The impact of work environment on employees' productivity

Master's Thesis, 2017

141 Pages










1.1 Background to the Study
1.2 Statement of the Research Problem
1.3 Research Objectives
1.3.1 General Objective
1.3.2 Specific Objectives
1.4 Research Questions
1.5 Significance of the Study
1.6 Scope of the Study
1.7 Organization of the Study

2.1 Introduction
2.2 Conceptual Definitions
2.2.1 Working Environment
2.2.2 Employee Productivity
2.3 Theoretical Literature Review
2.3.1 Goal-Setting Theory
2.3.2 Expectancy Theory
2.3.3 Maslow’s Hierarchy of Needs Theory
2.3.4 Frederick Herzberg's Theory
2.3.5 McGregor Theory X and Theory Y
2.3.6 Working Environment Factors that Affect Employees Productivity Supervisor Support Good relation with co-worker/employee Training & Development Workplace Incentives & Recognition Plane Adequate Workload Job security & safety Employee welfare Physical Work Environment Performance Feedback Job AID
2.4 Empirical Analysis
2.4.1 Empirical Analysis in the World
2.4.2 Empirical Analysis in Asia
2.4.3. Empirical Analysis in India National Investment & Manufacturing Zones (NIMZ)
2.5 Research Gap
2.6 Conceptual Framework
2.7 Theoretical Framework
2.7.1. Supervisor Support and Employee Productivity
2.7.2. Good relation with co-worker/employee and Employee Productivity
2.7.3. Training & Development and Employee Productivity
2.7.4. Work Incentives and Employee Productivity
2.7.5. Adequate Workload and Employee Productivity
2.7.6. Job security & safety and Employee Productivity
2.7.7. Employee welfare and Employee Productivity
2.7.8. Physical Work Environment and Employee Productivity
2.7.9. Performance Feedback and Employee Productivity
2.7.10 Job Aid and Employee Productivity

Our History
About Us
Vision and Mission
Company Founders
Our Pillar
Product Range
Some For Proudest Moments Baidyanath
Organization Structure Of Baidyanath(Naini Unit)
Organization Structure Of HRD In Baidyanath (Naini Unit)
Directors & Key Persons
Genesis & Accolades
Global Arena
Policies & Procedures Followed
Condition & Services Policy
Safety & Security Policy
At a Glance
Contact Us
Presence of Baidyanath

4.1. Basic Overview Of Industry
4.2. Major Players
4.4. Work Environment And Productivity

5.1 Introduction
5.2 Research Design
5.3 Study Area
5.4 Population of the Study
5.5 Sample Size and Sampling Techniques
5.5.1 Sample Size
5.5.2 Sampling Techniques
5.6 Data Collection Methods
5.6.1 Primary Data
5.6.2 Secondary Data
5.7 Data Collection Tools
5.7.1 Questionnaire
5.7.2 Observation
5.7.3 Interview
5.8 Reliability and Validity of Data
5.9 Data Analysis

6.1 Introduction
6.2 Findings and Data Analysis
6.2.1 Gender of Respondents
6.2.2 Rank of Respondents
6.2.3 Age of Respondents
6..2.4 SPSS OUTPUT Frequencies Frequency Table and Pie Chart Descriptive Statistics Correlation between work environment and factors

7.1 Recommendation
7.2 Conclusion



9.1 Questionnaire


I am extremely thankful to our Director, B.B.S. College of Engineering and Technology, for his invaluable support, for their kind permission to undergo project work successfully. I express my heartfelt thanks to our Head of the department, Miss Neha Singh, M.B.A., M.Phil. , Asst. Prof. Mr. Smarajit Basu my mentor of Master of Business Administration, department of BBS college of Engineering, and Technology Phaphamau Allahabad who provided all facilities for carrying out this project.

I express my sincere thanks to my Project Guide (Anil Kumar Shahi HR Manager, Shree Baidyanath Ayurveda Bhawan Pvt. Ltd. Naini Allahabad) for guiding me throughout the work. It would have been difficult to go through this project without their help. He not only helped me in collecting data but also supported me with their valuable knowledge and experiences in the successful completion of this project.

Any accomplishment requires the effort of many people and this work is no different it has been my proud privilege to be attached to SHREE BAIDHYANATH AYURVEDA BHAWAN PVT.LTD.

With due respect I express my indebtedness to the management of SHREE BAIDYANATH AYURVEDA BHAWAN PVT. LTD. For accommodating me as a summer trainee.

I thank God Almighty for showering his perennial blessing on me for giving me the courage to pursue this project work successfully.


There is a famous saying “The theory without practical is lame and practical without theory is blind.”

Employee ’ s Productivity is a serious workplace problem and an expensive occurrence for both employers and employees seemingly unpredictable in nature.

Human resource is an important part of any business and managing them is an important task.

Our institution has come forward with the opportunity to bridge the gap by imparting modern scientific management principle underlying the concept of the future prospective managers.

To the emphasis on practical aspect of management education the faculty of B.B.S. COLLEGE OF ENGINEARING AND TECHNOLOGY has with a modern system of practical training of repute and following management technique to the student as integral part of MBA in accordance with the above obligation under going project in SHREE BAIDHYANATH AYURVEDA BHAWAN PVT. LTD. MIRZAPUR ROAD, NAINI, ALLAHABAD. The title of my project is “IMPACT OF WORK ENVIRONMENT ON EMPLOYEE’S PRODUCTIVITY”

Certainly this analysis explores my abilities and strength to its fullest extent for the achievement of organization as well as my personal goal.


1.1 Background to the Study

Working environment plays an important role towards the employee’s productivity. Working environment is argued to impact immensely on employee’s productivity either towards negative or the positive outcomes (Chandrasekar2001).In the world, there are international organizations who debate the rights of employee. Most people spend fifty percent of their lives within indoor environments, which greatly influence their mental status, actions, abilities and productivity (Dorgan, 1994). Better outcomes and increased productivity is assumed to be the result of better workplace environment. Better physical environment of office will boosts the employees and ultimately improve their productivity. Various literature pertain to the study of multiple offices and office buildings indicated that the factors such as dissatisfaction, cluttered workplaces and the physical environment are playing a major role in the loss of employee’s productivity (Carnevale 1992,Clements- Croome 1997).

