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Final Report

Managing People for High Performance

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Submitted to:

Sir.Nabeel Arif

Submitted by:

ShahidNadeem (RMBA Fall 12-025)

Hassan Salman (RMBA Fall 12-022)

Muhammad Saleem (RMBA Fall 12-023)

ShanzaMehmood (RMBA Fall 12-037)

Muhammad Azeem (EXMBA Fall 10-026)

Date of submission:

29th

May, 2014

Institute of Business & Management

University of Engineering & Technology

Lahore

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Table of Contents Dedication....................................................................................................................................... 3

Acknowledgement ......................................................................................................................... 4

Executive Summary ........................................................................................................................ 5

Organizational Structure ............................................................................................................. 7

Organogram – Hosiery ................................................................................................................... 8

Project Background ........................................................................................................................ 9

Decision Making ......................................................................................................................... 9

Suggestions / Strategies for Improvement ................................................................................. 10

Decentralized Structure............................................................................................................ 10

ERP Training .............................................................................................................................. 11

Job Rotation and Effective Planning in Task Design................................................................ 11

Performance Management ...................................................................................................... 11

Justice & Equity ............................................................................................................................ 12

Grievance Redressal System .................................................................................................... 12

Performance Management System ............................................................................................. 13

Strategy Map for Interloop .......................................................................................................... 16

Competencies ............................................................................................................................... 18

Balance Scorecard ........................................................................................................................ 19

Comparison of Stated Versus Achieved Score of Objectives .................................................. 21

Actual Performance .................................................................................................................. 22

Targets....................................................................................................................................... 22

Graphical Presentation of Balance Scorecard Scores ................................................................. 23

Financial Perspective ................................................................................................................ 23

Comments ................................................................................................................................. 24

Customer Perspective............................................................................................................... 25

Comments ................................................................................................................................. 26

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Internal Perspective ..................................................................................................................... 27

Comments ................................................................................................................................. 28

Learning & Growth Perspective ................................................................................................... 29

Comments ................................................................................................................................. 30

Conclusion..................................................................................................................................... 31

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THIS REPORT IS

DEDICATED TO OUR

RESPECTED

TEACHERS AND

BELOVED GRAND

PARENTS.

Dedication

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Acknowledgement

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Executive Summary

This report is analysis of Interloop, one of the world’s largest socks manufacturer with an annual

company turnover exceeding $200 million, to identify its elements of high performance work

system. Organizational structure, Information system, Task design, Reward system, People

(selection, training and development), Justice and equity are few aspects critically analyzed in

this regard.

The effects of these defined elements on productivity and efficiency, Contribution to cost,

product quality, customer satisfaction, employee turnover, learning organizations on Interloop

are also investigated. Our team has recommended few solutions / strategies to these identified

key issues which arehampering growth of Interloop. We are very optimistic that Interloop will

overcome these hurdles if they apply these strategies in true sense.

Moreover, we have critically analyzed Performance Management System of Interloopand tried to

present our understanding of this system.

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Company Introduction

Interloop started out in 1992 with just 10 knitting machines, now has 2300 machines and a

workforce of more than 13500. Interloop Limited has transformed itself into South Asia’s largest

Socks Manufacturer and Exporter offering the highest quality socks at a level of service

unknown in our industry. It is located in Pakistan's Industrial hub Faisalabad and Lahore.

Interloop is an integral part of this business community, continuously striving to revolutionize

business practices in this region.

Interloop is a complete vertical unit offering a wide range of price points and needle counts and

is on the cutting edge in terms of the latest technology for each production process. They believe

their success is due to a highly focused concentration on quality and speedy turnaround, a

combination which increases its customers' edge in a highly competitive marketplace. In

pursuance of its goal to achieve and maintain good quality, Interloop set up a High-Tech

Spinning Unit that will ensure finest quality yarn made from the best available natural cotton.

This project has enhanced the value of money for our customers by offering even more

competitive rates to its clients.

Hard work and utmost commitment from its employees and management, strict Quality Control

Measures, timely Shipments and reliable Service Standards have been paramount towards

Interloop's phenomenal growth. It is one of the very few firms in Pakistan with an impressive

Social Responsibility Portfolio, realizing that a commitment to sustainability in all areas of

commercial activity endorse the long term interests of a business.

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Organizational Structure

Inter Loop Company follows vertical policy making system. All the goals and strategies are made by executives of the company. Their executive bodies are responsible for that all. The lower management performs operational tasks. The planning is done from top to bottom in

vertically direction.

