0

Z105 ETHICS

Boonon Knitting Limited

28.11.13

Sutapa Bhattacharjee

Assistant Professor

Institute of Business Administration University of Dhaka

Submitted To

Afsara Zaheen Ahmed

Nishadul Haque Nihal

Kashfia Tabassum Ahmed

Mansib Intisar Khan

Noushin Wadud Khan

Prepared By

RH 24

ZR 31

RH 42

ZR 44

RH 58

2

LETTER OF TRANSMITTAL

28th November 2013

Sutapa Bhattacharjee

Assistant Professor

Institute of Business Administration

University of Dhaka

Dear Madam

As per the course requirements for Z105 Business Ethics and Leadership, we present our

ethical review of Boonon Knitting Limited.

We have tried to bring together the big and small, the abstract and concrete, the analytical and

human side of business ethics. By merging global connections into local scenario, we can

show you a bird’s eye view. Ultimately, we take you to the factory itself, because business

ethics gives us another lens to capture the modern readymade garments company.

To attempt to present every possible dilemmas those stakeholders face is an exhaustive task.

We have been limited in our output to focus on the salient features gleamed from our

research. We acknowledge our sources and abhor plagiarism.

We believe that this report will be worth your while. Without constructive criticism, this

report is not complete. Thank you for the opportunity and for showing us the way.

Yours respectfully

Afsara Zaheen Ahmed, RH- 24 Nishadul Haque Nihal, ZR-31

_________________________ _________________________

Kashfia Tabassum Ahmed, RH-42 Mansib Intisar Khan, ZR- 44

_________________________ _________________________

Noushin Wadud Khan, RH-58

_________________________

3

CONTENT

EXECUTIVE SUMMARY 5

INTRODUCTION 7

Origin of the Report 7

Objective 7

Methodology 7

Scope 8

Limitations 8

COMPANY OVERVIEW 9

Stakeholders 9

Labor 9

Owner and Management 10

Customers 10

Consumers 11

Environment and the Society 11

THE WORKFORCE 12

Managing Diversity 12

Recruitment and Selection 13

Training 13

Working Conditions 14

Machinery 16

Health and Fire Safety 17

Code of Conduct 18

Compensation 18

Employee Benefits 19

Trade Union 20

Labor Unrest 21

4

PRODUCTION PROCESS 23

Industry Practices 23

Quality Assurance at Boonon 24

Capacity and Subcontracting 25

Quality of Supply 26

FINANCIAL POLICIES 28

Seed Money 28

Betting on the Jackpot 28

Networked 28

Transparent Numbers 29

Fight for Minima 30

A Safer Workplace 30

Shareholders against Stakeholders 31

THE ENVIRONMENT and SOCIETY 32

CONCLUSION 33

Think Global 33

Act Local 33

Small Steps 34

REFERENCES 36

APPENDIX 38

Questionnaire 38

5

EXECUTIVE SUMMARY

he clothes you wear were made in Bangladesh. The extraordinary story of how the

textile industry flourished and almost single-handedly propelled the country

forward began in the Eighties. Daring entrepreneurs dreamt amidst poverty and

disenfranchisement. Slowly but surely emerged an industry built upon cheap labor. Nearly

4,500 factories today employ more than three million and half women, bringing home dollars

and pennies through four-fifths of exports.

Textile and ethics do not gel very well. Historically, textile has been traditionally the domain

of developed countries, until globalization turned the world around, and the producers of

clothes became its biggest consumers. Outsourcing led production to interesting places like

Savar and Mirpur – labor working for long-shifts at minimum wages.

We look at an exception to the rule – Boonon is different. The firm attempts to navigate a

more humane route to profitability. A company without child labor, as is common, and with

unionized labor, which is not. While only 30% of cloth-makers are in a union, in Boonon the

number is 85%.(Interview 2013) When collective bargaining in the industry is considered taboo,

Boonon has forged ahead with plans to sit down with the most valuable stakeholder, not the

‘opposition’.

However, Boonon remains mired in an industry that remains insensitive to the plight of the

employees. Even more significant is that Boonon is just another cog in the global supply

chain, one inflexibly bound to cutting costs by cutting corners.

Five years down the road, Boonon has stood its ground. The management may have diluted

its values, but it has not abandoned them. Its modern manufacturing facility stands in stark

contrast to the fast and furiously constructed factories dotting the vicinity. Disaster strikes

every year during the mad rush in sub-contracted factories via electrical sparks and groaning

supports. (Yardley 2013)

However, in the gathering storm, there remains a nagging question whether Boonon can

balance the rights of its shareholders with the demands of its stakeholders. Boonon has

neither faced violent labor unrest nor significant accidents. But the 2013 disaster at Savar has

changed everything – economists stutter to justify the loss in human life, the misery, in terms

of dollars and euros.

T

6

We believe that a better understanding of business ethics will bring clarity to the

conversation. What do we do now? The urgent call to action need be tempered by the wisdom

accumulated from experience. Where quantified data stops, our journey begins. Let us talk of

why Boonon must do better.

Several highlights from the report helps us ground our point. Sub-contracting involves doling

out part of the deal to unverified, unaudited anonymous factories. Boonon denies engaging in

the practice.

The factory floor exists because of the people. We talk especially about how to make a fair

deal with labor. Compensation is not just a paycheck. There needs to be remedy against

workplace injuries, protection against gender discrimination, and prevention of the kind of

disasters endemic in the industry. Workers must get their fair share. Fairness is not just an

abstract concept – the recent agitation for the minimum wage is an example. When most of

your employees are women, you need to ensure fairness. If, or rather when, there is the next

fire outbreak or building collapse, fairness involves a multi-stakeholder compensation

package for those who are alive and for those dependents of the dead.

Financial transparency and accountability is one area of shortfall. Fairness involves not just

doing what is right, but also providing access to information to make that decision. We

predict that Boonon will mature into a more responsible company as it grows. Discussing the

recent legislation on minimum wage is a more fruitful avenue of research rather than taking a

side in this very important, but also very partisan, debate.

Boonon is different, as we have said. But there are still miles to go before it sleeps, both in

temporal terms and in terms of progress. Environmental and social responsibility concerns

are missing ingredients. Boonon has staked out a part of the fiercely competitive landscape –

the simplest of things – of T-shirts.

We will the first to criticize Boonon for its many, many failings. But we do acknowledge a

bit of hope that it will clear the air and shout out a new vision of Clean Clothes. This is a

testament to the entrepreneurial spirit, but far more importantly, concern for people and the

environment.

7

INTRODUCTION

oonon makes knitwear in the outskirts of Dhaka. The readymade garments (RMG)

industry is booming and Boonon is no different. The product ships out to Europe,

the raw material ships in, and labor add value. Founded in 2009, Boonon is now

home to 600 employees. (Interview 2013)

Origin of the Report

This document has been produced under the directions of the course instructor for

Business Ethics and Leadership, at the Institute of Business Administration. We understand

that the information herein will not be subject to plagiarism.

Objective

The objective of our report is to look into the company and assess ethical standards of

the management. This encompasses their human resource policies and practices, their

production policies, financial policies and concern for the society and environment.

Methodology

We use primarily two predictive model of ethical behavior – the pursuit of self-

interest and the path of least resistance. The criterion for judgment with respect to ethics is

mainly enlightened egotism; however, utilitarian concerns us when dealing with multi-

stakeholder scenarios.

It is difficult to find a model that predicts ethical behavior. We have highlighted two

traditional models: the economist's model and the bureaucrat's. The lever of economic

interest pulls the rational actor forwards, so while each stakeholder may be at loggerheads

with the other there is opportunity for collaboration. Ethical consideration then comes into

play at the end as an afterthought. Therefore, for example, the rational employee attempts to

improve worker conditions only to raise productivity.

