Jeans Therapy

LEVI’S FACTORY WORKERS ARE ASSIGNED TO TEAMS, AND

MORALE TAKES A HIT

The Company…

In the industry notorious for low wages and lousy working condition, Levi’s has prided itself on being a grand exception.It offers generous play plus plenty for charity support in factory towns.

All financed by its phenomenal profitability of its brilliantly marketed

brand name

THE COMPANY…

Due to many levis workers the company image has not fit for some time. In 1992 the company directed its US plants to abandon the old piece work to new system.

The new System…In the new system the groups of 10 to 35 workers would share the task and be paid according to the total number of trousers the group competed . Due to old system the workers are enable to do different tasks.

At the time the team concept was a much touted movement designed to empower factory workers in many industry and the levis unions agreed to the effort.

Others companies think that It could not keep many of its US plants open unless it could raise productivity and reduce cost .The teamwork system push the workers to do different tasks team work levis felt, would be more humane, safe and profitable.

The new System…

Problems with Team Work Concept

Skilled workers found themselves pitted against slower colleagues•Damaging morale•Triggering corrosive infighting

Problems with Team Work Concept

According to many Top performers Team Work Means:

•Their pay shrank •Cheated by slower colleagues because they were making less•Burden of work on the rest of team when a team member absent, inexperienced or just slow•Limited supervision (Groups are forced to resolve most workflow and personality issues themselves).

speed in garment making

Worker’s skillAnd stamina

Direct Relation Between Product And Worker’s Skill

The workers in Levi’s plants operate machines that perform specific tasks:•Pocket setter•Belt looper•Fly stitcher

Some employees work much faster than other

In 1993 Levi’s Hired A Consulting Firm

Its conclusion was The company should start from scratch and involve all parties in a redesign of pay structures and work processes

Some manager complained that sessions at times not business basedSome manager just did not like idea of having sewing machine operators challenge their authority

Costs Mounted

In 1994 plant managers were warned that they must cut costs by 28 % on average by the end of 1997ORFace an uncertain future

Decline in Levi’s Jeans

1990

1997

48%

26%

There is a decline in the domestic men’s denim jeans Market Fall

Due to this Factor:They Take additional debt to meet their needs

They Cut down its salaried workforce by 20% over 12 months in 1997

The firm announced the closing of 11 U.S plants

They Layoffs 6395 workers.

They can not adjust their workers in any of their plants

The Company shifted much of its work abroad .

15% of the jeans for the U.S market were manufactured

By the end of 1997 45% of the jeans were produced in foreign plants

Continue….

Comments about Team Approach

Levi’s says that for the survival of U.S plants in the long run Team approach is best option.

but company officially announced that team approach should not b adopted. They prefer the individualism

But many plants managers unofficially adopted team process.Because they said that due to team approach their productivity will enhanced and their cost reduced and obviously it will increase the profitability

What went wrong with Levi’s move to teams in their plants?

Levi’s was too late in attending global competition. To catch the market, they had to drastically redesign their strategy.

Levi’s did not align the company’s culture, values, people, and behaviors to encourage the desired outcome.

Levi’s did not capture value; responsible for designing, executing, and living with the changed environment.

Levi’s did not use creative means to maintain employees satisfied.

What could Levi’s have done differently to avert the problems?

I believe that if Levi’s had recognized the market demands the time it start to change and designed a structure to adjust with the market, slowly, the impact on the workers would not have being so drastic.

•Since they couldn’t use a long term goal to convince workers to participate on it.

• Levi’s could develop team based environment.

•They also didn’t worry about unique values and sense of individuality, and

• Creating a culture of loyalty and performance.

• Levi’s should “cultivate their human resources through careful selection and training of the best and brightest employees,

• Implementing innovative team-based employee involvement programs,

•Developing genuinely participate management approaches, and •Continually retraining their employees.”

Devise a team incentive plan that you think might work?

“Successful process improvement activities depend upon the active involvement of the

workforce. Engage key stakeholders and leaders to

integrate into program design and decision making.

Some approaches I would use are the following: Profit sharing:A plan that gives employees a share in the profits of the company. Team recognition events:A great way to establish a performance culture. Recognizing the extra efforts of teams that achieve high goals is personally rewarding.

Defined Benefit plan: promises the participants a specific monthly benefit at retirement and may state this as an exact dollar amount.

Do you think the need to move jeans production was inevitable? Could Levi’s have done anything to avert

the problem of increasing labor costs?

it is almost impossible to overcome the global competitiveness. Industries are realizing that exist people with skills offshore who work for the fraction of United States labor costs. Businesses now recognize that it has alternative sources of labor somewhere else, and it has used this variety to put pressure on labor to win wage concessions and to cut benefits

Levi’s could reduce the labor costs through:

• Better management of workforce.

• improving the speed and accuracy of employee time collection, and gain more control over payroll and Human Resources expenses.

•It would avoid administrative risks and experience gains in productivity. But, it would not restrain the advantages of globalization in terms of economic return because the competition is not fair.