In the 1990’s, the factors of work environment had changed due to the changes in several factors such as the social environment, information technology and the flexible ways of organizing work processes (Hasun & Makhbul, 2005). When employees are physically and emotionally fit will have the desire to work and their productivity outcomes shall be increased. Moreover, a proper workplace environment helps in reducing the number of absenteeism and thus can increase thee employee’s productivity which leads to increased productivity at the workplace (Boles et al.2004).

As the Economic and Social Council reported in 2007, global economic growth is increasingly failing to create the kinds of new and better jobs that can lead to a reduction in poverty. Despite high and sustained economic growth in many developing countries, unemployment is rising, a large proportion of the labour force is working below poverty level wages, and the majority of non-agricultural employment is situated in the informal economy. It is of little surprise that in recent years there has been a shift of focus from a singular interest in economic growth to an enlarged concern with improving the quality of work.

1.2 Statement of the Research Problem

Noble (2009) states that more attention should be paid in identifying and dealing with working environment because when employee have negative perception to their environment they sometimes suffer from chronic stress. Opperman (2002) stated that, working environment means those processes, systems, structures, tools or conditions in the workplace that impact favorably or unfavorably individual productivity. The working environment also includes policies, rules, culture, resources, working relationships, work location, internal and external environmental factors, all of which influence the ways that employee perform their job functions.

This study is designed to examine the impact of working environment on employee’s productivity at the Shree Baidyanath Ayurveda Bhawan Pvt. Ltd. This is the Pvt. Ltd institution which operates at the center Allahabad city with about 320 employees. The problem 5 identified which made to undergo this research is based on the physical work environment which mostly affect employee’s productivity. The institute is located in an area of 13.75 acres which is large compared to the number of employees. This resulted to enough offices for employees to do their work effectively, silence which cause comfort depending on the task they are given and the environment of the place they are working.

Through this study the employer will get to know how its work environment impacts greatly on the employee’s level of motivation and productivity. A well designed office signals the values and objectives of the organization and the use of design in office interior communicates an organization values and identity. Office design therefore should be one of the factors in affecting employee’s productivity. Employee’s morale is often interrelated when it comes to productivity in the work environment. It is therefore important to find out the impact of working environment on employee’s productivity at this institute which will provide knowledge and measures to other organization in Ayurvedic medicine industry.

1.3 Research Objectives

This research will be guided by the following study objectives

1.3.1 General Objective

The general objective of this study is to assess the impact of working environment on employee’s productivity at the Shree Baidyanath Ayurveda Bhawan Pvt. Ltd. in Allahabad.

1.3.2 Specific Objectives

i). To determine the contribution of productivity feedback on employee’s productivity.
ii). To assess the use of job aid towards employee’s productivity.
iii). To determine whether physical work environment has influence on employee’s productivity.
iv). To examine whether supervisor support contribute towards employee’s productivity.

1.4 Research Questions

i). How does productivity feedback improve employee’s productivity?
ii). How can job aid enhance employees ‘productivity?
iii). What are the physical work environments that add towards employee’s productivity?
iv). Which contribution does a supervisor has towards employee’s productivity?

1.5 Significance of the Study

It is anticipated that the findings of the study will pave way for the authorities of the Shree Baidyanath Ayurveda Bhawan Pvt. Ltd. to accept the variable that affects employee’s working environment and their productivity at the organization. Such an acceptance could be utilized to improve on the working conditions of employees. It will also visualize that the findings of this study will enable the organization to know how to address issues concerning the employees and its working environment and to consider office design as an important factor in increasing employee’s productivity.

It will therefore serve as a reference material for future researches in this area. Also, the results will throw more light on factors affecting employee’s productivity as far as their environments are concerned. The study is expected to provide knowledge and measures to improve the working environment of employees for better productivity in public institution specifically at the Shree Baidyanath Ayurveda Bhawan Pvt. Ltd. in Allahabad.

1.6 Scope of the Study

The study will focus on employees at the Shree Baidyanath Ayurveda Bhawan Pvt. Ltd. This is the Pvt. Ltd. factory which produces Ayurvedic medicine at the Naini Industrial area of Allahabad with about 350 employees. This study will find out how working environment has a significant impact upon employee productivity and productivity.

1.7 Organization of the Study

The study will be structured into ten chapters. Chapter one will deal with introduction, statement of research problem, research objectives and significance of the study. Chapter two will consist of Industry Overview which will comprise of basic overview of industry, Major Player. Chapter three will contain the Company Profile. Chapter four will consists literature review Which Will Comprise of Conceptual Definitions, Theoretical Review, Empirical Analysis and Conceptual Frame Work. Chapter five will contain the research methodology which comprise of the research design, study area, research population, sampling design, and data collection methods. Chapter six will highlight the presentation and interpretation of data as well as discussing of findings. Chapter seven will contain the summary of the study, recommendations and conclusions.


2.1 Introduction

This literature review attempts to discuss the various literature related to working environment which has impact on employee productivity. The discussion also identifies gaps left by other researchers of similar studies. However, this study attempts to fill those gaps so that the write-up can contribute to a new body of knowledge in the academic world. Through this review, literature is re-packaged and analyzed as a way of bringing new insights into the problem studied.

2.2 Conceptual Definitions

This subsection provides definitions of key concepts such as working environment and employee productivity from various sources.

2.2.1 Working environment

Kohun (1992), defines working environment as an entirely which comprises the totality of forces, actions and other influential factors that are currently and, or potentially contending with the employee’s activities and productivity. Working environment is the sum of the interrelationship that exists within the employees and the environment in which the employees work.

Brenner (2004) was of the opinion that “the ability to share knowledge throughout organizations depends on how the work environment is designed to enable organizations to utilize work environment as if it were an asset. This helps organizations to improve effectiveness and allow employees to benefit from collective knowledge”. In addition, he argued that working environment designed to suit employee’s satisfaction and free flow of exchange of ideas is a better medium of motivating employees towards higher productivity. Opperman (2002) defines working environment is a composite of three major sub-environments: the technical environment, the human environment and the organizational environment. Technical environment refers to tools, equipment, technological infrastructure and other physical or technical elements. The technical environment creates elements that enable employees perform their respective responsibilities and activities. The human environment refers to peers, others with whom employees relates, team and work groups, interactional issues, the leadership and management. This environment is designed in such a way that encourages informal interaction in the work place so that the opportunity to share knowledge and exchange ideas could be enhanced. This is a basis to attain maximum productivity. Organizational environment include systems, procedures, practices, values and philosophies. Management has control over organizational environment. Measurement system where people are rewarded on quantity, hence workers will have little interest in helping those workers who are trying to improve quality. Thus, issues of organizational environment influence employee’s productivity.