The bureaucrat model is a more realistic predictor of behavior. The firm has generally

set it itself apart by taking care of its workers, to a far greater extent than self-interest will

allow for. This model takes into account the pervasive influence of the executive into setting

up company values and organizational culture. In a path of least resistance model, various

B

8

forces pull the bureaucrat (the factory floor manager). The employer agitates for better

conditions while the employee calls for greater productivity. There are external pressures

upon the manager as well in the form of employee and employers' associations. In the light of

these, the manager does not choose the most ethical option or the most efficient solution, but

follows the path of least resistance. The manager chooses the most acceptable solution to the

involved parties. The bureaucrat can only follow democratic practices if, and only if, there

are external pressures. However, the insular nature of the company prevents a more robust

application of this model. (Cline 2012)

Finally, we can consider the consensus model as an alternative that is likely to satisfy

all stakeholders. However, no matter how admirable the model is in theory, in practice ethical

behavior will not be so easily realized. (Cline 2012)

Primary data source has been collected during the visit to the factory during which

structured interviews of the production manager was taken.

Secondary data sources include magazine articles, journals and reports concerning

the RMG sector. Theoretical approaches and terminologies has been further explained in the

course material and texts.

Scope

The focus on day-to-day operations at the management level. We emphasize the

practical aspects of the scenario rather than policy guidelines at the macro level

Limitations

The workers could not give us as much time as we wanted, as we could only talk to

them during their lunch hour. Since their supervisor was present throughout the entire

interview, they may have withheld some information for fear of dismissal.

Our behavioral models have sufficient theoretical backing but lacks experimental data

on its application in this situation.

The primary source bias has not been minimized through extensive cross-referencing

due to full-time production running at the factory, which prevented further interviews.

We lacked financial information that hindered our investigation regarding transparency.

9

COMPANY OVERVIEW

oonon Knitting is private limited company backed financially by its shareholders.

It is a 100% export-oriented composite knit garments factory. It is located in the

outskirts of Dhaka, specifically in the Ashulia Road. The project is in operation

since February 2009. At present cutting, sewing and finishing operations are running on the

242 machines of the factory, spread over the 27,373 square feet premise. All the machines

have been acquired brand new with fully automated features to endure high quality and

extraordinary efficiency. Boonon believes the technologically advanced machinery provides

an edge to Boonon over other garments factories. Specifically, the sewing facilities are

allocated in ways that makes the production procedure more efficient with different lines for

different apparels like four lines for basic T-shirt, 3 lines for Polo shirt etc. At 100% capacity

utilization, the factory manufactures around 8,000 pieces of T-shirt and 4,500 pieces of Polo

shirt. Four managers and the three owners head 600 employees. (Interview 2013)

Boonon has plans of extending the capacity by procuring circular knitting machines in the

near future. Moreover, it also hopes to increase the number of sewing machines to increase

the production of its current apparels.

The management of the Boonon Knitting Ltd constitutes of the Sponsor Management

representatives and professionals. Finishing on time is more important than cost. Boonon

believes in keeping their labor force satisfied and motivated through various facilities and

flexible leaves. The capability and experience of the managing team and the enhanced morale

of the workforce is considered the reason of Boonon’s smooth operation.

Stakeholders

While considering ethics we must also look at the participants. For Boonon the

stakeholders consist of the customers, consumers, labor, the Board of Directors and the

society and environment as a whole.

Labor

No matter what the issue is, the first and foremost affected party is always the people

at work. Boonon has around 600 men and women working in its factory. About 95%

of this workforce comes from villages near and far. Living in slums nearby and

B

10

working for hours in the factories in the hopes of being able to provide for their

families. (Hossain 2013) Most of them are women directly involved in manufacturing the

garments. The male workers in comparison are mainly line supervisors, low to mid-

level managers or technicians involved in operations of the many heavy machines.

However, it is not uncommon in Boonon Knitting to see women doing the same jobs

that in other factories one would find dominated by men. In a country like Bangladesh

where workplace gender discrimination is typical, this is a huge ego boost to the

female workforce. (Paul-Majumder, Pratima 2002)

Owner and management

Whether the pressure is from the customers, the employees or the government in

terms of risk it is the owners and management that have the most on the line. They

invest their time and money in a company and expect to get something in return. From

the company overview, we can see that Boonon has four Board members and three

others as Senior Managers. While the major motivator for the management is

obviously profit making, Boonon is also dedicated to both protecting and improving

the lives of those who work for them. In addition, there is the added incentive of

gaining international recognition not only as a textile exporter but also as a

Bangladeshi in doing so. In a country where garments factories are everywhere,

growing like mushrooms, it is difficult to stand out and make a name for yourself.

However, we can see that with their dedication to their workforce and strict

compliance maintenance Boonon has the foundation to grow into a sustainable and

successful company.

Customers

The major customers of Boonon are mainly European markets like Sweden, France

and Spain. Due to the cheap labor market and a growing garments industry,

Bangladesh is their main source for clothes. Brands like H&M, 3Pomme and Tex Ebo

are some of Boonon’s noted customers. (Interview 2013) The main attraction for them is

not the cheap labor market but the bargaining power that they have in Bangladesh. As

a small company in a flourishing market, Boonon is required to maintain strict quality

standards. For the customers this is an opportunity to exploit the market and get high

quality products for lowest possible costs. Although the companies themselves are

not heavily affected due to any material losses to either the workers or owners there

11

always exists the risk of defamation. Especially after the recent 2012 Tazreen Fire

(Motlagh 2013) and and the 2013 Rana Plaza Collapse (Goos 2013), the majority of Boonon’s

customers have become more involved in the ethical sourcing.

Consumers

Of all the stakeholders, the consumers are perhaps the most detached from the factory

floor workers. For them it is all about getting the best bargain for the latest fashion.

(Shannon 2013) However, the recent disasters in the garments industry (Stillman 2013) have

forced the consumers to look deeper into the world of cheap fashion. Whilst the

majority are indifferent to the plight of the garments workers and could care less

about where their clothes come from, many believe that the workers deserve better.

They have protested against the extreme profit making strategy of the retailers and

demanded that they pay their suppliers more. However, the reality is that 95% of

consumers would switch brands if they had to pay more than they currently have to.

(Shannon 2013) Therefore, the story remains that although the reason for Boonon’s

survival lies in the high demand of their customers, there is very little they are willing

to do to help those who are supplying them.

Environment and the Society

The final stakeholders would be the society and the environment. The success of the

garments industry has brought prosperity to not only the workers but also the country.

It has a profound impact on the economy of Bangladesh. Boonon being located in

Savar like many other garments factories provides jobs for many, thereby improving

their lives. Especially for the women of Bangladesh, the garments industry has given

them a source of earning which in turn has helped raise their status in their families

and in the society. For any ethical manufacturer the environment is always a cause for

concern. Given how polluting the environment is indeed a self-destructive move in

the end, it is also in the best interest of the company’s future to invest in protecting the

environment. Blinded by the age-old profit maximizing business model of the

capitalistic world, a company cannot simply be indifferent towards the society at large

in which it operates and the environment that accommodates its chase for wealth. Any

ethical management must strive to maintain balance between the collateral damage to

the environment due to its activities and the reaped benefits.

12

THE WORKFORCE

he growth of the RMG sector has been apparent in Bangladesh in the last decade.

The most important intrinsic competitive advantage of RMG sector can be

attributed to cheap labor supply. As the industry is highly labor-intensive, it has had

a significant impact on Bangladesh’s employment as well especially among the unskilled or

semiskilled level. Although low wages go a long way in explaining the demand for apparel

“Made in Bangladesh”, (Davidson 2013) due to the political unrest and recent tragedies the industry

is in a flux.

Managing Diversity

In the early 1980s, the young women of Bangladesh first started being the part of

country’s workforce. Social revolution and women empowerment has a significant hand in

the currently employed 3.5 million women among 4.5 million total employees of the RMG

industry who belong to the bottom of the population income pyramid.

