Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Productivity rises when companies are facing closure

09.05.2008
In companies that are slated to be shut down, productivity increases during the phase-out period itself.

When management is busy dealing with matters other than daily operations, employees shoulder a greater responsibility for their work­ and efficiency is enhanced. According to business economist Magnus Hansson at Örebro University in Sweden, this shows that it is possible to boost productivity considerably without investing. This is also an argument for longer phase-out periods, which would benefit both the employees and the company.

“Extending the shut-down periods creates better conditions for employees to find new jobs, for the surrounding business community to develop substitute jobs, and for company management to phase over production to other facilities.”

Magnus Hansson recently submitted a doctoral dissertation in business studies at the Swedish Business School, Örebro University. His research is based on the closure processes at ten manufacturing companies, two of them outside Sweden, between 2002 and 2007, and he has seen the same course of events in all cases:

“The patterns are surprisingly clear. When the decision to close is made public, there is an initial drop in productivity. People are angry, sad, and worried about their future. But when negotiations are over and everyone knows what the conditions are, productivity rises,” he explains.

And then, as management control of everyday operations lets up, there is suddenly scope for employees to act spontaneously and independently, and to reorganize their work.

“Innovative forces are released. They don’t have to lead to radical changes, but many minor changes can boost productivity. In several cases I studied it was also apparent that individuals who had no formal responsibility or authority took on greater responsibility and became informal leaders.”

“This is just the opposite of what happens when a company downsizes its employees. Even though the aim is to increase productivity, paradoxically it hampers production.”

The explanation for this difference, according to Magnus Hansson, is that a decision to shut down eventually leads to a situation where employees know what is going to happen, whereas employee downsizing creates uncertainty and conflicts.

Magnus Hansson’s research is based on the factories’ own production statistics, but to see what lies behind the figures, he also studied three companies in depth.

Interviews with plant managers, union representatives, and employees were complemented by his own observations, including what employees talked about during coffee breaks, what views they had of management and their work. Here he discovered several key factors that largely explain the increase in productivity:

“It’s about people and what motivates them. It’s surprising to see the commitment and efforts of employees in such an extreme situation as when they are losing their jobs.”

Magnus Hansson defended his thesis on March 28, and his dissertation is the first one to be submitted at Örebro University’s newly established Swedish Business School.

The ten companies covered by Magnus Hansson’s dissertation are:

Korsnäs Marmaverken in Söderhamn
SSAB in Luleå
PLM (Hammars Glasbruk) in Hammar (moved to Limared)
Fundia Steel, Wire Rod, in Smedjebacken
Lovene Dörr in Lidköping
Gusab Stainless in Mjölby
Gislaved tire factory, tire production in Gislaved
Gislaved tire factory, studding division in Gislaved
BHP Billiton in Newcastle, Australia
Boston Scientific in Seattle, USA

Ingrid Lundegårdh | alfa
Further information:
http://www.oru.se

More articles from Business and Finance:

nachricht How Strong Brands Translate into Money
15.11.2016 | Kühne Logistics University - Wissenschaftliche Hochschule für Logistik und Unternehmensführung

nachricht Demographic change depresses tax revenues
04.11.2016 | Fraunhofer-Institut für Angewandte Informationstechnik FIT

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Novel silicon etching technique crafts 3-D gradient refractive index micro-optics

A multi-institutional research collaboration has created a novel approach for fabricating three-dimensional micro-optics through the shape-defined formation of porous silicon (PSi), with broad impacts in integrated optoelectronics, imaging, and photovoltaics.

Working with colleagues at Stanford and The Dow Chemical Company, researchers at the University of Illinois at Urbana-Champaign fabricated 3-D birefringent...

Im Focus: Quantum Particles Form Droplets

In experiments with magnetic atoms conducted at extremely low temperatures, scientists have demonstrated a unique phase of matter: The atoms form a new type of quantum liquid or quantum droplet state. These so called quantum droplets may preserve their form in absence of external confinement because of quantum effects. The joint team of experimental physicists from Innsbruck and theoretical physicists from Hannover report on their findings in the journal Physical Review X.

“Our Quantum droplets are in the gas phase but they still drop like a rock,” explains experimental physicist Francesca Ferlaino when talking about the...

Im Focus: MADMAX: Max Planck Institute for Physics takes up axion research

The Max Planck Institute for Physics (MPP) is opening up a new research field. A workshop from November 21 - 22, 2016 will mark the start of activities for an innovative axion experiment. Axions are still only purely hypothetical particles. Their detection could solve two fundamental problems in particle physics: What dark matter consists of and why it has not yet been possible to directly observe a CP violation for the strong interaction.

The “MADMAX” project is the MPP’s commitment to axion research. Axions are so far only a theoretical prediction and are difficult to detect: on the one hand,...

Im Focus: Molecules change shape when wet

Broadband rotational spectroscopy unravels structural reshaping of isolated molecules in the gas phase to accommodate water

In two recent publications in the Journal of Chemical Physics and in the Journal of Physical Chemistry Letters, researchers around Melanie Schnell from the Max...

Im Focus: Fraunhofer ISE Develops Highly Compact, High Frequency DC/DC Converter for Aviation

The efficiency of power electronic systems is not solely dependent on electrical efficiency but also on weight, for example, in mobile systems. When the weight of relevant components and devices in airplanes, for instance, is reduced, fuel savings can be achieved and correspondingly greenhouse gas emissions decreased. New materials and components based on gallium nitride (GaN) can help to reduce weight and increase the efficiency. With these new materials, power electronic switches can be operated at higher switching frequency, resulting in higher power density and lower material costs.

Researchers at the Fraunhofer Institute for Solar Energy Systems ISE together with partners have investigated how these materials can be used to make power...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

ICTM Conference 2017: Production technology for turbomachine manufacturing of the future

16.11.2016 | Event News

Innovation Day Laser Technology – Laser Additive Manufacturing

01.11.2016 | Event News

#IC2S2: When Social Science meets Computer Science - GESIS will host the IC2S2 conference 2017

14.10.2016 | Event News

 
Latest News

UTSA study describes new minimally invasive device to treat cancer and other illnesses

02.12.2016 | Medical Engineering

Plasma-zapping process could yield trans fat-free soybean oil product

02.12.2016 | Agricultural and Forestry Science

What do Netflix, Google and planetary systems have in common?

02.12.2016 | Physics and Astronomy

VideoLinks
B2B-VideoLinks
More VideoLinks >>>