2.2.2 Employee Productivity

Sinha (2001) stated that employees’ productivity is depending on the willingness and also the openness of the employees itself on doing their job. He also stated that by having this willingness and openness of the employees in doing their job, it could increase the employees’ productivity which also leads to the productivity.

Stup (2003) also explained that to have a standard productivity, employers have to get the employees task to be done on track as to achieve the organization goal or target. By having the work or job done on track, employers could be able to monitor their employees and help them to improve their productivity. Furthermore, a reward system should be implemented based on the productivity of the employees. This is to motivate the employees in order to perform more on their task.

There are several factors that being described by Stup (2003) towards the success of the employees’ productivity. The factors are such as physical work environment, equipment, meaningful work, productivity expectation, and feedback on productivity, reward for good or bad system, standard operating procedures, knowledge, skills and attitudes.

Franco et al (2002) defined productivity that relies on internal motivation but presence of internal factors such as necessary skills, intellectual capacity and resources to do the job clearly have an impact. As a consequence employers are supposed to provide appropriate working conditions in order to make sure the productivity of employees meet the required standards.

2.3 Theoretical Literature Review

Employees' productivity has been established to be directly related to employees' motivation. This assertion was corroborated by different management theories since the works of Frederick Taylor on 'The Principle of Scientific Management' in 1911and Henry Gantt on 'Works, Wages and Profits' in 1913. Modern employees' motivation management methods have evolved over time which discredited Taylor's" differential piece rate work" and Gantt's "task and bonus wage" systems. The modern employees' motivation management methods are employees' oriented and are more effective (Gardner and Lambert 1972).

Maslow (1943) said that people work to survive and live through financial compensation, to make new friends, to have job security, for a sense of achievement and to feel important in the society, to have a sense of identity, and most especially to have job satisfaction. All employees that have job satisfaction are high performers in their respective workplaces.

Taylor (1911) opined that the most important motivator of workers is salary and wages when he said that "non-incentive wage system encourages low productivity". He said that if employees receive the same wage irrespective of their individual contribution to the goal, they will work less and that employees think working at a higher rate means fewer employees may be needed which discourages employees to work more (Gardner and Lambert 1972).

Basing on those explanations, this study indicates that the success of any organization largely depends on the motivation of its employees.

2.3.1 Goal-setting Theory

The goal-setting theory had been proposed by Edwin Locke in the year 1968. This theory suggests that the individual goals established by an employee play an important role in motivating him for superior productivity. Skills required include the ability to engage employees in mutual goal setting clarify role expectations and provide regular performance feedback. Time and energy will also need to be given to providing relevant performance incentives, managing processes, providing adequate resources and workplace training.It also advice that in order to drive the organization to peak performance managers and supervisors must put out front the human face of their organization. Principle here is the human-to-human interaction through providing individualized support and encouragement to each and every employee (Salaman et al, 2005).

Employee productivity is a major multidimensional construct aimed to achieve results and has a strong link with planned goals of an organization (Abbas and Yaqoob, 2009). Productivity is the key multi character factor intended to attain outcomes which has a major connection with planned objectives of the organization (Sabir et al. 2012).

Employees ‘goals achievement in this theory is by creating of work environment attractive, comfortable, satisfactory and motivating to employees so as to give them a sense of pride and purpose in what they do. How working environment is designed and occupied affects not only how people feel, but also their work productivity, commitment to their employer, and the creation of new knowledge in the organization (Taiwo, 2009).

2.3.2 Expectancy Theory

The most widely accepted explanations of motivation have been propounded by Victor Vroom. His theory is commonly known as expectancy theory. The theory argues that the strength of a tendency to act in a specific way depends on the strength of an expectation that the act will be followed by a given outcome and on the attractiveness of that outcome to the individual to make this simple. Expectancy theory says that an employee can be motivated to perform better when there is a belief that the better productivity will lead to good productivity appraisal and shall result into realization of personal goal in form of some reward future events. The theory focuses on three things efforts and performance relationship, performance and reward relationship, rewards and personal goal relationship (Salaman et al, 2005).

This theory is based on the hypothesis that individuals adjust their behavior in the organization on the basis of anticipated satisfaction of valued goals set by them. In order for employees to perform in this theory is by making sure each employee's workplace goals and values are aligned with the organization's mission and vision is important for creating and maintaining a high level of motivation. That can lead to higher productivity, improve employee performance, reduce the chances of low employee morale, encourage teamwork and instill a positive attitude during challenging times (Salaman et al, 2005).

2.3.3 Maslow’s Hierarchy of Needs Theory

Abraham Maslow defined need as a physiological or psychological deficiency that a person feels the compulsion to satisfy. This need can create tensions that can influence a person's work attitudes and behaviors. Maslow formed a theory based on his definition of need that proposes that humans are motivated by multiple needs and that these needs exist in a hierarchical order. His premise is that only unsatisfied need can influence behavior; a satisfied need is not a motivator (Ramlall, 2004).

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Figure 4.1 Maslow’s theory hierarchy needs

Source: Ramlall, S. (2004)

A person starts at the bottom of the hierarchy (pyramid) and will initially seek to satisfy basic needs (e.g. food, shelter).Once these physiological needs have been satisfied, they are no longer a motivator. The individual moves up to the next level. Safety needs at work could include physical safety (e.g. protective clothing) as well as protection against unemployment, loss of income through sickness etc.).Social needs recognize that most people want to belong to a group. These would include the need for love and belonging (e.g. working with colleague who supports you at work, teamwork, communication).Esteem needs are about being given recognition for a job well done. They reflect the fact that many people seek the esteem and respect of others. A promotion at work might achieve this. Self- actualization is about how people think about themselves - this is often measured by the extent of success and/or challenge at work (Ramlall, 2004).One should also take care that employees don’t just work for financial incentives. One should create an environment where employees like to come to work because they enjoy their jobs hence increase performance. Incentives also motivate the employees when you want them to go that extra mile to achieve your targets. Maslow's model has great potential appeal in the business world. The message is clear - if management can find out which level each employee has reached, then they can decide on suitable rewards (Ramlall, 2004).

