Masood Textiles

ACRJ

This case was prepared by Dr Zafar Iqbal Qureshi of the Lahore University of Man-agement Science as a basis for classroom discussion rather than to illustrate effective or ineffective handling of an administration or business situation.

Please address all corre-spondence to: Dr Zafar Iqbal Qureshi, Visiting Pro-fessor, Lahore University of Management Sciences, Opp Sector U, DHA, Lahor Cantt. 54792, Pakistan. E-mail: [email protected].

ASIAN CASE RESEARCH JOURNAL, VOL. 9, ISSUE 1, 61–81 (2005)

© 2005 by World Scientifi c Publishing Co.

Performance Challenges atMasood Textile Mills

In early November, 2001 on a cool, breezy morning in Faisalabad (Pakistan) Shahid Nazir, CEO of Masood Textile Mills (MTM), sat at his desk and refl ected on the highly competitive environment that his company operated in. According to the World Trade Organization (WTO) Agreement, 1994, on Textile and Clothing, special protection for textiles would be phased out by 2005, and in these changed circumstances, only those producers who were cost and quality conscious would survive as exporters. Aware of the emerging situation, Nazir wanted to enhance the competitiveness of his company.

To realize his aim, Nazir decided that he had to trans-form his employees into ‘corporate athletes’ by enhancing their physical, emotional and mental capacities. He knew that his employees were a valuable asset and that their enhanced abilities would contribute signifi cantly to his organization’s effectiveness and towards achieving his mission for MTM.

Earlier in the year, results from employee surveys and focus groups on performance appraisal had showed that the performance evaluation system was perceived by the employees to be inadequate and that they had little faith in it. In addition, employees considered it to be a bureaucratic system with no employee participation encouraged in goal setting or self-assessment. As appraisal did not necessarily translate into promotion and other expected rewards, it created a culture where communication was poor between the upper and lower levels of management. This, in turn, was creating problems of commitment and motivation amongst the employees.

62 ACRJ

Nazir understood the probable impact of these issues on the performance of his company, and decided to con-front them immediately. He knew that in order to meet the stringent productivity and quality standards set by the buyers, enhancing the motivation and commitment of his employees was vital. Keeping in mind his customers’ demands and the fl aws in the present performance appraisal system, the CEO and his management team developed a Performance Reward System (PRS) which according to them would compensate employees on the basis of their performance and so enhance their motivation and commitment.

Nazir had planned to introduce the proposed system in September 2001, but the political events following 9/11 and the global economic downturn put a severe stress on the textile industry of Pakistan which saw a general slump in exports. To deal with the immediate crisis at hand, the implementation of the new PRS was temporarily delayed.

Nazir was concerned about the impact of the slump on his business as well as on the morale of his employees. He realized that it was vital to introduce changes in the evaluation process in order to improve the credibility of the appraisal system, linking it with merit increments and promotions with a view to boosting employees’ morale and managing the current crisis. He hoped to see these changes in place by the middle of 2002.

PAKISTAN’S TEXTILE INDUSTRY

The textile industry had played an important role in the economic development of Pakistan and was the largest industrial sector in terms of investment, employment of labour and exports. It accounted for 64 per cent of Pakistan’s export, 46 per cent of employed industrial manpower, and 8.5 per cent of GNP. The period between 1980 and 2001 had witnessed a vast growth in the industry.

Despite its impressive contribution to Pakistan’s national economy, the textile industry’s share in world export of textile and clothing (especially in clothing) was insignifi cant due to its low competitiveness. In spite of its

PERFORMANCE CHALLENGES AT MASOOD TEXTILE MILLS 63

fl uctuating fortunes, the industry had managed to maintain a stable performance (see Exhibits 1 and 2).

Apparel exports were a new addition to the industry and its share in the total merchandise export of Pakistan was about 22 per cent. Internationally its share was at 1.0 per cent in 1997 (see Exhibit 2).

In 1994 during the WTO’s Uruguay Round it was decided that trade in textiles and clothing would be completely liberalized and all restrictions would be totally eliminated by 2005. This would make trade more challenging and competitive, as there would be no guarantee in the form of quotas for Pakistani exports.1 This would be an excellent opportunity for those fi rms that could build a competitive edge based on productivity, quality and cost to emerge as winners in an open global economy.

