual survival strategies

Another loyalty issue in Timex is the negative effects created by individuals having short-term personal survival strategies.

It is notable in several occasions that some employees engage through personal links with top management attempts to apply several ad hoc procedures in the company, which may sometimes do not match with the company practices. Their interior motive is to become popularize and survive in the company in the initial period. When they get move with the culture and when they realize that those ad hoc practices do not fit to the company, they just become another kind of presenteeism employees, having no loyalty to the company.

In addition, some employees misuse and overlap ‘no gift policy’ and ‘information confidentiality’ policy of the company, whereby they get hidden gifts from the customers and work as the customers’ hidden preferences without considering the profits and procedures of the company. Similarly, some employees reveal confidential information to the competitors and other third parties for getting hidden gifts for them and making hidden personal links.

Organizational Sources

Organizational sources are considered as the factors (challenges and issues) affecting loyalty of employees within organization.

3.2.1. Unsupportive management & leadership

Unsupportive management and leadership refer to the managerial problems which weakens loyalty of the employees.

One major management issue in Timex was the aggressive nature of the management, which had weakened the performances of loyal employees, while making them demotivated. There had been several occasions, where the management without conducting proper background instigation and just looking at the hard numbers and numerical values, had scolded and disrespected employees for poor performances and even have dismissed unfairly. It has caused to the turnover of skilled employees from the company and later creating an unpleasant impression about the company in the industry. As a result of this management and leadership, not only the loyalty, but also the brand image of the company have been damaged and, it has blocked the entrance of high performers to the company, as when the employees are not loyal to the company, they have spread out actual and even false rumors in a harmful manner.

3.2.2. Less training & development

Lesser opportunities for training means lower ability for employees to learn job related processes and lower chances for employees for being promoted and upgrading themselves.

The aggressive and favourism based culture in Timex does not facilitate better performers to learn more and new things and to developing them. The trainings are basically provided to some selective employee groups according to the preference of the superiors.

On the other hand, recognition and rewards are also offered as the management preferences, where loyal, high performers get discouraged and tend to decrease the loyalty of the company. It is highly notable that for some upper level positions in Timex, most foreigners are selected based on their popularity and favourism without assessing their performances properly, which highly demotivated and threaten loyalty of local high performing and loyal employees. As a result, most of them stay until they get better alternatives from the industry, and once they get, they tend to move to the competitors with superior knowledge and expertise they gathered, which in turn they use competitively for the competitors.

Thus, these challenges and issues can be identified as the factors which affect negatively on the loyalty of the employees of Timex, which consecutively affect the performances of the company as well.

Proposed Solutions and Impact on Loyalty

Solutions for the above discussed issues and challenges (in section 3) can be explained in several aspects. Since many of the issues reflects that the company is not loyal to the loyal employees of the company, the suggestions are provided to strengthen loyal practices towards employees, which include,

  • Sound work atmosphere
  • Employee engagement
  • Proper upgrading with fair rewards and recognition
  • Sound manager – employee relations

Sound Working Atmosphere

One key thing that Timex has to focus is on creating a sound working atmosphere, where employees are fairly and appropriately treated and dealt. Sound working environment requires proper human resources management practices as well as operational factors.

Initially, the recruitment process should be properly practiced, by employing the most suitable persons for the jobs, with a thorough analysis of their performances. Afterwards, they should be provided with proper guidance and facilitates for performing with their expertise and skills. It will affect in creating a better perception within employees regarding the opportunities and support they get from the company to perform, and they automatically tend to perform more with higher level of loyalty. On the other hand, when there are more loyal high performers in the company, the working environment gets vibrant with positivity and energy, where the loyal employees try to make others feel to perform properly as a team effort. It discourages non-loyal employees to proceed with their destructive and non-productive processes, while making them more assertive and performance oriented.

