PERFORMANCE MANAGEMENT SYSTEMS APPLIED

IN T H R E E ORGANIZATIONS OF

MAS HOLDINGS

ummxsm OF ^ o 3Ri 'K/̂

By

I C Kirindegedara

Supervised by

Dr. Wathsala Wicicramasinghe

This dissertation was submitted to the Department of Management of Technology of

the University of Moratuwa in partial fulfillment of the requirement for the degree of

Masters of Business Administration.

Department of Management of Technology

University of Moratuwa

Moratuwa

niversity of Moratuwa t 4 A J 3

104403

1''January 2011 /0M//O3

DECLARATION

I Inoka Chamalie Kirindegedara here by certify that this dissertation does not

incorporate any material without acknowledgement and material previously submitted

for a degree or diploma in any university to the best of my knowledge and believe it

does not contain any material previously published, written or orally communicated

by another person except where due reference is made in the text.

Candidate " | ,

Inoka Chamalie Kirindegedara (Registration Number MBA/MOT/06/9024)

Date:-01/01/2011

1 certify that the statement above is true to the best of my knowledge and dissertation

is ready for submission.

Research Supervisor

Dr. Wathsala Wickramasinghe

Senior Lecturer,

Department of Management of Technology,

University of Moratuwa

Date: 01/01/2011

ACKNOWLEDGEMENT

I was able to finish this research successfully due to the support of the people around

me. Firstly my sincere thanks to my supervisor Dr. Wathsala Wickramasinghe. Her

assistance and personal guidance always influence me to carry on this research to the

end when I met with some hard periods and barriers through out my research. Thanks

should also go to the lectures those who always provided necessary assistance. Also I

should thank for academic staff for all the support during my academic period. I

would like to thank all MAS Holdings' executives for spending their valued time to

fill this questionnaire, managers and the directors those who supported me to carry on

this project in MAS Holdings. I specially thank Mr. Dian Gomes. Group director

MAS Holdings for giving his authorization to circulate this questionnaire among the

intimates cluster, and unless it 1 may not be able to continue this project in MAS

Holdings witch is the most suitable place to continue this type of project within the

apparel industry in Sri Lanka.

Thank you very much.

I.e. Kirindegedara

r'January 2011

ABSTRACT V

MAS Holdings is the single largest employer in Sri Lanka having spread over their

own companies in ten different countries such as China, Mexico, Indonesia,

Bangladesh, Hong Kong, India, New York, United Kingdom and Sri Lanka. Having

45,000 of work force this massive organization has divided mainly into two different

areas as Apparel and Investment. Intimates, Active, Fabric and Linea Aqua are the

main parts (or clusters) belongs to Apparel sector and has 32 organizations.

Information Technology Solutions, Retails. Accessories and Real estate are the main

parts of lnvestment.lt also divided in to 7 different areas like Saber technology. Attune

consulting. Trade Card, Amante, Nellore, Fabric park and Linea Leather. Fox this

research executives were selected from 3 different organizations from Intimates

cluster out of 11 companies. Considering its massive spread, MAS Holdings wil l be

the most suitable organization in apparel field to select this type of study in Sri Lanka.

There are three main objectives of this study. From first two objectives it is trying to

identify the differences in managerial behaviors towards their performance

management system and the main criteria of the performance evaluation. From the

third objective, it is trying to investigate employees' perceptions towards the

performance evaluation process. When considering the first objective it is trying to

gather information for managerial behaviors towards the performance management

system. Management level involvement is the key to success for any implementation

within the organization. Employees' perceptions towards the performance evaluation

process says whether the employees are happy with the current evaluation system and

the main criteria measures whether the current available performance management

system is completely covered the important areas as expected through the

performance management system.. From this study it was tried to have a feedback for

main three areas such as current perfonnance management system, key performance

indicators and the management. Further it was included some details of personal,

organizational and the service.

Research was conducted using a questionnaire sent via email. Total data collection

was represented different areas like human resources, production, finance, quality,

technical, product development, stores and information technology. 110 executives

were answered for the questiomiaire out of 140 circulated questiormaires. Population

ABSTRACT

MAS Holdings is the single largest employer in Sri Lanka having spread over their

own companies in ten different countries such as China, Mexico, Indonesia,

Bangladesh, Hong Kong, India, New York, United Kingdom and Sri Lanka. Having

45,000 of work force this massive organization has divided mainly into two different

areas as Apparel and Investment. Intimates, Active, Fabric and Linea Aqua are the

main parts (or clusters) belongs to Apparel sector and has 32 organizations.

Information Technology Solutions, Retails. Accessories and Real estate are the main

parts ofInvestment.lt also divided in to 7 different areas like Saber technology. Attune

consulting. Trade Card, Amante, Nellore, Fabric park and Linea Leather. For this

research executives were selected from 3 different organizations from Intimates

cluster out of 11 companies. Considering its massive spread, MAS Holdings will be

the most suitable organization in apparel field to select this type of study in Sri Lanka.