COMPANY BACKGROUND

Masood Textile Mills (MTM) was a Public Ltd Company located in Faisalabad which was about 360 km south of the capital Islamabad. Faisalabad was an industrial city and was also known as the ‘Manchester of Pakistan’ due to its many industrial units and more importantly due to its contribution to the textile industry of Pakistan.

MTM was a vertically integrated unit, comprising of spinning, knitting, dyeing and stitching facilities. It began in 1986 when Chaudhry Nazir (Nazir’s late father) bought three spinning units and, later an additional unit in 1998. Due to the success of his spinning business, Chaudhry Nazir set up a knitting facility in 1989 and a dyeing plant two years later. MTM’s apparel division became operational in 1995 with a stitching facility of 35 machines, 15 permanent and 35 contractual employees and produced 20,000 pieces of clothing per month.

1A. Malik, “Demand for Textile and Clothing Exports of Pakistan”, Pakistan Institute of Development Economics, 2000.

64 ACRJ

Over a span of seven years, MTM acquired 800 machines and had a monthly production of 40,000 dozen fashion garments such as Polo, Rugby and Henley shirts; along with basic garments such as crew-neck t-shirts, sweat shirts and boxer shorts.

Over time, MTM invested heavily in the training and development of its employees. A team of MBAs and textile and industrial engineers were working at various levels in Marketing & Merchandising, Operations, and Production & Quality Control departments. Nazir believed that this long-term investment in human capital would give MTM an advantage in meeting the challenges of the 21st century.

In 2001 MTM ranked among the top three textiles and apparel manufacturers in Pakistan in terms of its annual turnover and brand profi le; it had also achieved an annual turnover of US$28 million. The company was currently marketing knitwear products to premium international brands such as Ralph Lauren, Calvin Klein, Gap, and Nautica.

THE CEO’S PROFILE

Nazir was born in 1964 in Faisalabad. He graduated from Atchison College which was one of the best institutions in Pakistan. He did his master’s in business administration in the UK and attended several management development courses at the Rausing Executive Centre at the Lahore University of Management Sciences in Pakistan. After his father’s death in 1993, Nazir at the age of 29 years became the CEO of Masood Textile Mills.

Nazir had other business ventures as well apart from MTM. He owned Kohistan Transport; Kakakhel Oil Mills which was leased to Rafhan Best Foods and was the Coke bottler in Faisalabad. In addition to his business interests, he was active in politics and was elected a Member of the National Assembly in 1993. However, he soon left politics so that he could concentrate on his business and add value to his company, which was a source of income for about 5,000 families.


MTM’S ORGANIZATION STRUCTURE

MTM consisted of various departments: Production, Finance, Merchandising, Information Technology (IT), Human Resource (HRD), Procurement, and Production Planning and Control (PPC). The factory fl oor contained the Cutting and Production Floor which further included the Stitching and Quality Control departments. The PPC, Procurement and Stores acted as support services for the Production department only, while HRD, IT and Finance were support departments for the whole of the Garment Division (see Exhibit 3).

There were two general managers (GM), who were assisted by managers of various departments. One general manager headed the MTM Garments Division and the other headed the Spinning Mill and both reported to the CEO. The GM of the Spinning Mill was Nazir’s younger brother, Yasir who had just returned from the US after completing his master’s degree in business administration.

The GMs independently reported to the CEO, as did the Finance Director. The Director of Finance was responsible for the entire MTM Group (Mills and Garment Division) whereas the GMs were only concerned with their respective divisions. Although the Marketing Manager formally reported to the GM Garment Division, most of his interaction was with the CEO, since he also led the marketing function (see Exhibit 3 for MTM’s partial organizational chart).

MANAGEMENT STRUCTURE

At MTM, the management was divided into four categories; M1 being the highest tier and M4 the lowest. The production, marketing and IT managers were in M1 and their salary was above Rs40,000 per month.

M2 comprised the top fi ve department managers, with salaries ranging between Rs24,000–37,000 per month. M3 had 13 assistant managers from the production, quality control, purchasing, merchandising and procurement departments.

66 ACRJ

Their monthly salaries ranged between Rs7,200 and 22,000. M4 had 23 functional support staff such as merchandisers, management trainees and unit managers, with salaries in the range of Rs8,000–19,000 per month.

Keeping this in mind Nazir wondered whether MTM’s management structure needed to be rationalized or not.

The M4 layer was added when the management felt that the company had too many ‘technical’ managers. Hence Unit Managers with MBA degrees were inducted and were expected to liaise between the upper management and the production units.

