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Questions 1. Why productivity had declined in Sakshi Garments Limited? 2. Who was responsible for the problem in the case? 3. Was the strategy adopted by the Vice President correct?

Questions 1. Why productivity had declined in Sakshi Garments Limited? 2. Who was responsible for the problem in the case? 3. Was the strategy adopted by the Vice President correct?

Understanding Business
Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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1. Why productivity had declined in Sakshi Garments Limited?

2. Who was responsible for the problem in the case?

3. Was the strategy adopted by the Vice President correct?

4. Had you been in Ghosh's position, how would you have handled the situation?

5. Has the problem been resolved in the case? Comment.

CASE 6: SAKSHI GARMENTS LIMITED Sakshi Garments Limited was established in 1975 at Chennai. It was a 100% export oriented unit having a similar unit at Dehradun. The company manufactured readymade garments and had employed 500 workers. The garment unit consisted of measurement, cutting, stitching, finishing and packaging sections. Most of the processes had been automated in recent years. The garment unit was headed by Vice President A.K. Ghosh aged 45 years, an engineer by training, who had been with the company since its inception. He had risen fast to this position by virtue of his capability and hard work. His concern was to maintain the productivity standards of the company while keeping morale of the workers high. Declining Profitability In December, 1996 the company saw a decline in the profitability which greatly concerned the top management. A team led by Ghosh was formed to review the costs under all heads. It was found that overtime cost had increased and the performance of the workers in general had declined considerably against the agreed norms. It was realized that laxity in monitoring had led to such a state. The supervisors were pulled up but no punitive action was taken against them. The company had entered into an agreement with the recognized union eighteen months ago fixing performance standards of each job and deduction of proportionate wages for any shortfall in the performance standards. The norms were set realistically on the basis of the performances achieved by the executive trainees. The shortfall was severe in the stitching section where performance declined to 73% workers' performance were 60-65% of the norms. The problem required an immediate attention. The team decided to initiate the corrective measures in this section. the set norms. Most of the Productivity Improvement In February 1997, the team decided to deduct proportionate wages for work not done as per the agreement. The recognized union was apprised of the situation and sounded about the decision to deduct the wages for the month of March. Since April and May fall in marriage season, the step was assumed to put more pressure on the workers. The stitching section having 50 workers, was chosen for implementation of this decision. The management had faced a similar problem in another unit at Dehradun in October 1995 wherein the workers had gone on "go slow" and management had deducted proportionate wages for the work not accomplished. The union had moved to court and the court had granted a verdict in the company's favour. The gradual improvement had been witnessed in this unit, but still it was not up to the mark. The workers of the stitching section agitated against the deduction of the wages, but the management stood by its decision. In addition, they sent two good performers working on simpler machines to a comparatively complex stitching machine. The two achieved 107% of the set performance norms within 45 days. The two junior workers became role models to other workers of the stitching section, who also began to show improvement in their performance that reached 96% of the set norms in some cases. By the end of May 1997, Ghosh was feeling relaxed at the thought that the strategy had worked.
Transcribed Image Text:CASE 6: SAKSHI GARMENTS LIMITED Sakshi Garments Limited was established in 1975 at Chennai. It was a 100% export oriented unit having a similar unit at Dehradun. The company manufactured readymade garments and had employed 500 workers. The garment unit consisted of measurement, cutting, stitching, finishing and packaging sections. Most of the processes had been automated in recent years. The garment unit was headed by Vice President A.K. Ghosh aged 45 years, an engineer by training, who had been with the company since its inception. He had risen fast to this position by virtue of his capability and hard work. His concern was to maintain the productivity standards of the company while keeping morale of the workers high. Declining Profitability In December, 1996 the company saw a decline in the profitability which greatly concerned the top management. A team led by Ghosh was formed to review the costs under all heads. It was found that overtime cost had increased and the performance of the workers in general had declined considerably against the agreed norms. It was realized that laxity in monitoring had led to such a state. The supervisors were pulled up but no punitive action was taken against them. The company had entered into an agreement with the recognized union eighteen months ago fixing performance standards of each job and deduction of proportionate wages for any shortfall in the performance standards. The norms were set realistically on the basis of the performances achieved by the executive trainees. The shortfall was severe in the stitching section where performance declined to 73% workers' performance were 60-65% of the norms. The problem required an immediate attention. The team decided to initiate the corrective measures in this section. the set norms. Most of the Productivity Improvement In February 1997, the team decided to deduct proportionate wages for work not done as per the agreement. The recognized union was apprised of the situation and sounded about the decision to deduct the wages for the month of March. Since April and May fall in marriage season, the step was assumed to put more pressure on the workers. The stitching section having 50 workers, was chosen for implementation of this decision. The management had faced a similar problem in another unit at Dehradun in October 1995 wherein the workers had gone on "go slow" and management had deducted proportionate wages for the work not accomplished. The union had moved to court and the court had granted a verdict in the company's favour. The gradual improvement had been witnessed in this unit, but still it was not up to the mark. The workers of the stitching section agitated against the deduction of the wages, but the management stood by its decision. In addition, they sent two good performers working on simpler machines to a comparatively complex stitching machine. The two achieved 107% of the set performance norms within 45 days. The two junior workers became role models to other workers of the stitching section, who also began to show improvement in their performance that reached 96% of the set norms in some cases. By the end of May 1997, Ghosh was feeling relaxed at the thought that the strategy had worked.
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