1.

Introduction to the Organization

Sri Lanka's apparel industry is a significant contributor to the country's economy, with its
exports accounting for 40 percent of all exports and contributing 6 percent to the country's GDP.
The industry provides direct employment to around 350,000 workers and an additional 700,000
workers receive livelihood opportunities from it (Varshney, 2022). In 2022, the industry had
around 300 factories that generated export revenues of US $ 5.90 billion.
The apparel industry in Sri Lanka has been successful in attracting global brands due to
its reputation for producing high-quality products, using ethical and sustainable manufacturing
practices. The industry is primarily export-oriented, with a strong focus on the United States and
the European Union markets.

Brandix Apparel Limited

Brandix Apparel Limited is one of the largest apparel manufacturers and exporters in the
country. Brandix plays a key role in the country’s economy by bringing in approximately USD
1.1 billion as the annual turnover and by providing more than 50,000 jobs in Sri Lanka.
The company has a strong geographical footprint across the globe by establishing manufacturing
facilities, regional offices, and other facilities in 12 countries.

Figure 1Global manufacturing footprint (Brandix, 2021)

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 Brandix, with the theme of "To be the inspired solution for branded clothing," has forged
partnerships with several renowned apparel brands.
To efficiently serve the needs of their customers, Brandix operates under five different
clusters. Each cluster has multiple factories specialized in different types of garments. The five
clusters are Essentials, Lingerie, Fast Fashion, Athleisure, and Casualwear. This structure allows
Brandix to provide focused expertise and tailored solutions to their clients, ensuring that their
products meet the highest standards of quality and innovation.

Figure 2 Top management structure

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 Brandix has its core values defined under the term “RITE”. These values encourage the
employees to be inspired people providing inspired solutions.

Figure 3- RITE values of Brandix

Under this study, the potential challenges of Brandix related to people and organization due
to Sri Lankan current economic crisis, and the mitigation plan will be considered.

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 2. Challenges Created due to Economic and Political Crisis

General Impact and the Impact on Sri Lankan Apparel Industry

Sri Lanka's current economic crisis is a result of several years of mismanagement,

corruption, shortsighted policymaking, and an overall lack of good governance. Insufficient
foreign reserves at Sri Lanka's Central Bank and loss of access to international capital markets
resulted in the country defaulting on debt for the first time in history.
Tourism, together with apparel and tea exports - some of Sri Lanka's main income
sources were affected in recent years due to various internal and external factors. Now, the
economic crisis presents multiple challenges including severe threats to nutrition, food security,
healthcare, and education. (Wanigasinghe, 2022).
The worst affected sector is apparel. The Joint Apparel Association Forum (JAAF) has
raised concerns over the industry's ability to continue operating due to the prevailing fuel and
power crisis. The garment-exporting market may face increased competition from other
countries, especially Bangladesh and Vietnam, due to recent tax hikes. Corporate taxes have
been raised and the export tax has increased from 14 percent to 30 percent (W.A. Sunil &
Malalagama, 2022).
As the situation worsens, smaller manufacturers are more likely to be impacted than
larger ones. There is concern that the economic crisis will affect the trust of global buyers in Sri
Lanka's apparel sector.

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 Figure 4Apparel Sector Exports 2022 (Daily FT, 2023)

The impact of these events had a cascading effect on Brandix Apparel Limited, resulting
in the cancellation of most of the orders, including those that were already in production. As a
result, the company faced cashflow-related challenges, which necessitated pay cuts and
workforce layoffs to compensate.

Key Potential Challenges for Brandix due to Economic Crisis

1. Difficulty In Retaining Top Talent Due to Employee Turnover

The crisis has put a lot of financial stress on apparel manufacturers. Brandix also went
through a capacity reduction during this period, and to compensate the loss of revenue and the
impact on the cashflow, measures such as pay cuts on employees, reduction in overtime income
and cutting off the annual bonus were taken.
In terms of employee turnover, Herzberg's Two-Factor Theory suggests that
dissatisfaction with hygiene factors can lead to employee turnover. If employees are unhappy
with basic aspects of their job, such as their pay, working conditions, or company policies, they
are more likely to leave their job (Chiat & Siti Aisyah, 2019). According to Herzberg's Two-
Factor Theory, a variety of hygiene factors may occur, leading to an increase in employee
turnover at Brandix.

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 Figure 5 Herzberg's Two Factor Theory

Employee turnover can be both expensive and detrimental to productivity. It also serves
as an indicator of turbulence within a company. The effects of high employee turnover can be
seen in several areas:

 Cost impact: Directly associated with the expenses of hiring and training
replacements, this cost has been estimated to be as high as 50% of an employee's
monthly salary (Griffeth, et al., 2000). Additionally, the company must bear the
cost of overtime payments to cover for absent employees.

