ASIAN CASE RESEARCH JOURNAL, VOL.

9, ISSUE 1, 61–81 (2005)

ACRJ
Performance Challenges at
This case was prepared by
Dr Zafar Iqbal Qureshi of the Masood Textile Mills
Lahore University of Man-
agement Science as a basis
for classroom discussion rather In early November, 2001 on a cool, breezy morning in
than to illustrate effective Faisalabad (Pakistan) Shahid Nazir, CEO of Masood
or ineffective handling of
an administration or business Textile Mills (MTM), sat at his desk and reflected on the
situation. highly competitive environment that his company operated
Please address all corre- in. According to the World Trade Organization (WTO)
spondence to: Dr Zafar Agreement, 1994, on Textile and Clothing, special protection
Iqbal Qureshi, Visiting Pro-
fessor, Lahore University of for textiles would be phased out by 2005, and in these
Management Sciences, Opp
Sector U, DHA, Lahor Cantt. changed circumstances, only those producers who were cost
54792, Pakistan. E-mail: and quality conscious would survive as exporters. Aware
zafar@lums.edu.pk.
of the emerging situation, Nazir wanted to enhance the
competitiveness of his company.
To realize his aim, Nazir decided that he had to trans-
form his employees into ‘corporate athletes’ by enhancing
their physical, emotional and mental capacities. He knew that
his employees were a valuable asset and that their enhanced
abilities would contribute significantly to his organization’s
effectiveness and towards achieving his mission for MTM.
Earlier in the year, results from employee surveys and
focus groups on performance appraisal had showed that
the performance evaluation system was perceived by the
employees to be inadequate and that they had little faith in
it. In addition, employees considered it to be a bureaucratic
system with no employee participation encouraged in goal
setting or self-assessment. As appraisal did not necessarily
translate into promotion and other expected rewards, it
created a culture where communication was poor between
the upper and lower levels of management. This, in turn, was
creating problems of commitment and motivation amongst
the employees.

© 2005 by World Scientific Publishing Co.

62 ACRJ

Nazir understood the probable impact of these issues

on the performance of his company, and decided to con-
front them immediately. He knew that in order to meet the
stringent productivity and quality standards set by the buyers,
enhancing the motivation and commitment of his employees
was vital. Keeping in mind his customers’ demands and the
flaws in the present performance appraisal system, the CEO
and his management team developed a Performance Reward
System (PRS) which according to them would compensate
employees on the basis of their performance and so enhance
their motivation and commitment.
Nazir had planned to introduce the proposed system
in September 2001, but the political events following 9/11
and the global economic downturn put a severe stress on
the textile industry of Pakistan which saw a general slump
in exports. To deal with the immediate crisis at hand, the
implementation of the new PRS was temporarily delayed.
Nazir was concerned about the impact of the slump
on his business as well as on the morale of his employees.
He realized that it was vital to introduce changes in the
evaluation process in order to improve the credibility of
the appraisal system, linking it with merit increments and
promotions with a view to boosting employees’ morale and
managing the current crisis. He hoped to see these changes in
place by the middle of 2002.

PAKISTAN’S TEXTILE INDUSTRY

The textile industry had played an important role in the

economic development of Pakistan and was the largest
industrial sector in terms of investment, employment of labour
and exports. It accounted for 64 per cent of Pakistan’s export,
46 per cent of employed industrial manpower, and 8.5 per cent
of GNP. The period between 1980 and 2001 had witnessed a
vast growth in the industry.
Despite its impressive contribution to Pakistan’s
national economy, the textile industry’s share in world
export of textile and clothing (especially in clothing) was
insignificant due to its low competitiveness. In spite of its
 PERFORMANCE CHALLENGES AT MASOOD TEXTILE MILLS 63

fluctuating fortunes, the industry had managed to maintain a

stable performance (see Exhibits 1 and 2).
Apparel exports were a new addition to the industry
and its share in the total merchandise export of Pakistan was
about 22 per cent. Internationally its share was at 1.0 per cent
in 1997 (see Exhibit 2).
In 1994 during the WTO’s Uruguay Round it was
decided that trade in textiles and clothing would be
completely liberalized and all restrictions would be totally
eliminated by 2005. This would make trade more challenging
and competitive, as there would be no guarantee in the form
of quotas for Pakistani exports.1 This would be an excellent
opportunity for those firms that could build a competitive
edge based on productivity, quality and cost to emerge as
winners in an open global economy.

