1.1. Rationality

The RMG industry is the only multi-billion-dollar manufacturing and export industry in Bangladesh. Whereas the industry contributed only 0.001 per cent to the countrys total export earnings in 1976, its share increased to about 75 per cent of those earnings in 2005. Over the past one and half decade, RMG export earnings have increased by more than 8 times with an exceptional growth rate of 16.5 percent per annum, due to policy support of the government and dynamism of the private sector entrepreneurs. The export-quota system in trading garment products played a significant role in the success of the industry. However, the quota system came to an end in 2004. Even after the end of the quota system, earnings reached about 8 billion USD in FY06, which was only less than a billion USD in FY91. Excepting FY02, the industry registered significant positive growth throughout this period. Bangladesh exported garments worth the equivalent of $6.9 billion in 2005, which was about 2.5 per cent of the global total value ($276 billion) of garment exports. The countrys RMG industry grew by more than 15 per cent per annum on average during the last 15 years. The foreign exchange earnings and employment generation of the RMG sector have been increasing at double-digit rates from year to year. Some important issues related to the RMG industry of Bangladesh are noted in table 1.

Table 01: Important issues related to the Bangladesh ready-made garment industry

Currently, The RMG industry in Bangladesh has still been expanding horizontally and contributing to national development significantly. It comprises of about 16 percent of GDP (FY 2010-11) providing employment (both directly and indirectly) to 10.72 percent of national labor force, in which 6.83 percent are directly employed (BBS& BGMEA). Nearly 79 percent of the total exports of the country comprises of RMG products in FY 2010 11(EPB). Now as per the 2011 statistics, the number of RMG units is around 5,000 and the export earnings have reached over $19.00 billion and over 3.7 million garment workers are working in the RMG units, of whom 80 per cent are women. The following table shows the growth of RMG sector in Bangladesh.

Table 2: Year wise Total number of RMG factories and its total employees. (BGMEA website, 2011)

To about 30 countries around the world, Bangladesh presently exports ready-made garments, with over 45% to USA, 50% to the countries in EU and 3% to Canada and rest to the other countries of the world. Bangladesh is known in these countries as -Bangladesh is a small country with a strong presence.In terms of GDP, RMGs contribution is highly remarkable; it reaches 13 percent ofGDP which was only about 3 percent in FY91. This is a clear indication of the industrys contribution to the overall economy. It also plays a pivotal role to promote the development of other key sectors of the economy like banking, insurance, shipping, hotel, tourism, road transportation, railway container services, etc.

Bangladeshi RMG products are mainly destined to the US and EU. Back in 1996-97, Bangladesh was the 7th and 5th largest apparel exporter to the USA and European Union respectively. The industry was successful in exploring the opportunities in markets away from EU and US. In FY07, a successful turnaround was observed in exports to third countries, which having a negative growth in FY06 rose three-fold in FY07, which helped to record 23.1 percent overall export growth in the RMG sector. It is anticipated that the trend of market diversification will continue and this will help to maintain the growth momentum of export earnings.

Fig 1: Data Source Export Promotion Bureau (Year 1983-84 to Year 2013-14) Compiled by BGMEA (3Based on Table 03)In the above line graph (Fig 1), one can easily find out trend and the growth rate of Bangladesh garments industry. The trend starting to going up from the year 1994-1995 and started to have a sharp rise from the year 2009-2010. And now our total RMG export is around 25b US$ where else the total export of Bangladesh is only around 30b US$. In the Fig 2, one can see the comparison of export based on type. From 1992 to 2004, woven dominated to total RMG export but now the difference is quite minimum. In the year 2013-2014, we can see the total woven export was about 12.5b US$ compare to the knit whose total export was just above the 12b US$.

Fig 2: Data Source Export Promotion Bureau (Year 1992-93 to Year 2013-14) Compiled by BGMEA(4Based on Table 04)

And in the following graph (Fig 3) we can see the comparison of total RMG export in the last two fiscal year 2012-2013 and 2013-2014. Where we can see the RMG growth rate is experiencing a declining trend starting from the month of April 2014. And this is due to the recent violence and security issues in the garments industries of Bangladesh.