Skilled and unskilled workers formed the non-management cadre and were divided into four categories from S1 to S4. S1 had 91 supervisors with salaries ranging from Rs2,700–12,600, while S2 had 82 operators, auditors and inline and fi nal inspectors with monthly salaries ranging from Rs2,400–10,000.

S3 consisted of 243 employees covering assistants, packers, security guards and quality observers. Their salaries were in the range of Rs2,050–7,800. S4 had 191 support staff such as helpers, sweepers etc. and their take home salaries varied from Rs2,000 to 5,000 per month.

Table 1. Payroll Cost of the Garment Division Managerial Staff

(Pak Rupees)

Source: Corporate documents.

Level No. of Staff at Each Level

Average Salary Per Month

Total MonthlySalary

Average Annual Salary

M1 3 45,000 135,000 1,620,000

M2 5 32,000 160,000 1,920,000

M3 13 16,000 208,000 2,496,000

M4 23 13,000 299,000 3,588,000

Total 802,000 9,624,000


PERFORMANCE APPRAISAL SYSTEM

The performance appraisal system at MTM was only applicable to salaried employees on an annual basis and formed the basis for determining the employee’s annual raise. However, the fi nal decision on the annual raise was also infl uenced by the employee’s grade and length of service. The annual increment for skilled and unskilled workers was, in general between 5% and 6% of their base salary; for supervisors 8–10% of their base salary; for Unit managers a minimum of 10%; and for senior managers, between 12–15% of their base salaries. If employees exceeded their targets for the year, their increment could be doubled or tripled on the discretion of the upper management. This appraisal system had been in practice for the past year and a half.

In spite of these percentages, the supervisors and skilled and unskilled workers were dissatisfi ed with merit increments since they felt that the increments were based on management discretion rather than on an objective appraisal system. Concern was also raised about equity and fair play in the award of merit increments. There were other concerns as well such as: the logic behind the difference in salary ranges for different categories; the confusion over why employees performing in the same category, be given the

Table 2. Payroll Cost of the Garment Division Non-Managerial Staff

(Pak Rupees)

Source: Corporate documents.

Level No. of Staff at Each Level

Average Salary Per Month

Total MonthlySalary

Average Annual Salary

S1 91 7,000 637,000 7,644,000

S2 82 6,000 492,000 5,904,000

S3 243 4,000 972,000 11,664,000

S4 191 3,000 573,000 6,876,000

Total 2,674,000 32,088,000

68 ACRJ

same raise if their salary range varied from the minimum to the maximum.

Nazir understood that something had to be done to answer these concerns and to remove this feeling of inequity in the award of merit increments.

In MTM two tools were used to evaluate employees:

i) Employee Evaluation Form (EEF)

The employees’ immediate supervisor fi lled out the Employee Evaluation Form and forwarded it to the Human Resource department. Two separate forms were used for appraisal — one for the supervisory level and above and the other for skilled employees and below (see Exhibits 4 and 5). The former was more of a behavioral indicator where the management was rated on a scale of 1 to 10 on skills such as systems oriented approach, ability to utilize resources, communication, co-operation, initiative, professional skill, organization/ discipline, administrative ability and reliability.

The latter form measured behavioral aspects of skilled and unskilled workers, where they were rated on a scale of 1 to 10 on versatility/experience, company policy awareness and implementation, compliance, issues awareness, attitude, initiative, communication and intelligence. The more objective performance measures were those of quality or workmanship, target orientation and punctuality.

ii) Quality Assurance Rating (QAR)

The QAR was applicable to Inline and Final Inspectors at MTM (see Exhibits 6 and 7). The job specifi cation of these inspectors was to check the quality of fabric/garments at each stage of the production process and set aside those that needed re-work or those that were to be discarded. A QAR rating was given as a fi nal, stringent check on the quality of the audited garment pieces and had a 5% threshold of acceptance for inline inspectors. Since the prospect of fi nding defects was


reduced after inline inspectors checked the fabric/garments — the threshold for fi nal inspectors was raised to 6.5%.

Evaluation of quality inspectors was carried out on a quarterly basis. The QAR received each month had a 60 per cent infl uence in determining the inspectors’ annual increments along with 40% more assigned to the results based on EEF which was done annually. If it was discovered that an inspector had consistently maintained a high percentage of defects (5 per cent for inline inspectors and 6.5 per cent for fi nal inspectors — or higher — 3 times over three months), he was penalized in the form of a demotion, which meant reduction in grade and consequently a reduced increment and salary. However, no penalty was imposed if it was found that the defects had resulted due to factors beyond the inspector’s control.

