Management and Organization Behavior REPORT, MBA

United International University

“A Decision to Bring Significant Change in Our Organization-RIMERS Tea Estate”

Prepared for

Prof. Md. Salim Bhuiyan

Management and Organizational Behavior

MGT-506 Section: B

Prepared by

Md. Tahminul Islam ID: 112131006

Md. Marufur Rahman ID: 113123007

Srabonti Chakraborty ID: 112131098

Mohtasim Kaisar ID: 112131012

Ishaq Ahmed ID: 112131066

Kazi Refat Hossain ID: 112131067

1

Date of Submission: 16th May 2013

Letter of Transmittal

May 16, 2013.

Prof. Md. Salim Bhuiyan 

Adjunct Faculty

School of Business and Economics

United International University

House-80, Road-8/A, Satmasjid Road

Dhanmondi, Dhaka-1209.

Sub: Submission of Term Report

Dear Sir:

It is of great honor to us to present our term report to you. The entire duration of preparing

this report has been immensely helpful to us, giving us a golden opportunity to move to the

real world. We have learnt a lot of new things through working on such a latest topic.

Developing decision making skills, analyzing organizational issues and utilizing each detail

were just to name a few. The knowledge we gathered, will help in our professional life too.

We would like to express our sense of gratitude towards you for giving us the opportunity to

work on such an innovative topic.

Sincerely,

Md. Tahminul Islam ID: 112131006 ……………………

Md. Marufur Rahman ID: 113123007 ……………………

Srabonti Chakraborty ID: 112131098 ……………………

Mohtasim Kaisar ID: 112131012 ……………………

2

Ishaq Ahmed ID: 112131066 ……………………

Kazi Refat Hossain ID: 112131067 ……………………

Executive Summary

Bangladesh is one of the top most tea producers in the world. In the tea market there

are lots of companies among them we are one of them. In the report we have focus on the

problems we faced when we bought the company from the previous owners. We have found

out that the market is very much penetrated & consumers have several alternatives, so if the

performance of one company gets bad then the others come up from behind & take the

position. Here in the company we have faced some problems which were hampering the

performance of the organization. Then we found that we have the solution on giving the

employees a better compensation package, which will motivate them. Here we have

discussed it that how we have implemented it & how the performance of the company &

employees get better through our decision. Here we have briefly discussed the problem we

have faced, the solutions, the decisions & how we have implemented it.

3

Topic:

“Assume that you are the top executive of an organization. Now think of a

decision which will bring significant change in your organization. Justify

why do you want to take such a decision & how will you implement it.”

4

Decision Making

Decision-making is an essential aspect of modern management. It is a primary

function of management. A manager's major job is sound/rational decision-making. He takes

hundreds of decisions consciously and subconsciously. Decision-making is the key part of

manager's activities. Decisions are important as they determine both managerial and

organizational actions. A decision may be defined as "a course of action which is

consciously chosen from among a set of alternatives to achieve a desired result." It

represents a well-balanced judgment and a commitment to action.

It is rightly said that the first important function of management is to take decisions

on problems and situations. Decision-making pervades all managerial actions. It is a

continuous process. Decision-making is an indispensable component of the management

process itself.

5

Means and ends are linked together through decision-making. To decide means to

come to some definite conclusion for follow-up action. Decision is a choice from among a

set of alternatives. The word 'decision' is derived from the Latin words de ciso which means

'a cutting away or a cutting off or in a practical sense' to come to a conclusion. Decisions are

made to achieve goals through suitable follow-up actions. Decision-making is a process by

which a decision (course of action) is taken. Decision-making lies embedded in the process

of management.

A manager has to take a decision before acting or before preparing a plan for

execution. Moreover, his ability is very often judged by the quality of decisions he takes.

Thus, management is always a decision-making process. It is a part of every managerial

function. This is because action is not possible unless a firm decision is taken about a

business problem or situation.

This clearly suggests that decision-making is necessary in planning, organizing,

directing, controlling and staffing. For example, in planning alternative plans are prepared to

meet different possible situations. Out of such alternative plans, the best one (i.e., plan

which most appropriate under the available business environment) is to be selected. Here,

the planner has to take correct decision. This suggests that decision-making is the core of

planning function. In the same way, decisions are required to be taken while performing

other functions of management such as organizing, directing, staffing, etc. This suggests the

importance of decision-making in the whole process of management.