COMPANY BACKGROUND

Masood Textile Mills (MTM) was a Public Ltd Company

located in Faisalabad which was about 360 km south of the
capital Islamabad. Faisalabad was an industrial city and was
also known as the ‘Manchester of Pakistan’ due to its many
industrial units and more importantly due to its contribution
to the textile industry of Pakistan.
MTM was a vertically integrated unit, comprising of
spinning, knitting, dyeing and stitching facilities. It began in
1986 when Chaudhry Nazir (Nazir’s late father) bought three
spinning units and, later an additional unit in 1998. Due to
the success of his spinning business, Chaudhry Nazir set
up a knitting facility in 1989 and a dyeing plant two years
later. MTM’s apparel division became operational in 1995
with a stitching facility of 35 machines, 15 permanent and 35
contractual employees and produced 20,000 pieces of clothing
per month.

1A. Malik, “Demand for Textile and Clothing Exports of Pakistan”, Pakistan Institute
of Development Economics, 2000.
64 ACRJ

Over a span of seven years, MTM acquired 800

machines and had a monthly production of 40,000 dozen
fashion garments such as Polo, Rugby and Henley shirts;
along with basic garments such as crew-neck t-shirts, sweat
shirts and boxer shorts.
Over time, MTM invested heavily in the training and
development of its employees. A team of MBAs and textile
and industrial engineers were working at various levels in
Marketing & Merchandising, Operations, and Production &
Quality Control departments. Nazir believed that this long-
term investment in human capital would give MTM an
advantage in meeting the challenges of the 21st century.
In 2001 MTM ranked among the top three textiles
and apparel manufacturers in Pakistan in terms of its annual
turnover and brand profile; it had also achieved an annual
turnover of US$28 million. The company was currently
marketing knitwear products to premium international brands
such as Ralph Lauren, Calvin Klein, Gap, and Nautica.

THE CEO’S PROFILE

Nazir was born in 1964 in Faisalabad. He graduated from

Atchison College which was one of the best institutions in
Pakistan. He did his master’s in business administration in
the UK and attended several management development
courses at the Rausing Executive Centre at the Lahore
University of Management Sciences in Pakistan. After his
father’s death in 1993, Nazir at the age of 29 years became the
CEO of Masood Textile Mills.
Nazir had other business ventures as well apart from
MTM. He owned Kohistan Transport; Kakakhel Oil Mills
which was leased to Rafhan Best Foods and was the Coke
bottler in Faisalabad. In addition to his business interests,
he was active in politics and was elected a Member of the
National Assembly in 1993. However, he soon left politics so
that he could concentrate on his business and add value to
his company, which was a source of income for about 5,000
families.
 PERFORMANCE CHALLENGES AT MASOOD TEXTILE MILLS 65

MTM’S ORGANIZATION STRUCTURE

MTM consisted of various departments: Production,

Finance, Merchandising, Information Technology (IT),
Human Resource (HRD), Procurement, and Production
Planning and Control (PPC). The factory floor contained
the Cutting and Production Floor which further included
the Stitching and Quality Control departments. The PPC,
Procurement and Stores acted as support services for the
Production department only, while HRD, IT and Finance
were support departments for the whole of the Garment
Division (see Exhibit 3).
There were two general managers (GM), who were
assisted by managers of various departments. One general
manager headed the MTM Garments Division and the other
headed the Spinning Mill and both reported to the CEO.
The GM of the Spinning Mill was Nazir’s younger brother,
Yasir who had just returned from the US after completing his
master’s degree in business administration.
The GMs independently reported to the CEO, as did the
Finance Director. The Director of Finance was responsible for
the entire MTM Group (Mills and Garment Division) whereas
the GMs were only concerned with their respective divisions.
Although the Marketing Manager formally reported to the
GM Garment Division, most of his interaction was with the
CEO, since he also led the marketing function (see Exhibit 3
for MTM’s partial organizational chart).

