New analysis of manufacturing interplant rotation programs sheds valuable light on how new work settings increase knowledge transfer and lifelong learning
Analysis: One of the most common practices in current organizational management is the temporary assignment of workers from one function to perform a similar role in another part of the company or even at an external organization. This practice happens in medicine when doctors complete fellowships to learn new skills. It occurs in management consulting when partners are asked to spend time in a new practice area. It happens in management training programs, as new MBAs experience different parts of a large firm. It is also widespread in operational roles such as manufacturing when managers and line workers are asked to spend time in different factories to facilitate knowledge transfer and innovation. Indeed, 2015 research noted that “at leading companies, up to 75% of annual productivity gains can be traced back to bottom-up ideas from non-R&D employees.”
Most executives take it as a given that temporary assignments are positive for the worker and the firm. Researchers have typically supported this perception at a high level, with studies regularly showing significant benefits from well-run temporary assignment programs. However, while the aggregate effects are generally understood, the mechanics of knowledge transfer and learning on individuals in these kinds of programs has not received a similar level of scrutiny and analysis. A newly published paper by Philipp B. Cornelius, Bilal Gokpinar, and Fabian Stinga, looks at this very issue. Their findings verify the overall perception of these efforts as valuable and suggest some nuances that managers should consider to maximize their ROI.
As the basis of their work, the researchers analyzed a database created from the operational data of a large multi-national tier-one automotive supplier. They collected four years’ worth of process improvement and innovation suggestions from manufacturing employees participating in the company’s temporary-assignment program. The program’s goal is to “increase the production efficiency of plants by systematically eliciting, evaluating, and implementing employee improvement ideas.” The program has a wide scope, and “improvements are targeted at all products and all parts of the manufacturing process, including production, product costs, acquisition strategy, development, and overhead costs.” It is also, as the authors note, rigorously documented:
The centrepiece of the programme is a global database, into which employees enter their ideas and that is used to track idea evaluation and implementation. Submitting ideas is voluntary and is not part of employees’ job requirements. To increase the number of idea submissions, the database interface is easy to use and the company encourages employees to submit all their ideas for potential improvements, regardless of perceived quality or other factors. All submitted ideas are independently evaluated by the accounting department according to a standardised process. Because the firm is looking to increase production efficiency, improvements are evaluated in terms of cost savings over a three-year period (to allow for the amortisation of potential upfront investments). If the evaluation indicates that implementing an idea would yield net positive cost savings, the improvement is adopted.
With this data in hand, the team set out to test three hypotheses:
Hypothesis 1. The value of employees’ improvement ideas increases during and shortly after interplant assignments.
Hypothesis 2. During and shortly after interplant assignments, the value of employees’ improvement ideas increases more if there is high functional overlap between the plants.
Hypothesis 3. After interplant assignments, employees’ improvement ideas are permanently more valuable.
Before analyzing their findings, it’s worth a moment to consider the nature of the work that the participants were asked to improve. In its most basic sense, knowledge about manufacturing consists of two types of information. Input-output relationships are the most fundamental. Material set X enters machine A and product Y is produced. This transformation function knowledge is what the authors call the “know-how” in the learning process. Managers with experience seeing the know-how in different applications and settings develop an understanding of production that is contextual and explains variations across products and/or plants. This is manufacturing “know-why” and it explains the inevitable variations one finds when observing similar production (or, for that matter, surgical, consulting or management) processes in different settings. These two types of knowledge are complementary, note the authors in a recent summary of their research:
To illustrate, consider injection molding (a key operation at the company we studied). The minimum heating time of thermoplastic material for a specific mold — for example, five minutes — is know-how. However, understanding why that time threshold has to change when the mold design becomes more complex or delicate is know-why. Once acquired, this type of knowledge significantly improves employees’ ability to come up with innovations, because they better understand how the different pieces of the manufacturing process fit together and therefore how they can be enhanced.
The distinction noted above is important because the authors wanted to understand not just how exposure to new work generated knowledge that could be used for improvement. They also wanted to determine whether that knowledge was about the know-how or the know why. As the researchers note, participants in the program often started their improvement work by observing a production process and noting the variations inherent in the new plant they had been assigned to. As they come to understand the new why, the authors note, “visiting employees become more aware of preexisting knowledge and are better able to recognize opportunities for knowledge transfer.” In other words, the more the visiting employees grasped the full context of the new operational way of doing things, the more they were able to imagine a different way of operating back in their home plant.
A critical element of this learning process, the researchers also note, is the generation of personal trust in the visitors for the employees at the receiving plant. This makes sense as trust generation is an integral part of just about every educational setting. IN this specific context, as the visitors came to trust their hosts more and more, the safety of this relationship gave observers a more expansive intellectual space to consider new ideas and process improvements once they returned to their home settings.
With the mechanics of knowledge enhancement understood, the findings of the database analysis were established.
Finding 1: Worker reassignments did increase front-line innovation “by facilitating knowledge transfer and stimulating employee learning.” Their individual findings align with previous macro-level results that such programs have positive outcomes overall. But it also dispels the notion that front-line manufacturing employees are not capable of driving significant innovation. As the authors argue:
In our study, employees’ ideas increased in value by 20,000 euros ($24,000) per month after a move, and this increase lasted for several years. Beyond the issue of front-line mobility, the result adds a new dimension to human resource management: Not only can front-line employees learn to become better at their (primary) jobs, but they can also learn to become better innovators.
Finding 2: The first finding above comes with a caveat, however: “knowledge transfer between two plants decreases as more employees are exchanged between them.” Indeed, the authors found that knowledge transfer starts to reduce after about five temporary assignments over a period of three months. Consequently, they suggest that “assignments should be spread out equally over time and between different destinations in order to maximize knowledge transfer and avoid production disruptions.”
Finding 3: Employees are better able to transfer knowledge “between plants that have similar products, processes, and machinery.” In other words, learning and knowledge transfer require some similarities in conditions to be effective. When workers faced conditions that were too different, the ability to learn decreased. This is an essential conclusion for managers in all functions. It is often tempting to send employees to settings that are “out of the box” to develop new improvement ideas. However, suppose the conclusions of this research team are correct. In that case, employees sent into a widely different setting will fare worse than those sent to an environment that has, on the whole, more rather than less in common with their home location.
Finding 4: Employee reassignments generate the most knowledge transfer ideas during and shortly after they conclude. However, there are significant long-lasting benefits to employee learning that persists long after the reassignment. As the authors note, the early stage of knowledge transfer “is followed by a learning effect that materialises in the months after an employee’s return and that increases idea values in the long term.” Put another way: “The knowledge transfer effect is larger in the short term, but the learning effect is perpetual: it does not diminish during our four-year study period.” Indeed, the authors suggest that this learning effect can persist for years.
This newly revised and published analysis provides essential insights and guidance to leaders of manufacturing operations. However, its findings have implications for managers across many functions and in many industries. On the whole, programs that allow employees to expand their understanding of both the know-how and know-why of their work are the most valuable. Moreover, these kinds of programs are most effective when the employees’ new settings have much in common with the old ones and where visitors and hosts can create a high degree of personal trust. Sending employees to “benchmark” or “learn from” very different operations and from people not vested in helping visitors learn will probably provide the lowest return on this form of investment.
Philipp B. Cornelius, Bilal Gokpinar, Fabian J. Sting (2021) Sparking Manufacturing Innovation: How Temporary Interplant Assignments Increase Employee Idea Values. Management Science 67(4):2231-2250. https://doi.org/10.1287/mnsc.2020.3673