Keeping with this trend the majority of workforce is also female based in Boonon

Knitting as well. Here 315 labors are rural women among the total 600 employed. This shows

that as like every other garments Boonon has also offered a reliable source of income for

women helping them to be self-sufficient.

While the RMG sector has taught women to be financially independent, it has also

affected their morale adversely as the women only get to work in the lower hierarchy. In the

RMG sector, female workers are considered low skilled, which is why they mostly work as

helpers, machinists, finishing helpers and sewing helpers.

However, in Boonon women are not only employed to do jobs that hardly require

specialized skills but also employed in positions like supervisors and quality controllers. Such

scenario shows unlike the many other RMG factories, Boonon does not discriminate in

allocating jobs merely on basis of gender. In fact, they have employees from almost all

religions, different districts, and different castes including people from tribal communities

even.

Nevertheless, it is still rare to find women working as cutting masters, production

managers, supervisors, finishing and machine operators.

T

13

Although women are not seen in the top of the organizational hierarchy, we still have

to appreciate Boonon and the garments industry as they have provided a source of

employment and income for poor women, which directly accounts for improving their

enhanced living standard and social status relative to men in low-income families. In

addition, as per utilitarian approaches, if the consequences are favorable for the greatest

number of people the action counts as ethical. And the fact that in many families women now

earn more than men and their voice is steadily growing which would translate to falling

gender inequality in Bangladesh in the long run shows the importance of RMG in shaping the

working population of our nation.

Recruitment and Selection

Recruitment is done primarily by the company’s recruitment policy, which is

compliant with buyers’ guidelines, prevailing Labor Law (2006) of Bangladesh and the

guidelines of the BKMEA. According to the official company recruitment policy the

minimum age for hiring is 20. Candidates for any position are selected based on their skill

level.

Looking into the performance appraisal scenario Boonon is no different from most of

the factories out there. Immediate supervisors appraise employees once a year and any

promotion, in position or payment, is given based on that. The results of the performance

appraisal are not made public to the workers and they have no scope for questioning the

judgment given. From an ethical perspective, the one-way appraisal system is not ideal and

leaves much room for bias.

Training

There is no alternative to training a worker in terms of improving skills and making

them fit for the job that they have been hired to do. Most of the garment workers who work in

many factories are not skilled to do the job as per the standards required by the management;

as a result in most cases the product produced are of inferior quality and have many

inconsistencies. Although there is demand of our garment products in the world, the demand

would have been much higher if our products are produced with precision. Hence, the

Ministry of Commerce along with the BGMEA, in the last few years has started a training

program for fresh garment workers to build them into a skilled workforce and to counsel

them on working environment in factories. (Paul-Majumder, Pratima 2002)

14

In Boonon, all new workers are given basic training in stitching, buttoning and any

other relevant task by a supervisor, who is essentially an experienced employee, with little or

no understanding of ergonomic design beyond trial-and-error. External trainers are brought in

for workshops only when it comes to operating new equipment, investment in which is

infrequent in the company. Trainers also focused on workers' technical expertise, skills,

factory environment, workers' attitude and behavior as well as security and cleanliness. The

management plans to extend the training programs to include experts who can design the

most efficient route to performance through time-and-motion studies, for instance, by

eliminating redundant hand movements, and effective pedagogy. These aspects of training

should focus primarily on the supervisors themselves. As recruitment goes on all year round,

it is important to get the supervisors up-to-date as soon as possible, since it will be difficult to

arrange workshops with foreign experts frequently. The training will also focus on operation

of sweater machines, woven machines, knitting machines and quality control.

This shows the realistic approach of Boonon Knitting in preparing its workforce.

They arrange for “on-the-job training” on a regular basis. Because only training can get an

employee accustomed to the work and make him or her more capable. Companies frequently

dismiss employees for their poor quality work where as they lack in providing the basic

education required for performing.

It is because of this that Boonon expects its products to be highly appreciated and

ordered at a price higher than the prevailing price, which means more foreign exchange for

our country. Moreover, boosted quality will accompany our cheap labor cost to leverage us

over other countries.

Working Conditions

Although most garments factories tend to overlook the safety of workers entirely,

Boonon Knitting Ltd. has taken all necessary steps to ensure the safety of their hard working

labor. When asked to rate the company in specific categories on a scale of 1 to 10, the results

were as follows:

15

Currently RMG factories working with renowned global brands must be fully

compliant with buyers’ requirements, which covers all of the above parameters and more. To

be a compliant Factory the overall rating should be above 70. The latest compliant audit

rating of Boonon Knitting is 87.

When asked if they wanted to see any changes in the work environment of the

company, the workers responded by saying they wanted slight changes to make the

environment more comfortable and employee friendly. They also said slight changes in the

Supervisory Management would be welcome for e.g. improving the people management skill

of the first line supervisor.

The total area of the factory and the area allocated to each department are listed

below:

9 98 8

10

Safety Measures Workload Work Environment Conduct of Supervisors Payment & Salary

RATING

16

There are supplementary facilities that enhance living standards, such as:

Prayer Hall

Day-care Centre

Attendance Bonus Recreation facility

Insurance facility

Lunch Room

Medical Centre

Machinery

Boonon Knitting Ltd. has 242 pieces of machinery for production purposes. Most of

these machineries are from trusted brands such as ‘Brother International Corporation’, which

is a U.S.A.-based company and ‘Pegasus Sewing Machine Pte. Ltd’ that is a Japanese-based

company. Both these brands are globally recognized for producing quality machinery and

therefore we can conclude that the equipment in this factory should not pose any direct threat

to the health of the workers.

Insurance of capital has been maintained regularly. Depreciation costs as per financial

standards has not been verified.

Figure 1: Medical Centre Figure 2: Lunch Room Facility

17

Health and Fire Safety

The factory facilities have adequately placed fire extinguishers, fire exits, and water

hoses to use in cases of emergencies. Other than that, the facility also has a proper ventilation

system so that in case of a fire, the workers are not trapped, suffocating from the toxic fumes

that might be released from the burning chemicals. Regular and routine fire safety training is

also provided so that workers are prepared for emergency cases. Below is the quantity of each

health & fire safety equipment in details, along with some pictures we took during our visit to

the facilities:

Figure: Pictures showing the fire safety equipment along with a fire exit.

18

Code of Conduct

While dealing with workplace conduct, the company strictly follows its written code

of ethics. To ensure that the employees are aware of the ethical codes of the company,

immediate supervisors properly brief the employees about the code of ethics as soon as they

are employed. The management has a strict zero tolerance policy towards sexual harassment

or any form of ethnic or religious discrimination. Moreover, employees are encouraged to

come up and report unethical behavior, which they may have witnessed among their

coworkers. Employees who want to report can easily speak to their senior manager, or they

can drop a report in the anonymous complaint box. They can also discuss the issue through

WPC (Workers Participatory Committee). However, the extent to which these measures are

effective cannot be gauged from the outside. While the firm promotes anonymous reporting,

it is difficult to assess the advantages accrued to the complainant considering that the power

imbalance between senior and entry level workers is considerable.

Compensation

The minimum wage of a labor in Bangladesh is $0.21 per hour, given Bangladesh in

comparison to China’s wage rate of $0.93 per hour, which is more than three times the wage

given in our country. (ILO 2005a) This shows the difference between the wage of our country and

neighboring countries. Recently, Bangladeshi panel raised the minimum wage for garment

workers by 76% to $67. (Abdullah 2013) However, it is still the lowest in the world, which is

likely to preserve Bangladesh’s competitive advantage over other countries.

The majority of garments pay the labors required minimum wage, as it is the standard

of conduct. Nevertheless, the amount is still frugal and much less than that paid in other

countries.

In Boonon Knitting Ltd, the workforce is paid according to the minimum wage law.

In fact, there are a moderate percentage of employees who are paid a little above the required

rate, as they are loyal labors of this growing company and they have been trained to make the

production process better.

