Hrm in a Multinational Clothing Company

SEMINAR 1

Case study 1: HRM in a multinational clothing company

You are the newly appointed Operations Director for a multinational clothing company, replacing an operations manager who left to start a new firm. There are no head-office HR staff in the company and you will now be responsible for performance management of the plant managers and this will include any people management issues that come up.

Answer the questions set at the end of the case study and explain: What lessons does the case provide for other MNCs?

People management and ethics

You are the newly appointed Operations Director for a multinational clothing company, replacing an operations manager who left to start a new firm. You have an extensive background in the industry, having held operational management roles in three international clothing firms, and having worked in three different countries. You are the first operations executive in the company to have a seat on the board.

The company you have now joined is not a household name but is a major supplier of international retail chains, making vast quantities of women’s fashion items (outer-wear) for house-label ranges. The design function is located in Italy while the company manufactures in a diversified range of low-cost countries, including Mexico, Morocco, China, Bangladesh, Sri Lanka, Indonesia and the Philippines. It does not manufacture in any high-wage countries. The company has prospered from the escalating trend to offshoring in the last 10 years but its price margins are under constant pressure from its powerful retail customers. The factories the company owns, or jointly owns, are managed by trusted, experienced expatriate and local management staff.

The company is a lean kind of operation in corporate terms. There are no head-office HR staff in the company. Up till now, the company’s CEO has taken personal responsibility for recruiting and managing plant managers. As the new Operations Director in this company, you will now be responsible for performance management of the plant managers and this will include any people management issues that come up in the process.

The board you are joining is small, consisting of the chairman (who has extensive industry experience and a major shareholding), the CEO (who also has a major shareholding), the head of the design function, a finance director and the company’s longstanding lawyer. They are very experienced in the industry, know its work practices well, and are not attracted to modern ‘HR’ jargon. Unions are not really a big factor and they maintain a pragmatic attitude towards them. This means they do not actively seek to negotiate with unions but, where they are a strong industry feature in a particular country, they expect plant managers to conclude a collective agreement that is cost effective (i.e. that meets company operating margins) and maintains uninterrupted production.