MANAGEMENT STRUCTURE

At MTM, the management was divided into four categories;

M1 being the highest tier and M4 the lowest. The production,
marketing and IT managers were in M1 and their salary was
above Rs40,000 per month.
M2 comprised the top five department managers, with
salaries ranging between Rs24,000–37,000 per month. M3 had
13 assistant managers from the production, quality control,
purchasing, merchandising and procurement departments.
66 ACRJ

Table 1. Payroll Cost of the Garment Division Managerial Staff

(Pak Rupees)

No. of Staff at Average Salary Total Monthly Average Annual

Level
Each Level Per Month Salary Salary

M1 3 45,000 135,000 1,620,000

M2 5 32,000 160,000 1,920,000

M3 13 16,000 208,000 2,496,000

M4 23 13,000 299,000 3,588,000
Total 802,000 9,624,000
Source: Corporate documents.

Their monthly salaries ranged between Rs7,200 and 22,000.

M4 had 23 functional support staff such as merchandisers,
management trainees and unit managers, with salaries in the
range of Rs8,000–19,000 per month.
Keeping this in mind Nazir wondered whether MTM’s
management structure needed to be rationalized or not.
The M4 layer was added when the management felt
that the company had too many ‘technical’ managers. Hence
Unit Managers with MBA degrees were inducted and were
expected to liaise between the upper management and the
production units.
Skilled and unskilled workers formed the non-
management cadre and were divided into four categories
from S1 to S4. S1 had 91 supervisors with salaries ranging
from Rs2,700–12,600, while S2 had 82 operators, auditors
and inline and final inspectors with monthly salaries ranging
from Rs2,400–10,000.
S3 consisted of 243 employees covering assistants,
packers, security guards and quality observers. Their salaries
were in the range of Rs2,050–7,800. S4 had 191 support staff
such as helpers, sweepers etc. and their take home salaries
varied from Rs2,000 to 5,000 per month.
 PERFORMANCE CHALLENGES AT MASOOD TEXTILE MILLS 67

Table 2. Payroll Cost of the Garment Division Non-Managerial Staff

(Pak Rupees)

No. of Staff at Average Salary Total Monthly Average Annual

Level
Each Level Per Month Salary Salary

S1 91 7,000 637,000 7,644,000

S2 82 6,000 492,000 5,904,000

S3 243 4,000 972,000 11,664,000

S4 191 3,000 573,000 6,876,000
Total 2,674,000 32,088,000
Source: Corporate documents.

PERFORMANCE APPRAISAL SYSTEM

The performance appraisal system at MTM was only applicable

to salaried employees on an annual basis and formed the
basis for determining the employee’s annual raise. However,
the final decision on the annual raise was also influenced
by the employee’s grade and length of service. The annual
increment for skilled and unskilled workers was, in general
between 5% and 6% of their base salary; for supervisors
8–10% of their base salary; for Unit managers a minimum of
10%; and for senior managers, between 12–15% of their base
salaries. If employees exceeded their targets for the year,
their increment could be doubled or tripled on the discretion
of the upper management. This appraisal system had been in
practice for the past year and a half.
In spite of these percentages, the supervisors and
skilled and unskilled workers were dissatisfied with merit
increments since they felt that the increments were based
on management discretion rather than on an objective
appraisal system. Concern was also raised about equity and
fair play in the award of merit increments. There were other
concerns as well such as: the logic behind the difference in
salary ranges for different categories; the confusion over why
employees performing in the same category, be given the
68 ACRJ

same raise if their salary range varied from the minimum to

the maximum.
Nazir understood that something had to be done to
answer these concerns and to remove this feeling of inequity
in the award of merit increments.
In MTM two tools were used to evaluate employees:

i) Employee Evaluation Form (EEF)

The employees’ immediate supervisor filled out the Employee

Evaluation Form and forwarded it to the Human Resource
department. Two separate forms were used for appraisal
— one for the supervisory level and above and the other for
skilled employees and below (see Exhibits 4 and 5). The former
was more of a behavioral indicator where the management
was rated on a scale of 1 to 10 on skills such as systems
oriented approach, ability to utilize resources, communication,
co-operation, initiative, professional skill, organization/
discipline, administrative ability and reliability.
The latter form measured behavioral aspects of skilled
and unskilled workers, where they were rated on a scale of
1 to 10 on versatility/experience, company policy awareness
and implementation, compliance, issues awareness, attitude,
initiative, communication and intelligence. The more objective
performance measures were those of quality or workmanship,
target orientation and punctuality.

