MAS Holdings: Supporting the advancement of factory-floor associates in Sri Lanka MAS Holdings (MAS) is a global apparel manufacturing company headquartered in Sri Lanka.i Established in 1987, it now has 52 manufacturing facilities across 17 countries, with its biggest markets in the United States, Europe, and Asia. MAS uses inclusive employment practices to support continued growth and improvements to productivity, while avoiding labor shortages common to the industry. This case study focuses on its Sri Lankan operations, however, most of the policies and initiatives apply across MAS Holdings. The Challenge Benefits for Workers Approximately 70 percent of workers in the Sri Lankan labor market Some 80 percent of MAS’s Sri Lankan employees work in entry-level are informal, making the garment sector a vital source of formal production roles on the factory floor. Most of these employees, known employment and training for unskilled workers from poorer, rural as ‘associates’ come from rural, economically-disadvantaged, and/or areas.ii The garment sector is especially important for Sri Lankan post-conflict areas. Women account for 76 percent of MAS associates women, who hold 78 percent of production-level jobs in the industry. in Sri Lanka, and this includes internal migrants, women widowed by This contrasts with low levels of participation across the wider war, and women who are the head of their household, and often the economy of just 32 percent for women percent versus 72 percent for sole breadwinner. men.iii,iv The company sought to create conditions that would also attract and retain workers from economically-disadvantaged groups, Benefits for Business including women, and further strengthen company performance. Inclusive Employment Solutions Employee turnover at 30 percent, about half the industry average. Turnover is even MAS uses several inclusive employment practices and initiatives, lower (about 1 percent) for employees using including some that specifically target women, such as its flagship Human Capital childcare services. Performance ‘Women Go Beyond’ program, launched in 2003. MAS is an employer of Participation choice in the region, enabling it to avoid labor Access shortage issues common Targeted recruitment with operations in rural to the sector. to labor and post-conflict areas. Robust procedures and support to combat gender-based violence and harassment within and outside the workplace. Employee benefits include meals, transportation, Built and expanded relationships with buyers. Opened up new partnership and childcare. opportunities, such as via Gap Inc.’s Access PACE program. to markets Advancement Training and leadership development program to help employees progress to more advanced roles. Life and technical skills training through the Personal Advancement and Career Enhancement (PACE) program. Entrepreneurship training to help associates open small businesses to supplement incomes. 1 MAS Holdings: Supporting the advancement of factory-floor associates in Sri Lanka Industry: Apparel manufacturing Founded: 1987 Size: 52 manufacturing facilities across 17 countries, producing lingerie, sleepwear, loungewear, sportswear, leisurewear, and athleticwear for leading global brands such as Nike, Gap, Patagonia, Ralph Lauren, and Victoria’s Secret. Base of the Pyramid Workforce: Directly employs 116,029 people, 69% of whom are women. In Sri Lanka, it operates 33 manufacturing facilities that employed 90,944 people in 2022. 2 MAS Holdings: Supporting the advancement of factory-floor associates in Sri Lanka How MAS Puts Inclusive Employment Solutions into Practice Participation: Target recruitment “Our purpose as an organization, is to be changemakers, enabling dreams and enriching the Providing secure employment opportunities for fabric of life on our planet. Since our industry is labor economically-disadvantaged communities has always been a priority intensive, we have a great opportunity to create for MAS. Founder, Mahesh Amalean, says from the outset, the positive change in the communities and countries company made a strategic decision to set up factories in rural areas, we operate in. This change must include economic taking “the work to the workers, instead of the workers to the work”.v empowerment and better living standards as well After the end of Sri Lanka’s civil war in 2009, MAS established new as social, cultural change and mindset that is more operations in the northern provinces where fighting was most inclusive and respectful. When this happens, the fierce. The company recognized that there was a scarcity of formal dreams and aspirations of all our people are enabled, employment opportunities in these post-conflict areas, and that it and this in turn brings out the changemaker in each could tap into a significant labor supply, while also benefitting women of them, so that they can continue to create positive widowed by the conflict, who often head their household and are the impact in their communities.” sole wage earner. Dinali Peiris, Human Resources Director Participation: Address discrimination and harassment Concerns about sexual harassment and violence in Participation: Reduce entry barriers the workplace can be a significant barrier to women’s participation in the garment sector. To counter this, MAS has robust anti- Since its inception, the company has provided one harassment policies and procedures. nutritious meal per shift for all associates, with additional nutrition for pregnant and lactating women. It also offers free shuttle buses These are communicated to all employees in mandatory induction to and from MAS factories. This transportation is particularly sessions, and in follow-up training. The company also has multiple important for women as many are concerned about the safety of channels for making confidential reports about harassment and alternative transport methods. violence, including anonymously. Trained counsellors provide ongoing support to victims, and MAS offers free legal assistance Recent studies show that “having children below five years to anyone who wishes to make a complaint about gender-based of age” can prevent the labor force participation of Sri Lankan violence and harassment (GBVH) in the workplace. For GBVH that women Recognizing this, MAS provides high-quality childcare in occurs outside the workplace, including domestic violence, MAS 23 locations globally, including 17 in Sri Lanka. In some locations supports staff with in-house counselling, referrals to organizations childcare is provided at free on-site facilities managed by MAS that help GBVH victims, and access to the legal aid camps and or, in locations where that is not feasible, it subsidizes the cost of consultations that MAS runs several times a year. childcare at private facilities within five kilometers of the factory. In collaboration with doctors and other health professionals, MAS conducts activities related to maternal and reproductive health to It’s not just that it’s a safe environment so I do support the participation of women associates in rural and low- not have to worry about my children while I’m at income-communities, where such discussions are often taboo. In work … the crèche also fulfils their educational, 2021, the company ran 672 awareness-raising sessions, covering issues such as breast and cervical cancer. In addition, MAS finances psychological and entertainment needs.” medical check-ups for women at or near its factories. Amalraj, sportswear factory associate 3 MAS Holdings: Supporting the advancement of factory-floor associates in Sri Lanka Advancement: Upskill Advancement: Build capacity for self-employment MAS offers extensive training and opportunities MAS provides entrepreneurial training so that to help its associates develop new skills so they can progress into associates can open a small business, either alongside their work technical and leadership roles. Starting with induction training, at MAS, or after they leave the company. This program includes MAS encourages associates to imagine a career path within training in financial management, business plan development, the company. Human resources staff also encourage eligible marketing with social media, plus practical skills in making crafts candidates to apply for higher-level positions. and tailoring that might provide the basis for an enterprise. In The Team Leader and Group Leader Development Program is a 2021, 5,000 employees across the company participated in the MAS-wide initiative that equips associates with the technical and entrepreneurial skills program. leadership competencies they need to progress to more senior, higher-paying roles. Under this program, MAS pays the fees for associates with only a secondary education to earn a certificate or diploma at a local vocational or tertiary education facility. In 2021, 814 women and 265 men benefited from MAS’s leadership Associates who have benefited from development training opportunities. MAS’s training programs Women associates can also sign up for the Personal Advancement Yamuna, who joined MAS as a trainee production associate, and Career Enhancement (PACE) program, which MAS provides had only a secondary-level education, but through the in partnership with the global clothing brand, Gap Inc. PACE Team Leader and Group Leader Development Program, provides 65 to 80 hours of life skills and technical skills training she completed a university diploma and was promoted to in communication, time management, and decision-making skills, Assistant Manager, overseeing a team of 450 associates. as well as financial and legal literacy. As many of MAS’s associates are young, undereducated women, who lack confidence, the PACE Madhusha, who started as a production associate in 2009, program helps to empower them, both at work and at home. In now leads a team of 60, and works directly with customers. 