The working hours in Boonon Knitting Ltd are 8 hours per day with a 1-hour lunch in

between. However, in case of political unrest or strict deadlines the workers are encouraged

to work over time. The payment for overtime is said to be double the normal rates however

the labor are not always aware of how much overtime they are working and how much

19

overtime they should be getting. However, the employees at Boonon seem to be relatively

satisfied with their pay schedule mainly because by the eighth of the month they receive their

basic wage although the overtime payment is often delayed. However, by the 15th they also

receive their overtime pay. In a survey conducted by local researchers it was found that on

average workers operated on average of 80 hours overtime and their pay was around 60-80%

of due. The under payment was equivalent to 24 hours of uncompensated work per month.

Moreover, the owners frequently impose an extension of the working day beyond the legal

maximum, and they ignore regulations regarding night work and the payment of overtime. In

comparison the night shifts, which are forced on employees by many garments in order to

speed up shipment, Boonon as much as possible avoids it. They try to make up for the lag in

production by encouraging overtime for employees and thereby avoiding the night shift.

Festive bonuses are pre-arranged for all the employees twice a year. The practice of duplicate

timesheets cannot be assessed.

Nevertheless, our single biggest competitive advantage is our cheap labor force and

thus rising wages could eat away our competitive edge over competitors like China. For one

thing, wages are sticky downwards and will only rise over time and so Bangladesh has to

work on newer policies to maintain this competitive cost advantage in global RMG trade in

the near future.

Employee Benefits

When it comes to workers benefits, a very common practice among businesses can be

exemplified by the well-known incident of Tazreen Fashions Ltd. Mominur Rahman a

worker from Tazreen Fashions fractured his spine while jumping for his life from the third

floor of the factory building, which burnt down in November 2012. (Motlagh 2013) He received

only a miserly amount as compensation from the association of owners with nothing more

after the first payment. The incident that left him disabled for life also left him with the

concern for providing for his family. The meager amount of money he had been given was

not even adequate to pay for his medical bills. Therefore, the poor man managed to survive

but had no idea how he was to provide for himself and his family for the rest of his remaining

life.

An industry where such inhuman actions and events are common, a different situation

was observed in Boonon’s factory.

20

First, they have an extensive leave offers for employees at times of crisis, which are

summarized in the table below:

Employees are satisfied with the leaves available as this are enough for them.

Nonetheless, one differential treatment was seen in offering maternity leaves as it varies with

hierarchy. For supervisor level, it is almost a month more than for the labors.

Second, they have a medical center to facilitate the process of treatment whenever any

casualty takes place. Finally, to make it easier for women employees to work longer hours as

they offer child care facilities. Not to mention they have lunchrooms as well. For death of

employees while they are working with Boonon Knitting Ltd, the company provides life

insurance to the family of the deceased.

However, one drawback, which may question the ethics of the company, is no extra

security or motivation is given to the labors that come to work during strike or blockades. As

there are many other benefits available, labors did not seem to mind it.

While numerous of garments fail to provide a safe working environment, Boonon

with the amenities and accommodations it offers gives a new light to RMG for the all the

bottom line workers.

Trade Union

From among 54.1 million people, over 15 years of age were employed in the RMG

sector, a thrifty number of about 2.1million workers were found to be members of unions,

according to a survey by the Bangladesh Bureau of Statistics. Going by that account, only

3.88% workers out of the total workforce were members of the 7106 trade unions dispersed

among the industrial locations of the country. (Sohel 2013)

21

In Boonon Knitting Ltd, 80% of the employees are part of the trade union and others

are inclined towards joining it. Instead of opposing the willingness of labors to join trade

union, Boonon encourages it. As it believes, the labor union represents its entire labor force

and assists in knowing and implementing workforce’s recommendation in making various

company policy.

On the contrary, in widespread garments factories across the country workers are

being harassed, and even dismissed from their jobs in their efforts to form trade unions. In

fact, dozens have lost their job or faced suspension as well as per the president of Bangladesh

National Garment Workers’ trade unions whereas right to trade unions is a right assured and

sanctioned by law. Yet the workers fail to form trade union due to the lengthy and

cumbersome bureaucratic process and the fear of losing job.

Labor Unrest

At Boonon Knitting Ltd., there is a friendly and understanding relationship between

the workers and the owners/managers. Communication between different levels of employees

is also encouraged. Although their corporate head office is in Dhaka the senior management

visit the factory every week in order to look into the factory operations and interact with their

employees. The level of concern showed by the top tier act as a boost for worker morale as

they feel their views are being taken into consideration which in turn keeps labor unrest to a

minimum. In addition, the heavy involvement of the trade union or WPC enables the workers

to express their views during policymaking. This participatory style of management has

worked very well for Boonon so far, in keeping communication channel between workers and

owners open. Moreover, the company makes sure to engage in activities that keep the

relationship between the labor friendly and cooperative. Some of these activities include

annual picnics, cultural programs, etc.

We can see that a consensus-building model is in the works at Boonon. However, in

the current scenario, the enlightened egotism model shapes ethical behavior and attitudes.

The proactive approach by the management, as advertised, is less likely to be a function of

philanthropy than common sense writ large.

The idea of the manager following the leader into the path of least resistance also fails

to hold true in the case of Boonon. The reason Boonon differentiates itself from the rest of the

industry is that the Board and the owners have pushed the management continuously onto

22

new grounds. This top-down model of ethical decision-making is in contrast to the more

natural bottom-up models. Workers have been silent, in spite of WPCs, trade unions and

anonymous reporting. While this may be a cultural issue, the management needs to double

check whether the paternalistic approach to securing the rights of workers needs to

complemented with a hands-off policy. Perhaps transactional leadership as offered by the

management can be substituted with a transformational model that helps workers to realize

their own potential through productivity goals and team-building exercises.

23

PRODUCTION PROCESS

perational side of the facility at Boonon comes second only to employee

satisfaction in importance. Boonon ascribes its success in spite of going against

industry norms to its flexible

Industry Practices

The largest garments manufacturers in Bangladesh can be found to make name brand

clothes of premium quality from just threads of cotton or, if specified, of other fibers. In

factories of such dimensions, they do everything except for the extraction of fibers (cotton,

linen, hemp, and rayon that come from bamboo, pine, spruce and hemp). While this requires

a lot of investment, both in terms of money and long-term commitment, doing everything in-

house lets the manufacturer ensure Total Quality Management. If the quality of the final

product is not found satisfactory, the part of the production process responsible can be

redesigned to provide the best possible outcome.

The industry practice is adopting Total Quality Management in production, be it due

to pressure from the buyers or the manufacturers’ own reputation. This calls for constant and

first-hand supervision of the production of the companies’ goods until it has been delivered to

the customer. As mentioned earlier, this is possible for large-scale manufacturers but not so

much for medium enterprises who often bite off more than they can chew. (AQF 2013)

Officially, there are over 4,500 apparel manufacturers of varying sizes, operating in

Bangladesh. Unofficially, there are more, most of which are small residential factories whose

main source of work is sub-contracts from large exporters. Exporters get work orders on the

bulk and when it gets too much for them to handle, instead of rejecting the order they take it

anyway in hopes of subcontracting it to smaller firms. This is a serious ethical issue, if not a

legal one.

The implications of subcontracting because of the lack of supervision:

Product quality cannot be assured

Worker safety and fair wages cannot be assured

O

24

Quality Assurance at Boonon

Being an export oriented company Boonon Knitting Ltd. has to maintain standards set

by the international fashion brands. The production process of the company is illustrated

below:

Relaxing: This entails loading the bolt of fabric on a spinner and manually feeding

the material through a piece of equipment that relieves tension in the fabric as it is

pulled through. Mechanical fabric relaxing performs this same process in an

automated manner.

Boonon Knitting Ltd. also integrates quality assurance into this process to ensure that

the quality of the fabric meets customer standards. This step is performed manually

spot-checking each bolt of fabric using a backlit surface to identify manufacturing

defects such as color inconsistency or flaws in the material. Fabrics that fail to meet

customer standards are returned to the textile manufacturer.