Fig 3: Data Source Export Promotion Bureau (FY 2012-13 & 2013-14) Compiled by BGMEA(6Based on Table 05)

1.1. Performance Appraisal CriteriaResults: QuestionAnswers

Epyllion GroupHa-Meem GroupZA ApparelsDesign & Source Ltd.

Did you ever use essay appraisal for performance appraisal? Would you like to share the experience with us?Yes but faced difficulties and stop using it.Yes and gives conflicting resultsYes but faced difficulties and gives conflicting results.Yes but faced difficulties and gives conflicting results.

What are the important components of your company's performance appraisal system?Regular feedbacks:360 degree feedbackStrengths and improvement areasSupport and planBest fit and compensationJob Expectations & GoalsTimely Reviews & FeedbackPerformance RewardsTraining & CoachingDevelop an evaluation form.Identify performance measures.Set guidelines for feedback.Create disciplinary and termination procedures.Set an evaluation schedule.PlanningMonitoring Rewards

What are the main objectives of your company's performance appraisal system?Achievement of Organization GoalsSetting of individual objectivesEvaluation of individual performance against objectivesImprovement of PerformanceAllocation of RewardsEncouraging Performance ImprovementMotivating Superior Performance.Setting and Measuring GoalsCounseling Poor PerformersDetermining Compensation ChangesEncouraging Coaching and MentoringSupporting Manpower PlanningDetermining Individual Training and Development NeedsDetermining Organizational Training and Development NeedsImproving Overall Organizational PerformanceSetting and Measuring GoalsTo judge the gap between the actual and the desired performance.To help the management in exercising organizational control.Helps to strengthen the relationship and communication between superior subordinates and management employees.To diagnose the strengths and weaknesses of the individuals so as to identify the training and development needs of the future.To provide feedback to the employees regarding their past performance.Provide information to assist in the other personal decisions in the organization.Achievement of Organization GoalsSetting of individual objectivesMotivating Superior Performance.Supporting Manpower PlanningImproving Overall Organizational Performance

Have your traditional performance appraisal system ever failed? Does it give you conflicting results? Do you think "Behavioral anchored rating scale (BARS)" might help you to overcome these difficulties?Yes.Yes, most of the time. Yes I think "Behavioral anchored rating scale (BARS)" might helpYes.Yes, most of the time. Yes I think "Behavioral anchored rating scale (BARS)" might helpNo.Yes, most of the time. Yes I think "Behavioral anchored rating scale (BARS)" might helpYes.Yes, most of the time. Yes I think "Behavioral anchored rating scale (BARS)" might help

What are the main KPI's (Key Performance Indicators) of your company?Factory Efficiency%: Man to Machine RatioCut to ship ratioOrder to ship ratioOn time DeliveryRight First time qualityQuality to ProductionAverage style changeover timeDown time percentageFactory Efficiency%: Man to Machine RatioCut to ship ratioOrder to ship ratioOn time DeliveryRight First time qualityQuality to ProductionAverage style changeover timeDown time percentageFactory Efficiency%: Man to Machine RatioCut to ship ratioOrder to ship ratioOn time DeliveryRight First time qualityQuality to ProductionAverage style changeover timeDown time percentageFactory Efficiency%: Man to Machine RatioCut to ship ratioOrder to ship ratioOn time DeliveryRight First time qualityQuality to ProductionAverage style changeover timeDown time percentage

What are your major criteria to assess the performance of an employee?Quality & quantityTimelinessCost efficiencyNeed for supervisionInterpersonal collisionProblem examinationCustomer directionMarket directionNegotiation skills etcQuality & quantityTimelinessCost efficiencyNeed for supervisionInterpersonal collisionimprovement & creativityProblem examinationCustomer directionMarket directionEntrepreneurial driveNegotiation skills etcQuality & quantityTimelinessCost efficiencyNeed for supervisionProblem examinationCustomer directionMarket directionEntrepreneurial drive etcQuality & quantityTimelinessCost efficiencyNeed for supervisionProblem examinationCustomer directionMarket directionEntrepreneurial drive etc

What performance appraisal system are you following, a) 180 degree performance appraisal system. Or b) 360 degree performance appraisal system and why?360 Degree360 Degree180 Degree360 Degree