ii) Quality Assurance Rating (QAR)

The QAR was applicable to Inline and Final Inspectors at MTM

(see Exhibits 6 and 7). The job specification of these inspectors
was to check the quality of fabric/garments at each stage of
the production process and set aside those that needed re-
work or those that were to be discarded. A QAR rating was
given as a final, stringent check on the quality of the audited
garment pieces and had a 5% threshold of acceptance for
inline inspectors. Since the prospect of finding defects was
 PERFORMANCE CHALLENGES AT MASOOD TEXTILE MILLS 69

reduced after inline inspectors checked the fabric/garments

— the threshold for final inspectors was raised to 6.5%.
Evaluation of quality inspectors was carried out on
a quarterly basis. The QAR received each month had a
60 per cent influence in determining the inspectors’ annual
increments along with 40% more assigned to the results based
on EEF which was done annually. If it was discovered that
an inspector had consistently maintained a high percentage
of defects (5 per cent for inline inspectors and 6.5 per cent for
final inspectors — or higher — 3 times over three months),
he was penalized in the form of a demotion, which meant
reduction in grade and consequently a reduced increment
and salary. However, no penalty was imposed if it was
found that the defects had resulted due to factors beyond the
inspector’s control.

CHALLENGES

The discrepancy in raises for different levels of management

posed many questions. The CEO knew that a system had
to be devised to address the negative effects of the system.
Other problem areas were also apparent; the two forms used
to evaluate employees were lacking in objectivity making it
difficult to differentiate between high and low performers. As
the form measured behavioral aspects it was not performance
oriented; this led to the appraiser being biased and subjective
in the appraisal process.
In addition annual evaluations were too infrequent and
determined only a small percentage of annual increments.
It was also not clear what the criterion was for deciding
the remaining merit raises. An annual appraisal was not
sufficient for feedback purposes, as the evaluator could make
errors in judgment. The Performance Appraisal system could
be used for calculating bonuses and considering promotions,
but at MTM there was no formal link between performance
appraisal and performance based incentives.
The focus groups and surveys carried out indicated
that employees at the management, supervisor and worker
levels had no faith in the system and regarded it merely as
70 ACRJ

a formality, with no employee participation in goal setting

or self-assessment. Career progression was unclear, no
counseling was provided, and consequently the use of an
appraisal system which did not translate into promotion was
considered a futile exercise. Promotions were made on the
sole discretion of the appraiser as opposed to being linked to
annual appraisals.

CHANGES ADOPTED

Linking Performance Appraisal with Rewards

According to the results of a survey carried out at MTM,

money (compensation and rewards) and recognition of efforts
were identified as the two most important motivators for
employees at MTM. At present, there was no performance
based incentive system in the company; bonuses served
statutory requirements and were given irrespective of the
employee’s performance. The bonus scheme consisted of two
categories:

i) One month’s gross salary

It was a statutory requirement of Section 10C of the Labour

Laws of Pakistan that a company was liable to give bonuses if
its profits for the year were equal to or exceeded the amount
of total salaries paid each year. Accordingly, a bonus was
equal to two-thirds of the gross salary and the remaining
one-third was paid exgratia.

ii) 5% of profits

This again was a statutory requirement, since a company was

liable to pay its workers a bonus out of the ‘workers’ profit
participation fund’ each time the company made profits. This
bonus was paid to workers only.
 PERFORMANCE CHALLENGES AT MASOOD TEXTILE MILLS 71

