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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
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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
_________________________
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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
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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
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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.
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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.
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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
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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.
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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
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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
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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.
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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.
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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)
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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:
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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
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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
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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.
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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
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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.
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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)
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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
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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?
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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?
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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
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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
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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?
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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