Following structure is indicating how activities such as task allocation, coordination and

supervision are directed towards the achievement of organizational aims. When organization

structure and design change it impact on the organizational culture and also on the management

policies and practices too

Chief Executive Officer

Chief Operating

Officer

PPC (Sr Manager)

Operation HD 01 (DGM)

Operation HD 02 (DGM)

Processing (DGM)

QAD (DGM & Q&M)

Organizational Development

MIS (DGM)

EHS (Manager)

Productivity improvement (Consultant)

Director Technical

Engineering (Sr Manager

Administration (GM)

HRD (DGM)

Director Finance

Finance

Store (Sr. Manager)

Director Sourcing

Supplies

S & M (Sr. Manager)

Spinning (G M)

Executive Director I & E

Internal Audit

I & E (Sr Manager)

Merchandize DGM Q&M

Corporate

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Organogram – Hosiery

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Project Background We have identified issues in the system of Interloop mentioned in the last report submitted. Now

we are suggesting Interloop few strategies for removing and improving its system which are as

follows:

Decision Making Decision making in Interloop is centralized as shown in the following chain of command

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Suggestions / Strategies for Improvement

Decentralized Structure Interloop should use the model of TQM (from downward to upward) by decentralization and delegate the

power to the front level employees for making decisions to avoid any wastage and increase the efficiency.

Because any organization cannot grow unless the management delegate powers.

For example, an inspection executive receiving and inspecting raw material cotton bags in huge quantities

should have authority, after consultation with immediate supervisor, to accept or reject particular type of

product. The same procedure should be used for finished goods delivery to avoid any kind of delay.

Recommended decentralized chain of command is as follows:

Team

Members

Supervisors

Coordinators

Executive

Manager

Assistant

Manager

Senior

Managers

Managers

General

Managers

CEO

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ERP Training Interloop must schedule ERP training sessions for selected employees recommended by department heads

with regular interval for optimal utilization of ERP. Once implemented thoroughly, Interloop can save

huge amount of cost which can used in other development projects.

ERP user manuals should be available in every relevant department for references purpose.

Job Rotation and Effective Planning in Task Design The management reliance on particular employee for completing any task can be minimized by

rotating employees on different areas of departments. Every personnel of department should

know responsibilities of every employee to avoid any delay. This will help them in following

ways:

o Decision.It will improve tactical-level decisions throughout the Interloop. It will also

remove many small decisions from senior management, which therefore has more time to

develop strategic direction.

o Speed. Since there are fewer layers of bureaucracy in a decentralized structure,

Interloopwould be able to make decisions more quickly, which is useful in a highly

competitive environment.

o Turnover. Employees who are given more authority tend to stay with aInterloop longer,

so employee turnover declines.

o Training. Giving some authority to local managers is an excellent way to observe their

decision-making ability, which can be used to determine advancement to higher

positions.

o Wide span of control. There is less need for middle managers, since many employees can

report to fewer managers. This reduces overhead costs.

Task assignment and planning should be done in sucha way that no employee gets

overburden for achieving targets.

Performance Management

Interloop should implement well acquired Performance Management System (analyzed later) to

avoid any kind of biasness like recency effect, personal biases has been seen in Interloop.

Interloop must developa system of evaluation which involves employee himself/herself for feedback and

ultimately it will enhance their motivation level.

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Justice & Equity

Grievance Redressal System

We are suggesting Interloop a Grievance Redressal System to resolve differences in peaceful, orderly and expeditious manner.

It enables the parties to investigate and discuss the problem through

(i) Open-door policy

(ii) Step ladder type

(iii) Grievance handling committee

Steps in Handling Grievances

Interloop should follow the points mentioned below:

1. Receive and define the nature of dissatisfaction.

(a) Manner and attitude when complaint is received

(b) Acknowledging grievance – it will create a conducive work environment with instances

of grievance reduced.

(c) Assessment must be made that the complaint is presented fairly.

(d) Statement and issues must not be pre-judged.

(e) Proper time and attention is given.

2. Get the facts

(a) Facts are separated from impressions and opinions.

(b) Consult the policies.

(c) Consult the records.

3. Analyze the cause of grievance and decide alternative course of actions should be though to

manage it.

4. Execution and review

The manager should execute the decision quickly, ignoring the fact, that it may or may not hurt

the employees concerned.

5. Follow-up

After implementing the decision, a follow-up must be there to ensure that the grievance has been

resolved completely and adequately.

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Performance Management System

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Setting of Personal Objective / Personal Performance Plan

Goals are determined for each personnel of departments at the start of year till 30th January. The

following factors are considered while setting goals for individuals:

Look at your business and departmental goals

Identify where you could deliver results to support your business and department

Create SMART objectives and development of actions

Use the success factors as a reference in creating development of actions

Discuss and agree your personal objectives and development of actions for the

year with your manager

Ensure your agreed objectives and development of actions are recorded on your

P&D Dialogue paper

Performance Dialogue I

This supervisor / head dialogue is for reviewing the objectives to assess progress and adjust if

necessary, based on changing business needs or priorities.Coaching the individuals if required.