2.3.4 Frederick Herzberg's Theory

Herzberg's theory concludes that certain factors in the workplace result in job satisfaction, but if absent, they don't lead to dissatisfaction but no satisfaction. The factors that motivate people can change over their lifetime, but "respect for me as a person" is one of the top motivating factors at any stage of life. He distinguished between motivators; (e.g. challenging work, recognition, responsibility) which give positive satisfaction, and hygiene factors; (e.g. status, job security, salary and fringe benefits) that do not motivate if present, but, if absent, result in demonization. The theory is sometimes called the "Motivator-Hygiene Theory" and/or "The Dual Structure Theory." Herzberg described four basic states that could occur:

1. High Motivation/High Hygiene: Perfect state of happy, motivated employees
2. High Motivation/Low Hygiene: Motivated employees who love the work but have lots of Complaints
3. Low Motivation/High Hygiene: Bored employees punching a clock for a Pay check
4. Low Motivation/Low Hygiene: Total mess of bored, unhappy employees.

Herzberg's research proved that people will strive to achieve 'hygiene' needs because they are unhappy without them, but once satisfied the effect soon wears off - satisfaction is temporary. Then as now, poorly managed organizations fail to understand that people are not 'motivated' by addressing 'hygiene' needs. People are only truly motivated by enabling them to reach for and satisfy the factors that Herzberg identified as real motivators, such as achievement, advancement, development, etc., which represent a far deeper level of meaning and fulfillment.

2.3.5 McGregor Theory X and Theory Y

McGregor has developed a theory of motivation on the basis of hypotheses relating to human behavior. According to him, the function of motivating people involves certain assumption about human nature. Theory X and Y are two sets of assumptions about the nature of people. THEORY X considers individuals who dislike work and avoid it where possible, individuals who lack ambition dislike responsibility and prefer to be led, and individuals who desire security. The management implications for Theory X workers were that, to achieve organizational objectives, a business would need to impose a management system of coercion, control and punishment. THEORY Y considers effort at work as just like rest or play, ordinary people who do not dislike work. Depending on the working conditions, work could be considered a source of satisfaction or punishment, individuals who seek responsibility (if they are motivated). The management implications for Theory X workers are that, to achieve organizational objectives, rewards of varying kinds are likely to be the most popular motivator. The challenge for management with Theory Y workers is to create a working environment (or culture) where workers can show and develop their creativity.

2.3.6 Working Environment Factors that Affect Employees Productivity

An attractive and supportive working environment provide conditions that enable employees to perform effectively, making best use of their knowledge, skills and competences and the available resources in order to provide high-quality of organization service. Basing on this study the factors are explained below. Supervisor Support

A supervisor is also known as a person with an experience leader, a person who can solve problem and also the role model at the first level of organizational management (Adair, 1988; Nijman, 2002). Therefore, as an experience leader, the supervisors had always being involved in conducting a training program. The training program that is being conducted are such as establishing the objectives, selecting the trainer, developing a lesson plans, selecting the program method and techniques that is being used, preparing the materials, scheduling the program and also conduct a training needs analysis (Adair, 1988; Elangovan & Karakowsky 1999). Rabey, (2007) stated that, a supervisor could be a trainer to the employees, as the trainer will assist the employees in getting their job done by guiding employees on the operational process especially when it comes to a new operational procedure. A supervisor support could lead to the employees’ productivity but there is a case that the supervisor had failed in supporting their employees. For example, the miscommunication between employees and the supervisor in term of delivering the information or process on the job to the employees (Harris et. al., 2000). In order to gain the employees productivity, both party in between the employees and supervisor needs to play their part which is to commit with the relationship. If full commitment is given, it will leads to positive result to the performance from the employees (Blau, 1964). Good relation between co-workers

This is unique interpersonal relationships with important implications for the individuals in those relationships, and the organizations in which the relationships exist and develop. Studies show that workplace relationships directly affect a worker's ability to succeed. Because workers are spending on average 50 hours a week in the workplace, these long work hours are resulting in the formation of workplace friendships. These connections can be both positive, and have the potential to become harmful. Training and development

Training and Development basically deals with the acquisition of understanding, know-how, techniques and practices. In fact, training and development is one of the imperatives of human resource management as it can improve productivity at individual, collegial and organizational levels. As the process of ‘increasing one’s capacity to take action, organizations are now increasingly becoming particular with organizational learning and therefore collective development. Organizational learning, on the other hand, refers to the “efficient procedure to process, interpret and respond to both internal and external information of a predominantly explicit nature. According to Easterby-Smith (1999), the emergence of the concept of organizational learning is central on the hitherto idea that prior advocacies of learning are tended to its commercial significance and are lacking of empirical information on learning processes. Workplace Incentives and recognitions plane

The organization determines what motivates its employees and sets up formal and informal structures for rewarding employees behaving in the way required. Rewards may consist of a mix of internal rewards, such as challenging assignments, and external rewards, such as higher compensation and peer recognition (Chandrasekar, 2011). Productivity of professional employees is poor not only due to working environment factors but also due to lack of human resource management aspect such as recognition of employees who performs well, poor working condition, absence of productivity appraisal system and poor feedback on productivity outcome .Therefore significant changes in promotions, compensation and benefits helps in keeping employees satisfied and in turn increases production. Adequate Workload

Adequate workload distribution which is crafted to enable the employees to achieve optimal productivity and productivity levels. A balanced distribution of workload helps the management of an organization to enhance the productivity of their existing workforce. With the ever increasing workload the employees become more susceptible to stress and burnouts which impacts the productivity of the organization. JOB SECURITY & WORKPLACE SAFETY:-

Job security is a concept that refers to the real or perceived probability that an individual will keep his or her job. An employee’s job security can be impacted by the terms of work that are described in the employment contract, by legislation governing labor termination in the jurisdiction he or she works in, by labor organizations such as unions, and by economic conditions. Employees may also feel more or less secure depending on the behavior of their employer.