THE PROPOSED SYSTEM

Keeping in view the flaws in the current appraisal system,

the CEO and his management team decided to develop a
Performance Reward System that would pay employees
on the basis of their performance, satisfy their mone-
tary needs and recognize/acknowledge their work (see
Exhibit 8). To achieve this objective, the management decided
to link performance directly with Purchase Orders (POs)
upon completion of which, rewards would be paid out to
employees and departments. It was also decided that reasons
such as a shortfall in the volume of garments; or a delay
in delivering a consignment which could cost the company
extra by shipping the order by air would get zero points for
the entire PO. Additionally, if an external auditor re-screened
a PO, it would be disqualified from receiving a reward. The
employees however did not agree and considered these
conditions to be rather stringent in earning performance
based rewards.
The reward amount was set at 0.05 per cent of the total
rupee value of the Purchase Order. Rewards were disbursed
based upon three factors (see Exhibit 8):

i) Responsibility factor

The responsibility factor was directly proportional to an

employee’s hierarchical level in the organization: managers
at higher levels would get higher rewards as they had greater
responsibility in the organization. Each level was assigned a
numerical value in order to ascertain the difference in rewards
due to this factor.

ii) Opportunity factor

The opportunity factor was established to further refine the

performance based reward system. This factor was defined
as the probability of earning performance reward by an
employee based on the assumption that work on 10 POs
72 ACRJ

would be done simultaneously. The opportunity factor,

therefore, was applied in ascertaining the number of POs
which an employee was working on.
The opportunity factor was further divided into
fixed and variable categories. The fixed opportunity factor
related to employees working in the services department
like Maintenance and PPC departments whereas the variable
opportunity factor was used to determine the performance
rewards of employees who were directly involved in the
production of a PO. This distinction between employees
of the service and production departments was viewed
by management as an incentive for production workers to
improve their rewards through improved productivity.

iii) Formula for reward

To calculate the performance based reward of an employee, a

formula was developed by the management:

Per Employee Share

= (contribution of the hierarchical level/
total number of employees in that hierarchical level]

It was proposed that a Board of Controllers (BoC)

would operate the PRS. The BoC would consist of managers
and deputy managers who would be responsible for selecting
the POs and the calculation of rewards. The BoC would then
forward its recommendations to the Board of Directors (BoD)
consisting of senior managers. The BoD was responsible for
analysis and verification of information provided by the
BoC, and for finalizing the recommendations of the BoC to
distribute the performance rewards.
Although the employees seemed satisfied with the new
system they were anxious about the complexity of calculating
the amount of rewards. The management on its part, however,
felt that their proposed system of determining performance
based rewards was detailed enough and would not cause
any concern to the employees.
 PERFORMANCE CHALLENGES AT MASOOD TEXTILE MILLS 73

THE FUTURE

Nazir decided to implement the proposed Performance

Reward System by the middle of 2002 for he was convinced
that it was an effective tool for performance management. He
also realized that it was vital for the company to introduce
reward schemes for the managers for better performance.
It was not just individual performance that mattered;
the performance of each department was critical for the
achievement of the company’s goals.
The issues that faced Nazir were how he could ensure
a successful implementation of the proposed Performance
Reward System and how he would measure the effectiveness
of the system in terms of the impact it would have on his
employees and the organization. Most of all, Nazir knew
that the realization of his vision warranted that he develop
his employees into ‘corporate athletes’. But would his new
PRS help in the fulfillment of his strategic intent? Or, did he
need to make other management interventions to enhance
the performance of his employees to keep MTM competitive
in the new competitive environment?
 74
ACRJ
Exhibit 1. Contribution of Textile and Clothing in the Total Exports of Pakistan

450000

400000

350000

300000

250000

200000

150000

Rupees in Million
100000

50000

985 986 987 988 989 990 991 992 993 994 995 996 997 998 999
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Years
Total Exports Textile Exports Clothing Exports
Source: International Trade Statistics (Various Issues); International Financial Statistics, yearbook (1997, 1999).
 Exhibit 2. Performance of Textile and Clothing Exports of Pakistan Internationally

200000

175000

150000

125000

100000

75000

(Million US$)
50000

25000

0
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
Years

Textile Exports World Textile Exports Pakistan

Clothing Exports World Clothing Exports Pakistan
Source: International Trade Statistics (1985–1997).
PERFORMANCE CHALLENGES AT MASOOD TEXTILE MILLS
75
 76
ACRJ

Exhibit 3. Performance Challenges at Masood Textile Mills

Partial Organizational Charts

CEO
Shahid Nazir
Director
Finance
Farooq Azam

General Manager General

Garments Div Manager Mills
Amer H. Khan Ghulam Abbas

Finance Marketing Administration Factory Asst. HR Maintenance IT Quality

Manager Manager Manager Manager Manager & Support Mgr. Manager Assurance Mgr.
Zafer Tayaab Masood Asghar Bhatti Atta Ullah Nasir Zia Asghar Bhatti Asad Ullah

PPC Production Quality

Manager Manager Manager
Shahzad

DPM DQM

APM AQM

Supervisor Inline
Inspector

Worker

Source: Company documents.