CHALLENGES

The discrepancy in raises for different levels of management posed many questions. The CEO knew that a system had to be devised to address the negative effects of the system. Other problem areas were also apparent; the two forms used to evaluate employees were lacking in objectivity making it diffi cult to differentiate between high and low performers. As the form measured behavioral aspects it was not performance oriented; this led to the appraiser being biased and subjective in the appraisal process.

In addition annual evaluations were too infrequent and determined only a small percentage of annual increments. It was also not clear what the criterion was for deciding the remaining merit raises. An annual appraisal was not suffi cient for feedback purposes, as the evaluator could make errors in judgment. The Performance Appraisal system could be used for calculating bonuses and considering promotions, but at MTM there was no formal link between performance appraisal and performance based incentives.

The focus groups and surveys carried out indicated that employees at the management, supervisor and worker levels had no faith in the system and regarded it merely as

70 ACRJ

a formality, with no employee participation in goal setting or self-assessment. Career progression was unclear, no counseling was provided, and consequently the use of an appraisal system which did not translate into promotion was considered a futile exercise. Promotions were made on the sole discretion of the appraiser as opposed to being linked to annual appraisals.

CHANGES ADOPTED

Linking Performance Appraisal with Rewards

According to the results of a survey carried out at MTM, money (compensation and rewards) and recognition of efforts were identifi ed as the two most important motivators for employees at MTM. At present, there was no performance based incentive system in the company; bonuses served statutory requirements and were given irrespective of the employee’s performance. The bonus scheme consisted of two categories:

i) One month’s gross salary

It was a statutory requirement of Section 10C of the Labour Laws of Pakistan that a company was liable to give bonuses if its profi ts for the year were equal to or exceeded the amount of total salaries paid each year. Accordingly, a bonus was equal to two-thirds of the gross salary and the remaining one-third was paid exgratia.

ii) 5% of profi ts

This again was a statutory requirement, since a company was liable to pay its workers a bonus out of the ‘workers’ profi t participation fund’ each time the company made profi ts. This bonus was paid to workers only.


THE PROPOSED SYSTEM

Keeping in view the fl aws in the current appraisal system, the CEO and his management team decided to develop a Performance Reward System that would pay employees on the basis of their performance, satisfy their mone-tary needs and recognize/acknowledge their work (see Exhibit 8). To achieve this objective, the management decided to link performance directly with Purchase Orders (POs) upon completion of which, rewards would be paid out to employees and departments. It was also decided that reasons such as a shortfall in the volume of garments; or a delay in delivering a consignment which could cost the company extra by shipping the order by air would get zero points for the entire PO. Additionally, if an external auditor re-screened a PO, it would be disqualifi ed from receiving a reward. The employees however did not agree and considered these conditions to be rather stringent in earning performance based rewards.

The reward amount was set at 0.05 per cent of the total rupee value of the Purchase Order. Rewards were disbursed based upon three factors (see Exhibit 8):

i) Responsibility factor

The responsibility factor was directly proportional to an employee’s hierarchical level in the organization: managers at higher levels would get higher rewards as they had greater responsibility in the organization. Each level was assigned a numerical value in order to ascertain the difference in rewards due to this factor.

ii) Opportunity factor

The opportunity factor was established to further refi ne the performance based reward system. This factor was defi ned as the probability of earning performance reward by an employee based on the assumption that work on 10 POs

72 ACRJ

would be done simultaneously. The opportunity factor, therefore, was applied in ascertaining the number of POs which an employee was working on.

The opportunity factor was further divided into fi xed and variable categories. The fi xed opportunity factor related to employees working in the services department like Maintenance and PPC departments whereas the variable opportunity factor was used to determine the performance rewards of employees who were directly involved in the production of a PO. This distinction between employees of the service and production departments was viewed by management as an incentive for production workers to improve their rewards through improved productivity.

iii) Formula for reward

To calculate the performance based reward of an employee, a formula was developed by the management:

Per Employee Share = (contribution of the hierarchical level/

total number of employees in that hierarchical level]

It was proposed that a Board of Controllers (BoC) would operate the PRS. The BoC would consist of managers and deputy managers who would be responsible for selecting the POs and the calculation of rewards. The BoC would then forward its recommendations to the Board of Directors (BoD) consisting of senior managers. The BoD was responsible for analysis and verifi cation of information provided by the BoC, and for fi nalizing the recommendations of the BoC to distribute the performance rewards.