Planning the Decision

Decision will get four benefits out of planning:

i. Planning give chance to the establishment of independent goals. It is a conscious and

directed series of choices.

ii. Planning provides a standard of measurement. It is a measurement of whether you

are going towards or further away from your goal.

6

iii. Planning converts values to action. You think twice about the plan and decide what

will help advance your plan best.

iv. Planning allows for limited resources to be committed in an orderly way. Always

govern the use of what is limited to you. (e.g. money, time, etc.)

Decision-making is one of the defining characteristics of leadership. It’s core to the

job description. Making decisions is what managers and leaders are paid to do. Yet, there

isn’t a day that goes by that you don’t read something in the news or the business press that

makes you wonder, “What were they thinking?” or “Who actually made that decision?”

That’s probably always been the case, but it seems exponentially more so in the opening

decade of the new millennium where everything seems marked with, “too big, too fast, too

much, and too soon.” The reality seems to be that most organizations aren’t overrun by good

decision makers, yet alone great ones. When asked, people don’t easily point to what they

regard as great decisions. Stories of bad decisions and bad decision-making come much

more readily to mind.

Some of that is due to our tendency to notice and recall exceptions vs. all the times

things go as planned. For example, you’ve walked along side buildings more times than you

could possibly count. Yet you remember vividly the one time you got nailed by a pigeon

overhead. That’s how we are about bad decisions. We’re also that way because the really

bad ones tend to really hurt. It’s not that people don’t have the capacity to make high-quality

decisions in them. Decision-making is a distinctly human activity. It’s what that great, big

frontal lobe is for. We all make decisions all the time.

But the fact that we’re hard-wired to make decisions doesn’t by itself make us good

decision-makers. That takes discipline: discipline to do at least four things all the time and

well.

1. Realize when and why you need to make a decision.

2. Declare the decision: decide what the decision is, how you’ll work it, and who

should be involved.

7

3. Work the decision: generate a complete set of alternatives, gather the information

you need to understand the possibilities and probabilities, and ultimately make a

choice that best fits your values.

4. Commit resources and act.

8

Company Overview

Srimongol holds total 19 Tea Estates. RIMERS Tea Estate is one of the well known

Tea Estates in Srimongol. It is situated at Srimangal. It was previously known as “Shatgaon

Tea Estate”, but in 2012, we have purchased the ownership of “Shatgaon Tea Estate” and

named it as “RIMERS Tea Estate”. It was actually established approximately more than two

fifty years ago by the British colony. After that, by generation the ownership of this Tea

Estate was transferred.

Basically, there are three types of tea estates:

British Garden

Shaw Walls

Duncan’s

The area around Sylhet is traditional tea growing area. Srimangal is known as the tea

capital of Bangladesh and for miles around one can see the green carpet of tea gardens on

the hill slopes. Sylhet area has over 150 tea gardens. Nearly 300,000 workers are employed

on the tea estates. The gardens are relics from the days of the British Raj. The plantations

were started by the British and the manager still live in white timber homes as they did in

those days. The Bungalows stand on huge beautifully maintained lawns and the service and

lifestyle is pretty much unchanged.

RIMERS Tea Estate has three divisions. These are,

i. RIMERS Tea Estate

ii. Makrichara Tea estate

iii. Ichamoti Tea Estate

Among these divisions, our main and biggest division is the RIMERS Tea Estate.

9

Industry Overview

History of Bangladesh Tea Industry dates back to 1840 when a pioneer tea garden

was established on the slopes of the hill in Chittagong. First Commercial tea garden was

established in 1857 at Mulnichera in Sylhet. During the partition in 1947 Bangladesh (East

Pakistan) owned 103 tea estates covering 26,734 hectors of tea plantation with annual

production of 18.36 M.kg with a yield of about 639 kg per H.A. Home consumption was

around 13.64 M.kg up to 1955. After that home consumption went up rapidly and

government imposed 3% mandatory extension of tea area per year 1961. Ten years later by

1970 tea are extended to 42,658 hectors and production was increased to 31.38 M.kg.

During liberation war in 1971, our tea industry suffered immense damage which caused in

poor management, high vacancy, insufficient inputs, inadequate maintenance etc.

