Editor's Page -- Production Workers Can Be Your Competitive Edge

Dec. 21, 2004

Leadership determines whether employees add cost or add value.

With all the talk defending labor arbitrage, with its "Why pay more?" philosophy dominating leadership thinking these days, it's time to review the research on employee management best practices that answers that question. IW's research repeatedly -- and convincingly -- shows that top performing manufacturers value their plant-level employees as assets to be invested in, not costs to be cut. As knowledge workers who deliver high-pay-off ideas if given the chance, not just interchangeable cogs in the machine. The data also suggest that if your employees are not providing the company with a competitive edge, the problem might not be with the employees, but with your leadership. IW's Best Plants Statistical Profile and the IW/MPI Census of Manufacturers together provide rigorous data that allow us to compare the practices of high performing plants with ordinary ones and -- more important -- to show which leadership practices correlate with world-class performance. Findings include the following:

Self-Directed Work Teams: 85% of Best Plants finalists have more than 50% of their production workers in self-directed work teams, compared with a fraction over 26% of the general plant population represented by the Census. The teams handle their own inter-team communications (97% of finalists), training (95%), quality assurance (94%), safety reviews and compliance (92%), and daily job assignments (90%), among other tasks.

Training: Fully half of the Best Plants finalists provide 65 hours of formal training for each production employee, while only 11% of Census respondents offer more than 40 hours. Further, 86% of Best Plants finalists have established curriculum with a local college.

Pay For Performance: At Best Plants finalist companies, 89% offer individual, and 87% offer team-based awards. Also, many have programs that pay for additional skills (58%) and knowledge (40%) mastered by the production employee.

Customer-Interaction and Feedback: 82% of Best Plants finalist companies share customer survey data with production employees, and nearly 100% give production workers some (58%) or many (42%) opportunities to meet with customers.

Share Financial Information: Best Plants finalists involve the production employees in the business, with 98% sharing financial information and showing them how specific actions affect the plant's and, ultimately, the parent company's bottom line. None of these approaches is new to most executives; it's how most lead their managerial workforce. Yet, holding some executives back from implementing such proven leadership practices for their production workforce is an outdated bias -- too many refuse to believe the laborer is as capable as his or her managerial counterpart. Still others see this, in the context of global competition, as beside the point: No matter how productive the U.S. labor force, we just can't compete with low-cost labor elsewhere. But the research says otherwise. It tells me that U.S. manufacturing leaders who haven't implemented proven employee best practices on the plant floor haven't begun to tap the potential of their companies' production employees. It tells me that we are failing to capitalize on what should be our most valued assets. We need to fully recognize the contributions production workers can make to our competitiveness and to change our attitudes and our leadership of production work -- as companies, and as a country.. The research shows us how to do it. You have only to supply the leadership. Patricia Panchak is IW's editor-in-chief. She is based in Cleveland.

About the Author

Patricia Panchak | Patricia Panchak, Former Editor-in-Chief

Focus: Competitiveness & Public Policy

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In her commentary and reporting for IndustryWeek, Editor-in-Chief Patricia Panchak covers world-class manufacturing industry strategies, best practices and public policy issues that affect manufacturers’ competitiveness. She delivers news and analysis—and reports the trends--in tax, trade and labor policy; federal, state and local government agencies and programs; and judicial, executive and legislative actions. As well, she shares case studies about how manufacturing executives can capitalize on the latest best practices to cut costs, boost productivity and increase profits.

As editor, she directs the strategic development of all IW editorial products, including the magazine, IndustryWeek.com, research and information products, and executive conferences.

An award-winning editor, Panchak received the 2004 Jesse H. Neal Business Journalism Award for Signed Commentary and helped her staff earn the 2004 Neal Award for Subject-Related Series. She also has earned the American Business Media’s Midwest Award for Editorial Courage and Integrity.

Patricia holds bachelor’s degrees in Journalism and English from Bowling Green State University and a master’s degree in Journalism from Ohio University’s E.W. Scripps School of Journalism. She lives in Cleveland Hts., Ohio, with her family.