 Productivity impact: With the learning curve of new replacements, efficiency is

likely to be lower, and production costs may increase due to defects and re-works.

 Impact on customer satisfaction: The quality of output from newly recruited

employees may not match that of experienced employees, leading to decreased
customer satisfaction.
Given these facts, an increase in employee turnover can pose a significant economic
challenge for Brandix.

2. Resistance to Organizational Changes

During the economic downturn, Brandix must make changes to its company structure,
capacity, processes, and systems to survive the business. Because of people's aversion to change,
the company may be unable to implement the changes as planned.

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 According to Lewin's force-field analysis, the driving forces and restraining forces can be
identified as follows in a crisis.

Driving Forces -
Economic crisis: The economic crisis could be a significant driving force that compels
Brandix to make changes to its company structure, capacity, processes, and systems.
Survival of the business: The need to survive in the market during the economic crisis
may drive the company to take the necessary changes to stay afloat.
Market competition: The need to remain competitive in the market may be a driving force
to change.
Opportunities for growth: If the company identifies opportunities for growth during the
economic crisis, it may become a driving force to make changes.

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Restraining Forces -
Employee resistance: People's reluctance to change may be a restraining force in the
implementation of the changes planned by the company.
Lack of resources: If the company lacks the necessary resources, it may be a restraining
force in implementing the changes.
Company culture: The existing company culture may be a restraining force, and the
change may be against the company's culture.
Government regulations: If the changes planned by the company go against government
regulations, it may become a restraining force.

Figure 6 Lewin's Force Field Analysis for Brandix

3. Decreased Morale and Motivation of Employees

A highly motivated workforce is the most valuable asset any company can have.
However, the economic crisis can demotivate the Brandix team due to internal factors such as
lack of recognition and barriers to career advancement, as well as external factors such as rising
living costs and falling living standards. As a result, it is critical to understand why individual
employees behave in certain ways and what steps Brandix should take as an employer to ensure
that all employees are equally focused on achieving both organizational and personal goals.
As per the Maslow's Hierarchy of Needs, behaviors of an individual can be described as
motivated by needs that have not been fulfilled (Maslow, 1954). In ideal circumstances,
organizations should be able to align organizational goals with employee needs satisfaction,
ensuring that goals are met by motivated employees. However, the economic crisis has
drastically altered the needs of employees, causing motivation to stray from the path of achieving
organizational goals.

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 Effects of drop in employee motivation
• Loss in productivity
• High absenteeism rate and chronic lateness
• Poor performance and lack of quality
• Lack of accountability in employees and not respecting the company policies
All of this will result in additional costs for the company, lower income, and customer
dissatisfaction. As a result, it is critical to maintain high levels of employee motivation.

4. Increased stress and burnout of Brandix Employees

The economic downturn may cause Brandix to make changes in new hires, promotions,
and financial controls on capital and operational expenses, which may increase workloads and
stress levels for employees, leading to burnout.
The General Adaptation Syndrome (GAS) is a model that explains how the person
responds to stressors over time. It consists of three stages: the alarm stage, the resistance stage,
and the exhaustion stage.

Figure 7 General Adaptation Syndrome Stages, Phases & Model(Bennett, 2016)

In the case of economic crisis, the increased workload and stress levels experienced by
employees can trigger the alarm stage of GAS. During this stage, the employee's stress response
system is activated, which can impact an employee's productivity and overall wellbeing.

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 If the stressors persist, employees may enter the resistance stage of GAS, where they
attempt to cope with the ongoing stress. However, if the stressors continue, employees may
eventually reach the exhaustion stage of GAS, where they experience burnout. Burnout is a state
of emotional, physical, and mental exhaustion caused by prolonged or chronic stress.
Therefore, the increased workload and stress levels experienced by employees during an
economic crisis can activate the different stages of GAS, ultimately leading to burnout if the
stressors are not managed effectively. Companies should, therefore, take measures to support
their employees during times of crisis and minimize the impact of stressors on their mental and
physical health.
5. Maintaining Organizational Culture - Brandix’s “RITE” Values

Brandix has its core values Respect, Integrity, Teamwork and Excellence. Maintaining a
company's culture and values can be challenging during an economic crisis, and apparel
company Brandix is no exception. Here are some areas that could potentially affect the
company's culture and values:

 Employee morale - During an economic crisis, employees may become anxious

about job security and future opportunities. This can lead to low morale and a lack
of motivation, which could impact their adherence to the company's core values.

 Cost-cutting measures - In order to survive an economic crisis, companies may

need to take cost-cutting measures such as reducing staff or benefits. These
changes can create a negative atmosphere and damage employee loyalty to the
company.

 Workload and stress - During an economic crisis, employees may need to take on
additional responsibilities due to staffing reductions or changes in business
operations. This increased workload and stress can negatively impact employee
well-being and make it more difficult to maintain a positive workplace culture.

