Motivating for higher performance in manufacturing

International research indicates that High Performance Work Practices (HPWP) – investing in employee knowledge, skills and abilities, motivating and rewarding them for effort and performance, and creating opportunities for employees to contribute – deliver better financial performance, greater innovation and lower employee turnover. These benefits are particularly evident in traditional manufacturing sectors – which employ more than 930,000 Australians.

Yet despite the evidence on the benefits, a previous Government-commissioned report found that there is a low uptake of such practices across Australian workplaces (Boedker et al., 2011). The Centre for Workplace Leadership has been commissioned by the Australian Government Department of Industry to investigate the use of High Performance Work Practices (HPWP) among manufacturing SMEs and uncover the barriers to take-up. The aim is to find ways to promote and support the adoption of high performance workplace cultures in manufacturing. “We’re trying to find out how prevalent these practices are among Australian manufacturing SMES and how successful businesses went about it.” Mulyadi says.

The research team surveyed some 1000 workplaces in small and medium enterprises spanning capital cities and rural and regional areas in Australia, in manufacturing sectors such as pharmaceuticals,food and beverage, petrochemicals, transport and metals. The survey was complemented by best practice case studies to learn from manufacturing businesses that have successfully adopted and reaped the benefits of this management approach.

In some businesses that we’ve spoken to, there is effective training and development, and employee participation, but they lack comprehensive performance management,” Mulyadi says. “You might hire the people with the right skills, but if you don’t get the motivation right, you won’t get far.”

Some managers admit resource constraints have prevented them from focusing on rewarding individual employees’ performance. Others are unsure whether the best approach is to reward individuals or teams. For many, what to do about motivation remains elusive, because everyone wants different things. However, researcher Dr Brigid van Wanrooy, points out that there are various ways of rewarding and recognising employees for their efforts that need not involve a lower bottom line.

In both a medium and small best practice businesses, the managers reported doing well on employee participation and said their efforts were helped by an explicit business philosophy, and a genuine commitment from the firm’s leadership. “Sometimes it comes from the owner who has read up on something interesting or gone to a seminar, and thinks, ‘Oh, this fits in with what we do, let’s try it,” Mulyadi says.

The project also includes a comparison of manufacturing policy in different countries as a basis for formal recommendations to government on stimulating adoption of High Performance Work Practices. Laura Good says liberal market economies like Australia tend to focus on voluntary adoption, while coordinated economies such as the EU (particularly Germany), Nordic countries and Singapore tend to be more directive in using tools such as legislation and tax incentives to stimulate outcomes like employee involvement and innovation.

“Market economies tend to adopt education and information provision, offering grants and subsidies for companies to hire consultants or to redesign certain work processes,” Laura says. “Some of the firms we’re using as case studies mentioned they started using new processes because of a grant from the government.”

A series of industry engagement forums in Adelaide, Geelong, Penrith and Newcastle will be conducted to disseminate early findings from the study and to obtain feedback from industry stakeholders. Specifically, these forums will share insights with businesses on benefits and implementation and what successful firms do right.

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