Total global export of tea in 2006 was 1572 million kgs of which Bangladesh

exported only 4.97 million kgs. World export levelers hardly increased during the year under

review. India, Srilanka, Vietnam and Argentina ended the year with higher exports even as

exports from Indonesia, Kenya and Bangladesh dropped. Export from Bangladesh declined

about 88% from 9.01 M.Kg in 2005 to 4.79 M.kg. In 2006 mainly due to increase of internal

demand that pushes the local action price up (www.teaboard.gov.bd). Most of the tea estates

are located in the north-east region of Bangladesh .The first tea garden was established by

The Duncan Brothers. Since then all the tea gardens have been established clearing jungles.

Those who did the jungle cleaning were non-locals brought by Duncan from Assam, Bihar,

Madras, Orissa and other place in India.

They are not well aware of their origins. Their lives in Bangladesh are confined to

the tea gardens and they do not interact much with people of other ethnic identities. They do

not speak their language perfectly and most of them illiterate. In 1854 when the tea workers

(Santals, Oraons, Munda etc) from different states of India first arrived they each signed a

four year contract that eventually obliged them to remain on the tea gardens for generations.

That was the beginning of hard labor, erosion of cultural identity and captivity that never

came to an end. Illiterate, they do not understand what the document contained when they

signed it.

10

Employee-structure of our Company

In our company there are three levels of employees - Top, Mid and Lower Level.

Top level employees include:

Designation Number of Employee Base

Chairman 1 Head Office

Managing Director 1 Head Office

Director 1 Head Office

General Manager 1 Head Office

Mid level employees include:

(1st Tier)

Designation Number of Employee Base

Marketing Manager 1 Head Office

Sales and Distribution Manager 1 Head Office

Trading Manger 1 Head Office

Accounts and Logistics Manager 1 Head Office

Human Resource Manager 1 Head Office

Technical Service Manager 1 Head Office

Commercial and Regulatory Affairs Manager 1 Head Office

(2nd Tier)

Designation Number of Employee Base

Marketing Manager 6 Head and Branch

Offices

Sales and Distribution Manager 4 Head and Branch

Offices

Assistant Trading Manager 2 Head Office

Assistant Accounts and Logistics Manager 2 Head Office

Assistant Technical Service Manager 2 Head Office

Assistant HR Manager 2 Head Office

11

Low level employees include:

(1st Tier)

Designation Number of Employee Base

Marketing Executive 8 Head and Branch

Offices

Sales and Distribution Executive 12 Head and Branch

Offices

Trading Executive 5 Head and Branch

Offices

Accounts Executive 12 Head and Branch

Offices

Technical Executive 7 Head and Branch

Offices

Executive Secretary 4 Head Office

HR Executive 7 Head Office

(2nd Tier)

Designation Number of Employee Base

Store Keeper 4 Head Office

Worker 20 Field

Delivery Man 12 Head and Branch

Offices

Peon 5 Head and Branch

Offices

Driver 10 Head and Branch

Offices

12

Problems we are Currently Facing

Lack of co-ordination: Lack of Co-ordination among the employees of all levels is

a main problem of the organization. Lack of Co-ordination among the mid & low

level employees are hampering the work environment, it is also one of the reason

behind low productivity.

Weak distribution channel: The distribution channel of the organization is very

poor. In the distribution level the people who are working are not efficient. They are

not maintaining proper liaison to the distribution level, so we are losing market.

Low sales margin: The sales margin of the company is very low. Workers are not

producing a high quality of product. So there becomes a very low sales margin.

Low Production: The production of the company becomes very low. The labor has

not sufficient knowledge about production. Moreover they are not getting enough

wages to do their works.

High competitions in the market: In the market there are many companies & there

are many brands. So the market is very much penetrated, for competing in the market

we need a proper plan

Lack of awareness of the labor group: The labors that work on the garden are

totally aware of them, they are not aware of their own work & their health. They are

also not aware of their duties & responsibilities as they have Lack of proper

education.

Lack of motivation: Motivation is a big factor. Every employee needs motivation.

Motivation makes them more energetic; they found new inspiration to do the work.

Mangers of our organization don’t give the employees sufficient motivation.

No labor insurance: There is no insurance for the labors, who work on the field, as

they work on the field they have many risks. For the sake of the labors insurance

should be adequate for them.

13

Lack of Monitoring: As the tea state is a very large arena here the monitoring is

very difficult. So for proper monitoring there should be a proper plan & for

implementing the plan effective manpower should be used.