The protection of employee job security is an important aspect of occupational health and safety regulation enforcement. Bidyanath in the Naini unite, as well as the regulations of governmental health and safety organizations in many other jurisdictions, protect the job security of employees who report injuries, illnesses, or problems with workplace safety. These regulations do not allow employers to discourage workers from reporting health and safety issues, and they also prohibit retaliation against workers for doing so.

Job security is the probability that an individual will keep their job; a job with a high level of job security is such that a person with the job would have a small chance of becoming unemployed. Workplace safety is the practice of an employer using preventative measures to prevent hazards to the employees' health and personal safety. This practice includes creating plans and procedures for employees and managers in the workplace. In addition, workplace safety involves creating policies and keeping emergency materials available for employee and manager use while at a work site.


There are many different types of safe practices included in workplace safety. This includes providing a first AID kit for employee injuries, bright exit signs over entry and exit doors and a list of phone numbers posted near office or facility telephones. Books with emergency information are also among the ways an employer can help facilitate a safe workplace.


Workplace safety in many businesses requires additional training for the employees and management. This can include a lecture by an expert, hand-on training or a tour of the grounds and materials. For example, an employee whose job requires the use of a machine is not only trained to use the machine, but he is typically trained on how to operate machinery to avoid injury, dismemberment or death. The employee can also be trained on what to do if a co-worker injures herself on the job. EMPLOYEES WALFARE:-

Employee welfare defines as “efforts to make life worth living for workmen”. “Employee welfare is a comprehensive term including various services, benefits and facilities offered to employees & by the employers. Through such generous fringe benefits the employer makes life worth living for employees.”

The very logic behind providing welfare schemes is to create efficient, healthy, loyal and satisfied labor force for the organization. The purpose of providing such facilities is to make their work life better and also to raise their standard of living. Physical Work Environment

Physical working environment can result a person to fit or misfit to the environment of the workplace. A physical work environment can also be known as an ergonomic workplace. Researches on the workplace environment need to be done in order to get an ergonomic workplace for every each of the employees. By having this ergonomic physical workplace at their workplace, it will help employees from not getting the nerve injury (Cooper & Dewe, 2004).

Furthermore, McCoy and Evans (2005) stated that the elements of working environment need to be proper so that the employees would not be stressed while getting their job done. In their article, they also stated that the physical element plays an important role in developing the network and relationship at workplace. Result of the employees’ productivity can be increased from five to ten percent depending on the improvement of the physical workplace design at their workplace (Brill, 1992).

Further, Amir (2010) mentions elements that related to the working environment. There are two main elements which are the office layout plan and also the office comfort. Amir (2010) also stated that a physical workplace is an area in an organization that is being arranged so that the goal of the organization could be achieved. Performance Feedback

Performance feedback is an information exchange and conflict resolution process between the employee and supervisor. This consists of both positive feedback on what the employee is doing right as well as feedback on what requires improvement. Managers and supervisors will need to be comfortable with working with the whole range of workplace factors that influence employee performance. While the supervisor gives his/her feedback and requirements, the employee enables to give his her feedback regarding his/her requirements. Although this process is formal, it could be managed informally by gaining closer relations for two sides (Chandrasekar, 2011). Job Aid

Rossett and Gauier (1991) stated that, the purpose of job aid is to direct and guide as to enlighten the employees performance. Job aid also helps in order to support the employees’ performance. An example of a military performance had been reviewed by (Duncan 1985) regarding the military reliance on job aids between 1958 and 1972 which is significant and positive contribution toward the military performance. He also stated that based on the results of military analysis, job aid saved money without jeopardizing employees work performance. There are three ways to increase performance based on the job aid (Cavanaugh, 2004). The first way is through the external support which means that the employees need to take leave from work and look for the source as for their reference to their job. The second way is through the extrinsic support. An extrinsic support means that the job aid is being given within the system itself. As for the third way, it is called the intrinsic support. An intrinsic support is an insider or software that is being used as for the efficiency of workflow.

2.4 Empirical Analysis

This empirical analysis attempts to discuss various studies on working environment which has impact on employee productivity. These studies will be categorized as empirical analysis in the world, empirical analysis in Africa and empirical analysis in Tanzania.

2.4.1 Empirical Analysis in the World

Historically, the job satisfaction-productivity linkage has been primarily discussed by theorists from the Sociotechnical and Human Relations schools of thought. According to the Socio-technical approach (Emery & Trist, 1960), organizational productivity depends on congruence between the technical and social structures of the organization. Building on this notion, the Human Relations perspective posits that satisfied workers are productive workers (Likert, 1961; McGregor, 1960). Thus, organizational productivity and efficiency is achieved through employee satisfaction and attention to employees’ physical as well as socio-emotional needs. Human relations researchers further argue that employee satisfaction sentiments are best achieved through maintaining a positive social organizational environment, such as by providing autonomy, participation, and mutual trust (Likert, 1961). Based on this logic, employee satisfaction is believed to influence the development of routine patterns of interaction within organizations. Through mutual interactions, employees develop relationships with co-workers that also prescribe behavioral expectations and influence behaviors (e.g. norms or informal standards of acceptable behavior).

For example, an unhappy employee could be prevented from lowering their productivity by control mechanisms (e.g., standards of measurement, supervisory influence); however, widespread dissatisfaction among employees could lead to a strike or sabotage that might hinder an organization’s effectiveness. Alternatively, dissatisfied employees might choose to maintain productivity levels (due to control mechanisms) but neglect to inform supervisors of important information that, over time, would result in lower organizational effectiveness or efficiency. Thus, employees’ job satisfaction sentiments are important because they can determine collaborative effort (Harter et al., 2002).Brenner (2002) asserted that the ability of employees within an organization to share knowledge throughout the system depends on the conditions of their work environment. Some employees tend to be more productive in a well facilitated work environment. More so, the quality of comfort variable from work environment determines the level of satisfaction and productivity of workers. Workers productivity cannot be optimal, if the conditions of work environment are not favorable. Improved work environment enhances employee’s productivity.

