By Elena Fanjul-Debnam, Vice President of Labor Solutions, Emerging Markets
Achyuta Adhvaryu (Assistant Professor, University of Michigan), Teresa Molina (Assistant professor, University of Hawaii at Manoa) and Anant Nyshadham (Assistant professor, Boston College) recently released a working paper called “More Money, More Problems: Expectations, Wage Hikes and Worker Voice.” The paper details the first real-world study of economist Albert Hirschman’s landmark thesis on the relationship between voice and exit.
To test Hirschman’s theory as it relates to worker voice, the study’s authors conducted a randomized controlled trial in India’s largest ready-made garment factory where turnover was traditionally high, averaging 7-10% per month. The goal of the study was to determine the impact of employee turnover when workers were given a way to meaningfully communicate their dissatisfaction with their employer.
Using an anonymous survey as the worker voice tool, the trial revealed that enabling worker voice reduced employee turnover by 20%. However, the impact of the worker voice tool was most notable among those employees who were identified to be most disappointed in a recent wage announcement. Disappointed employees who had access to the survey were 84% less likely to quit than the control group that did not have access to the survey. Access to the worker voice tool also had a favorable impact on reducing absenteeism.
According to the authors, the study affirms the value of providing voice to vulnerable workers in environments with frequent turnover due to low wages, poor working conditions and restricted worker rights as a means of increasing workers’ job satisfaction and thus reducing turnover. It also demonstrates that employees see value in the ability to communicate dissatisfaction to an employer, showing voice essentially functions as a type of non-wage compensation.
To read the entire paper, click here.