The period of dialogue is from 1st to 10th of April every year.

Mid Year Performance Management Review Meeting

The period of midyear performance management review is from 20thto 30th of June every year

which consists of following points:

Internal audit of performance

Hold frequent informal feedback, discussion with your manager throughout the

performance year

Hold a more formal dialogue with your manager in the middle of the year

Review your progress on objectives and development of actions

Discuss long term development plans

Performance Dialogue II

This performance dialogue longs from 15th to 30th of September every year to discuss following

matters:

Review progress and accomplishments

Evaluate performance against the objectives agreed upon

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Final Year Performance Management Review Meeting

Internal Audit of Performance

o Manager collects feedback, assesses results interms of objectives, progress on the

development actions and the employees’ level of competence for each of the

success factors

Performance Review

o Manager decides on an overall proposed performance rating and passes this to the

next higher manager for review.

o Next higher manager discuss with their team the proposed ratings and overall

department distribution in a calibration process.

o Manager and employee hold the year-end discussion on results, development

progress, level of competence on the success factors and overall rating.

o Manager finalizes and signs the form, sends it to the employee for comments and

signature.

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Strategy Map for Interloop

The following diagram shows how integrated and interdependent are different departments in an

organization to achieve its objectives. Like:

Interloop staff is trained in Balance Scorecard to utilize knowledge base effectively and

to create mobile workforce which helps in enhancing customer satisfaction and improve

customer awareness about our offers. Consequently, this stepimproves customer

satisfaction boasts each project’s profitability.

All fresh hiring / graduates / employees are assigned a mentor for counseling, couching,

training etc. which will develop staff on-board process, enhance customer awareness and

therefore reduces overhead cost.

This couching proves Interloop to be a great place to work that result into improving

consultant utilization, customer awareness which ultimately reduce overhead cost of the

plant.

This strategy map clearly depicts interdependence of each division which ultimately leads

towards increase profitability and reducing overhead cost of the firm.

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Financial

Customer

Internal

Learning & Growth

Increase Project Profitability Reduce Overhead Cost

Improve Customer Satisfaction Improve Customer Awareness

Better Use of Knowledge Base Improve Staff on-board process Improve Consultant Utilization

Create a mobile workforce Automate Invoice Processing

All Staff Trained in Balance Scorecard All Graduates have a Mentor A great place to work

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Competencies

Interloop has divided competencies to evaluate its employeeswhich are as follows:

Core

Integrity

Respect

Accountability

Technical

Ability to ensure timely production and output of work,

Maintaining consistent quality

Managerial

Interpersonal Skills: (establishing desired communication / cordiality with

subordinates/peers/superiors, ability to train and develop subordinates)

Leadership: (intelligence/common sense, maturity & confidence, expression(verbal &

written) and Dependability

We have analyzed competencies or evaluated followingemployees’ performance during the

period of project visits.

1. Mr. Mujahid Abbas HR Generalist

2. Mr. Babar Saeed Assistant HR

3. M. Farooq Assistant Manager operation

Moreover, we have attached evaluated reports of these employees for your reference.

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Balance Scorecard

Interloop is working on the following objectives to alignbusiness activities to its vision and

strategy, improve internal and external communications, and monitor overall performance

against strategic goals.

It provides a framework that not only provides performance measurements, but helps Interlooop

planners identify what should be done and measured. Moreover, it enables executives to truly

execute their strategies.

Financial Perspective

Increase Project Profitability

o Projetcs greater than 250 million

o Operating Profit

o % Operating Profit

Reduce Overhead Cost

o % overhead to revenue

o Sales people trained in software

Internal Perspective

Better use of knowledge base

o Number of items in database

o Number of hits to database

o Total Number of Industry template

Improve staff on-board process

o % staff through company induction

o Cost to crecruit per head

Improve consultant utilization

o % consultant utilization

o No. of new projects found

Create a mobile workforce

o Sales staff issues with iPads

Automate invoice processing

o Days taken to issue an incoice

o Number of bad debts issued

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Customer Perspective

Improve Customer Satisfaction

o % Satisfaction Surveys complete

o Satisfaction Survey score

o Consultant days on customer site

Improve Customer Awareness

o Position 1 in Google search

o Number of customer meetings

Learning & Growth Perspective

All staff trained on Balance Scorecard o Number of courses booked o Number of courses attended

o Total number of staff trained

All graduates have a mentor

o % graduates with a mentor o Number of consultants mentoring

A great place to work o Employee staisfaction score

o Number of CVs received

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Comparison of Stated Versus Achieved Score of Objectives

The Annex-I is explanation of objectives in more detail and comparison of stated versus

achieved targets in terms of scores.

