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WDI to Launch New Labor Practices Group

Wednesday, October 14, 2020

Announcing New Labor Practices Group

Research shows improving worker’s lives in small ways can have big bottom line impact

Happy workers, with their basic needs met, will be more productive workers. More productive workers contribute positively to the bottom line. It sounds like common sense, but proving this with hard data has not always been the norm.

Achyuta Adhvaryu is doing just that. Adhvaryu, associate professor of Business Economics and Public Policy at the Ross School of Business at the University of Michigan, and his work with Good Business Lab (GBL) are proving the hypothesis that small improvements in worker happiness have a positive return on investment for companies.

Adhvaryu’s work has found its place with the William Davidson Institute’s consulting services, in the newly formed Labor Practices group. The new practice area will add value to the work happening across WDI, and will enhance learning opportunities at Michigan Ross and U-M, while demonstrating that good labor practices are an important tool of commercial success.

Adhvaryu, along with the team at GBL, test innovative workplace policies via large-scale randomized control trials in real business environments, to quantify the impact of employee-oriented investments. To date, GBL’s work has focused primarily on four areas: a holistic view of physical and mental health; skills training programs; worker voice; and, hiring and selection. This work has shown that even small investments in workers’ happiness and well-being can sometimes have a significant impact.

“It’s important to understand the impact poverty has on everyday life and how if you eliminate or mitigate those barriers that hold people back you can unleash their potential,” said Adhvaryu. “Our work is bringing a unique understanding of worker well-being, backed by rigorous data and impact evaluation methodology, to the discussion.”

Business metrics surrounding return on investment and attention to a profitable bottom line are commonplace when implementing new procedures and investing in capital intensive equipment. The practical output of Adhvaryu’s research has led to the development of a portfolio of programs and workplace policies based on evidence demonstrating that worker well-being through specific policies produces a positive return on investment when implemented properly.

As an example, GBL recently completed an innovative worker voice project at Shahi Exports, the largest garment manufacturer in India and one of the largest in the world. The study was completed with support from Michigan Ross students, WDI and financial assistance from Humanity United. The result was Inache, a new, mobile-based technology that empowers workers to communicate anonymously to share concerns and problems, and report grievances with their employer. The low-cost, easy-to-use technology solution came about after two randomized controlled trials conducted at Shahi facilities, both demonstrating a 3-4% reduction in absenteeism with the use of similar tools.

“Often workers don’t communicate grievances due to fear of repercussions. We conducted three trials in which we provided workers with the right kind of voice and a solution that was easy to access,” said Adhvaryu.

Achyuta Adhvaryu

Often workers don’t communicate grievances due to fear of repercussions. We conducted three trials in which we provided workers with the right kind of voice and a solution that was easy to access.

- Achyuta Adhvaryu, associate professor of Business Economics and Public Policy at the Ross School of Business at the University of Michigan

The insights from those trials enabled the GBL team to develop, test and implement Inache. The technology, which GBL built from scratch is rooted in principles of human-centered design. The low-cost solution also helps to bridge important usage barriers, such as low technological literacy rates among workers.

“Inache was rigorously designed after intensively studying different opportunities for communication, and determining what would be most effective for both employees and the employers,” said Adhvaryu. “WDI-Ross student team then helped to develop a market entry strategy for the product.”

Michigan Ross students took part in this process through the Multidisciplinary Action Project (MAP) course. MAP is Ross’s flagship action-based learning course, in which MBA students consult with organizations to solve real-world problems under guidance from faculty advisors at the business school. Each project requires analytical rigor, critical thinking and teamwork. The Ross MAP team benefited from the support of faculty advisors Adhvaryu and Paul Clyde, WDI president and Michigan Ross professor, as well as WDI and GBL. This collaboration will pave the way for more opportunities for Ross students to work together with WDI and GBL.

“The work that Ach is doing examines what holds people back from growing their income and improving their well-being,” said Clyde. “Ach and his team have developed programs that use randomized controlled trials to show that improving worker well-being can and does positively impact employers in ways that can affect the bottom line.”

The continued research potential and the practical applications of Adhvaryu’s work and GBL will continue to bring benefits to Ross and WDI. The collaboration is another offering for Ross MAP student teams, as well as a new consulting strength for WDI and its partners.

“There are great opportunities for students to get involved during their education U-M, working with firms to solve their real-world problems,” said Clyde. “That’s what this is focused on – any tools that improve labor practices will increase the probability of commercial success and thus are very much in line with what we do at WDI.”

WDI has a focus on the development of business models and practices that come out of real research and improve the ability of a company to operate profitably. Profitable companies will employ people and provide goods and services that consumers value, thereby providing social value. The mission of WDI aligns with the work that Ach and GBL are doing to achieve this.”

GBL and WDI have found a way, using hard evidence that is rigorously sourced from academic studies, to change the culture around workplace programing for workers and help to make it a key part of a firm’s investment strategy. The end goal is to convince companies that if they incorporate key principles of good labor practices in their business operations, they can impact productivity and show a positive effect on profits and their bottom line in addition to meaningfully improving their workers’ well-being.

Women workers outside of a Shahi Exports garment facility in Delhi. Image credit: Nayantara Parikh
Women workers outside of a Shahi Exports garment facility in Delhi. Image credit: Nayantara Parikh

Lead Photo: Workers in a Shahi Exports shop floor in Bangalore, India. Image credit: Nayantara Parikh

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