2.4.2 Empirical Analysis in Asia

Developing country labor practices and the working conditions that result from them are both generally poor and increasingly drawing attention from governments, corporations, and the popular media. This review provides an introduction to some of the leading academic literature and ideas that are important for understanding the persistence of poor labor practices and possible policies to address these conditions. Asia gained a significant amount of global apparel production following the end of the Multifibre Arrangement (MFA) in 2004. With the increase in production came renewed attention to the conditions workers experience while producing apparel that is largely exported to developed countries. Apparel is important for several reasons. First, apparel is often seen as one of the first steps in the process of economic development. Second, in most countries, most workers are women and it is becoming increasingly well understood that the rights and working experience of women play a critical role in economic development. Third, for many countries, “globalization” has deep ties to the apparel industry because in many emerging Asian economies, their exports and foreign investment are related to apparel.

The term “working conditions” is broad and is often applied to a wide range of ircumstances. The International Labour Organization’s (ILO) Working Conditions Laws Report includes working hours and annual leave, maternity protection, and minimum wages. Other literature interprets working conditions more broadly and includes compliance with national laws and international norms (often defined by ILO conventions). Labor practices that generate working conditions that fall short of these standards are often referred to as poor labor practices in both the literature and this report. In practice, factory-level compliance reports are often used to measure working conditions. This report uses a broad definition of working conditions and draws upon factory-level reports for examples and illustrations of broader points in the literature.


Labor practices in developing countries generally, and often in Asian factories in particular, are criticized widely for being “poor” or “unacceptable.” In 2005, the International Labor Organization reported that nearly 9.5 million people work in “slave-like conditions” in Asia (ILO 2005a). Often cited examples of poor practices include wages below living wages, excessive hours and days worked per week, discrimination, verbal and physical abuse, suppression of trade unions, and preventable disasters that result in death.1 popular stories, such as the collapse in Bangladesh’s Rana Plaza, create the impression that labor practices are very poor.

Independent of popular perceptions, however, it is important to point out that Asia is extremely diverse: Japan and Bangladesh have very different labor practices. As described by Robertson et al. (2009), poor practices in developing country factories often are a reflection of development status. Practices in developing country factories are considered poor when compared to developed countries. Developing countries, by definition, are often characterized by low productivity, relatively low education levels, low wages, and volatile economic conditions. These conditions result in poor conditions generally (not just in factories) that include malnutrition, infant mortality, low education levels, and other poverty-related problems. Low wages, long hours, and unfavorable working conditions within factories, therefore, are often a reflection of development status.

Much of the difference in working conditions across countries is explained by differences in levels of development. To illustrate this point, consider one of the most salient and illustrative examples of such conditions: working hours.2 Figure 1 shows the negative relationship between working hours and gross domestic product (GDP) per capita. The negative relationship is statistically significant and shows that poorer countries tend to work longer hours (often more than the 40-hourper-week standard in many developing countries). South and Southeast Asian countries fall below the predicted line, but are not far from their predicted values.

Governments may enact progressive laws to improve conditions, but often, enforcement is expensive. The lack of resources generally may mean that enforcement is insufficient to maintain standards intended by the law (Amengual 2014a, 2014b, Lee and McCann 2014, Weil 2014). When government enforcement falls short, tension between public and private enforcement emerges and pressure on factories to improve their standards comes from other stakeholders (Weil 2005, Willborn 2014).

Abbildung in dieser Leseprobe nicht enthalten

Figure 1: Working Hours and GDP per Capita

Notes: Working hours data are drawn from household surveys. The working hours are the usual hours per week for all workers and are the mean values over the 2005௅ 2015 period in order to present long-run averages. GDP per capita data are from the World Bank Development Indicators and are the natural log of 2005 dollar valued GDP divided by population.

Source: Authors’ elaboration using working hours data from the ILO database.

Abbildung in dieser Leseprobe nicht enthalten

Figure 2: Working Hours Relative to Regular Weekly Hours Limits

CAM = Cambodia, GDP = gross domestic product, INO = Indonesia, MAL = Malaysia, PHI = Philippines, THA = Thailand, VIE = Viet Nam. Notes: Working hours data are drawn from household surveys. The working hours are the usual hours per week for all workers and are the mean values over the 2005-2015 period in order to present long-run averages. GDP per capita data are the natural log of 2005 dollar valued GDP divided by population.

Sources: ILO database; World Development Indicators; ILO 2010b. Working Conditions Laws Report 2010 A Global Review. Geneva.

Another key concern about working hours is that poor countries may have progressive worker protections, such as established limits for weekly work, but actual hours worked may exceed these values. To illustrate this point, Figure 2 shows the ratio of actual hours worked to the legal established “normal” workweek. Values above 1, therefore, suggest a prevalence of overtime work (which may, of course, be legal) or workweeks longer than established norms. Again, the figure shows a negative relationship. The negative relationship highlights the fact that workers in developing countries work longer relative to their own domestic norms than richer countries. Again Asian countries fall close to their predicted values. The People’s Republic of China (PRC) is a notable exception in which workers work more hours per week than their established normal limitʊfar more than would be predicted by the PRC’s GDP per capita.

Other examples of poor conditions in factories in Asia are ubiquitous and have received a great deal of attention in the popular media (see Box 1). Formal analysis of these conditions, however, is not so common. Concerns about working conditions emerged in analysis about East Asia’s Newly Industrialized Countries (NICs) as early as the 1980s (Addison and Demery 1988). When taking an academic view of these conditions, researchers often group these practices under the rubric of human resource policies, since they include wages, hours, environment, sanitation, and other dimensions that are set by factories. As a result of these practices, The Rana Plaza Collapse conditions in factories in developing On 24 April 2013 more than 1,100 apparel workers died when a factory complex collapsed in Rana Plaza. Since that time, European and United States buyers have dedicated considerable efforts toward addressing safety concerns in Bangladesh. The Accord on Fire and Building Safety in Bangladesh (“The Accord”), the Alliance for Bangladesh Worker Safety (“The Alliance”), and the National Initiative were collections of apparel buyers (mainly from the United States and Europe) that now cover about 89% of the Bangladesh apparel workers (Anner and Bair 2016). These programs seek to help factories invest in safety improvements while mitigating the effects on factory competitiveness. Factory fires as recently as 1February 2016 demonstrate that ongoing efforts are necessary to minimize safety risks in these apparel factories.

countries are often called “sweatshops” and have a large and growing literature. This paper reviews several aspects of this literature with theC goal of describing labor practices in factories in developing countries generally and in Asia in particular. Other examples of poor conditions in factories in Asia are ubiquitous and have received a great deal of attention in the popular media (see Box 1). Formal analysis of these conditions, however, is not so common. Concerns about working conditions emerged in analysis about East Asia’s Newly Industrialized Countries (NIs) as early as the 1980s (Addison and Demery 1988). When taking an academic view of these conditions, researchers often group these practices under the rubric of human resource policies, since they include wages, hours, environment, sanitation, and other dimensions that are set by factories. As a result of these practices, conditions in factories in developing countries are often called “sweatshops” and have a large and growing literature. This paper reviews several aspects of this literature with the goal of describing labor practices in factories in developing countries generally and in Asia in particular.

