Soft skills, often undervalued, are now recognized as crucial for workplace success. Recent research shows that cultivating soft skills leads to better performance and higher pay. In this article Chief Development Officer and Co-founder Achyuta Adhvaryu takes us through the journey of how he along with Chief  Strategy Officer and Co-founder,  Anant Nyshhadham and Dr Jorge Tamayo discovered the importance of soft skills training for frontline workers which resulted in a soft skills training programme – STITCH.

The academic community, slow as it often is, is catching up to what workers and managers in the “real world” have known their whole working lives: that the so-called “soft skills” — things like effective communication, leadership, emotional intelligence, gender sensitivity, and grit — aren’t so soft after all. Cultivating these skills can have hard impacts on people’s workplace performance and pay. We’ve known for a long time that soft skills command a “wage premium,” and recent evidence points to the fact that this premium is going up over time as more rote jobs that require less of a human touch are automated away.

But only in the last few years have we begun to understand just how much of this relationship is truly causal, versus being part of a larger package of characteristics that shape how much workers are paid for their skills. It turns out that not only do soft skills matter, but you can also teach them effectively through workplace training, and doing so has big implications for productivity and compensation. And this last bit is a potential game-changer for firms. Because adopting these trainings can not only be beneficial to workers — imparting valuable life skills that they can take with them wherever they go in their careers; but it is also good for business, by improving productivity and raising profits as a result.

For me, the fascination (obsession, some might say!) with soft skills began with my first brush with a program called Gap Inc. P.A.C.E., a workplace training in life skills for female workers designed and first implemented by the clothing brand in garment factories in India. We partnered with Shahi Exports, one of the largest garment exporters in the world, to see if the training program not only delivered improvements in the lives of women workers, but also could deliver financial returns to the firm, through improvements in productivity. Anant Nyshadham, Namrata Kala, and I conducted a large-scale randomized controlled trial (RCT) inside five of Shahi’s factories. It turns out that thousands of women workers were interested in being part of the program — which was more than Shahi could train at one time — so we ran a lottery that enrolled about half of the women who had shown interest. We then tracked the outcomes of women who were randomized via the lottery to access the program and compared them to outcomes of women who, again via the lottery, happened to not be offered enrollment. And we tracked these outcomes for a long time: nearly two years!

What we found was truly startling: Gap Inc. P.A.C.E. had massive productivity returns, particularly in the period after the women completed the program. The rate of return on the investment of training women in soft skills was astronomical to the firm — over 200 percent — even after accounting for the fact that lots of women workers in our sample left Shahi over the course of the two-year experiment. I remember checking the data analysis code on those results repeatedly and rubbing my eyes to make sure I was seeing the numbers clearly. But as we presented this work in academic, policymaking, and business circles, it became increasingly clear that these estimates made sense. Soft skills constitute a vital part of the worker’s job — it isn’t just all about making the right stitches. A productive worker needs teamwork and effective communication skills to make sure bottlenecks and problems are resolved. If these key skills are missing, even the best seamstress in the factory could be slower than she ought to be.

Given these surprisingly positive results, my mind drifted to the next natural question. If soft skills were so productive for frontline sewing floor workers, they should be even more valuable for managers, since the “soft” parts of their everyday jobs — interacting with their teams, setting plans to make production targets, dealing with shocks to team morale or health, reading people, etc. — made up a much larger fraction of their overall responsibilities than technical skills. While this seemed self-evident, the next steps were less obvious. Which particular managerial skills mattered the most for productivity? Could a training that sought to impart those skills actually make a difference in managerial behaviors and ultimately on the productivity of the teams they managed? Or were managers already optimizing on these dimensions that suggesting a training program would have little impact? Or perhaps managers were just so set in their ways of doing things that they would struggle to learn new skills?

Anant and I, along with Jorge Tamayo, started on the long academic road to answering these questions about five years ago. We began with a comprehensive survey of managerial characteristics and behaviors conducted across the entire population of production line supervisors at Shahi. Supervisors are only one level up in the hierarchy from frontline workers — indeed many of them were once frontline workers themselves. They often had learned technical skills related to sewing and setting production lines through years of experience on the factory floor, but they had had little formal managerial training. What these supervisors, their team members, and their bosses (the upper management) told us in conversations was ultimately borne by our survey data as well. Managers potentially stood to gain tremendously from a little well-structured training in soft skills like communication, emotional understanding and regulation, gender sensitivity, delegation, and planning and goal setting. But there was no canned program that delivered these skills — supervisors were left largely to their own devices to manage their teams.