Sewing: Garments are sewn in an assembly line, with the garment becoming more

complete as it progresses down the sewing line. Sewing machine operators receive a

bundle of cut fabric and repeatedly sew the same portion of the garment, passing that

completed portion to the next operator.

Quality assurance is performed at the end of the sewing line to ensure that the

garment has been properly assembled and that no manufacturing defects exist. When

needed, the garment will be reworked or mended at designated sewing stations.

Finishing: In addition to identifying manufacturing defects, employees tasked with

performing quality assurance are also looking for cosmetic flaws, stains, or other

spots on the garment that may have occurred during the cutting and sewing processes.

Relaxing Cutting Sewing Finishing

Quality Assurance Checks

Occur during this process

Quality Assurance Checks

Occur during this process

25

Spots are often marked with a sticker and taken to a spot-cleaning area where the

garment is cleaned using steam, hot water, or chemical stain removers. (AQF 2013)

Capacity and Subcontracting:

Production Capacity: Boonon Knitting Ltd. has a fairly large production capacity,

which is fully utilized to keep up with the demands of the buyers. Due to the

increasing demand for cheap and high quality clothes, Boonon Knitting Ltd. is

looking to expand its production capacity.

Product Type Capacity in units/month

T-shirts 208,000

Polo Shirts 117,000

T-Shirts (plain) 416,000

Polo shirt (plain) 169,000

Sweat shirts (plain) 312,000

Boonon Knitting currently does not subcontract away any of its work orders to other

small companies. Concerned with the quality of the finished goods and the working

conditions the small factories provide, Boonon follows a strict no-subcontracting policy at

the opportunity cost of more sales volume. This is a commendable standpoint given that the

company operates in a very competitive market, not limited within national boundaries.

Industry Practices: The apparel manufacturers in Bangladesh differ from other

production-oriented industries in the country in the fact that apparel manufacturers

have to operate in a highly competitive international market. Production costs and

scheduled deadlines as well as profit margins have to counterbalance labor and

political unrest in the country. The buyers are presented with an array of different

manufacturers to choose from for their products thereby giving them immense

bargaining strength over the suppliers. Strict deadlines are to be met at rock bottom

prices without compromising quality.

26

As is often the case, manufacturers fail to meet deadline due to the political and

security situation of country. As a result, shipments worth millions of dollars often

face cancellation. The losses due to the wastage of good product cannot be

recuperated. Most manufacturers sell off clothes to the local market at cost price to

minimize losses. A U$20 T-shirt would be available in the Bangladeshi market for

just U$2. Retailers then illegally buy these branded premium products at the sale

prices and pass them on, not only to the local customers, but also to customers living

in other countries giving rise to a secondary underground market for cheap name

brand clothes.

Company Policy: As part of the responsible management, Boonon Knitting Ltd.

donates any waste/excess products to the underprivileged segment of the society.

Instead of selling of the products and potentially damaging the reputation of the brand

owners, they take of the labels donate the clothes to people who cannot afford to buy

clothes.

Quality of Supply

Quality Supply: As already mentioned, Boonon do not make their own cloth, they

buy it from suppliers abroad. This is done to save money, time and investment.

Because Boonon cannot oversea the manufacture of the supplies, the supplies go

through a thorough quality checking process during the first stage of production, i.e.

relaxing of the cloth, the details of which have been discussed in the earlier sections.

This ensures that the supply is of the required quality and thereby ensures that the

finished product is up to the standards set by the buyers.

Ethics of suppliers: Just as the buyers of Boonon set production and ethical standards

for the factory, Boonon also sets a list of standards for the suppliers to abide by.

Among which workers’ safety and ethical procurement is a mandatory component.

(AQF 2013) According to the Production Manager at Boonon, any knowledge of

suppliers’ unethical activity results in immediate termination of the contract with

them.

Quality of production: The manual and rigorous quality assurance process has

already been discussed in the earlier sections. However, a huge role in the production

quality is played by the quality of the machineries themselves. From sewing machines

27

to screen printers to irons, everything must operate at the optimum level for the

products to meet the buyers’ standards. To make sure that the machines are operating

in this optimum level, Boonon does an internal audit of the machines. Any faulty

machineries or parts are immediately repaired or disposed and replaced.

28

FINANCIAL POLICIES

o understand the economics that underpin the firm as well as the industry, we only

need to take a brief look in the company books. Before we begin, let us take a

detour around the industry itself – to understand how it grew into be a behemoth,

the engine of the country.

Seed Money

Very few firms started out without Foreign Direct Investment – and Boonon is one of

them. Simply put, the roots of the industry lie within our own entrepreneurs. A traditional

reliance on self-sufficiency and hard work gave rise to the mystic surrounding the founding

firms. However, the initial capital of the firms arrived via bank loans, government grants and

family enterprise. For export-oriented companies, the financial advantages of government-

sanctioned short-term financing as well as tax rebates are critical.

Betting on the Jackpot

Most firms, including Boonon, rely on banks to back raw material imports. This

symbiotic relationship between banks that provide L/Cs and the firms suggests poor liquid

asset management. Cash flow problems are frequent for one very good reason: profit. The

industry standard is a lean manufacturing outlook that emphasizes risk-taking. However, the

consequent rise in volatility and interest expenses incurred happens to be an interesting

counterpoint to the profitability ratio.

Networked

The highly competitive landscape Boonon faces cuts down on monopolistic behavior,

not just profits. The extent of the global reach of the industry – mainly in Europe and in

North America – is an exception to the insular nature of the economy. This, of course, means

that volatility in international markets creates storms here as well. More interesting is the

collusive nature of individual firms in the face of short-term contracts; hence the practices of

sub-contracting and shared production capacity. However, Boonon refuses to bow down to

local standards and sub-contract out to low-quality factories.

T

29

Transparent Numbers

Financial data in a private limited company is subject to fewer legal constraints. As

such, public data on the industry lacks the depth and clarity as in other sectors. While we

cannot vouchsafe the quality of the firm’s records, we can pinpoint where auditors need to

focus.

The first concern is that of the ‘dual-use’ data – the fake timesheets (Bilton 2013) that

suggest that workers have been working for eight hours for legal purposes – shown to

Western prospectors. As recent investigation into this practice of doctoring records show, the

firm needs to ensure that its records are verified by independent audits by the customer as

well as the industry body. In the short-term, the credibility of the firm will only rise if it

releases non-sensitive financial operations to its stakeholders, including the employees.

Sub-contracting is the practice of handing out part of the orders to smaller firms. This

practice is generally avoided at the firm for sensible reasons. The legal quagmire that the sub-

contracted firms fall into is the result of a blurred line of responsibility between the

outsourcing customer and the local dealer. The recent abdication of responsibility by Wal-

Mart of the 2012 Tazreen Fire (Motlagh 2013) has been justified on the grounds of illegal sub-

contracts. Unless there is a severe emergency, the job order is not doled out to other firms in

the vicinity. The problem arises when the firm is unable to complete the order on time. The

customer refuses to acknowledge local conditions (such as political violence) can affect itself.

However, up till now, Boonon has managed excellent completion records.

Capital cost at the factory happens to be a larger proportion of total costs. Labor itself

constitutes just one-twentieth of the selling price of the T-shirt. (Cline 2012) This raises the

consequent point whether labor ‘deserves’ a bigger slice of the profits, considering the

shareholders’ investment into capital and the banks’ concern for raw materials. However,

capital costs are huge one-time expenses that trickle down benefits in the end – in contrast to

the rent of labor – and can be a justification for shareholders’ equity.

Finally, insurance premiums at the factory is regularly paid. This is most important in

this most dangerous line of work – the dilution of risk is necessary. The firm shutting down

without compensation at the sight of a potential disaster is quite unacceptable to its

stakeholders. Fires are regular occurrences at the industry level, although the firm itself has

taken precautions to protect employee safety.

