(Tiểu luận) human resource managementtopic managing the salary system ofciyang garment factory

The pay difference betweenthe veteran senior workersin the factory and thosewho had worked in thesouth such as Liu Ning andher colleagues led to thecatalyst of the 'absenteeismincident'.

FOREIGN TRADE UNIVERSITY FACULTY OF BUSINESS ADMINISTRATION

HUMAN RESOURCE MANAGEMENT

TOPIC :

MANAGING THE SALARY SYSTEM OF CIYANG GARMENT FACTORY Lecturer: Mr Ngô Quý Nhâm Class ID: QTRE403(GD1-HK1-2223).1

Group 2

Nguyễn Thị Hằng Nga 2012250048

Hanoi, October 6th, 2022

TABLE OF CONTENTS

I INTRODUCTION 3

1 Company background 3

2 Human resources issue 3

II CASE ANALYSIS 4

1 Problems and causes 4

2 Impacts on business performance 6

III SOLUTIONS 8ar 1 Solution 1: Zero-experienced workers 8

2 Solution 2: The labor cost at CY was high 8

3 Solution 3: Uneven productivity 9

4 Solution 4: Pay difference 9

5 Solution 5: Absenteeism incident 9

IV IMPLEMENTATION 10

1 The third day of the absenteeism 10

2 The next three months 10

3 The next six months 12

4 One year from now on 13

V CONCLUSION 13

VI REFERENCE 14

1

- Ciyang Garment Factory was founded in 2005 by Li

- CY firstly hired a group of 13 workers and soon became the key staff of the company

- During 2006–2010, CY hired many new workers, and total profit had been increasing continuously

- Li invested a lot in new equipment and asked for assistance from experts after many returned orders

- The company increase revenue and successfully delivered to H&M, Guess, and Disney

- The progress wasn’t smooth sailing, with growth came competition

- Garment factories required a large number of skilled and ordinary workers during peak season Competition for workers heated up during the Chinese New Year, as factories needed to recruit large numbers of workers in advance

2

Sudden outbreak of the COVID-19 epidemic in 2020 caught small and medium-sized Chinese enterprises off guard, such as Ciyang Garment Factory (CY) in Zaozhuang City, Shandong Province Many migrant workers could not come to work

on time because of the outbreak, and Li Qiang-the founder and general manager of CY-felt uneasy about defaulting on orders and worried about future lawsuits The experienced garment maker Liu Ning, who had been working in Dongguan, Guangdong Province, was also stranded at home in Zaozhuang because of the epidemic After meeting with Li, the two reached a cooperation agreement Liu Ning's arrival temporarily solved the urgent labour shortage of CY; however, the pay difference between the veteran senior workers in the factory and those who had worked

in the south, such as Liu Ning, became the catalyst of the 'absenteeism incident' Because of the human resource management problems caused by this incident, Li was once again caught in a dilemma This case examines Li, the director of the factory, and Liu Ning, a skilled technician, to demonstrate the difficulties faced by small- and medium-sized private manufacturing enterprises in China under the impact of

COVID-19 With the conflict between the two salary systems as the background, this case discusses how Li deals with the crisis and the future development plan of CY

1.

The Covid-19 pandemic and the new salary system made Li and his company face with several problems mentioning below:

Zero experience

worker

The total number of workers on the assembly line was over

200, including many “zero-experienced” workers

The Covid-19 pandemic and the restrictions between cities and regions led to a huge shortage of skilled and

Moreover, the competition between garment factories during the peak season made Li difficult in hiring proficient workers but hiring the temporary workers with relatively poor skills

The labor cost at CY

was high

The labor cost at CY constituted for 60% of the total profit Moreover, the account receivables at the beginning of the year had not been fulfilled yet

The lack of labor led to the

efficiency Therefore, the quality of the company and products can not be assured Consequently, the rework rate and reject rate would be at a high level

Uneven productivity

When Liu Ning’s team was divided into 2 assembly lines and used a conveyor belt, they set the two lines to the highest speed The efficiency of Liu Ning’s team shocked Li, the conveyor belt never slowed or stopped, and the transition between shifts was seamless

However, comparing to the veteran team, even the mid-gear speed can make them struggle

After Liu Ning’s team joined, the daily outputs of each assembly line were two or three times higher than those by veteran worker

By having mastered in many of the processes and skills required for garment production, Liu and her team who followed Liu Ning to come to the South

to work had advanced and well organized training in working On contrast, in

CY, some of veteran workers had no experience

in garment production, which can cause the inefficiency in their work Moreover, the skilled workers had to coach the newbie and complete their orders at the same time so they cannot do as good as before

Pay difference The veteran worker team

thought that it was unfair of

CY to use the floating salary system to pay Liu Ning’s team

as it caused a huge gap in payment between the two systems at the end of the month They had to both coach the newbies and complete the factory’s orders, however, they obtain less pay than before In contrast, Liu Ning and her team were satisfied with the

The cause of this problem

is due to Li adopting and applying the new salary system for Liu Ning’s team but not changing the old piece-rate system for the veteran worker According

to the old salary system, the salary of each worker was determined by the workload and unit price of each garment accessory part However, Liu Ning

supposed that this system could not effective in improving the worker’s productivity Therefore, Liu Ning had a new floating salary system, which caused a big difference in the salary paid for two teams Moreover, in the new salary system, they can have rewards for high rank

or their special skills while the old one did not

Absenteeism incident

Several old machinists did not come to work, including the senior team leader Zhang, who was never absent from work

They collectively organised an absence from work to protest the switching salary system

