In an M4.0 world, democratization not only means making data available to more people, but giving them the tools and guides to use that data effectively.
Since the 5th century BCE, democracies have flourished in some form throughout the world. Most people agree that giving people the right to govern themselves – with either the authority to select their leaders, or decide on legislation, or both – is a right and noble cause. As companies pursue their digital journeys, can the concept of democratization now also be applied to manufacturing businesses that have traditionally operated with a top-down leadership style?
Over the last few decades, and recently accelerated by the global pandemic, workers have taken an ever more active and influential role in organizations. Employees have become an important driver of corporate policy and success. Yet, it’s also become increasingly more difficult to find and retain great people. Workers today have many options as to where, and when, to work. That’s why empowering employees is now essential to improving the levels of job satisfaction that will ensure a company’s increasing profitability.
A meta-analysis published in the Harvard Business Review1 states that leaders who empower their employees are more likely to be trusted by their people compared to leaders who do not. This is not to say that empowering employees involves pushing work onto underlings that managers don’t feel like doing themselves. Leaders who empower their employees act as coaches, pushing their employees to do their best work and supporting them along the way. But just like the mechanic that is asked to work on a new vehicle without training, guides, or instructions on the vehicle’s new systems, asking employees to improve the business without first providing them the data to understand where changes need to be made, will lead to frustration, anger, and doubt.
For manufacturing businesses, democratization means not only making data available to more people but giving them the tools and guides to use the data effectively. When a frontline manager knows that unscheduled overtime has a negative impact on their department’s profitability, they may suggest ways to reduce it. When an employee is incentivized to improve productivity and can see where they and their team are with easy-to-understand metrics that update in real-time, making positive changes that are easily measurable and readily visible becomes gamified, making improving productivity both fun and lucrative.
Democratizing a data driven workforce can have many positive results. It allows companies to be much more effective at influencing employee creativity and improving corporate citizenship behavior to better align with the company’s vision and goals. It helps build a culture of trust that delivers additional benefits including better employee retention and improved employee / manager relationships. It enables managers to optimize operations by leveraging advanced people analytics to build nimble teams that are scheduled effectively to address product planning, order requirements, and equipment constraints. It also allows for more personalized training scenarios and learning plans that workers can build themselves in a Netflix-style experience to take ownership of their own career advancement, and so consumerize the employee experience (EX) to drive engagement for both established and younger workers.
According to McKinsey & Company in their report on “Building a more competitive US manufacturing sector,”2 a critical factor for advancing M4.0 is the need for manufacturers of all types to find, retain, and train more specialized manufacturing talent. Doing so, “can boost future output growth and competitiveness…and upgrading existing jobs to attract the next generation of workers, perhaps from other industrial sectors,” notes the report. This in turn can help US manufacturers, “boost the [manufacturing] sector’s annual GDP by more than 15% above baseline forecasts while adding up to 1.5 million jobs,” suggests McKinsey.
Democratization also means making powerful Human Capital Management (HCM) and Work from Home (WFH) technology available in the cloud to manufacturers of all sizes. This allows smaller manufacturers to take advantage of the same economies of scale that larger organizations have access to. While this may not help them gain access to capital markets to finance growth, smaller manufacturers can be better positioned to attract and retain top talent, gain better control of their labor cost, and remove potential barriers to growth typically experienced in the market, while making their operations nimbler at the same time. It also enables them to scale quickly to meet unique demand increases.3
One thing that hasn’t changed over the course of the pandemic is that the second largest expense, and the most valuable asset, for manufacturers is their people. To succeed in M4.0, manufacturers will need to invest in an employee experience that reflects a modern workforce, one that is empowered, engaged, and more in control of their destiny, and by extension, that of the company they work for. Today, data drives decision-making at companies across geography and sectors. For manufacturers, it’s time to put some of that power, and trust, in the hands of your people. M
1 When Empowering Employees Works, and When It Doesn’t; Harvard Business Review, March 2018: https://hbr.org/2018/03/when-empowering-employees-works-and-when-it-doesnt
2 Building a more competitive US manufacturing sector; McKinsey & Company: https://www.mckinsey.com/featured-insights/americas/building-a-more-competitive-us-manufacturing-sector
3 DeRoyal Industries shifts labor and production to supply essential protective equipment; Ceridian: https://www.ceridian.com/resources/deroyal-industries-shifts-labor-and-production-to-supply-essential-protective-equipment