Although the employees seemed satisfi ed with the new system they were anxious about the complexity of calculating the amount of rewards. The management on its part, however, felt that their proposed system of determining performance based rewards was detailed enough and would not cause any concern to the employees.


THE FUTURE

Nazir decided to implement the proposed Performance Reward System by the middle of 2002 for he was convinced that it was an effective tool for performance management. He also realized that it was vital for the company to introduce reward schemes for the managers for better performance. It was not just individual performance that mattered; the performance of each department was critical for the achievement of the company’s goals.

The issues that faced Nazir were how he could ensure a successful implementation of the proposed Performance Reward System and how he would measure the effectiveness of the system in terms of the impact it would have on his employees and the organization. Most of all, Nazir knew that the realization of his vision warranted that he develop his employees into ‘corporate athletes’. But would his new PRS help in the fulfi llment of his strategic intent? Or, did he need to make other management interventions to enhance the performance of his employees to keep MTM competitive in the new competitive environment?

74 ACRJ

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76 ACRJ

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Exhibit 4. Employee Evaluation Form

MASOOD TEXTILE MILLS LTD (Apparel Division) EMPLOYEE EVALUATION FORM

( For Supervisory Level & Above )

Employee Code/Name

Position Department

Evaluation (Annually) Employee “Output Rating”

Score System Oriented Approach Likes to work in accordance with defined

system including compliance issues

Evaluation:-

2 4 6 8 10

Ability to Utilize Resources Man, Machine, Material etc. & how much

cost conscious he is

Evaluation:-

2 4 6 8 10

Score Communication How clearly understands the instructions of

superiors & shares with subordinates

Evaluation:-

2 4 6 8 10

Score Cooperation Willingness to help others accomplish their objectives

Evaluation:-

2 4 6 8 10

Score Initiative Voluntarily starting projects. Attempting non-

routine jobs and tasks

Evaluation:-

2 4 6 8 10

Score Professional Skill To blend jobs related education, skill,

experience and length of service with MTM

Evaluation:-

2 4 6 8 10

Score Organization / Discipline Organizes for prevention rather than

corrective measures

Evaluation:-

2 4 6 8 10

Score Perseverance / Stability Even temperament acceptance of unavoidable tension and pressure

Evaluation:-

2 4 6 8 10

Score Administrative Ability Tactful, cool, understands situation and keeps

people satisfied

Evaluation:-

2 4 6 8 10

Score Reliability Dependability and Trustworthiness

2 4 6 8 10

Total Score

Summary

Evaluator comments

Employee Comments Total

Max. Score

100

Employee Signature Date Evaluator Code/Signature

Source: Company documents.

78 ACRJ

Exhibit 5. Employee Evaluation Form

MASOOD TEXTILE MILLS LTD (Apparel Division) EMPLOYEE EVALUATION FORM ( For Skilled Employees & Below )

Employee Code/Name

Position Department

Evaluation (Annually) Employee “Output Rating”

Score Quality of Workman ship/skill How accurate & precise in the work done

Evaluation:-

2 4 6 8 10

Capacity @ 100%/Target oriented Concise efforts to achieve the target

Evaluation:-

2 4 6 8 10

Score Versatility/Experience How versatile a person is to know more than one job

Evaluation:-

2 4 6 8 10

Score Company Policy awareness and Implementation

Evaluation:-

2 4 6 8 10

Score Safety & Fire fighting procedures Awareness (compliance issues awareness)

Evaluation:-

2 4 6 8 10

Score Attitude toward colleagues/seniors Cooperation, obedience, language, work beyond normal hours

Evaluation:-

2 4 6 8 10

Score Initiative Voluntarily starting projects. Attempting non-routine jobs and tasks

Evaluation:-

2 4 6 8 10

Score Communication How effectively understands instructions

Evaluation:-

2 4 6 8 10

Score Intelligence How to calculate given targets in his capacity

Evaluation:-

2 4 6 8 10

Score Punctuality & Disciplinary matters Attendance, regularly, cooperation with other Deptts. General character 2 4 6 8 10

Total Score

Summary Evaluator comments

Total Max. Score

100

Employee Signature Date Evaluator Code/Signature Note: In case of Inline / Final Inspector, Cutting Inline / Auditor evaluation, QA Rating must be considered. For Inline & Final Inspectors. 50%, weightage is applied to each QA Unit In charge evaluation.