According to the Annex-I, Interloop has successfully exceeded the target in enhancing

project profitability and performed reasonably well in Financial Perspective.

Interloop has surpassed the targets in improving its customer awareness and performed

very well in enhancing customer satisfaction as shown by figures in Annex-I.

Moreover, the information in Annex-I reveals effectiveness of internal perspective of

Interloop managed to meet some targets but needs a lot of improvements in this area

particularly delegation.

Furthermore, Interloop has excelled in learning and growth perspective except number of

consultants appointed for mentoring and number of CVs received which needs

improvement as per data menioned in Annex-I.

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Actual Performance

The Annex-II shows the actual performance in each of the perspective of Balance Scorecard shown by

Interloopin meeting its objectives. It has proved itself as we comapre achievments with targets.

Targets The Annex-III explains as figures are goals set by Interloop management to grow and get

competitive advantage in its market.

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Graphical Presentation of Balance Scorecard Scores We have analyzed each of the perspective separately and shown in graphically to understand it

thoroughly.

Financial Perspective

Objective: Increase Project Profitability

Month

Actual

Target

%Achieved

April

0

1

0%

May

1

1

100%

June

1

1

100%

July

2

2

100%

August

2

2

100%

September

2

October

3

November

3

December

3

January

4

February

4

March

4

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

Actual

Target

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Comments August: After a poor start the financial are picking up with a general trend upwards. Need to

recognize the workforce is over utilized.

Performance Analysis

Their consultants are putting a lot of effort into the area often to expenses of other activities.

Sales are also working hard in this area with good results; however the overhead cost is too high

for the business.

Recommendation

They need to get the balance correct between activity on project greater than 250 million and

smaller project work. The key is in training for both their sales team and consultants.

Recommend they increase the training programs.

Strategic initiatives

Create a training program for sales

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Customer Perspective Objective: Improve Customer Satisfaction

Month Actual Target %Achieved

April 85% 90% 94%

May 87% 90% 97%

June 90% 90% 100%

July 92% 90% 102%

August 88% 90% 98%

September 90%

October 90%

November 90%

December 90%

January 90%

February 90%

March 90%

0.8

0.82

0.84

0.86

0.88

0.9

0.92

0.94

Actual

Target

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Performance Analysis

Customer satisfaction has been good and on the rise until this month. The sharp dip may indicate

that they have a problem with one or two customers however, it should be noted that they are

still well within target parameters.

Recommendation

Suggest they ask their account managers to work more closely with customers and spend more

time on customer site.

Strategic Initiatives

Account managers to spend more time on customer site

Comments

August: General trend is upwards however they are seeing a sharp decline this month. May be

connected to over- utilization.

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Internal Perspective Objectives

Better use of knowledge base

Improve staff on board process

Improve consultant utilization

Create a mobile work force

Automate invoice processing

Metrics

Number of items in database

Number of hits to database

Total number of industry templates

Objective: Better use of knowledge base

Month Actual Target %Achieved

April 22 27 81%

May 23 28 82%

June 23 29 79%

July 24 30 80%

August 24 31 77%

September 32

October 33

November 34

December 35

January 36

February 37

March 38

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Comments

August: Generally below target, they are not recruiting fast enough and existing staff have too

many roles

0

5

10

15

20

25

30

35

40

Actual

Target

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Learning & Growth Perspective Objectives:

All staff trained in balanced scorecard

All graduates have a mentor

A great place to work

Metrics

Number of courses booked

Number of courses attended

Total number of staff trained

Objective: All staff trained in balanced scorecard

Month Actual Target %Achieved

April 0 0

May 2 3 67%

June 1 3 33%

July 4 3 133%

August 3 3 100%

September 3

October 3

November 3

December 3

January 3

February 3

March 3

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Comments August: After a good recovery in July they are seeing another decline in august. Focused

attention must be placed on training programs.

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

Actual

Target

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Conclusion

Interloop has founded highly structured automated system which can only be beneficial in the long run if

they follow it sincerely and improve it continually. We have identified some weaknesses and suggested

improvements in the above explanation. Training to its employees regarding this automated system is the

key to its growth.

We have examined Performance Management System, Strategy Map, performance in terms of Balance

Scorecard actual versus target objectives in the form of statistics and graphically too. Interloop has

performed very effectively in Financial, Learning & growth perspectives of Balance scorecard while they

have performed average in Customer perspective and need improvement in Internal Perspective.