2021, 985 MAS associates participated in the PACE program. Following her technical training, Madhusha completed MAS’s MAS manufacturing divisions also train selected women to work as certificate program which developed her skills in English, mechanics and garment cutters—jobs traditionally held by men— computing, basic mathematics, leadership, and soft skills. and this training provides a talent pipeline across the company. In 2021, 136 women benefited from MAS’s technical training. Kumari, a single mother, is a machine operator at MAS. Along with her technical training, Kumari has taken the company’s entrepreneurial skills development program, which covers financial management, marketing, and business plan Advancement: Provide leadership and development. This program has enabled her to start a career development successful business sewing mosquito nets, pillowcases, and The exceptional contributions of women curtains. With the income from her own business, Kumari associates—both on the job and in their own communities—are has been able to save an entire month’s salary and plans to recognized through the MAS Abhimani Empowered Woman use this to expand her business. of the Year Awards. Winners of the award are offered several development opportunities, including mentoring, so that they, in turn, can support other women in the company to become leaders. 4 MAS Holdings: Supporting the advancement of factory-floor associates in Sri Lanka The Benefits for Business: MAS Holding’s Experience MAS’s efforts to provide career and personal development company’s childcare facility, she has seen noticeable increases in their opportunities for economically-marginalized groups, and especially productivity, and decreases in their absenteeism and lateness. MAS women, have enabled the company to recruit and retain staff at rates plans to institute a more robust data collection process so that it can well above the industry average. It has also been able to achieve its quantify the impact of childcare and other employee benefits. ambitious growth and productivity targets, and nurture collaborative, long-term relationships with international customers. “Companies often underestimate the knowledge and value factory floor workers hold, but making Human capital performance the effort to understand and encourage the dreams and ambitions of these workers and providing them MAS has a achieved a high level of employee with a career path helps the business too … in terms retention. In 2021, the turnover rate for factory floor associates of retention and productivity, for example.” was 29.5 percent compared to the garment industry average of 60 percent.vii This results in significant cost savings. Staff turnover can Suren Fernando, CEO, MAS Holdings be costly for companies across all skill levels, but costs associated with recruiting and training new associates are even higher if staff have developed specialized skills, expertise, and institutional knowledge.viii Access to labor MAS Training and Development Manager, Manik Welikala, believes that the company’s success in retaining staff is tied to its investments MAS has managed to avoid the labor shortages in training, skills development, and associates’ well-being. Research experienced by other garment manufacturers in recent years supports this, as a 2019 study on the Sri Lankan garment sector by establishing itself as an ‘employer of choice’ in Sri Lanka. Chief found that the working environment, work-life stress, and personal Executive Officer, Suren Fernando, attributes this success to the growth and career development opportunities are all important company’s career development and training opportunities, as well factors in whether an employee decides to stay or leave a company.ix as its robust policies and safeguards that create a safe working environment and help to overcome the safety concerns that prevent By encouraging associates to envisage a career beyond the factory some women from entering the garment sector. floor and providing them with training and opportunities, associates increased their engagement with their jobs. Training programs also In focus group discussions, associates said opportunities for increase productivity by improving individual performance and professional and personal development distinguish MAS from other ensuring that MAS can meet its needs for technical and managerial companies, giving them a strong reason to join and stay with the skills. In addition, the company’s emphasis on supporting associates company. Four women associates reported that they applied for a job to rise to leadership roles benefits team performance and at MAS after hearing positive reports from friends and family about productivity, compared to recruiting staff from outside the company the company’s safe working environment, and its extensive training who may have no factory floor experience. programs. MAS’s childcare investments also support recruitment. Nilmini, a team leader and mother of five, moved to MAS from Even when associates develop technical and managerial skills that another company to benefit from the company’s childcare center. are in high demand with other employers, many continue working at During a focus group, she said, “I was thinking about my children’s MAS because they like the