Research Reports: Evidence from the Steel Industry

Training & Development, June 1995 | Go to article overview

Research Reports: Evidence from the Steel Industry


A study of 30 steel plants found productivity jumps when firms implement systems of complementary and innovative human resource practices. The study, "The Effects of Human Resource Management Practices on Productivity," was by Casey Ichniowski, Columbia University School of Business; Kathryn Shaw, Carnegie Mellon University; and Giovanna Prennushi, Carnegie Mellon University and the World Bank.

The researchers studied a single finishing line in each of 30 steel plants. The sample included major producers and smaller ones, with and without unions, and with a wide range of human resource management environments. The sample included both high-performance and low-performance workplaces.

The study examined the effects of individual human resource practices as well as the effects of systems of practices. Extensive fieldwork allowed the authors to combine the benefits of a case-study approach with the more systematic results of their survey.

Ichniowski, Shaw, and Prennushi examined the effects of human resource practices on productivity and quality. They used delays on the finishing line as their measure of productivity, and prime yield rates as their measure of quality.

When they analyzed the effects of individual human resource practices, they found small, insignificant changes that resulted from incentive pay, work-team arrangements, and positive labor/management communication on performance.

Interviews with workers confirmed their interpretation of the results. When teams were implemented in a human resource environment that was not conducive to teamwork, workers thought problem-solving teams that produced results would eliminate their jobs, and they were not interested in participating. Workers also said they would be willing to sign up for incentive contracts only when trust between workers and managers was high. …

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