 Communication breakdowns - During an economic crisis, communication

breakdowns can occur, which can lead to misunderstandings and conflicts. This
can impact teamwork and the company's ability to maintain its core values.
Deviation from a company's culture and values can lead to employee distrust, decreased
motivation and productivity, loss of customer loyalty, reputation damage, and legal issues. This
may harm Brandix's long-term vision, and it is critical that Brandix maintain its culture and
values during the crisis.

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 3. Recommendations For Dealing with The Challenges

1. Maintaining Open and Transparent Communication

During an economic crisis, Brandix faces several challenges, such as employee turnover,
resistance to change, decreased morale and motivation, increased stress and burnout, and the
need to maintain organizational culture. Open and transparent communication can be a powerful
tool in overcoming these challenges.
By keeping employees informed about the state of the organization, including its
financial situation and plans for recovery, they are more likely to feel a sense of trust and loyalty
towards their employer. This can reduce employee turnover and increase morale and motivation,
as they understand the organization's goals and the role they can play in achieving them.
Additionally, open communication can help reduce resistance to change. When
employees are informed about why changes are being made and what benefits they will bring,
they are more likely to be accepting of them. This can also help reduce stress and burnout, as
employees are not left in the dark about what is happening in the organization.
Moreover, open and transparent communication can help maintain organizational culture.
By being honest and forthcoming with employees, even during difficult times, organizations can
demonstrate their commitment to the values and principles that underpin their culture. This can
help employees feel a sense of purpose and belonging, which can in turn increase morale and
motivation.
There are several methods of communication that can be used to maintain open and
transparent communication. These include regular town hall meetings, one-on-one meetings with
managers, email updates, and internal social media platforms. The key is to use a variety of
methods to ensure that all employees have access to information and that communication is two-
way, allowing employees to ask questions and provide feedback.

2. Providing Support and Resources for Employees

During an economic crisis, it is essential for companies like Brandix to support their
employees in various ways to maintain their loyalty and commitment. For instance, workload
management can be an effective strategy to help employees manage their tasks and
responsibilities and prevent burnout. Brandix could implement effective workload management
practices, such as prioritizing tasks, delegating responsibilities and providing adequate training
and resources to employees.
Similarly, offering flexible work arrangements, such as remote work or flexible hours,
can help employees manage their work-life balance and reduce their stress levels. For example,

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Brandix could offer telecommuting options for employees, particularly those who have long
commutes or who have caregiving responsibilities.
Health and wellness programs can also be a useful strategy to help employees manage
their stress and stay healthy during difficult times. Brandix could provide access to counseling
services, stress management programs, fitness classes, and other support services to help
employees stay healthy both mentally and physically.
Lastly, financial support is an important consideration during an economic crisis, as
employees may face unexpected financial challenges such as reduced pay or increased expenses.
Brandix could provide financial support or assistance to help employees overcome financial
difficulties and reduce the financial stress they may be experiencing.

3. Managing Organizational Changes in Accordance With Brandix's Core Values

In an economic crisis, organizations like Brandix may need to make changes to their
organizational structure, processes, and systems to remain competitive and adapt to new
challenges. However, it's important to implement these changes in a way that is consistent with
the company's core values and culture. Lewin's 3 Stage Model of Change can be a useful
framework for managing these changes in a smooth and effective way.
The first stage of Lewin's model is "unfreeze," which involves preparing the organization
for change. Brandix can do this by communicating the need for change, and the rationale behind
it, to employees at all levels of the organization. This communication should emphasize the
company's core values and how the changes are consistent with those values. It's also important
to involve employees in the change process, by soliciting their input and ideas for how to
implement the changes in a way that is consistent with company culture.
The second stage of Lewin's model is "change," which involves implementing the new
processes and systems. Brandix should do this in a way that is consistent with the company's
core values, by emphasizing teamwork and collaboration throughout the process. This can
involve creating cross-functional teams to implement the changes, and providing training and
support to employees to ensure they have the skills and knowledge necessary to adapt to the new
processes and systems.
The final stage of Lewin's model is "refreeze," which involves consolidating the changes
and embedding them into the organization's culture. Brandix can do this by communicating the
success of the changes to employees and celebrating the achievements of the teams that were
involved in the process. It's also important to continue to emphasize the company's core values
and how the changes are consistent with those values, to ensure that the new processes and
systems become part of the organization's culture.

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 Figure 8 Lewin’s three-step model for change management (Mind Tools Content Team, 2022)

Overall, by using Lewin's 3 Stage Model of Change, Brandix can implement changes in a
way that is consistent with the company's core values and culture. By involving employees in the
change process, emphasizing teamwork and collaboration, and celebrating the successes of the
change process, the organization can successfully adapt to new challenges while maintaining its
core values and culture.

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 4. Conclusion

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