A. The Apparel Sector

Just as factory practices vary with development status, so does the propensity to export apparel. Historically, apparel has been one of the first steps into manufacturing that countries take along the path to development (Fukunishi and Yamagata 2014). Garment exports from developing economies increased significantly after the Second World War and were led by Japan; the Republic of Korea; Hong Kong, China; and Taipei, China. As these economies became richer, their apparel production shifted toward lower-wage economies and apparel production has more recently been led by the PRC, Viet Nam, Cambodia, and Bangladesh.

B. Formal and Informal Firms

When talking about the differences between formal and informal firms, the first issue that comes up is the definition of formality. Differences in studies of “formality” in the academic literature often depend on definitions of formality. Paying taxes, participating in the national social security system, and providing formal benefits are three of the main criteria often used to delineate formality from informality. The conventional wisdom is that informal sector employment is “worse” because wages are lower and workers are not covered by government protections. As a result, the informal sector is usually seen as a problem and a sign of underdevelopment that serves as an inferior alternative to formal sector work.


The distinction between formal and informal does not take us far enough in understanding why some firms decide to implement poor practices. Certainly, poor conditions in the informal sector may be, by definition, the result of operating outside the law. But many of the concerns about poor practices are directed at the larger, formal sector factories. The fact that poor practices are found in both informal and formal factories implies that the law is one of possibly several determinants of poor practices.

Different academic disciplines take different approaches to understanding the behavior of firms. Economists often assume that factory managers are making decisions with the goal of optimizing some objective, which is usually maximizing profits. As noted earlier, decisions about working conditions are a subset of the decisions factories make and these decisions can be grouped generally under the rubric of human resource management (HRM) policies. These policies intersect with national and international labor standards, but also are driven by the economics of the factory itself.

The literature related to HRM policies pans more than 50 years (McGregor 1960 is one of the earlier examples). Much of the debate in the HRM literature focuses on the issue of incentives. Unlike machines, workers make their own decisions that affect their productivity at work (e.g., effort). Worker motivation and work quality are influenced by job characteristics (Hackman and Oldham 1976). HRM policies therefore can have both direct and indirect effects on costs. For example, putting in air-conditioning includes a direct cost of the air-conditioning unit. The indirect cost effects arise with the change in worker productivity that may result from climate control. Huselid (1995); and Ichniowski, Shaw, and Prennushi (1997) are two early studies in the new wave of academic literature that document increases in worker productivity after implementing new HRM policies. Shaw (2004) attributes the growth in United States (US) productivity in the 1990s to HRM polices (although acknowledging measurement problems), and Lazear and Shaw (2011) describe how firms can optimally design their HRM policies to increase productivity by describing specific policies that have been linked to productivity growth.

One particular area of HRM policies that have been linked to productivity is relationships with supervisors. Leblebici (2012) reports that 100% of sampled workers agree that their productivity is affected by their relationships with their supervisors. As mentioned earlier, Rossi and Robertson (2011) find that improving communication between supervisors and employees can pave the way for subsequent HRM innovations. While these results raise the question of the direction of causality (Wright et al. 2005), both literature reviews (Bloom and Van Reenen 2011 and Croucher et al. 2013) and meta-analyses (Judge et al. 2001 and Combs et al. 2006) find that the preponderance of the literature points to a causal relationship that runs from the relationships to worker productivity.

In addition to relationships with supervisors, other specific aspects of working conditions have been found to be significantly related to worker productivity, including incentive pay (Jones, Kalmi, and Kauhanen 2010 and Lazear and Shaw 2011) and training (Singh 2004). Improvements in productivity may require that workers are well educated (Shaw 2004) or that the changes are implemented in a way that makes them understood by workers (Black and Lynch 2001), but the gains apply to a range of workers within plants (Jones, Kalmi, and Kauhanen 2006). Brown, Dehejia, and Robertson (2013 and 2014b) find that there is evidence of a positive relationship between firm compliance with labor standards and firm survival and that firms that try innovations in HRM policies, such as compliance, are not very likely to reverse those decisions. The main point from these studies is that improvements in HRM policies can improve worker productivity and perhaps firm productivity as well.

Improved working conditions are also correlated with increased productivity and firm profits. Brown et al. (2015), analyzing firm-level data from Viet Nam, find that compliant firms are more profitable. Further, profits increase as firms become newly compliant. The price-cost ratio nearly doubles over five Better Work assessment cycles. Evidence on a causal relationship is provided by Levine, Toffel, and Johnson (2012). Analysis of random OSH inspections of California firms found that inspected firms subsequently experienced significant reductions in costs associated with accidents and injuries with no reduction in the size of the workforce.

The main question that follows from this growing and important literature, of course, is why factories would resist implementing improvements in HRM policies if they have been shown to increase worker and factory productivity. In other words, what explains the choice of poor practices at the firm level and the persistence of poor practices in developing countries?

There are several leading explanations in the literature. The first is that the economist’s assumption of perfect information may not hold in developing countries. It is fairly well-known that developing countries do not usually use the most recent or “cutting edge” production techniques. Alvarez and Robertson (2004), for example, show that Mexican and Chilean firms are most likely to use older production technologies. Since more innovation takes place in developed countries, it takes some time for new techniques to spread to the rest of the world.