30

Fight for the Minima

The recent minimum wage legislation followed violent agitations by local trade

unions. The industry level bargaining suggests that the current minimum wage of BDT 3,000

is likely to rise by at least 76%. On the global level, the minimum wage is not likely to make

ripples – unless it is on the price. From the stakeholder’s perspective, better wages are likely

to lead to higher productivity and happier employees.

However, the management is concerned that if this rise in cost is pushed down to

customers, the final consumers in the developed countries will balk at the hike. For in spite of

the enormous strides that the industry has taken to ensure sustainability, there remains fierce

competition at the global south over who will race to the bottom. There remains emerging

players in Vietnam and Pakistan who will gleefully gobble up Bangladesh’s share. (Saunders 2013)

On the other hand, there is little that the firm can do. To accept the minimum wage as

given will skew the remuneration downwards, as the quality assurance employees at the top

grade get only a 25% raise. Employees may find the convergence of pay differentials

disconcerting.

From the price perspective, the management may prefer a wait-and-see approach.

This means holding off price hikes and releasing the pressure slowly to assure customers of

its commitment. But then the fall in profits will displease shareholders, even lead to

disinvestment.

A Safer Workplace

The firm is well prepared for the upcoming stringent labor law, for it takes a proactive

approach to the welfare of its employees. It retains high standards in supplier compliance

programs that will bring goodwill.

Review and auditing costs are likely to rise instead of actual safety practices. This

means another layer of middlemen into operation. There is significant moral hazard in the

intermediaries extorting high fees to implement redundant protocols to workplace safety –

especially as these concerns are already well integrated into the current management

structure.

Another avoidable cost is in the conflict between multiple standards. The ILO

recommendations may well clash with the customer’s conditions: both of which can change

31

much faster than antiquated local labor laws. The bare minimum of compliance is a tactic

competitors can use to edge out on the firm. In that case, can the firm be held responsible for

the inevitable round of lay-offs?

Lastly, an Effluent Treatment Plant requires high maintenance costs. Is the firm

obligated to be the green leader if it means dissatisfied shareholders?

Shareholders against Stakeholders

Tentatively we can conclude that holding the highest standards will satisfy

stakeholders, not shareholders. Whether shareholders reserve the right to determine the

bottom line is an intriguing query about how democratic the company practices are.

Finance remains the last bastion of shareholders, for the existence of the firm is

justified in the double-underlined figure at the bottom. However, even on financial matters

stakeholders are starting to claim their territory. For once, environmental and image concerns

have forced accountants to reconsider the numbers. Green accounting is a new entrant that

tries to quantify externalities such as pollution into the books. While the firm does not believe

in stakeholders’ being the primary concern, there is a grudging acceptance of the importance

of stakeholders in the management process.

Now the Return on Investment may be the misleading benchmark, but it has to be

improved. The first way of raising returns involves cutting costs that angers employees; the

second of raising prices annoys customers. A strategic option is to diversify into higher value

chains. This is indeed a better deal for all the stakeholders involved.

The wage raise prompts that productivity increases is necessary to avoid raising costs.

Unfortunately, raising the minimum wage, especially one involuntary, has to be a poor

incentive for a better workforce. Questions regarding the high turnover in employees bother

managers who believe in team building.

32

THE ENVIRONMENT AND SOCIETY

As it has been mentioned before, in order to be a successful and sustainable business a

company has to look beyond the profit maximizing goals and think about the environment

and society in which they operate.

Industry scenario: As with most businesses the Bangladesh garments sector has also

shown indifference to the society and the environment. As most of the work requires

workers of very low skills the garments industry has taken advantage of the

population to hire workers for very low wages and replace them whenever

advantageous to the company. With plenty of unemployed ready to fill up even the

empty places, the employers have never had to look far for a replacement. In addition,

due to lack of compliance laws, or due to lack of enforcement of compliance laws

thereof the garments industry has polluted and abused the natural environment.

Boonon Knitting on the other shows concern for both the society and the

environment. With their equal pay scales for men and women, and a more equalized

distribution of women in all hierarchical levels, they are addressing the issue of gender

inequality in a small but prominent manner. As all garments factories provide employment

opportunities for women, they are playing a significant role in women empowerment. In

addition, Boonon with BGMEA are working to train their labors so they become skilled.

To minimize pollution, Boonon will work with its stakeholders to finance and

maintain its own Effluent Treatment Plant. Although the company has no green policies

going on right now, the management is interested in switching to some green technology

soon.

In terms of social responsibility, Boonon has not traditionally been keen on diverting

attention away from its core competency.

33

CONCLUSION

n an industry where such ethical practices are almost non-existent, Boonon came out as

an exception as it has integrated ethical implications into its decision-making by

creating a win-win situation where both the owners and labor have a lot to gain.

Think Global

The supply chain that ends in the factory extends all the way upwards to European

markets. Nevertheless, the association with multi-nationals has failed to raise the bar in terms

of improving local practices. For one thing, responsibility to act has been so effectively

diluted so that customers refuse to talk about compensation when disaster strikes.

The great power imbalance between the local firm and its multi-national customer has

a dangerous precedent in colonialism. We must consider the ethical purview of the company

when the buyer pulls out at the slightest cost overrun or delay, relocating to other firms or

even other countries. While one can suggest that Wal-Mart is not responsible for the disasters

that take place due to local oversight, the reasoning cannot exist in a more humane world. As

international pressure groups and the industry organizes itself against the influence of the

MNCs, we are less likely to hear of ‘plausible deniability’ and more likely to hear

‘sustainable development’. This disconnect between the incentive of buyers and sellers

ultimately results in the buyers dictating the terms of the contract. However, the industry

listens to none but the buyers – so this may be a fruitful avenue for developing better working

conditions.

The market breathes in and out with the fashion season. Like all firms, the firm is

dependent upon short-term contracts – deals that are not conducive to exploring shared

responsibilities. Certainly, there can be industry-wide mechanisms that dole out contracts

according to capacity and compliance.

In the meantime, local practices are more likely to bring change.

Act Local

The owners’ association, BKMEA, are mostly responsible for self-regulating the

industry. Without legal constraints, the industry has been flexible with respect to changing

conditions. Nonetheless, there is, in fact, a great conflict of interest when the owner become

I

34

the judge. A paternalistic approach to decision-making reflects local customs. With trade

unions largely suppressed and labor activists harassed frequently, industrial voice of the

employees go down to a whisper.

Ethical challenges shown in the report is exacerbated by industry practices. The rapid

turnover in employees is an example. Workers are hired and fired with the ebb and flow of

contracts coming in. It is apparent that we cannot improve the lot of the workers if the ‘army

of unemployed’ is used to drum out dissent.

The firm is hurt by the poor public image of the industry. (Refferty 2013) When dealing

with foreign buyers, the frequently asked question revolves around disaster management.

Even when the firm has went far and wide to better the lives of its stakeholders, the bad PR

reminds us of the culpability of the industry leaders in setting trends.

Lastly, a large fraction of the local parliamentarians own textile factories. (Allchin 2013)

This unhealthy alliance between those in power and those in the industry poses problematic

opinions about whether the industry refuses to change because it has become untouchable.

Small Steps

Right now, the primary challenges involve huge corporations and millions of workers.

As the firm is buffeted around by external shocks, we need to reiterate the mission statement.

However, the firm needs to carve out its own policy to promote sustainability if only to

uphold its credibility in the eyes of its buyers.

The firm needs to talk about more broad indices rather than just the bottom line, we

can sure of that. Measure employee satisfaction and you measure your company’s future. Our

review suggests that employee interaction with managers is still woefully transactional rather

than transformational. Far too often, the manager dismisses the views of the employees as

irrelevant. Empathetic attitudes cannot be founded on short-term relationships. Whether a

more professional manager wants to enter an industry considered ‘toxic’ remains to be seen.