QA Rating

Source: Company documents.


Exhibit 6. Quality Assurance Rating (Inline Inspector)Inline Inspector’s Evaluation

From 01-NOV-01 to 30-NOV-01

Date & Time: 22-DEC-01 12:18 PM

UNIT # : 4

SR.# CODE NAME JOINING DATE DAYS AUDIT PCS. FAULT PCS. %AGE

1 7363 15-MAY-01 18 634 27 4.26%

2 7481 12-MAY-01 8 189 10 5.29%

3 8165 01-FEB-00 11 529 22 4.16%

4 8170 26-JUL-99 8 206 9 4.37%

5 8181 01-MAR-01 18 583 27 4.63%

6 8231 01-MAR-01 2 57 3 5.26%

7 8334 12-APR-00 19 749 29 3.87%

8 9557 11-OCT-99 23 636 31 4.87%

9 9602 15-SEP-99 13 318 13 4.09%

10 9683 09-JUL-99 17 565 23 4.07%

11 9806 22-OCT-98 15 443 18 4.06%

TOTAL 4909 212 4.32%

Source: Company documents.*For Inline Inspectors, the threshold for error was set at 5%.

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Exhibit 7. Quality Assurance Rating (Final Inspector)Final Inspector’s Evaluation

Source: Company documents.*For Final Inspectors, the threshold for error was set at 6.5%.

From 01-NOV-01 to 30-NOV-01

Date & Time: 22-DEC-01 12:16 PM

UNIT # : 10

SR.# CODE NAME JOINING

DATE DAYS

PRODUC-TION

AUDIT PCS.

FAULT PCS.

%AGE

1 7289 16-APRL-01 3 219 91 (42%) 7 7.69%

2 7409 09-MAY-01 5 768 176 (23%) 14 7.95%

3 7441 28-MAY-01 5 376 89 (24%) 5 5.62%

4 7442 01-JUN-01 15 0 382 15 3.93%

5 7443 28-MAY-01 24 3597 653 (18%) 35 5.36%

6 8132 18-JAN-00 24 1656 623 (38%) 19 3.05%

7 8178 02-MAR-00 5 965 183 (19%) 12 6.56%

8 8185 01-FEB-00 3 214 47 (22%) 4 8.51%

9 8366 01-MAY-00 23 3611 706 (20%) 47 6.66%

10 9412 08-APR-99 24 4018 671 (17%) 31 4.62%

11 9469 09-MAY-97 25 4153 709 (17%) 45 6.35%

12 9697 19-MAY-99 1 45 20 (44%) 1 5.00%

13 9777 01-AUG-98 24 4557 687 (15%) 25 3.64%

TOTAL 5037 260 5.16%


• Opportunity Factor: It is the probability of earning based on the assumption of 10 running POs

• Fixed Opportunity Factor: Personnel contributing equally to all POs and Units will have opportunity factor 0.1 [1/10]. This was meant to determine the rewards of the employees in the service departments

• Variable Opportunity Factor: Personnel contributing specifi ed PO and units will have varied opportunity factors subject to their contribution e.g., if one person contributes for one PO in one Unit, his opportunity factor will be 1/1 = 1

If he contributes to 2 PO’s, his opportunity factor will be ½ = 0.5, etc. This factor applied to employees directly involved in the production of a PO.

• Potential Earning: Per head share × [# of winning PO’s/# of running PO’s]/Opportunity Factor

Calculation of reward:

• Reward per Level: Share in the whole reward for a particular level Reward = [Opportunity Factor × Responsibility Factor × No. of Persons involved in

that PO]

• Contribution: Money value received for that particular level Contribution = {[Reward per level/Total amount of Reward] × Total Reward}

So, • Per Head share: contribution of certain hierarchical level/Total # of Employees for that

level.

_______Source: Company documents.

Exhibit 8. Criteria for PO Reward Distribution

Major Points:

• Responsibility Factor: Directly proportional to the levels in the Organization

Sr

mgrs Mgrs.

Dy

Mgrs

Asst

Mgrs

UM

Mgmt

trainee

Incha-

rge

Sprvsor Skilled Semi-

skilled

Un-

skilled

6 5 4 3 2 1.5 1 .9 .8 .6 .4

Documents

Masood Textiles