 PERFORMANCE CHALLENGES AT MASOOD TEXTILE MILLS 77

Exhibit 4. Employee Evaluation Form

MASOOD TEXTILE MILLS LTD (Apparel Division)

EMPLOYEE EVALUATION FORM
( For Supervisory Level & Above )

Employee Code/Name

Position Department

Evaluation (Annually) Employee “Output Rating”

System Oriented Approach Evaluation:- Score

Likes to work in accordance with defined
system including compliance issues 2 4 6 8 10
Ability to Utilize Resources Evaluation:-
Man, Machine, Material etc. & how much
cost conscious he is 2 4 6 8 10
Communication Evaluation:- Score
How clearly understands the instructions of
superiors & shares with subordinates 2 4 6 8 10
Cooperation Evaluation:- Score
Willingness to help others accomplish their
objectives 2 4 6 8 10
Initiative Evaluation:- Score
Voluntarily starting projects. Attempting non-
routine jobs and tasks 2 4 6 8 10
Professional Skill Evaluation:- Score
To blend jobs related education, skill,
experience and length of service with MTM 2 4 6 8 10
Organization / Discipline Evaluation:- Score
Organizes for prevention rather than
corrective measures 2 4 6 8 10
Perseverance / Stability Evaluation:- Score
Even temperament acceptance of unavoidable
tension and pressure 2 4 6 8 10
Administrative Ability Evaluation:- Score
Tactful, cool, understands situation and keeps
people satisfied 2 4 6 8 10
Reliability Score
Dependability and Trustworthiness
2 4 6 8 10
Summary
Evaluator comments Total Score

Employee Comments
Total
Max. Score
100

Employee Signature Date Evaluator Code/Signature

Source: Company documents.

78 ACRJ

Exhibit 5. Employee Evaluation Form

MASOOD TEXTILE MILLS LTD (Apparel Division)

EMPLOYEE EVALUATION FORM
( For Skilled Employees & Below )

Employee Code/Name

Position Department

Evaluation (Annually) Employee “Output Rating”

Quality of Workman ship/skill Evaluation:- Score

How accurate & precise in the work done
2 4 6 8 10
Capacity @ 100%/Target oriented Evaluation:-
Concise efforts to achieve the target
2 4 6 8 10
Versatility/Experience Evaluation:- Score
How versatile a person is to know more than
one job 2 4 6 8 10
Company Policy awareness and Evaluation:- Score
Implementation
2 4 6 8 10
Safety & Fire fighting procedures Evaluation:- Score
Awareness (compliance issues awareness)
2 4 6 8 10
Attitude toward colleagues/seniors Evaluation:- Score
Cooperation, obedience, language, work
beyond normal hours 2 4 6 8 10
Initiative Evaluation:- Score
Voluntarily starting projects. Attempting
non-routine jobs and tasks 2 4 6 8 10
Communication Evaluation:- Score
How effectively understands instructions
2 4 6 8 10
Intelligence Evaluation:- Score
How to calculate given targets in his capacity
2 4 6 8 10
Punctuality & Disciplinary matters Score
Attendance, regularly, cooperation with other
Deptts. General character 2 4 6 8 10

QA Rating Total Score

Summary
Total
Evaluator comments
Max. Score
100

Employee Signature Date Evaluator Code/Signature

Note:
In case of Inline / Final Inspector, Cutting Inline / Auditor evaluation, QA Rating must be considered.
For Inline & Final Inspectors. 50%, weightage is applied to each QA Unit In charge evaluation.

Source: Company documents.