What can you aim to achieve through your preferred performance appraisal system?An open review of performance at standard periods

A relation to the annual salary reviewA focus for arrangement about setting apparent performance objectives which are connected to the corporate and business strategyAn analysis of development requires and the setting of development action plans

An open review of performance at standard periods

What are the prerequisites and the main phases of your preferred performance appraisal system?TrainingEvaluationReviewTrainingEvaluationReviewTrainingEvaluationReviewTrainingEvaluationReview

How do you use your appraisal system to chalk out employees career progression?PromotionCompensationEmployees DevelopmentSelection ValidationCommunicationMotivationPromotionCompensationEmployees DevelopmentSelection ValidationCommunicationMotivationPromotionCompensationEmployees DevelopmentSelection ValidationCommunicationMotivationPromotionCompensationEmployees DevelopmentSelection ValidationCommunicationMotivation

How does your appraisal help in counselling?Understanding himself - his strengths and weaknesses.Improving his professional and interpersonal competence by giving him feedback about his behavior.Setting goals and formulating action plans for further improvement.Understanding himself - his strengths and weaknesses.

Who, When, and How often your company evaluate employees performance based on "Graphic Rating Scales or Category Ratings" method?Initiated by HR DepartmentConducted by ManagersAfter every Three MonthsInitiated by HR & Admin DepartmentConducted by HR DepartmentAfter every Six MonthsInitiated by Head of the Respective DepartmentConducted by Head of the DepartmentYearlyInitiated by HR Department & ManagesConducted by ManagersYearly

Do you use Forced Choice Rating method for selecting or recruiting new employees? If, yes, then please arrange the following main goal that you want to achieved based on the priority; a) To identify the activities the candidate prefers to focus. b) To identify if the candidates strongest technical skills and knowledge areas match the job requirements. c) To identify whether the candidate prefers to work in a role where they are isolated and influence decisions solely or as part of a larger consensus. d) To identify whether the management style that they are the most productive.YesB, A, D, C

YesA, B, D, C

YesB, A, C, D

YesB, A, D, C

Do you think it is possible to follow Critical Incident Appraisal technique in Bangladeshi Garment Industries? Please explain your companys HR policy in relation to this.I dont think so, as the number of employees are much higher its very tough to maintain individual performance log. Its possible but only for the top level employees.

Its possible and weve tried to implement this technique for all of our employees but failed for the general level of employees. So we are using it only for the top level of employees. Not possible entirely as its tough to maintain such a huge number of employees as it results in very close supervision which may not be liked by the employee.

Does your Company maintain the Annual Confidential Report or ACR? If yes, then What is the evaluation period? 01st January to 31st December : For Workers01st July to 30th June : For Employees and other Worker01st January to 31st December : For All Workers01st January to 31st December : For All Employees01st July to 30th June : For All Employees

Management by Objective (MBO) system built a link between the upper management and the lower level of the hierarchy, does your company follow this system, if yes, then please provide the major advantages and disadvantages of this system (based on your experience) Yes, we do follow it.YesNo, we dont follow this technique. Yes we follow this technique.

Does your Company form a committee, which study the rating forms and make it as simple as possible for avoiding unnecessary complexity? (Simple Ranking / Rating)YesYes, we have a committee for this purposeNo, we dont have this type of committeeNo we dont have it but we from that committee occasionally.

