Building blocks of creating a High-Performance Culture – In a Family Owned Textile Business

Initiatives taken ina Case Company that helped in transformation:

The Case Company has operated in a conventional way since the last 4 decades, resulting in employees with a fixed mindset and conducting transactions without systems. This ultimately resulted in more people-dependent decision-making throughout. This is generally a norm in family-owned textile businesses which worked well in the past when net profit margins were higher. Eventually increases in oil prices, an increase in competitors with more focus and lower costs and global recession resulted in a decrease in buying power of the industries, cheaper alternatives for end-consumers, and organizations which started downtrading to cheaper options. China capitalized on this opportunity and provided low-cost solutions by developing economies of scale. This adversely affected Pakistan’s textile sector which operated in an unstable political and security environment with an energy crisis, high utility cost, and a decrease in margins drove a lot of companies out of the business as they remain uncompetitive.

For the case company, what this refers to is the lack of structured development of organizational and people capacity. However, the major shareholders and founding fathers of the company decided to bring about a change that would ensure the organization continued to drive and grow sustainably over the next four decades. To stay competitive, the Case Company, took very bold transformational initiatives where at the first stage they focused on correcting structures followed by taking tough calls on people. Professional management was hired to drive organizational transformation resulting in converting the company and bringing it to par with leading private companies and multinationals. Below is the transformation scope that impacted employee engagement in a few of the business units covered:

• Driving Pay-for-Performance Culture
• Bringing operating efficiencies
• Rationalization of structures and reporting
• People related to focused decisions
• Creating a learning organization
• System thinking; less reliance on people-related decisions

To achieve the above, numerous changes were also driven to business fundamentals such as, simplifying product types where the number of SKUs was significantly reduced, reducing the complexity of the mix, adjusting margins on products, merging business units, introducing ERPs, governance models and planning tools, transferring products to units where they can be manufactured more profitably thus transforming the overall business dynamics and leading a strategy that encompassed greater focus on people development, aligning people performances through structured processes and systems, empowering teams. The greater focus on people possibly led to higher levels of Employee Engagement which independently had a significant impact on overall business fundamentals in terms of productivity, rejection rates, safety incidents, and overall profitability.

How it can be replicated?

Some common key traits can be seen in highly engaged teams and can be implemented in family-owned businesses to bring a structured change. 5-pronged model is developed by Gallup which is elaborated with respect to the topic:

1. Consistent systems and procedures: When organizations have fair, transparent and consistent systems and procedures, there is less dependence on people-related decisions. This ensures continuity of the organization, sustainable delivery of results and consistency in terms of making decisions at different times. This brings procedural justice to the organization rather than distributive justice, where people are engaged with the process rather with the outcomes.
2. Authority to take decisions: Being able to take strong decisions is one of the key pain points for organizations. Line Managers and individual contributors struggle in terms of taking timely, tough, and correct decisions, having systems and processes may make it better. Additionally, the authority and autonomy to take decisions also matter. In family-owned businesses, critical decisions lie with the owners which they do not cascade down to employees as they like to remain in control. The mindset in such businesses is that of an entrepreneur with the primary concern to earn higher amounts of profit.
3. Performance management systems that distinguish superior performance: Organizations have limited resources, especially when it boils down to passing on benefits to employees in the form of increments or Variable Pay Plan. To distribute rewards in employees, a fair and transparent performance management system is key. Where employees set quality objectives, have formal and informal progress review protocols, effective evaluation, and feedback mechanisms, all theselinks to differentiating low, average, and top performers in terms of rewards payout.Most organizations in Pakistan lack such systems, and especially in the textile sector it is common to find immediate rewards based on short term achievements, with a lot of discretionary options given to the Line Managers. This creates a culture of favoritism or unconscious bias, resulting in low employee engagement.
4. Received adequate training: Creating a learning organization is the need of the time. There is a fundamental philosophy of Ken Blanchard “All employees want to and can be developed”. Most employee development is carried out through interventions related to trainings. As per global data from Strategic Human Resource Management (SHRM), 70% of the development comes from experiential learning, which is on the job training, 20% of it is the experiential/relational and 10% consists of training (functional/non-functional). Employees value classroom trainings and hence the company’s also focus only to get ready-made training programs or hire fancy trainers to deliver training programs which translates into short term engagement but has minimum ROI. The focus should be on identifying the right development needs for employees with respect to the positions, through a combination of development interventions.
5. Well informed about decisions that impact: Communication and information exchange is a very strong tool, which if managed effectively can contribute greatly in terms of effectively managing Employee Engagement. Information about company’s financial performance, key performance indicators, market dynamics, company’s direction, key challenges and employee’s own performance should be communicated through structured forums, few could be town halls, line manager feedback sessions, emails etc.

Hassan Hashmi
Head of HR Pakistan & Bangladesh
Midas Safety Careers

Hassan is a HR Professional, who has spent the past 17 years in the HR field working with top manufacturing companies. He remained involved as a critical HR practitioner and led various operational and change management initiatives which helped organizations transform and improve their bottom-line.