 PERFORMANCE CHALLENGES AT MASOOD TEXTILE MILLS 79

Exhibit 6. Quality Assurance Rating (Inline Inspector)

Inline Inspector’s Evaluation

From 01-NOV-01 to 30-NOV-01

Date & Time: 22-DEC-01 12:18 PM

UNIT # : 4
SR.# CODE NAME JOINING DATE DAYS AUDIT PCS. FAULT PCS. %AGE

1 7363 15-MAY-01 18 634 27 4.26%

2 7481 12-MAY-01 8 189 10 5.29%

3 8165 01-FEB-00 11 529 22 4.16%

4 8170 26-JUL-99 8 206 9 4.37%

5 8181 01-MAR-01 18 583 27 4.63%

6 8231 01-MAR-01 2 57 3 5.26%

7 8334 12-APR-00 19 749 29 3.87%

8 9557 11-OCT-99 23 636 31 4.87%

9 9602 15-SEP-99 13 318 13 4.09%

10 9683 09-JUL-99 17 565 23 4.07%

11 9806 22-OCT-98 15 443 18 4.06%

TOTAL 4909 212 4.32%

Source: Company documents.
*For Inline Inspectors, the threshold for error was set at 5%.
80 ACRJ

Exhibit 7. Quality Assurance Rating (Final Inspector)

Final Inspector’s Evaluation

From 01-NOV-01 to 30-NOV-01

Date & Time: 22-DEC-01 12:16 PM

UNIT # : 10
JOINING PRODUC- AUDIT FAULT
SR.# CODE NAME DAYS %AGE
DATE TION PCS. PCS.

1 7289 16-APRL-01 3 219 91 (42%) 7 7.69%

2 7409 09-MAY-01 5 768 176 (23%) 14 7.95%

3 7441 28-MAY-01 5 376 89 (24%) 5 5.62%

4 7442 01-JUN-01 15 0 382 15 3.93%

5 7443 28-MAY-01 24 3597 653 (18%) 35 5.36%

6 8132 18-JAN-00 24 1656 623 (38%) 19 3.05%

7 8178 02-MAR-00 5 965 183 (19%) 12 6.56%

8 8185 01-FEB-00 3 214 47 (22%) 4 8.51%

9 8366 01-MAY-00 23 3611 706 (20%) 47 6.66%

10 9412 08-APR-99 24 4018 671 (17%) 31 4.62%

11 9469 09-MAY-97 25 4153 709 (17%) 45 6.35%

12 9697 19-MAY-99 1 45 20 (44%) 1 5.00%

13 9777 01-AUG-98 24 4557 687 (15%) 25 3.64%

TOTAL 5037 260 5.16%

Source: Company documents.

*For Final Inspectors, the threshold for error was set at 6.5%.
 PERFORMANCE CHALLENGES AT MASOOD TEXTILE MILLS 81

Exhibit 8. Criteria for PO Reward Distribution

Major Points:

• Responsibility Factor: Directly proportional to the levels in the Organization

Sr Mgrs Dy Asst U Mgmt Incha- Sprvsor Skilled Semi- Un-

mgrs . Mgrs Mgrs M trainee rge skilled skilled

6 5 4 3 2 1.5 1 .9 .8 .6 .4

• Opportunity Factor: It is the probability of earning based on the assumption of 10

running POs

• Fixed Opportunity Factor: Personnel contributing equally to all POs and Units will
have opportunity factor 0.1 [1/10]. This was meant to determine the rewards of the
employees in the service departments

• Variable Opportunity Factor: Personnel contributing specified PO and units will

have varied opportunity factors subject to their contribution e.g., if one person
contributes for one PO in one Unit, his opportunity factor will be 1/1 = 1
If he contributes to 2 PO’s, his opportunity factor will be ½ = 0.5, etc. This factor
applied to employees directly involved in the production of a PO.

• Potential Earning: Per head share × [# of winning PO’s/# of running PO’s]/

Opportunity Factor

Calculation of reward:

• Reward per Level: Share in the whole reward for a particular level
Reward = [Opportunity Factor × Responsibility Factor × No. of Persons involved in
that PO]

• Contribution: Money value received for that particular level

Contribution = {[Reward per level/Total amount of Reward] × Total Reward}

So,
• Per Head share: contribution of certain hierarchical level/Total # of Employees for that
level.

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Source: Company documents.