So we did the only sensible thing: we designed a program that focused on exactly the set of soft skills that our research highlighted were important for productivity but that were missing from most supervisors’ tool kits. We called this training program STITCH, or Supervisors Transformation Into Change Holders (OK, a bit tortured, I admit, but the acronym works great!). As is the case with almost all of Good Business Lab’s work, we wanted to produce rigorous evidence on whether STITCH could affect productivity, so we designed and implemented an RCT, this time across dozens of Shahi’s garment factories in South India, in which we randomly allocated line supervisors to a group that received STITCH training (treatment) or a group that didn’t (control). We then tracked the outcomes of these supervisors and the production lines they managed for over a year, and compared workplace outcomes like supervisor and worker pay and retention, and most important of all: line productivity. There were some other bells and whistles added to our trial’s design that allowed us to understand what the optimal allocation strategy would be if a firm like Shahi couldn’t train all supervisors at once (given that some supervisors might gain more from training than others). Let’s skip past those for now to save your valuable time and attention.

This time, given the results of the Gap Inc. P.A.C.E. evaluation, our working hypothesis was that soft skills training for managers would indeed have some productivity impacts. So what surprised us wasn’t that the impacts existed, but that they were so large and pronounced. STITCH caused fairly immediate productivity effects (within 1–2 months of training start) on the order of 7–8 percent, and these effects were largely sustained around these levels after training was completed (5–6 percent increase post-training). Supervisor retention increased substantially, by nearly 15 percent, and what’s more: both supervisors and workers were paid more for their greater productivity, so in this case the gains from training were shared across the firm and workforce. Workers and supervisors were much more likely to hit target-based bonuses, and their base salary growth was also higher over the course of the evaluation period compared to controls, which means that overall compensation for both supervisors and workers increases as a result of STITCH training. Even factoring in this extra wage bill, the firm benefits tremendously — even our most conservative rates of return on STITCH (especially given how cost-effective it is to implement) are above 1000 percent! It’s frankly hard to find a workplace program or investment of any kind that starts to touch those kinds of returns.

Needless to say, the obvious next thought is — well, if STITCH was so incredibly productive, why aren’t firms giving their middle managers soft skills training already? This is a tricky question we hope to answer through ongoing research. Maybe upper management in most firms hasn’t quite realized how high the returns to soft skills are. Or maybe they have, but there isn’t an easily adoptable, neatly packaged program for them to offer to their managers. Or maybe upper management is just too far from the everyday grind on the factory floor to take stock of managers’ behaviors and respond accordingly. Or perhaps it is a combination of these reasons that leads to inaction. We hope to make a dent in this important question in future work.

In the meantime, we’re working hard to make STITCH available to other firms in the apparel supply chain in India and beyond. This involves finding qualified trainers and teaching them how to administer STITCH as effectively as we did during the trial at Shahi, as well as developing technology to enable a digital delivery platform for STITCH that managers can go through in their own time on a tablet. Given the many difficulties of getting work done during the COVID-19 pandemic era, digital learning could be hugely valuable to managers and firms in situations when in-person training is infeasible. In the short time we’ve begun to spread the word about STITCH, we’ve already seen an incredible latent demand for such training. Garment manufacturers, textile firms, and others — along with multinational brands — are beginning to recognize the transformative potential of soft skills training for production line managers. We hope to be able to meet this demand by expanding the GBL team’s service delivery capabilities and increasing our footprint in India and beyond.

And as always, we remain excited about the next study.

What else should we be asking about the impacts of soft skills in the workplace? What burning questions need rigorous answers? I hope this is the start to a deeper conversation about the importance of soft skills to workers, managers, and firms alike. Get in touch and let us know what’s on your mind!

Thanks for reading,

Achyuta Adhvaryu

Head to the projects section of our website to access and explore all of GBL’s projects.

Have any questions or thoughts on the article? Write to us at info@goodbusinesslab.org.