We predict that finding the next generation of managers will be difficult.

The gender imbalance at the factory floor suggests that the firm must invite more

women into managerial roles. Considered traditionally the job of men, we predict that more

and more women entrepreneurs, especially from cottage industries, will bring about a gradual

improvement in the gender ratio at the managerial level.

35

Talks about worker compensation need not be resolved by confrontation in the streets.

This is undoubtedly counter-productive to both employees and employers, as outsourcing

opportunities shrink. We predict that without recognizing the right of collective bargaining at

the factory floor, workers may be swayed by industrial wildcat strikes more frequently in the

near future.

The cognitive dissonance of the bureaucrat deserves to be told. The manager at the

factory floor is paid based upon work and not employee satisfaction. Without a broader

measure of the firm’s performance, employee satisfaction will not rise concurrently with pay

rises.

36

REFERENCES

Interview

1. Raju, M. (2013, 11 23). Interview by Ahmed. Boonon manager.

Books

2. Cline, E. (2012). Overdressed: The shockingly high cost of cheap fashion. (1st ed.).

NY: Penguin Portfolio. Retrieved from http://www.overdressedthebook.com

Video

3. Bilton, E. (2013). Bangladeshi factory workers locked in on 19-hour shifts [Web].

Retrieved from http://www.bbc.co.uk/news/business-24195441

Articles

4. Allchin, J. (2013, May 9). Death mill: How the ready-made garment industry captured

the Bangladeshi state. Foreign Policy, Retrieved from

http://www.foreignpolicy.com/articles/2013/05/09/bangladesh_factory_collapse?page

=full

5. Refferty, K. (2013, Jult 23). Obama's blunder with Bangladesh. The Japan Times,

Retrieved from

http://www.japantimes.co.jp/opinion/2013/07/23/commentary/obamas-blunder-with-

bangladesh/

6. Motlagh, J. (2013, April 24). In the wake of deadly fire, garment workers push for

stronger protections. The Atlantic, Retrieved from http://is.gd/BRZxSP

7. Goos, H. (2013, July 5). Made in Bangladesh: Greed, globalization and the Dhaka

tragedy. Spiegel International, Retrieved from http://is.gd/cIjKz2

8. Stillman, S. (2013, May 1). Death traps: Bangladesh garment factory disaster. The

New Yorker, Retrieved from http://is.gd/g53DQB

9. Shannon, S. (2013, April 29). Shoppers turn blind eye to Bangladesh in $6 bikini

hunt. Bloomberg, Retrieved from http://is.gd/jjmFsL

10. Yardley, J. (2013, April 30). The most hated Bangladeshi, toppled from a shady

empire. The New York Times. Retrieved from http://is.gd/bTJCPE

11. Saunders, D. (2013, April 27). Is your wardrobe killing Bangladeshis, or saving

them?. The Globe and Mail. Retrieved from http://is.gd/1aR0wV

12. Hossain, A. (2013, May 2). Made in Bangladesh, not in Bangladeshi blood. Forbes ,

Retrieved from http://is.gd/YAUHTW

13. Davidson, A. (2013, May 14). Economic recovery, made in Bangladesh?. The New

York Times Magazine, Retrieved from http://is.gd/Z2htjV

37

14. Sohel, K. (2013, August 28). The right to form trade union? not in rmg. Dhaka

Tribune. Retrieved from http://is.gd/5VXKT2

15. AQF. (2013, July 5). [Web log message]. Retrieved from

http://www.asiaqualityfocus.com/blog/ethical-manufacturing-wrap/

16. Abdullah, S. (2013, 11 21). Minimum wage 5300, highest 6850. bdnews24.com.

Retrieved from http://bangla.bdnews24.com/economy/article703008.bdnews

Reference

17. Fanning, E. (2005). Formatting a paper-based survey questionnaire: Best practices.

Practical assessment, research and evaluation, 10(12),

18. ILO (2005a). “Promoting fair globalization in textiles and clothing in a post-MFA

environment”, ILO Publications, International Labor Office, CH-1211 Geneva 22,

Switzerland.

19. Paul-Majumdar, Pratima (2002). “Organising women garment workers: A means to

address the challenges of integration of the Bangladesh garment industry in the global

market”, published in Muqtada Muhammed and Ali Rashid (ed) Bangladesh:

Economic and Social Challenges of Globalisation, Dhaka, The University Press

Limited, Dhaka, Bangladesh.

38

APPENDIX

Name: Md. Nazrul Islam Raju

Designation: General Manager

Age: 45 Years

(To identify and analyze the human resource challenges of the firm as perceived by the top

management)

1. How would you define your role in the company (tick one)?

Senior Manager Junior Manager Line Supervisor Production Worker

2. Is your organizational structure designed to accommodate various needs of employees of

different ethnic and religious backgrounds?

Yes No

• If yes, then please give an example or describe such a situation:

We have employees from almost all Religions, different districts, and different casts including

people from tribal communities.

3. Rate the following work place conditions of your organization on a scale of 0 to 10:

• Safety Measures: 9

• Workload: 9

• Work Environment: 8

• Behavior of supervisors: 8

•Payment & Salary: 10

Please justify your ratings of each category:

Nowadays RMG factories those are working with renowned global brands must be fully

compliant with buyers’ requirement, which covers all of the above parameters and more. To be

a compliant Factory the overall rating should be above 70. The latest compliant audit rating of

Boonon Knitting is 87.

Would you prefer any change?

39

We wish to have further improvement in Work Environment i.e. making it more comfortable

and employee friendly and in the Supervisory Management i.e. improving people management

skill of the first line supervisor.

4. How many workers work in your factory?

below 300 300 to 600 600 to 1000 1000+

• What percentage of this is female?

less than 5% 5 to 10% 10 to 50% Above 50%

5. What is the minimum age for hiring workers?

12 to 15 16 to 20 20+

6. What is your recruitment policy based on?

Primarily by the company’s recruitment policy, which is compliant with buyer’s guidelines,

prevailing Labor law of Bangladesh and the guidelines of BKMEAS.

7. Do you provide training opportunities for any or your workers?

Yes No

• If yes, then how do you determine who is eligible for training:

Regular and routine training is a part of compliance policy, especially fire safety training.

Moreover, “on the job training” for Operators is a regular practice.

8. What is the most common cause for dismissing workers?

Misconduct Low skill level Others

9. How many times do you conduct performance appraisal processes a year?

0 1 to 2 3 or more

•How is it carried out?

It is done through hierarchy – Operators’ appraisal are done by immediate supervisors and

subsequently by Line in-charges and Floor in-charges / Section heads and finally by the

General Manager.

10. Is the report from evaluation accessible to the employees?

Yes No

11. What is the basis for promotion of any employees?

Excellent Performance Length of employment Recommendation from Supervisor

40

12. How many hours do employees work per day on average?

less than 6 hours 6 to 7 hours 8 or more hours

13. Is there any over time policy in your organization?

Yes No

• If yes, then is there an overtime payment option? Please elaborate:

Overtime bonus is available at 50% of wage rate.

14. Do employees work in night shifts?

Yes No

• If yes, then is how do you determine who will work night shifts?

15. Is the payment of night shift any different?

Yes □ No

16. How do you ensure your employees or subordinates meet their respective targets and

deadlines?