working conditions. For example, many of education and thought this would be very useful.” those who develop a side business following their entrepreneurship training stay on at MAS for the stable income, training opportunities, Establishing operations in rural and post-conflict areas, with high and the large base of potential customers who work for MAS. rates of unemployment and limited access to basic services, has also helped MAS to recruit labor from a previously untapped pool MAS’s childcare offering also increased employee retention rates of talent. and productivity. The annual turnover rate of the parents who enroll their children in the kindergarten at the MAS Kreeda plant in Vaanavil is 1.3 percent, compared to the plant’s overall turnover rate of 49 percent. Supervisors also note significant productivity and performance gains. For example, one supervisor said that since several of her team members placed their children in the 5 MAS Holdings: Supporting the advancement of factory-floor associates in Sri Lanka Access to markets “MAS has very strong brand recognition in Sri Lanka. People know about our success stories – of MAS Holdings CEO, Suren Fernando, says customers workers who have joined at the shop floor level and want to know that products are made responsibly. With consumers’ growing concern about garment sector working conditions, progressed. That’s why we’ve been able to continue international brands also value MAS’s responsible business practices. to attract labor”. Over time, this has helped to cement and expand relationships Suren Fernando, CEO, MAS Holdings with buyers, as well as open up new opportunities for business and partnerships, such as that with Gap Inc.’s PACE program. 6 MAS Holdings: Supporting the advancement of factory-floor associates in Sri Lanka Endnotes & Sources In addition to company interviews and data provided in 2022, this study used the sources listed below. i In 2014, IFC provided MAS with a loan of $28 million for capacity expansions, implementation of sustainability projects and product development. IFC made an additional loan of $30 million to finance the working capital requirements and capital expenditures of the company’s operations in Sri Lanka. World Bank. 2021. “Sri Lanka Poverty Assessment: Accelerating Economic Transformation.” ii World Bank Open Knowledge Repository. Washington, DC: World Bank. https://openknowledge. worldbank.org/bitstream/handle/10986/36455/Sri-Lanka-Poverty-Assessment- Accelerating-Economic-Transformation-Synthesis-Report.pdf?sequence=1&isAllowed=y DCS (Department of Census and Statistics). 2021b. “Annual Survey of Industries 2019.” August iii 2021. Department of Census and Statistics of Sri Lanka. Battaramulla: Department of Census and Statistics. Ministry of Economic Policies and Plan Implementation. http://www.statistics. gov.lk/Industry/StaticalInformation/AnnualSurveys/2019 ILO (International Labour Organization). 2016. Factors Affecting Women’s Labour Force iv Participation in Sri Lanka. ILO. Colombo: ILO Country Office for Sri Lanka and the Maldives. https://www.ilo.org/wcmsp5/groups/public/---asia/---ro-bangkok/---ilo-colombo/ documents/publication/wcms_551675.pdf v IFC (International Finance Corporation). 2007. “Case Study: MAS Holdings. An Excerpt from Market Movers: Lessons from a Frontier of Innovation.” Washington, DC: IFC. https:// www.ifc.org/wps/wcm/connect/dc4a3e5e-1fb2-4b98-b833-000b1ddd9296/MarketMovers_ CS_MAS.pdf?MOD=AJPERES&CACHEID=ROOTWORKSPACE-dc4a3e5e-1fb2-4b98-b833- 000b1ddd9296-jkD10vu ILO (International Labour Organization). 2016. Factors Affecting Women’s Labour Force vi Participation in Sri Lanka. ILO. Colombo: ILO Country Office for Sri Lanka and the Maldives. https://www.ilo.org/wcmsp5/groups/public/---asia/---ro-bangkok/---ilo-colombo/ documents/publication/wcms_551675.pdf Rajapakse, W. 2018. “An Analysis of Major Factors Affecting Labor Turnover in the Apparel vii Industry in Sri Lanka: Policy Alternations for Solving the Problem.” International Journal of Academic Research in Economics and Management Sciences. Vol. 7, Issue 3. September 29, 2018. https://hrmars.com/papers_submitted/4542/An_Analysis_of_Major_Factors_ Affecting_Labor_Turnover_in_the_Apparel_Industry_in_Sri_Lanka_Policy_Alternations_ for_Solving_the_Problem.pdf IFC (International Finance Corporation). Making Progress: Sri Lankan Businesses Advance viii Gender Equality at the Workplace. Washington, DC: IFC: https://documents1.worldbank.org/ curated/en/674661594620429201/pdf/Making-Progress-Sri-Lankan-Businesses-Advance- Gender-Equality-at-the-Workspace-A-Sheworks-Sri-Lanka-Private-Sector-Partnership.pdf ix Fernando, A.G.N.K. 2019. “Factors Impacting on Employee Turnover with Special Reference to the Apparel Industry in Sri Lanka.” International Journal of Research and Innovation in Social Science. Vol. 3, Issue 9, September 2019. https://www.rsisinternational.org/journals/ ijriss/Digital-Library/volume-3-issue-9/184-187.pdf IN PARTNERSHIP WITH 7 MAS Holdings: Supporting the advancement of factory-floor associates in Sri Lanka