The hidden cost of employee turnover
New research establishes a direct link between manufacturing worker churn and decreased product quality
One of the competitive challenges faced by global high-tech manufacturers is maintaining extremely high levels of product quality while continuously bringing new technologies to market. Consequently, manufacturers typically invest heavily in a variety of quality control and assurance technologies to minimize defects in production environments. Researchers have focused extensively on this issue, noting, for example, the impact that quality management systems and techniques have on product performance.
One of the issues that has not received as much attention from researchers is the impact that human capital dynamics have on product quality. Unlike service industries, where human capital is widely acknowledged to be a principal driver of quality and customer satisfaction, manufacturing workers have not generally been considered an important determinant of high-tech product quality for two main reasons. First of all, the products themselves are sophisticated enough that their ultimate quality is seen as less dependent on the human capital used in assembly. Second, the high degree of standardization and automation in high-tech manufacturing operations suggests the human factor is less critical in overall production line quality outcomes. Consequently, when looking at human capital in production, researchers have tended to focus on economic issues such as plant efficiency and productivity.
In a break from the past research trends noted above, a recent paper from Ken Moon (Wharton), Prashant Loyalka (Stanford), Patrick Bergemann (UCI Merage), and Joshua Cohen (Apple University) provides an interesting analysis of one way in which human workers affect product performance. Specifically, their research examines the impact that turnover in a manufacturing workforce has on product quality.
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