Table 6: Results compression on the topic of Performance appraisal criteriaOut of the four local garments factory that weve visited follows more or less the same performance appraisal systems. For the essay appraisal system weve found that all of the garments faced difficulties using it as most of the employees are under educated. They have also faced difficulties using this technique for the educated employees as Managers do not take this method sincerely and Insufficient try from all involved. Out of the four garments the most common components performance appraisal system are Timely Reviews & Feedback, planning, developing guideline and setting up the goals. Surprisingly the main objectives of all the four garments companies are same. The main objective of performance appraisals is to measure and improve the performance of employees and increase their future potential and value to the company. Other objectives include providing feedback, improving communication, understanding training needs, clarifying roles and responsibilities and determining how to allocate rewards. All these are to meet the organizational goals. Among the four companies, three companys traditional performance appraisal system have failed but all four companies gets conflicting results because manages sometimes lacks skill in providing feedback and often provokes a defensive response from the employee, who may justifiably feel he is under attack. Consequently, managers avoid giving honest feedback which defeats the purpose of the performance appraisal. For these reasons they think "Behavioral anchored rating scale (BARS)" might to overcome this problem as it is behaviorally based, easy to use, fully equitable, individualized and action-oriented based system.Three out of four selected garment company has following the modern and effective 360 degree performance appraisal system because it help to design effective training and development programs that increase the companys overall performance and productivity. It gives employees a broad view of their performance from a range of sources and an opportunity to identify strengths and weaknesses.All four selected garment company follow the Forced Choice Rating method for selecting or recruiting new employees and they follow it to identify the activities the candidate prefers to focus, whether or not the candidates strongest technical skills and knowledge areas match the job requirements. To identify whether the candidate prefers to work in a role where they are isolated and influence decisions solely or as part of a larger consensus. And finally to identify at what management style, they are the most productive.Practically its not possible to follow Critical Incident Appraisal technique in Bangladeshi Garment Industries as the number of general worker are very high and it results in very close supervision which may not be liked by the employee.Out of four three of the selected company doesnt follow the Management by Objective (MBO) system because as in the local garment industry, the management has little trust on its general workers as well as on its other employees. This is the reason why management makes decisions autocratically and relies heavily on external controls to direct employee behavior. The amount of time needed to implement and maintain an MBO process may also cause problems as most of the employees have very little education. And only one company follows this system for their top level of employees. Findings:

Most of the company faced trouble using essay appraisal system. A most important trouble they have faced was teaching the managers. The key findings were; Managers do not take the method sincerely Insufficient try from all involved Awful statements and training obstruct effectiveness The systems are too distinctive, remote and disruptive, and Evaluation can be contradictory and dishonest.The traditional appraisal technique failed in most of the company and they think "Behavioral anchored rating scale (BARS)" might help to overcome this problem, because the BARS approach offers several key advantages: Its behaviorally based. The BARS system is totally focused on employee performance. Ideally, it removes all uncertainty regarding the meaning of each numerical rating. Its easy to use. The clear behavioral indicators make the process easier for the manager to carry out and the employee to accept. Its equitable. With its heavy emphasis on behavior, the evaluation process comes across as fair. Its fully individualized. From the standpoint of consistency within a company, BARS is designed and applied individually and uniquely for every position. Its action-oriented. With an understanding of the specific performance expectations and standards of excellence, employees can much more easily take steps to improve their performance, and theyre more likely to do so as a result.

The KPIs of these companies are the following. Factory Efficiency%: Factory efficiency indicates how efficiently sewing lines is run in a factory. For factory efficiency calculate total minutes produced by all lines and total minutes attended by all lines. Factory efficiency% = (Total minutes produced X 100)/Total minutes attended.Man to Machine Ratio:When it is factorys Man to Machine ratio (MMR), every employees of the factory is considered under manpower. So, Man: Machine= Total manpower: Total sewing machines available in the factory (machines those are in use). For example, if a factory has 500 sewing machines and total manpower of the factory is 1100 then man to machine ratio =1100:500 OR 2.2.Cut to ship ratio: This is a ratio of total cut quantity and total shipped quantity of an order. This indicator is measured order wise and monthly shipped orders. To keep buffer (for damaged, defective garments) factory cuts extra pieces than order quantity. For example: factory received an order of 20000 pieces, cut quantity 20200 pieces (1% extra cutting) and total shipped quantity 20000 pieces. Cut: Ship = 20200:20000 = 1.01. This indicator is measured to control surplus quantity after shipment, reduction in extra cutting and damaged garment. Target Cut to ship ratio is 1.Order to ship ratio: Buyer expect to receive full quantity from supplier that has been ordered. This is most important factor that buyer uses for vendor evaluation. This indicator is calculated as = Total order quality/ Total shipped quantity. Target of Order to Ship ratio is always 1.On time Delivery: Target on time delivery of each style is to meet shipment delivery date. If not meet reasons of not meeting delivery date are analyzed. It is calculate as = Total orders shipped on time/Total orders shipped on the month. For example, if factory shipped 18 styles on time out of total 20 styles shipped in month then On time delivery of that month is =18/20*100% = 90%Right First time quality: This indicator is represented in percentages. Total audits passed in first time out of total audit conducted by auditors. Higher values (percentage) of right first time quality is considered as better performance of the factory.Quality to Production: Quality level of each department is measured in DHU and Percentage defective unit. Higher the value of DHU higher alteration time and higher cost incurred in quality.Average style changeover time: Time gap between previous style over (last piece out from the line) and first piece output of the current style is known as style change over time. Shorter changeover time is considered as better performance level. It varies style to style and production systems. Time of Change over time of each style is recorded and average changeover time of the factory is measured.Down time percentage: Down time is one of the top most reasons for less factory efficiency. Factory analyses major down times to control and improve machine and operator utilization. Top 5 reasons for down time (also known as non-productive time, Off-standard time) are line setting, operation sitting idle, no feeding, machine breakdown and no planning for line.