Proper disciplinary procedures are also a must for creating a sound working culture. Rather than creating forceful disciplinary systems, employees should be guided and made aware about the reasonable outcomes of illegal and dishonest actions, by which, even due to fear and shame on being dishonest, employees try to protect integrity, which later becomes a true practice of integrity. Integrity makes employees volunteer to be loyal to the company.

While employees are educated regarding the importance of their role for the development of the company, they should make aware of the company vision, mission and goals. Awareness sessions can be conducted with the involvement of key roles of the company (such as a Director, CEO, CPO, COO etc), by which employees become excited to meet and follow their leaders, who are generally hard to approach. Being friendly and closer with the employees will automatically enhance their loyalty towards the leaders (managers) and towards the company.

In addition, its vital for creating a collaborative culture within the company, which can be done through proper team building activities and training programmes. Strong teams will assist in making the employees bound to the peers and leaders, and in the long way, to the company. Team spirit should be facilitated with proper grievance handling activities and personal well-being programmes as well. As a result, all employees will become loyal and they will support everyone to perform more.

Employee Engagement

Employee engagement can be mentioned as a synonym for enhancing employee loyalty. It refers to a process of getting the involvement of employees for possible decision making processes. One best method for engagement is empowerment of employees. Employees in Timex can be engaged in several steps by addressing different level of employees in significant ways for them.

Managerial and executive level employees can be engaged to the mass planning process. It can be done through general executive forums, departmental executive forums, where these employees are given opportunity to present their ideas and insights for the growth of the company. Further, they can be empowered to execute their suggestions while providing required facilitates. Time to time performance assessments on the assigned projects can be done and time to time feedbacks of top management can be provided for assisting them. It will affect for encouraging them to perform better for the success of their project and for the success of the company. Also it will create a perception of belonging and ownership of the employees that naturally increases the loyalty.

Old and less productive staff of the company can be engaged through giving them opportunity to handle small projects with proper authority. For instance, it can be a simple administrative task, such as vehicle planning, housekeeping, 5S leading etc, which will satisfy them in their capacity and make them more productive for the company. On the other hand, since the old employees perceive some kind of ownership of the company as they worked for longer period of time, they can be recognized properly and can enhance their loyalty in simple means.

Moreover, engagement has to be created within worker grade employees as well, for increasing their productivity and integrity towards the company. They can be empowered with their daily routines for getting the maximum output with a sense of ownership of the duty, rather than just a duty. For instance, machine operators can be empowered with completing and passing high quality products to the next level, due to which they try to perform their best and try to be the best. Once their effort is gifted with some rewards, the loyalty gets further increased. Loyalty ideas for workers can be generated through powerful slogans and that increase their feelings of ownership regarding the company, by which they perform better.

Proper Upgrading with Fair Rewards and Recognition

Employee upgrading, recognition and rewarding is a must for enhancing their loyalty to the company, which will build a trust within employees that the company is loyal to them and they will be loyal to the company in return.

For Timex, it is essential to implement fair recognition and rewarding functions for identifying actual performers and for rewarding them accordingly. Since the loyalty of performers has discouraged due to the recognition given to non-performers but who imply as perform. Thus, a proper performance appraisal system is essential by avoiding superiors’ discriminations. It is suggested to implement a 360o performance appraisal system, by assessing the tasks, success and time duration for the tasks achieved by employees.

Afterwards, high performers can be recognized and admired through annual get together and management forums, which will increase their loyalty and their contribution to perform better. Correspondingly, they should be rewarded in a fair manner, in consistent with their performances. Further, proper development opportunities should be created for them, by appraising each unique value and their importance to the company. Promotions need to be always transparent and reasonable, where there should be a perception that any best performer can achieve them. Thus, they will be motivated to perform better and afterwards, will serve excellently being loyal.

In addition, external development opportunities can be provided for personal betterment of the employees as well, which will create a respect and an affection within employee regarding the company. It is interesting that, there are some key managerial roles in Timex, who have given with such kind of personal development opportunities, whereby they have facilitated for abroad learning as well. Some of these employees have resigned at their young ages and again have joined as skilled managers. Thus, these kinds of opportunities can be promoted for high performers where their loyalty will anyhow remain with the company.

