TPP OP Class - DSpace@MIT:...

Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

TPP OP Class

Workforce Management: Updating the Social Contract at Work

and A Short Primer on Labor Relations


Today’s Agenda, Objectives

• Pose the key Challenge: viable social contract at work

• Short primer on Labor Relations--set up discussion of Kaiser Permanente Labor-Management Partnership Case

• Discuss Part Time Partner Redux case

Rebuilding a


The “Social Contract”

“The expectations that employees, employers and their communities and societies have for work and employment relationships”


The Old Social Contract?

• Emerged out of Depression & WWII • Image of a full time long term job • Loyalty, good performance exchanged for

security • Security increased with tenure • Benefits tied to tenure • Wages & productivity/profits grew together • Assumed spouse at home attending to

family & community responsibilities


Today’s World of Work

• 70% “Regular”; 30% “Non-standard work • 48% of the workforce is female • 15% workers have spouse at home • Job durations more uncertain • Less expectation for long tenure • Wages, profits, productivity less correlated • Increased premium on skills & learning


America’s Choice: New Social Contract

• Cumulative Pressures between haves/have nots – Decade of increased inequality – Crisis in corporate confidence – Void in worker voice—decline in unions – Declining pension security: – Tax cuts of 2001, 2003??, and renewed budget deficits – Social and human service cuts at state level – Long hours—family, community pressures

• Which post war scenario will play out? – WWII and a new social contract – Vietnam and an era of conflict over scarce resources

Class Warfare or a

from defined benefit to 401(k)s


Hourly Wages for Men by Wage Percentile, 1973-99

75

80

85

90

95

100

105

110

115

120

1973 1978 1983 1988 1993 1998

Inde

x (1

973=

100)

20th

50th

Source: Mishel, Lawrence, et al. 2000. The State of Working America 2000-2001. Economic Policy Institute.

95th


Hourly Wages for Women by Wage Percentile, 1973-99

75

85

95

105

115

125

135

145

1973 1978 1983 1988 1993 1998

Inde

x (1

973=

100)

20th

50th


95th


95/50 Percentile Wage Inequality, 1973-99

2.0

2.2

2.4

2.6

2.8

3.0

1973 1978 1983 1988 1993 1998

Rat

io

Men

Women



0 5,000

10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000

1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997

Median Family Income, 1947-98



Annual Growth in Family Income, 1989-95 and 1995-99

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

Lowest fifth Median 95th percentile

1989-95 1995-99



0

500

1000

1500

2000

2500

3000

3500

4000

4500

Black Hispanic White

1979 1989 1999

Average Family Hours, 1979-98



Change in Income and Hours for Middle Income Families, 1979-89 and 1989-98

-5%

-3%

-1%

1%

3%

5%

7%

9%

11%

13%

1979-89 1989-98

Average income Average hours



30%

35%

40%

45%

50%

55%

60%

65%

70%

75%

80%

1979 1982 1985 1988 1991 1994 1997

Health Insurance and Pension Coverage, 1979-98

Health insurance

Pension



0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

1979 1989 1998

All Female headed

Poverty Rate, Families With Children, 1979-98



Labor Management Relations

Efforts to Transform the New Deal Model of Labor Relations


Three Levels of Employment Relations System in a Firm

• Workplace Level--day to day relationships, job structures, co-worker, supervisory relations, etc.

• HR Functional Level--specific terms and conditions of employment are established or negotiated

• Strategic Level--basic decisions on firm strategy, location, structure, technology etc.


New Deal Model--1930s-70s

• Workplace: grievance procedure for input,

• Collective Bargaining: system; “take wages out of competition”

• Strategic Level: management--outside the influence of workers and unions

Tight, narrow job definitions,

Centerpiece of the

Left entirely to


Efforts to Transform, 1980s

• Workplace: • Collective Bargaining:

flexibility, job security; new pay systems • Strategic Level:

joint governance, employee ownership • Current estimates:

significant efforts to change in place • Limited by business-labor political impasse

participation, teams, flexibility work rule

Info sharing, consultation,

1/3 relationships have


The Larger Setting

• Unions declined--35% in mid 50s to 9% in private sector today

• Still influential in older mnf. Industries • Growing in service sector; e.g. health care • Wide variations in quality of individual, local

relationships • National Level:

– Political impasse on labor policy--Business vs Labor – Void in informal business-labor dialogue


Isolated Alternatives

• Labor-Management Partnerships – Saturn – Kaiser Permanente – New York Hospitals and Health Care Union – San Francisco Hotels & Hotel Workers Union – Airlines:

• New York City labor-management community post 9-11

Southwest & Continental


Situating Saturn • Grew out of GM-UAW workplace

experiments with QWL, teams, NUMMI • GM couldn’t build small cars profitably • High level of trust built up between UAW

leader Don Ephlin & GM’s Al Warren • Both willing to champion a new approach • Most far-reaching & controversial labor

relations & org. design experiment in the U.S of the past quarter century


Key Features of Saturn Partnership

• Team based work system--”29 work functions”

• Co-management--union-management partners throughout the organization

• Union participation in Manufacturing Action Council and Strategic Action Council

• Risk-reward pay system • Employment security • Partnership extends to suppliers & retailers


Kaiser Permanente Partnership

• Biggest in the nation--started in 1997 • Visited Saturn & used it as a Benchmark • National in scope--26 unions • KP is a decentralized partnership with 2 parts:

– Permanente Group (for-profit physician groups) – Kaiser Health Care (HMO) and Hospitals (non-profit)

• Broad set of objectives--improve health care, expand the business, involve employees/unions in business operations and strategies


Case of the Part-Time Partner

So, didn’t we solve this problem?


Summary Pts:

• Positive Features – Allows better work-personal life integration

• Risks – Signaling lower commitment? – Less opportunities to build social networks – Reduced learning/development opportunities? – Blurring of work & family/personal time/space

Employees


Summary Pts:

• Flexible work: – Retain valuable employees – Attract future employees looking for flexibility – Build employee appreciation & commitment – Avoid burnout – Identify/test links between hours & productivity – Discover new paths to productivity & quality

Benefits to the Firm


Summary Pts:

• Managers: – Must take a system’s perspective—what other

HR policies need to be adjusted? – Dealing with differing workforce views-life

situations – Changing traditional “control” mindset

• Society/Government – Need to adapt employment laws/regulations to

fit more varied employment relationships

Challenges

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