Bangalore: Another way to increase companies' productivity and profits could be giving pay incentives to low-level workers and investing in their health and well-being. According to a study led by Jody Heymann, founding director of the Institute for Health and Social Policy at McGill University, it is good business for companies to invest in and listen not only to their high level executives but also to the low level management too, reports Steven Greenhouse.
"The companies in our study showed that investing in their employees at all levels made economic sense, going against the common market wisdom that considers these investments an unnecessary expense," Heymann concluded in her report. There are few instances cited from her report. It was seen that, a teamwork system adopted by American Apparel had tripled the productivity of the workers. The workers were paid based on the number of garments their team produced. The output jumped to 90,000 pieces a day from 30,000, aided by a 12 percent increase in the number of workers at the factory.
One of the instances says that, the efficiency of the employees of Dancing Deer Baking Company in Boston had increased when they had offered free classes in English as a second language to its bakery workers. The company's employees could communicate better with one another. Heymann took an initial look at several hundred companies that had employee-friendly policies. Most of them did not have policies that improved conditions for employees at the bottom, she ultimately focused in depth on a dozen companies in nine countries that had such policies and were succeeding financially.
The report found that the turnover of Autoliv Australia fell to 3 percent a year from nearly 20 percent after they adopted a flexible policy on leaves and vacations. When SA Metal, decided to provide employees with free access to H.I.V. or AIDS treatment, costing about $3.50 a day per employee, the program still produced considerable savings because it cost roughly $120 a day whenever one of the company's truck drivers missed work for health related reasons.
Juliet Schor, a professor of sociology at Boston College and the author of a new book, "Plenitude: The New Economics of True Wealth," said: "This effort has strong case studies showing that firms can prosper when they take the high road, and that means their employees are also prospering. It's a good direction for any economy." Citing the success of "high-road economies like Germany that share their prosperity," she said the study demonstrated that "this strategy could work at the micro level at many firms."
Heymann said the companies that she studied had continued these employee incentive and engagement programs during the recent downturn. This was not surprising, she said, because these programs such as incentive pay and soliciting employee suggestions helped reduce costs and increase productivity.