Why Managers Should Care About Employee Loyalty Case Study

1. Introduction
In the article “Why Managers Should Care about Employee Loyalty” by Timothy Keiningham and LerzanAksoy; Benjamin Schneider, professor emeritus at the University of Maryland, has shown conclusively that employee's loyalty-related attitudes precede a firm's financial and market performance. Also he stated that there is a much greater payoff in working on improving the human factor than what people believe it to be. Researchers at University of Pennsylvania found out that, by spending 10 percent of a company's revenue on capital improvements increased productivity by 3.9 percent, but by investing the same amount in for the development of human capital is expected to double the effect on a company, which is suggested as an amount
Hayleys MGT is engaged in manufacturing knitted fabric for the Sri Lanka-based apparel industry and for direct export. The Company's product range includes single jersey, fleece, interlock, pique, rib, polar fleece, structures, pointelle and marl fabrics. The range also includes printed and lycra-based fabric. The printing work of the company is currently outsourced. Fabric composition covers a range including cotton, polyester, spandex, lycra, rayon, wool, viscose, modal and a multitude of such blends. The Company has accreditation from Marks & Spencer, NEXT, BHS, TESCO, Boden, Mothercare, Adams and Woolworth. It has a production capacity of 1,000,000 kilograms of fabric per month. As of March 31st 2012, the Company's ultimate parent undertaking and controlling party holds to be Hayleys
They mostly hire skilled labor due to the importance of maintaining the quality of fabric. The labor force is paid a fixed monthly amount and the production process of the company is active for 24 hours and 7 days. As the company works for 24 hours they have a night shift as well. (Hayleys MGT Annual report 2014/2015). The organization is also highly unionized and this has highly impacted negatively on organizational performance and employee loyalty. Also the factory is isolated from an industrial zone and majority of the work force come from surrounding villages. This has resulted in finding new recruits difficult. Further, the organization human capital consist of 1158 men and 42 women employees. Also Labor cost is one of the main competitive advantages and a challenge that Hayleys MGT faces at present. To examine the practical application of people management concepts, Hayleys MGT thus has been selected due to the discussed reasons, and therefore it is crucial for them to satisfy their employees and retain their