The effect of Employee Involvement in Decision-Making on Manufacturing and Service-Sector Company Success: Findings from a Regional Competitiveness Project

The paper describes the results of some analysis of a Regional Competitiveness Project Benchmarking database covering both Manufacturing and Service sectors in the North East of England. The survey was conducted by a number of partner organisations using a variant of a well-established benchmarking tool. The study involved day-long visits to companies and the assisted completion of a specially designed questionnaire. Analysis of results was conducted using several multivariate methods to reveal statistical models that indicate factors that influence business success. Predictive models have been developed that indicate the effect of various company policies in a number of areas on the two outcomes; Change in Turnover and Change in Profitability. The effectiveness of certain strategies and activities can be demonstrated, as can the clear difference between the Manufacturing and Service sectors. The findings include models that show that involving employees fully in the decision making process (Empowerment) can lead to increasing turnover in a Manufacturing enterprise regardless of the changing size of a company. Half measures are shown not to work as well and can actually be worse than no employee involvement at all in cases where companies are downsizing. The paper will establish the notion that full employee involvement in decision making can be a good way of improving performance in any sized enterprise. Although, as would be expected, many findings confirm results from earlier well established work, there are several surprises and the work does suggest a few hither-too unknown but potentially successful methods and strategies for improving manufacturing outcomes.