Improving manufacturing productivity requires firms to translate technological investment into more efficient production. Yet technological adoption does not guarantee productivity gains. Returns also depend on whether organisations can act on the information technology generates and whether managers have incentives to address the problems it reveals. For India, where manufacturing policy places considerable emphasis on investment, modernisation and technology adoption, organisational incentives deserve greater attention as a determinant of productivity.
The Limits to Information
Manufacturing firms can identify operational problems through digital systems, production monitoring and worker feedback, but identifying a problem does not ensure its resolution. Managers face competing demands, and addressing equipment failures, workplace conditions or administrative delays may require coordination, resources and effort beyond their immediate responsibilities. Where performance systems prioritise short-term production targets, such problems can remain unresolved even when they affect output or worker attendance.
Workers are an important source of operational intelligence because they encounter production constraints directly, including problems that routine supervision may overlook. Reporting channels can make this information available to management, but their effectiveness depends on whether someone has the authority, resources and incentives to act. A firm may therefore possess valuable information about production constraints without an effective organisational mechanism for addressing them.
The Productivity Returns to Managerial Responsiveness
A randomised controlled trial at Shahi Exports, a large garment manufacturer in southern India, examined whether a worker communication tool could improve workplace and production outcomes, and whether its effects changed when human resources (HR) teams were incentivised to respond to grievances.
Conducted between 2019 and 2021, the study analysed 41 factories. One group received Inache, an anonymous two-way communication tool developed by Good Business Lab that allowed workers to submit grievances and receive responses from HR. A second group received the tool alongside an incentive system combining training, performance monitoring and team-based recognition. Performance was assessed based on the promptness of the initial report filing, allocation and initial response, as well as total resolution time and quality. A control group received neither intervention.
Access to the communication tool alone produced no detectable improvements in productivity, absenteeism, worker earnings or employee turnover. When the tool was combined with HR incentives, productivity rose by approximately 5 percent, absenteeism fell by around 13 percent and worker earnings increased by more than 3 percent.
The contrast suggests that the constraint was not simply workers' ability to communicate problems, but the organisational response to the information they provided. The findings demonstrate the importance of combining a worker communication technology with managerial practices that encourage action, although they do not establish that the same mechanisms apply equally to every form of manufacturing technology.
How Managerial Incentives Changed Workplace Reporting
Factories with HR incentives met the required deadline for resolving grievances 16 percentage points more often than factories using the communication tool alone. Response quality remained similarly high in both groups, suggesting that faster resolution did not come at the expense of the quality measured in the study.
The incentives also changed what workers reported. Grievances about production conditions, such as high temperatures, faulty equipment and requests for fans or repairs, increased by 0.28 cases per factory-month, against a control-group average of 0.15. Reports concerning salary, retirement and insurance rose by 0.34 cases, against a control-group average of 0.33.
An increase in grievances does not necessarily indicate deteriorating workplace conditions. It may reflect greater willingness to report problems when workers expect management to respond. In this case, improved grievance resolution and increased reporting suggest that organisational responsiveness can help bring previously unaddressed problems into management processes.
Greater visibility of operational constraints, combined with more timely resolution, offers a plausible explanation for the productivity gains. Worker feedback can become a productive resource when reporting is connected to effective managerial action.
Beyond Technology Adoption: Building Organisational Capability
The findings have implications for India's manufacturing policy, particularly programmes encouraging technology adoption and industrial modernisation. Investment in equipment and digital systems is relatively straightforward to observe, but their contribution to productivity depends on how firms integrate them into everyday operations. Assessing organisational readiness alongside technology adoption would help support the productive use – rather than just the installation – of new technologies.
This requires attention to managerial responsibility, problem-solving capacity and the outcomes that technologies are intended to improve. Evaluations could examine productivity, absenteeism, response times and the effective resolution of reported problems, rather than relying primarily on investment or adoption indicators. The specific measures would necessarily vary across technologies and production processes.
Worker feedback also deserves a more established place in manufacturing management. Employees may recognise equipment failures, unsafe or uncomfortable working conditions and coordination problems before these become visible through formal performance indicators. Accessible and confidential reporting channels, safeguards against retaliation and clear escalation procedures can help ensure that such information reaches those able to act. The challenge is to make worker knowledge part of routine operational decision-making rather than treating grievances solely as an administrative HR function.
Managerial accountability is equally important. Incentives linked only to complaint-processing speed or case closure can encourage superficial compliance without resolving underlying problems. Effective systems need to consider resolution quality, recurring grievances and whether corrective actions are completed. The wider lesson is that information becomes valuable when firms create both the capacity and the motivation to act on it.
The productivity debate in Indian manufacturing often centres on better machines, newer technologies and larger investments. Yet firms may already possess valuable information about what constrains production, held by workers who encounter these problems every day. The challenge is to build organisations capable of listening and responding. Some productivity gains may depend less on generating new information than on acting on what workers already know.