Recent findings from Good Business Lab (GBL) show that worker wellbeing initiatives can significantly boost firm productivity. What sets GBL’s research apart is its reliance on randomised controlled trials (RCTs), the gold standard in social science research. By using RCTs, GBL can offer businesses robust data-backed evidence on the impact of worker welfare programs. These insights challenge conventional assumptions and provide fresh data that businesses should consider when evaluating the link between wellbeing and productivity.
Adept Economics Director Gene Tunny interviewed GBL co-founder Professor Ach Adhvaryu about GBL’s work in Economics Explored podcast episode 251.
That improving worker wellbeing can lead to better business outcomes is often discussed, but GBL has used rigorous RCTs to quantify the impact. In labour-intensive industries like garment manufacturing, GBL’s RCTs have shown that when businesses invest in worker welfare, productivity can improve measurably. These trials have allowed GBL to isolate the specific effects of various interventions, providing firms with concrete data rather than assumptions.
For example, in one trial, GBL found that firms investing in worker health and wellness initiatives saw lower absenteeism and turnover, alongside significant productivity gains. Importantly, these effects were identified through controlled experiments that compared workers who received the interventions to a randomly selected control group who did not. By carefully measuring outcomes such as retention rates and output, these RCTs ensure the results are both reliable and actionable for businesses.
One of GBL’s most intriguing findings from its RCTs concerns the role of soft skills. While soft skills like teamwork, communication, and leadership are traditionally associated with white-collar work, GBL’s RCTs in blue-collar environments have demonstrated their importance in industries like manufacturing.
In a controlled trial involving garment workers in India, GBL evaluated the PACE (Personal Advancement & Career Enhancement) program, a soft skills training initiative implemented by Gap Inc. The randomised design of the trial allowed researchers to measure the impact of this program accurately. The results were striking: participants in the PACE program saw a 20% increase in productivity compared to those in the control group who did not receive the training. This productivity boost also translated into a substantial return on investment for the firm, with a net return of over 250% after 18 months. For further information regarding this study, see NBER Working Paper 24313:
The Skills to Pay the Bills: Returns to On-the-job Soft Skills Training
These results suggest that soft skills can improve efficiency and teamwork, even in environments where technical skills are prioritised. Using RCTs ensures that these findings are not coincidental but directly attributable to the intervention, giving businesses confidence in the effectiveness of similar programs.
GBL’s RCTs also underscore the importance of worker voice—the ability for employees to express concerns, give feedback, and be heard by management. In a series of trials, GBL tested interventions that provided workers with platforms to communicate their grievances and feedback through surveys or digital tools that allowed anonymous submissions to HR.
The results showed that when workers had a reliable way to voice their concerns, companies saw measurable improvements in retention and productivity. For example, in one trial, employees with access to feedback mechanisms were less likely to leave their jobs and had fewer absences than those in the control group. Interestingly, these workers also displayed increased engagement and productivity, suggesting that when employees feel heard, they are more motivated to perform better.
RCTs were crucial in validating these findings. By comparing the outcomes of workers who participated in these voice-enhancing programs with those who did not, GBL could confidently conclude that the improvements directly resulted from the interventions. This rigorous evidence should encourage businesses to consider implementing similar feedback systems.
GBL’s randomised controlled trials offer more than just theoretical insight—they provide concrete, data-driven evidence of what works and what doesn’t when it comes to improving worker wellbeing. These findings challenge businesses to rethink their approach to employee welfare. GBL’s research suggests that such initiatives can provide a clear return on investment.
The findings are especially relevant for firms in labour-intensive industries, but the principles likely apply more broadly. Whether it’s through soft skills training or mechanisms for amplifying worker voice, businesses have an opportunity to enhance both employee satisfaction and productivity. The use of RCTs in this research means that firms can trust the reliability of the results and can consider these interventions as part of a broader strategy to improve efficiency and worker engagement.
Good Business Lab’s work, grounded in randomised controlled trials, offers compelling evidence that investing in worker wellbeing can yield significant business benefits. These findings, while still emerging, provide businesses with rigorous data to consider when developing their strategies for improving productivity. Rather than relying on assumptions or anecdotal evidence, businesses now have a body of research showing that interventions like soft skills training and worker voice platforms can make a tangible difference. These are insights worth considering for companies looking to stay competitive or grow.
Published on 2 October 2024. For further information, please email us at contact@adepteconomics.com.au or call us at 1300 169 870.