There are three main objectives of this study. From first two objectives it is trying to

identify the differences in managerial behaviors towards their performance

management system and the main criteria of the performance evaluation. From the

third objective, it is trying to investigate employees' perceptions towards the

performance evaluation process. When considering the first objective it is trying to

gather information for managerial behaviors towards the performance management

system. Management level involvement is the key to success for any implementation

within the organization. Employees' perceptions towards the performance evaluation

process says whether the employees are happy with the current evaluation system and

the main criteria measures whether the current available performance management

system is completely covered the important areas as expected through the

performance management system.. From this study it was tried to have a feedback for

main three areas such as current performance management system, key performance

indicators and the management. Further it was included some details of personal,

organizational and the service.

Research was conducted using a questionnaire sent via email. Total data collection

was represented different areas like human resources, production, finance, quality,

technical, product development, stores and infonnation technology.! 10 executives

were answered for the questionnaire out of 140 circulated questionnaires. Population

ii

is 820 executives in all three organizations and the sample is nearly 13% of the

population. Data was analyzed using SPSS version 16.

When considering the mean values and standard deviations of each and every

indicators of the main three objectives, it can be seen that they are not very satisfied

with the current managerial behaviors on performance management system as they

have some doubts with the case. Considering the perceptions toward the performance

evaluation system, the results says that they are not refusing the current system but

also not recognize to keep the system as it is. As to the results they believe that the

current performance management system needs few modification for further

satisfaction of the individual and organizational expectations.

iii

T A B L E OF CONTENTS

ACKNOWLEDGEMENT i

ABSTRACT i i

TABLE OF CONTENTS iv

LIST OF FIGURES vi i

LIST OF TABLES vii i

CHAPTER L INTRODUCTION 01

1.1 Background of the study 01

1.2 Identification of the problem ' 02

1.3 Objectives of the study 02

1.4 Scope of the study . 03

1.5 Significance of the study 04

1.6 Chapter outline 05

CHAPTER 2. LITERATURE REVIEW 06

2.1 Introduction 06

2.2 Performance management 06

2.3 Performance management system requirement in apparel industry 06

2.4 Overview of apparel industry 15

2.4.1 General features of the industry 16

2.4.2 Technological features of the industry 17

2.4.3 Future prospects 18

2.5 Apparel industries in Sri Lanka 18

2.5.1 Industry Challenges 20

2.5.2 Sri Lanka's competitive and comparative advantages 21

2.6 Important factors for successful implementation and use of Performance

management system 22

2.7 Skill based and education based evaluation 23

2.8 Perfonnance management systems applied in MAS Holdings 23

2.9 Chapter summary ' 1-27

CHAPTERS. METHODOLOGY 28

3.1 Introduction 28

3.2 Population and sample 28

3.3 Data collection method 28

3.4 Data analysis 31

3.5 Chapter summary 31

CHAPTER 4. DATA ANALYSIS 32

4.1 Characteristics of the sample 32

4.1.1 Organizational divisions 32

4.1.2 Gender 33

4.1.3 Age 33

4.1.4 Promotions 34

4.1.5 Highest level of education 35

4.1.6 Years served in the present work place 35

4.1.7 Years of experience in apparel industry 36

V

4.2 Dimensional analysis of Performance management system 37

4.2.1 Identify the managerial behaviors that are responsible for the successful

design and implementation of a performance management system 37

4.2.2 Identify the main criteria of the performance evaluation 41

4.2.3 Employees' perceptions towards the performance evaluation process 43

4.3 Test for Reliability of tlie indicators for main objectives 47

4.4 Chapter summary 48

CHAPTER 5. CONCLUSIONS AND RECOMMENDATIONS ' 49

5.1 Summary and conclusion * 49

5.2 Recommendation 49

5.3 Limitations and fiirther Research 50

5.4 Implication for further Research 51

REFERENCES 53

APPENDIX 55

A. Questionnaire 55

B. Variable Table 63

C. Sample for Statistical summary tables 68

vi

LIST OF FIGURES

Figure 2.1 13

Figure 4.1: Gender of respondents 33

Figure 4.2: Age distribution of respondents 34

Figure 4.3: No ofpromotions received by respondents 34

Figure 4.4: Highest level of education 35

Figure 4.5: Current Firm Experience 36

Figure 4.6: Years of experience in Apparel Industry ' ,| 37 \

vii

LIST OF TABLES

Table 2.1: Guide for ratings , 26

Table 3.1: Sample distribution , 29

Table 4.1: Distribution of respondents of divisions 32

Table 4.2: Years served in present work place by the respondents 35

Table 4.3: Years of experience in the apparel industry by the respondents 36

Table 4.4: Mean and standard deviation of performance management for continues

Improvement k 38

Table 4.5: Mean and standard deviation of feed back with performance

management system 39

Table 4.6: Mean and standard deviation of Balance System 39

Table 4.7: Mean and standard deviation of Management Style 40

Table 4.8: Mean and standard deviation of Individual 42

Table 4.9: Mean and standard deviation of Organizational 43

Table 4.10: Mean and standard deviation of Justice 44

Table 4.11: Mean and standard deviation of Satisfaction 44

Table 4.12: Mean and STD deviation of Utility 46

Table 4.13: Mean and standard deviation of Acceptable 46

Table 4.14: Cronbach's alpha values for variables 47