Now most of the company find using 360 degree performance appraisal system useful because, 180 degree because its enable two-way feedback on an individuals performance. 360 degree because its a multi-rater evaluation and focuses on skills needed across organizational boundaries. 360 degree because it encourages self-development and promotes a more open culture where giving and receiving feedback is an accepted norm. In addition it also increases communication within the organization. 360 degree because it help to design effective training and development programs that increase the companys overall performance and productivity. It gives employees a broad view of their performance from a range of sources and an opportunity to identify strengths and weaknesses.

The HR department of these company use the following points of appraisal system to chalk out employees career progression. Promotion: Performance Appraisal helps the supervisors to chalk out the promotion programs for efficient employees. In this regards, inefficient workers can be dismissed or demoted in case.Compensation: Performance Appraisal helps in chalking out compensation packages for employees. Merit rating is possible through performance appraisal. Performance Appraisal tries to give worth to a performance. A compensation package which includes bonus, high salary rates, extra benefits, allowances and pre-requisites are dependent on performance appraisal. The criteria should be merit rather than seniority.Employees Development: The systematic procedure of performance appraisal helps the supervisors to frame training policies and programs. It helps to analyze strengths and weaknesses of employees so that new jobs can be designed for efficient employees. It also helps in framing future development programs.Selection Validation: Performance Appraisal helps the supervisors to understand the validity and importance of the selection procedure. The supervisors come to know the validity and thereby the strengths and weaknesses of selection procedure. Future changes in selection methods can be made in this regard.Communication: For an organization, effective communication between employees and employers is very important. Through performance appraisal, communication can be sought for in the following ways:1. Through performance appraisal, the employers can understand and accept skills of subordinates.2. The subordinates can also understand and create a trust and confidence in superiors.3. It also helps in maintaining cordial and congenial labor management relationship.4. It develops the spirit of work and boosts the morale of employees.All the above factors ensure effective communication.Motivation: Performance appraisal serves as a motivation tool. Through evaluating performance of employees, a persons efficiency can be determined if the targets are achieved. This very well motivates a person for better job and helps him to improve his performance in the future.After analyzing the mentioned four companies results, we can conclude that the following are the main advantages and disadvantages of Management by Objective (MBO) system.Management by Objective (MBO) system is a performance Appraisal method that includes mutual objective setting and evaluation based on the attainment of the specific objectives.MBOS advantages lie in its results oriented emphasis. It assists the planning and control functions and provides motivation, as well as being an approach to performance appraisal. Thats because employees know exactly what is expected of them and how they will be evaluated. Moreover, employees understand that their evaluation will be based on the success in achieving mutually agreed-on objectives.The major disadvantage of MBO is that it is unlikely to be effective in an environment where management has little trust in its employees. So in the case of Garments industry, like ours; the managements has very little trust on its employees. This is the reason why management makes decisions autocratically and relies heavily on external controls to direct employee behavior. The amount of time needed to implement and maintain an MBO process may also cause problems as most of the employees have very little education.Table List: Table 1: Important issues related to the Bangladesh ready-made garment industry