Identifying the Causes of Current Problem

As we found deviations from our set plan and previous experiences we carried out an

internal survey on immediate basis to identify the reasons and root causes of our current

problems. The found causes are interconnected in most of the cases.

1. For the last few years the cost of living has gone up significantly in Bangladesh that

caused the mid-income group to fall under a threat. Majority of our mid and low

employees’ income is spent for buying regular food items, house rents and

conveyances. As a result we have found that mid and low employees are very much

dissatisfied with their current salary structure. They are depressed with the price hike

that made their life miserable than earlier.

2. As fuel price has increased employees are to spend more on their transportation cost.

3. Our competitor companies are offering competitive remuneration packages to our

very efficient mid level managers. As a result, some of them left the organization.

4. As some of the efficient mid-level employees left the organization one after another,

our company is now having management crisis. Leading in departmental level,

organizing and controlling had been hampered and that has resulted into indiscipline

among the low level supervisee’s. They are not getting due direction and not paying

attention to their work.

5. Among Mid and Low level workers, who are mediocre and not getting opportunities

to switch to other organizations has become frustrated and de-motivated and as a

result they have lost interest in their works. It has direct impact on our decrease of

sales.

14

Our Decision

Considering the facts that our employees are dissatisfied with their salary and benefits we

have to take a major decision. We believe that employees are our assets and they can

contribute to our profitability if they are empowered properly. We will maintain the present

employees and change their compensation package and balance the pay policy with present

economic situation of Bangladesh. The compensation package given below:

SWOT Analysis of the Decision Taken

As top level executives we cannot take a decision, which will satisfy all the concerned

people. There are merits and demerits of our decision. While taking decision we have to

comply with both the merits and demerits of our decision. Here we have mentioned the

Strength, Weakness, Opportunities and Threats of our decision.

1) Strengths

The attributes of the decision that is helpful to achieve the company objective is called the

strengths.

a. We will be able to achieve our estimated daily sales and profit target again after

implementing our new decision as it will motivate our employees and their

productivity will increase.

b. This decision will help to restore our goodwill.

c. Employees will be more benefited as well as the company. Better employees would

ensure better service.

d. Satisfaction level of worker will increase and thus we will be able to increase the

productivity rate.

e. Transportation facility to the mangers will bring satisfaction, the transportation

allowance will properly and reduce daily hassle of the employees.

15

2) Weaknesses

Attributes of the company those are harmful to achieve the company objectives is called

weakness.

a. One major concern is the cost of extra budget which was not included in financial

year so some unexpected cost will be added with yearly expenditure.

b. Some other factories may also use such similar ideas to reduce dissatisfactions.

c. Since we cannot provide their expected salary in line with the actual inflation rate so

some de-motivation will still remain after implementing the decision.

d. The different percentage for different Tiers and levels may bring disappointment

among the employees.

3) Opportunities

Opportunities are those external conditions that are helpful to achieve the objective. So in

order to make our roots deeper into the market, we will get those opportunities in future.

a. Since we will be able to run our production smoothly without any interruptions, we

will be able to trade more products at a cheaper rate & in shorter time.

b. Many companies may be unable/ have that much courageous to invest huge

amount of money to increase salaries & take the benefit of such decision.

c. Government will appreciate and may provide support for our company. We may get

strong investment offer from other financial organizations if we want to extend.

d. We might draw more efficient and dedicated workers from other trading

companies as we will offer competitive packages and transportation facility after

implementing our decision.

16

4) Threats

Threat means external barriers for a new product or service.

a. Other trading companies may also follow our decision more effectively.

b. It they implement this types of facility then they can snatch our managers.

Developing Alternative Solutions

We came up with two solutions after analyzing the situation and these are:

1. Maintain the present employees and change their compensation package and balance

the pay policy with present economic situation of Bangladesh.

2. Hiring more efficient & energetic sales and marketing executives with present salary

package to put an impact on the market and maintain the profit.

3. Use Job Rotation and Cross Function Policy in order to increase their effectiveness.

4. Job Evaluation of the managers.

5. Provide proper training to the employees.

6. Performance appraisal for the employees & on the basis of performance proper

performance bonus should be provided.

