Together We Grow

Mag City

1. No Poverty 6. Clean Water and Sanitation 9. Industry, Innovation and Infrastructure

Overview

Mag City had more than 70% of their staff from low income earning families living in poor standards. A unique payroll method is practiced, that enables them to not only to secure the best talents but also provide a better living standard for the society. The innovation is providing a 15% commission to the employees for every unit of work done from the labour cost that is charged from customers. Labourers are entitled to their minimum wage plus the certainly achievable additional commissions. For instance, an average mechanic in the industry receives up to 35 000-40 000LKR whereas a Mag City average mechanic makes up to 90 000LKR due to the increased productivity and employee motivation (A, Gunathilake, personal communication July 19, 2019).

Author

Maduri Sritharan

Maduri Sritharan

School

Monash University

Monash University

Professor

Gitanjali Bedi

Gitanjali Bedi

Innovation

By doing so employees are actively engaged to achieve their targets hence it improves the living standards for the particular worker and their community.

Another innovation that contributes to help achieve UN SDGs goal 6 to avoid wasting water is the Japanese recycling plant and paint booths. “The quality of the recycled water is as pure as drinkable” (A, Gunathilake, personal communication July 19, 2019). The recycling plant processes the liquid wastage, separating water and other chemical substances. The water is then purified and neutralised to be able to be reused within the machines.

Together We Grow

Oldest Staff, Managers and Director's Family

Inspiration

The inspiration for the payroll innovation was trial and error for three decades. Mag City being a service based company, the director believes that retaining the best talent was key to the success of the business. Ensuring that the employees are satisfied was linked to monetary benefits, that led to the commission based system- since 45% of the population in Sri Lanka lived in poor condition, the majority of the talent workers were striving to relieve it.

The innovation to recycle water occurred to the director after realising the effect of gallons of polluted water and it being discharged in sea water. The government had given warning to stop the activity and that is when the Mr. P. Gunathilake decided to invest in a recycling plant. After the implementation of the plant Sri Lanka was going through the crisis for water supply that was announced in 2017 in 11 districts (News first, 2018), Hence all the branches adapted to a water recycling plant.

Overall impact

Mag City’s payroll strategy has been successful for the past 6 years. “Employees are so highly motivated that they do not take the annual 14 days lawful paid leave” (A, Gunathilake, personal communication July 19, 2019). Due to the motivation and employee satisfaction the overall turnover is low. The living standards are improved. Mag City has 43 employees who have worked over 25 years, and been offered jobs from the competitive firms but employees refuse because of the loyalty for improving living standards.

For instance, Mr. Mahinda De Silva a mechanic from low class community in Galle has been working for over 33 years and now has afforded his own vehicle, house and higher education for his kids.

On the water consumption side, Mag City saves over 14 000 gallons of recycled water. Subsequently, decreasing their contribution to the threat of drought and environmental harm.

Business benefit

Securing best talent, the best talents are attracted and retained within the business, “kindness and flexibility is key in our business”, to ensure employees are satisfied is our way to success (A, Gunathilake, personal communication July 19, 2019). The payroll innovation improves employee engagement which consequently increases customer satisfaction. Mechanics engage with customers so that the next job of the same vehicle is given back to them, therefore no customer is turned back. Job done to perfect satisfaction of the customer will lead the customers to be loyal to the particular mechanic creating a customer base for the business.

Mag City has now built the image for friendly and fast service in town, which is the reason for them to be the market leaders in Sri Lanka. A positive image in society is enhancing the trust for the brand.

Social and environmental benefit

Besides the head branch located in the city of Colombo, there are 5 other branches in rural areas. Mag City provides quality employment that does not exploit staff with minimum wages. “It doesn’t make sense for our competitors for over-paying the staff but we see the bigger picture of improving the society and alongside be profitable” (A, Gunathilake, personal communication July 19, 2019).

Interview

Ashane Gunathilake, Managing Director

Photo of interviewee

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Mag City

Mag City

Colombo, Western province, LK

Business Website: https://www.magcity.lk/

Year Founded: 2004

Number of Employees: 201 to 500

Sri Lanka is a country that has faced a brutal civil war for 30 years which ended in 2009. Even though only 1.8% of the population is considered to be extremely poor, the living standard remains low, since 45% of the population still live below the $5 a day in 2018 (The World Bank IDA, 2018). Mag City is the largest automobile maintenance super-mart in Sri Lanka with over 400 staff across the island.