Reporting Manufacturing Performance Measures to Workers: An Empirical Study

Much management accounting research has focused on the provision of periodic, aggregated financiai information to managers for planning and control. Recently, many firms have adopted just-in-time production, total quaiity management, and teamwork practices for their manufacturing operations. These new manufacturing practices rely on increased worker involvement in the control of ail phases of manufacturing, with the expectation that such involvement will result in the identification of opportunities for process innovations and manufacturing performance improvements. The central theme of this paper is that the adoption of the new manufacturing practices necessitates changes in performance reporting and control systems. Successful implementation of these practices requires the workers to identify ways to improve the manufacturing process, reduce defects and ensure that the manufacturing operations run efficiently. Reporting manufacturing performance information provides line personnel with the feedback that is necessary for learning and directs their efforts to productivity and quality improvements. Demand for shop floor performance reporting systems Is therefore likely to be greater where these new manufacturing practices are employed. Using a sample of 362 worker responses from 40 plants, we document that the reporting of manufacturing performance measures to line personnel is positively related to the implementation of just-in-time, teamwork, and total quality management practices. Worker morale is also found to be positively related to these new manufacturing practices and to the reporting of performance information. As such, the resuKs provide evidence on the linkage between manufacturing practices and performance reporting systems.