17

Justification of the Decision

Base Pay Will Increase:

Top Level: 6%

Mid Level (1st Tier): 12%

Mid Level (2nd Tier): 11%

Low Level (1st Tier): 8%

Low Level (2nd Tier): 7%

Cost of Living:

Cost of living adjustment will be the same increase to everyone, regardless of performance.

But mid and low level employees will get the main incentives as the top level employees are

few in numbers and actually the mid and low level employees are facing this problem.

Short Term Incentives:

Short term incentive will be given to all employees. It will be based on their individual

performance.

Long Term Incentives:

Long term incentive will be given to all the employees.

Income Protection:

Medical facilities.

Retirement Package.

Life insurance.

Provident Fund.

18

Work Life Balance:

Employees will get flexible work arrangement, like-

Nonpaid time off

Time Away from work (Vacations)

Women employees will receive access to services to meet specific needs maternity

leave, child care.

Allowances:

All employees will get transportation allowances. For the managers we will have a package

housing & car facility.

Situation before the Compensation Package

19

Poor Compensation Package

Employee Dissatisfaction

Poor Performance of the Organization

Less Profit

More RiskHigh Turnover

Fig: Our New Compensation Package

20

Total Compensation

Cash Compensation

Base

Cost of Living

Short-TermIncentives

Long-TermIncentives

Benifits

Income Protection

Work/LifeBalance

Allowances

Relational ReturnRecognition &

Status

Employment Security

Challenging Work

Learning & Training Opportunities

Action Plan – How to Implement the Decision

A plan may sound very high but it will not bring any result unless it is implemented. Plans

are to be implemented. So we should make a realistic & logical action plan & act

accordingly to reach our objective.

Action plan

1. First we will calculate our existing staff salary cost, increased salary cost,

transportation cost and estimate the added expenditure required to implement our

decision.

Level and TierCurrent Salary Cost

(Per anum)

Increased Salary cost

(per anum)

Top Level : 4 persons 1,95,00,000/= 2,04,75,000/=

Mid Level (1st Tier): 7

persons

91,00,000/= 1,04,65,000/=

Mid Level (2nd Tier): 18

persons

1,56,00,000/= 1,71,60,000/=

Low Level (1st Tier): 54

persons

1,13,75000/= 1,27,40,000/=

Low Level (2nd Tier): 51

persons

4,160,000/= 44,92,800/=

Total 59,735,000/= 65,332,800/=

Extra amount needed Tk. 55,97,800/=

21

Transport cost per annum

Monthly rent and fuel for 2 Micro buses

(12 seated)

25 Days * 2500 Tk * 12 months * 2 =

15,00,000/=

2. We have to make plans on how to recover the cost of our new decision. We will set

new sales target that will recover our extra cost without hampering our profit target.

As shown the calculation above, this investment will bring a significant change of

workers’ behavior with a very small investment. If we can achieve our daily sales

target to TK. 1000000, then it would not be a problem to recover the extra cost.

Ultimately they will be likely to perform better in their respective works. Per day

sales will be high and this extra sales profit will be given to them as new increased

wages and also accommodated transportation cost.

3. We will set controlling and evaluation mechanism to retain our new sales and profit

target.

o We will make a networking system among all the supervisors, so that we can

sense any human resource related problem before it takes place.

o We will always keep our reserve fund and all the necessary parts ready so

that we can use them whenever we need.

o We will analyze our performance every month, so that we can come to know

about the current market scenario.

22

Action Plan Framework

23

Calculate existing salary

cost

Situation after the Compensation Package

24

Effective running of the organization

More Profit

Better Performance of the Organization

Employee Satisfaction

Better Compensation Package

Conclusion

RIMERS Tea State was bought by six of us when it was in a very bad situation. As

the market of tea has become very penetrated, the competition is very high among the

companies. We face heavy difficulties when we purchased it; the company’s situation was

not good. It was losing market, the sales volume was decreasing. The performance of the

employees was poor, they were demotivated. From there we try to hold on the situation, then

we try to find out the problems that was hampering the company’s overall performance, then

we came up with solution, we try to bring new things in the company. Then after finding the

possible solutions, we came up with a new compensation package, that boost the employees

& we bring new people who are energetic & ready to work in any situation. From then we

have find out that the company’s performance is getting better day by day. The company is

getting its profit back & the overall performance in company & market is developing & we

hope that we will be able to become the market leader in the upcoming days through our

decision.

25