If we view HRM policies as a form of technology, and it seems reasonable to take that view (Shaw 2004), then it is possible, and probably likely, that developing country firms may not be aware of the alternative policies. The fact that Lazear and Shaw (2011) describe specific HRM policies that firms can implement to improve productivity suggests that there are factories in developed and developing countries that may not yet be aware of these HRM policies. Even if factories are aware of the alternatives, they may not be aware of the positive results that might follow from such changes. The role of information has been shown to be especially salient for developing country producers. In particular, Bloom et al. (2013) find that firms benefit from new information. Using a randomized experiment of consulting services in India, they show that firms that received the new information in the form of consulting services increased their productivity. In developing countries, the issue of information may be especially relevant because firms tend to be smaller (de Grip and Sieben 2005). Even if factories are aware of the technology and aware of the net benefits, they may not be large enough or have a sufficiently long expected time horizon to capture the expected benefits. Size matters because the up-front costs may be fixed and production volumes are not sufficient to lower the average cost to make the investment pay off. Figure 6 shows that larger firms are more compliant, which is consistent with the idea that fixed costs matter.

2.4.3 Empirical Analysis in India


Make In India - National Manufacturing


- The need to raise the global competitiveness of the Indian manufacturing sector is imperative for the country’s long term-growth. The National Manufacturing Policy is by far the most comprehensive and significant policy initiative taken by the Government. The policy is the first of its kind for the manufacturing sector as it addresses areas of regulation, infrastructure, skill development, technology, availability of finance, exit mechanism and other pertinent factors related to the growth of the sector.


- An increase in manufacturing sector growth to 12-14% per annum over the medium term.
- An increase in the share of manufacturing in the country’s Gross Domestic Product from 16% to 25% by 2022.
- To create 100 million additional jobs by 2022 in manufacturing sector.
- Creation of appropriate skill sets among rural migrants and the urban poor for inclusive growth. x An increase in domestic value addition and technological depth in manufacturing. x Enhancing the global competitiveness of the Indian manufacturing sector. x Ensuring sustainability of growth, particularly with regard to environment.


- India has already marked its presence as one of the fastest growing economies of the world.
- The country is expected to rank amongst the world’s top three growth economies and amongst the top five manufacturing destinations by 2020.
- Favorable demographic dividends for the next 2-3 decades. Sustained availability of quality workforce.
- The cost of manpower is relatively low as compared to other countries.
- Strong consumerism in the domestic market.
- Strong technical and engineering capabilities backed by top-notch scientific and technical institutes.

- Well-regulated and stable financial markets open to foreign investors.

Salient Features of NMF Policy

1. Focus Sectors:

- Employment-intensive industries like textiles and garments, leather and footwear, gems and jewelry and food processing industries.

- Capital goods industries like machine tools, heavy electrical equipment, heavy transport, earthmoving & mining equipment.

- Industries with strategic significance like aerospace, shipping, IT hardware & electronics, telecommunication equipment, defense equipment and solar energy.

- Industries where India enjoys a competitive advantage such as automobiles, pharmaceuticals & medical equipment.

- Small & medium enterprises. o Public sector enterprises.

2. National Investment & Manufacturing Zones (NIMZ):

- The National Investment and Manufacturing Zones are being conceived as giant industrial greenfield townships to promote world-class manufacturing activities.

- The minimum size is 5000 hectares (50 square kilometers) wherein the processing area has to be at least 30%.

- The central government will be responsible for bearing the cost of master planning, improving/providing external physical infrastructure linkages including rail, road, ports, airports and telecom, providing institutional infrastructure for productivity, skill development and the promotion of domestic and global investments.

- The identification of land will be undertaken by state governments. State governments will be responsible for water requirement, power connectivity, physical infrastructure, utility linkages,

environmental impact studies and bearing the cost of resettlement and rehabilitation packages for the

-wners of acquired land.

- The state government will also play a role in its acquisition if necessary.

- In government, purchase preferences will be given to units in the national investment and manufacturing zones.

- For financial year 2016-17, USD 0.515 million has been earmarked under the scheme for

implementation of National Manufacturing Policy for 'Master planning of NIMZs and Technology acquisition & development fund.

- National Investment and Manufacturing Zones Identified

i. Under DMIC:

ƒ Ahmedabad-Dholera Investment region, Gujarat

ƒ Shendra-Bidkin Industrial Park City near Aurangabad, Maharashtra ƒ Manesar-Bawal investment Region, Haryana

ƒ Khushkhera-Bhiwadi-Neemrana Investment Region, Rajasthan ƒ Pithampur-Dhar-Mhow Investment Region, Madhya Pradesh ƒ Dadri-Noida-Ghaziabad Investment Region, Uttar Pradesh ƒ Dighi-Port Industrial Area, Maharashtra

ƒ Jodhpur-Pali-Marwar region, Rajasthan

ii. Outside DMIC:

14 NIMZ outside the DMIC region have also been given in-principal approval.

ƒ Kuhi and Umred Taluka of Nagpur district, Maharashtra ƒ Tumkur, Karnataka

ƒ Chittoor, Andhra Pradesh ƒ Medak, Telangana

ƒ Prakasam, Andhra Pradesh ƒ Gulbarga, Karnataka

ƒ Kolar, Karnataka

ƒ Bidar, Karnataka

ƒ Kalinganagar, Jajpur District, Odisha

ƒ Hyderabad Pharma NIM, Rangareddy and Mehbubnagar district of Telegana ƒ Ramanathapuran, Tamil Nadu

ƒ Ponneri, Tamil Nadu

ƒ Auraiya, Uttar Pradesh ƒ Jhansi, Uttar Pradesh


Simplification of Regulatory Environments

- Timelines will be defined for all clearances.

- Central & State governments to provide exemptions from rules and regulations related to labour, environment etc. subject to the fulfilment of certain conditions.

- Mechanisms for the cooperation of public or private institutions with government inspection services under the overall control of statutory authorities to be developed.

- Process of clearances by centre and state authorities to be progressively web-enabled. o A combined application form and a common register to be developed.

- The submission of multiple returns for different departments will be replaced by one simplified monthly/quarterly return.

- A single window clearance for units in NIMZ. 4. Acquisition of Technology & Development

- The policy intends to leverage the existing incentives/schemes of government and also introduce new mechanisms to introduce green technologies.

- A technology acquisition and development fund has been proposed for the acquisition of appropriate technologies, the creation of a patent pool and the development of domestic manufacturing of equipment used for controlling pollution and reducing energy consumption.


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