Make them work overtime

Let them take the work home

Pressure them to finish with in time

17. If you are lagging behind on meeting deadlines then how do you deal with the situation?

We do not lag behind

Cover it up through overtime

18. How do you manage workload before vacations?

Give benefits to those who do more work

Encourage overtime

Hire Part Time workers

Make employees work on weekends

19. Is it mandatory for workers to come to work during strike?

Yes No

20. If workers stay at the factory during strike then what facilities are provided for them?

both lunch and dinner

41

snacks at intervals

sleeping quarters (if overnight strikes continue)

Resting time

no extra facilities are given

21. What on site facilities are available for workers?

prayer room

lunch hall

resting area

childcare

Medical Center with full time Nurse and Part time Doctor

22. Do employees get lunch breaks? How long is it?

Yes (1 hour) No

23. What steps have you taken to ensure worker’s safety in their workplace?

Proper ventilation

Fire escapes

24. Do you have fire/ earthquake training exercises?

Yes No

25. If there has been a casualty in your workplace how will you deal with this situation?

Ignore it

Provide first aid only

Take them to a hospital or clinic, if necessary

Send the Employee home

26. Shed some light on your compensation packages.

Minimum wages for entry level workers

27. Are you satisfied with this package?

Yes No

28. What sort of policies are there regarding maternity leave? Are these the same for employees

from all level?

There is no maternal leave policy

It is the same for all employees

Policy varies according to employee hierarchy

42

29. What is your policy on sick leaves? How do you ensure that an employee does not abuse this

facility?

There is no scope for sick leave

2-3 days maximum

7 days maximum

More than 7 days

Depends on the illness

As per labor law

30. Is this sick leave policy the same for employees from all level?

Yes No

31. In the event of death of an employee, what (if any) support is provided to the family

members of the deceased?

No compensation is given

A sum of tk._________ maximum is given (monthly/ yearly/ one time)

There is a pension plan

There is a Life Insurance Policy

32. What is the minimum wage of your employees or staffs? Give us an estimate according to

organizational level.

Grade-7: Minimum Salary Tk. 5,300/month for new and unskilled Helpers

Grade-6: Minimum Salary Tk. 5,678/month for Ge. Operators

Grade-5: Minimum Salary Tk. 6,042/month for Jr. Operators

Grade-4: Minimum Salary Tk. 6,420/month for Operators

Grade-3: Minimum Salary Tk. 6,805/month for Sr. Operators

Grade-2: Minimum Salary Tk. 11,000/month for Supervisors

Grade-1: Minimum Salary Tk. 13,000/month for Sr. Supervisors

33. Do you give your employees festival bonuses?

Yes No

34. Are payments made on time?

yes

usually on time

rarely on time

never on time

35. Does your company have a written down code of ethics?

Yes No

43

36. If the answer to the previous question is yes, has it ever changed throughout the years?

In the last one year

in the last 5 years

more than 5 years ago

never

37. How do you ensure that they follow the code of ethics?

We expect everyone to follow the code

Employees are monitored constantly for unethical behavior

Unethical behavior leads to severe punishment

38. What is your stand towards sexual harassment?

There is no sexual harassment in our company

We expect employees to solve the matter among themselves

Sexual harassment is not tolerated

Employees are urged to come forward about sexual harassment

39. Do you encourage your employees to speak up when they see an unethical practice?

Yes No

If yes, how do you do so?

they can tell their senior manager

there is an anonymous complaint facility

they can confront the person involved

They can discuss the issue through WPC (Workers Participatory Committee)

40. If any employee has any complaints to make, to whom do they go?

fellow workers

supervisor

plant manager

41. Do you protect the anonymity of anyone who complains?

Yes No

42. Do you engage in any activity to keep the relationship among labors friendly and

cooperative?

Yes □ No

If yes what are the activities

43. How would you describe the relationship between the workers and owners/ managers?

44

Workers do not interact with the top level

There is a very formal relationship

Owners and workers do not know one another

There is a friendly understanding relationship

44. Is communication between employees at different levels encouraged?

Yes No

45. Is there a labor union?

Yes (WPC) □ No

46. How is the labor force represented during policymaking?

The labor union acts as the representative

Workers are allowed to voice their opinion

A random group of workers is allowed to act as the representative

There is no representation

47. Do employees get other benefits such as child education?

Yes No

48. Do employees get health insurance?

Yes No

49. How much consideration do you give to your employees and their needs when making a

decision?

Only the policy makers decide what is important

Needs of employees are not given much importance

the policy makers try to incorporate the needs of employees as best as possible

All employee needs are catered to

(To understand the firm’s production process and supply chain)

50. How do you maintain the quality of the production process?

quality is not important

few pieces are checked for quality

every piece is checked

Is there any defined/specific standard?

there is no standard

Standard is set by the company

The customers set standard

51. When choosing suppliers what criteria do you give more importance to?

45

quality of supply

□ quantity required

□ delivery time

□ lowest price

□ other factors (________________________________)

52. If you get to know that one of your suppliers is involved in an illegal side business. What step

will you take?

□ No action is taken as the supplier is not a part of the company

□ After the current contract ends no further associations will continue

the contract is terminated immediately and no further businesses conducted

53. Do you include dealers within your supply chain? (Yes or No) If yes, do you check that they

are operating ethically?

54. How do you ensure the consistency of your product in terms of quality and price?

55. What do you do with your faulty inventory?

Whatever possible is salvaged

The product is sold off to (_______________________)

Faulty products are destroyed

56. Of the segments you outsource (only if applicable), how do you ensure that their employees

are eligible and are aligned with your company policy?

57. Are you keen on incorporating automation in your organization?

Yes No

If yes, how do you think it is affecting your stakeholders

The stakeholders’ opinions do not matter

the stakeholders have expressed indifference

Stakeholders approve of the decision

How do you think automation affects the employees

the employees’ opinion do not matter

the employees do not have an opinion

the employees have expressed concern

the employees are not satisfied with this decision

the employees have expressed interest in the decision

58. How are machine quality maintained and how frequently are they checked?

the machines are checked for damages regularly (daily/weekly/monthly) Daily, preventive

46

Machines are checked once a year

machines are only looked into if there is a complaint

59. In the case that transportation is involved in your supply chain (only if applicable), how do

you ensure that illegal activities (for example road bribes and commissions) are avoided?

60. Do you have internal and/or external inspectors to check your compliance with safety

standards and government regulations?

Yes (internal only/ external only/ both)

No

61. How do you handle government bans & prohibitions in terms of buying or selling your

products (only if applicable)?

There are no government bans

we abide by all government regulations

62. How much of the product information is disclosed in the product packaging (only if

applicable)?

As much as required by the customer

Minimal information (color, size and material only)

As much as possible excluding negatives

everything including negatives

63. If any product is found to be defective after sale what policy do you follow in this situation?

customer cannot return product or claim compensation

product can be returned but no compensation will be given

compensation is given only if product is returned

product may not be returned but company gives compensation

(To understand the firm’s financial policies and practices)

64. How important is profit making to your company?

not very important

it is necessary to survive

it is the most important part of business

65. Do workers get any part of the profits?

Yes No

66. Do you have any authorized audit firm?

Yes No

47

If yes, how frequently is it carried out?

more than once a year

once a year

every 2 years

right before paying taxes

Others ____________________

67. What are your internal auditing policies (only if applicable)?

68. Do you think it is important that you keep your financial information non-accessible from

the lower level employees?

Yes No

69. If, in practice, you were given the power to select a tier within your hierarchy until which

you will divulge your financial information, which tier would it be? Why so?

Senior Manager Junior Manager Line Supervisor Production Worker

(To check the level firm’s level of concern over society and environment)

70. From the point of view of profit making, do you think getting involved in CSR activities is

important?

Yes No

Please justify.

71. Do you have any CSR activities?

Yes No

72. If the answer to the previous question is yes, can you give an example of one of the projects?

How did you measure its impact?

Our project was___________donating excess stock_________________________

it was made mandatory by the government

the customers made it mandatory

the top management thought it would make the company look good

the management is interested in CSR activities

73. How many of your CSR activities were reported in the media? ____0_____

74. In your factory, do you currently use any green/environment friendly technology?

Yes No

75. Do you have any “green” activities planned or in process?

48

Yes No

76. Do you have a waste disposal system (only if applicable)?

Yes No

77. Does your waste disposal system include any recycling process?

Yes No

78. Do you think being environment friendly affects your profit margin?

Yes No

If yes how does it do so?

Cost and maintenance of Effluent Treatment Plant may be very high