You can make any change in a workplace and see productivity go up.
This is related to the Hawthorne Effect. It even jas a wikipedia page.
Another question is, could your father had had the same increase in productivity, or even more, if he had used other strategies, like productivity bonuses for the team?
Being nice and respectful is not something that you try to do despite the relentless market competition. It's something that you must do precisely because of that competition. The reason being, unless you can have a good working culture, you'll end up with a group of desperate people that have no where else to go. Good luck trying to come up with any creative work or idea with a company full of desperate people.
Since we are social animals then preventing talking between us make things harder for us at some points, ie the job gets harder, so that could be an argument for higher wage.