Table 2: Year wise Total number of RMG factories and its total employees. (BGMEA website, 2011)

Table 03: COMPARATIVE STATEMENT ON EXPORT OF RMG AND TOTAL EXPORT OF BANGLADESHYEAREXPORT OF RMG(IN MILLION US$)TOTAL EXPORT OF BANGLADESH (IN MILLION US$)% OF RMGS TO TOTAL EXPORT

1983-8431.57811.003.89

1984-85116.2934.4312.44

1985-86131.48819.2116.05

1986-87298.671076.6127.74

1987-88433.921231.235.24

1988-89471.091291.5636.47

1989-90624.161923.7032.45

1990-91866.821717.5550.47

1991-921182.571993.9059.31

1992-931445.022382.8960.64

1993-941555.792533.9061.40

1994-952228.353472.5664.17

1995-962547.133882.4265.61

1996-973001.254418.2867.93

1997-983781.945161.2073.28

1998-994019.985312.8675.67

1999-004349.415752.2075.61

2000-014859.836467.3075.14

2001-024583.755986.0976.57

2002-034912.096548.4475.01

2003-045686.097602.9974.79

2004-056417.678654.5274.15

2005-067900.8010526.1675.06

2006-079211.2312177.8675.64

2007-0810699.8014110.8075.83

2008-0912347.7715565.1979.33

2009-1012496.7216204.6577.12

2010-1117914.4622924.3878.15

2011-1219089.6924287.6678.60

2012-1321515.7327018.2679.61

2013-1424491.8830176.8081.16

Data Source Export Promotion Bureau (Year 1983-84 to Year 2013-14) Compiled by BGMEA

Table 04: VALUE OF TOTAL APPAREL EXPORT FISCAL YEAR BASISYEARTOTAL APPAREL EXPORT IN MN.US$

WOVEN KNITTOTAL

1992-19931240.48204.541445.02

1993-19941291.65264.141555.79

1994-19951835.09393.262228.35

1995-19961948.81598.322547.13

1996-19972237.95763.303001.25

1997-19982844.43937.513781.94

1998-19992984.961035.024019.98

1999-20003081.191268.224349.41

2000-20013364.321495.514859.83

2001-20023124.821458.934583.75

2002-20033258.271653.824912.09

2003-20043538.072148.025686.09

2004-20053598.202819.476417.67

2005-20064083.823816.987900.80

2006-20074657.634553.609211.23

2007-20085167.285532.5210699.80

2008-20095918.516429.2612347.77

2009-20106013.436483.2912496.72

2010-20118432.409482.0617914.46

2011-20129603.349486.3519089.69

2012-201311039.8510475.8821515.73

2013-201412442.0712049.8124491.88

Data Source Export Promotion Bureau (Year 1992-93 to Year 2013-14) Compiled by BGMEATable 05: BANGLADESH'S RMG EXPORTS TO WORLD, FY 2012-13 & 2013-14

Value in Million US$

MonthALL COUNTRIES

WovenGrowth RateKnitGrowth RateTotal(Woven + Knit)Growth Rate

YearYear

2012/132013/142012/132013/142012/132013/14

July993.841262.3827.021001.071253.7625.241994.912516.1426.13

August765.85796.053.94792.53848.157.021558.381644.205.51

September697.17985.2641.32746.231058.2941.821443.402043.5541.58

October761.48820.497.75873.16862.01-1.281634.641682.502.93

November710.04889.3525.25653.96877.6134.201364.001766.9629.54

December1042.681229.9817.96908.941048.8715.391951.622278.8516.77

January1147.641195.24.14944.961045.8310.672092.602241.037.09

February979.711049.647.14811.24915.7612.881790.951965.409.74

March991.77993.370.16854.68920.697.721846.451914.063.66

April835.17944.9513.14795.11972.3822.301630.281917.3317.61

May997.721092.269.481008.371115.7210.652006.092207.9810.06

June1116.781183.145.941085.631130.744.162202.412313.885.06

Total: 11039.8512442.0712.7010475.8812049.8115.0221515.7324491.8813.83

Data Source Export Promotion Bureau (FY 2012-13 & 2013-14) Compiled by BGMEA