The pay difference between the veteran senior workers

in the factory and those who had worked in the south such as Liu Ning and her colleagues led to the catalyst of the 'absenteeism incident'

3

- Impact of COVID 19 epidemic on:

+ Employment Pattern: Li has to hire temporary workers including skilled and ordinary workers from neighboring cities to fill the gap due to a labor shortage to cope with the upcoming peak season Although the temporary

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workers possessed relatively poor skills, they could complete simple tasks after short-term training, thereby alleviating labor shortage However, the temporary workers were unable to travel for work owing to the

COVID-19 pandemic => shortage of labor

+ Working process of experienced workers: Due to difficulties in recruiting new employees from other cities, the total number of workers on the assembly line includes many “zero-experienced'' new local workers The

older, experienced workers worked overtime to complete the work in hand while mentoring the new workers The veteran workers were required to

spend a lot of time and energy to coach the new workers

=> affecting their production efficiency

- Impacts of Liu Ning and her team joining Ciyang on:

+ Company's salary system: Liu Ning expressed her desire that Ciyang could calculate the salary using the same salary system as her old factory for her and her team of workers Li finally decided to accept Liu Ning's request despite Ciyang's financial difficulties: The labor cost at CY was already high (constituting 60% of the total profit) and the account receivables at the beginning of the year had not been fulfilled yet

=> Ciyang has introduced a new floating pay system for these experienced new workers

+ Productivity: With the efficient operation of Liu Ning's team, Ciyang had the order successfully completed five days ahead of schedule In addition to

their extremely high work efficiency, the new workers have a rigorous working attitude and standardized garment production process.

=> With the coming of these senior workers, Ciyang increased their productivity and approached a new working process

- Impacts of the two salary system in parallel:

Liu's team was satisfied with the salary Li paid, but some existing workers showed great dissatisfaction with it According to the old salary system, Zhang's team members could not earn more than 3,000 yuan per month, while each member of Liu Ning's team could

earn 4,000 to 5,000 yuan with the new salary system The huge gap between the two

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systems deeply offended these veteran workers Therefore, they collectively organized an absence from work to protest.

Moreover, these veteran workers worked hard to train new ones and significantly contributed to completing factory orders For example, Zhang had been coaching five newbies this year and could often be seen teaching them skills during the day and even working late at night Each of these skilled workers had worked diligently to fulfill their

duties => They think it was unfair to bear more pressure and obtain less pay than the

newbies

While Li decided to adopt the new floating salary system for Liu Ning's team, he did not replace the old piece-rate salary system for original workers and decided to apply the two systems simultaneously

=> The use of the two makes the existing workers unsatisfied and organize absence from work If this situation lasts for a long time, it will cause a labor crisis and deeply affect all the operation and productivity of Ciyang Therefore, Li, as a founder and manager, has to come up with solutions to improve this situation

1.

- Build more sources of recruitment to find the most suitable worker working for the company: This is a great way to avoid substandard portfolio and ensure the

best quality of the company’s workforce

- The power of automation: CY can consider this solution as an effective way to

take over the place of zero-experienced workers Instead of hiring temporary workers with relatively poor skills, CY can use the application of automation in certain production steps It will help CY boost the efficiency of performance and avoid the risk of hiring new and zero-experienced workers simultaneously

4

Build an experienced HR department:This factor is more and more important when the company grows Li should care more about building and training a strong and skilfull team of HR professionals to meet with the demand of hiring quality workers

due to the lack of labor, CY needs to know how the industry leaders are basing their compensation and reward structure

5

- Apply advanced technology to enable a faster training process for newbies:

Besides teaching them skills during the day and even working late at night, the company can introduce interactive learning modules through an online platform (Weibo, WeChat) By arranging online meetings like this, newbies will find it easier to learn new skills for better performance at work without wasting the time

of veteran workers It will lead to the reduction in the burden of training on the existing personnel of CY

- Peer-to-peer training: Another way to change the situation of uneven productivity

is to exchange members within the two teams The method of mixing old groups of workers with new members of Liu Ning’s team helps boost the efficiency of their overall performance By working together with peers, newbies can easily learn new skills from them and feel more comfortable to ask for help from people of their age

6

Change the salary system: In this case, Li should merge the two existing salary systems

into a new one with different conditions that will support all workers equally

+ Fixed salary: This criterion is applied for all workers (based on the position and level of skills, there will be a change in the salary rate)

+ Variable pay: CY should have bonus for everyone who is not absent from work in a month

+ Additional wage: Rewards for high rank or special skills at work are considered as important aspects in terms of the salary system

7

- Announce a new salary system: In order to solve the absenteeism incident, Li

needs to publicly announce a new salary system that will apply for all workers, without any exception By doing this, Li can reassure old machinists that everything is now settled and they can trust him to go back to work

- Compensation for veteran senior workers: Li should give all senior workers an

amount of bonus/reward money as a way to compensate for his mistake in allocating the salary system It is also a way of acknowledging and praising their efforts to make contribution to the development of the company

The implementation process will be presented in a chronological way:

(1) The third day of the absenteeism

(2) The next three months

(3) The next six months

(4) One year from now on

1.

Action: Li should contact Zhang and other veteran workers to come and begin

negotiation with them:

- Give them an amount of bonus/reward money as a way to compensate for his mistake in allocating the salary system

- Reassure them that he would declare a new salary system applied for all workers in 2 months

Clarify: This is mainly to placate these irritated workers It is also a way of

acknowledging and praising their efforts of making contribution to the development of the company

Expected outcome: The veteran workers would return to work and accept the

current solution

8