Sound Manager – Employee Relationships

In many occasions, it can be observed discriminative and aggressive management approaches in Timex, which neglects the soft human aspects. Therefore, healthy relationships have to be built in between managers and employees.

Instead of the famous aggressive culture in Timex, it is essential to create a warmer and humble culture, with an open door policy. Thus, employees are given equitable opportunities to discuss with managers and solve their problems. It will avoid the hire and fire culture of the company and employees will feel more secure and fair within the organization.

Employees have to be given opportunities to know them mistakes and weaknesses and correct themselves and perform again with constructive feedback. Thus, proper up and down communication channels are essential for this purpose. Moreover, respecting employees and admiring them also helpful for sound manager – employee relationships. It will enhance their preferences for managers and loyal to managers and then to the company. The major issue for Timex of being creating a good brand name again in the market, will be an easy task, mainly with these relationships.

Accordingly, there are several methods to enhance the loyalty of the employees of Timex, which will affect in enhancing the performances of the employees and then performances of the companies, and on the other hand, it will positively affect in a good employer branding for the company.

Conclusion

The aim of this report was to analyze the loyalty related issues in Timex Garments, which is a leading apparel manufacturer in the industry, while highlighting the key loyalty related issues and the suggestions for overcoming the issues.

As loyalty relates with the perceptions of the employees regarding the work environment, peers, superiors and job itself, both organizational and individual efforts needs to make and altered for enhancing loyalty.

Main loyalty related issues of Timex included several individual (i.e. employee centric issues) and organizational issues (i.e. managerial and functional issues). Individual issues were summarized as presenteeism, integrity issues, inter-role conflicts and short-term individual survival strategies. Organizational issues were summarized as unsupportive management and leadership and less training and development opportunities.

Suggestions for the above mentioned issues included, the creation of sound working atmosphere (through proper recruitment functions, proper disciplinary procedures, collaborative culture and awareness sessions), employee engagement (engaging and empowering all three levels of employees, i.e. managers & executives, old/ less productive employees and worker grade employees), proper upgrading with fair rewards and recognition and sound manager- employee relationships.

It is suggested that all these improvements will result in enhancing employee loyalty, which will increase their individual performances and company performances at last.

References

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Keiningham, T & Aksoy, L 2009, Why Loyalty Matters, BenBella Books Inc, Suite, USA.

MetLife 2011, ‘The Importance of Employee Loyalty’, Available from https://www.inmoment.com/blog/the-importance-of-employee-loyalty/. [27 March 2017].

Nasiri, S, Najafbagy, R & Nasiripour, A 2015, ‘The Impact of Employee Loyalty on the Success of Commercial Organizations: A Case Study on the Dealerships of Heavy Equipment in Iran ‘, Journal of Human Resource Management, vol 3, no. 3, pp. 27-32.

Preko, A & Adjetey, J 2013, ‘A Study on the Concept of Employee Loyalty and Engagement on the Performance of Sales Executives of Commercial Banks in GHANA ‘, International Journal of Business Research and Management (IJBRM), vol 4, no. 2, pp. 51-62.

Smith, M 2015, Motivation and its Impact on Employee Loyalty and Commitment: A Qualitative Analysis, Trinity Washington University.

Sravani 2016, ‘Employee Loyalty: Importance, Ways, Signs, Pros & Cons’, Available from http://content.wisestep.com/employee-loyalty-importance-ways-signs-pros-cons/. [27 March 2017].

Timex 2017, Company Website., Available from http://www.timexsl.com/. [27 MArch 2017].

Wan, H n.d., ‘Employee Loyalty at the Workplace: The Impact of Japanese Style of Human Resource Management’, International Journal of Applied HRM, vol 3, no. 1, pp. 1-17.