Confronted with rising wages and high worker turnover rates, manufacturers in China and other increasingly less “low-cost” countries are introducing systems that engage the workforce and stimulate higher productivity rates. Examples of these non-monetary benefit systems were given at the third Manufacturers Forum, organized by the World Federation of the Sporting Goods Industry in Hong Kong last month.
Micro Benefits, a social impact company that was hired by the China Development Bank to help improve the workers' welfare, has developed an SMS-based platform that allows a company's management to be in more frequent contact with the members of the workforce, interacting with them between 15 and 20 hours per month.
The system can automatically announce new initiatives, get the workers' feedback, conduct satisfaction surveys, organize photo contests and other such actions. According to Micro Benefits, this has led the participating manufacturers to retain their staff longer in a country where 82 percent of the workers tend to leave their employers after a few years, generally to return to their homes in the western part of China. Only two percent are really committed to stay, according to a survey.
Some 850,000 workers throughout China are currently connected to Micro Benefits' platform, which was launched in 2013 based on the fact that Chinese people, especially youngsters and blue-collar workers, spend on average three and a half hours per day with their heads down on their cell phones.
Some companies use Micro Benefits even to teach a foreign language or to help workers to act as distant parents. The platform can ultimately be used to create a more skilled workforce that will be able to stand up to future technological challenges. It can help the workers to become entrepreneurs in the longer term.
Another system provider operating in Indonesia, Micro-Solutions, had clients using text messages to let the workers know that the company cares about them. It instituted a regular question & answer program to assess possible causes of stress for some employees and to help determine what should be done to reduce it.
Complaints can be filed in a completely anonymous way and posted on a “dashboard,” providing contacts in cases of emergency. The services provided by Micro-Solutions' system include a wellbeing assessment as well as an “automatic micro-coaching” program via SMS. The system can also offer all kinds of training.
Micro-Solutions' program was developed over the past five years by Workplace Options (WPO), described as the world's largest provider of mental health care benefits for employees, extending its services to blue-collar workers in developing countries. WPO had previously concentrated on the mental health of white-collar employees in developed economies.
A speaker for Micro-Solutions said that the adoption of its system led to a 43 percent drop in permanent departures from an Indonesian factory in connection with the Ramadan holidays. It can also reduce absenteeism and improve productivity levels.
Nick Lin-Hi, a professor at the University of Mannheim, actually discovered through an experiment conducted at the high-tech sports apparel manufacturing plant of KTC near Guangzhou that the creation of a more positive work environment can lead to an increase in productivity rates of more than 15 percent, and that it can be more effective across all age groups than a wage increase of 10 percent.
Worker retention has risen to a level of 90 percent thanks to higher levels of job satisfaction, dialogue, motivation and education at KTC, which employs more than 3,800 workers in the manufacture of highly technical clothing for the likes of Black Yak, Helly Hansen, Karrimor, Mammut, Mountain Force, Musto, Radys and Rapha. More than 15 percent of the workforce is involved in quality control.
As the workers' basic necessities are already met at current wage levels, “money is no longer the dealmaker in competing with other companies and industries to keep the workforce,” said Gerhard Flatz, the Austrian managing director of KTC, addressing a group of journalists invited to visit the plant before the WFSGI convention. He said his company wants to “celebrate craftmanship,” mastering product customization and other processes that require a high level of experience and dedication.
KTC's Austrian investors pioneered apparel manufacturing in China in 1978. KTC's management has introduced and built up on its corporate social responsibility (CSR) policy since it became independent of the local government in 2008, dropping the image of a sweatshop ahead of many other local producers. It is a member of the Fair Wear Foundation.
The regular work week at the factory was reduced from 60 to 48 hours last November. Recent initiatives include end-of-season parties with a fashion show where the workers wear the clothes that they have been making. It is starting an apprenticeship program. KTC also operates a lower-cost factory with a staff of 2,000 people in Laos where it funds educational programs for 1,000 of their children.