TPP OP Class

1. TPP OP Class Workforce Management: Updating the Social Contract at Work and A Short Primer on Labor Relations Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

2. Today’s Agenda, Objectives • Pose the key Challenge: Rebuilding a 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 Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

3. The “Social Contract” “The expectations that employees, employers and their communities and societies have for work and employment relationships” Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

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

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

6. America’s Choice: Class Warfare or a 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: from defined benefit to 401(k)s – 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 Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

7. Hourly Wages for Men by Wage Percentile, 1973-99 Source: Mishel, Lawrence, et al. 2000. The State of Working America 2000-2001. Economic Policy Institute. Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

8. Hourly Wages for Women by Wage Percentile, 1973-99 Source: Mishel, Lawrence, et al. 2000. The State of Working America 2000-2001. Economic Policy Institute. Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

9. 95/50 Percentile Wage Inequality, 1973-99 Source: Mishel, Lawrence, et al. 2000. The State of Working America 2000-2001. Economic Policy Institute. Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

10. Median Family Income, 1947-98 Source: Mishel, Lawrence, et al. 2000. The State of Working America 2000-2001. Economic Policy Institute. Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

11. Annual Growth in Family Income, 1989-95 and 1995-99 Source: Mishel, Lawrence, et al. 2000. The State of Working America 2000-2001. Economic Policy Institute. Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

12. Average Family Hours, 1979-98 Source: Mishel, Lawrence, et al. 2000. The State of Working America 2000-2001. Economic Policy Institute. Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

13. Change in Income and Hours for Middle Income Families, 1979-89 and 1989-98 Source: Mishel, Lawrence, et al. 2000. The State of Working America 2000-2001. Economic Policy Institute. Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

14. Health Insurance and Pension Coverage, 1979-98 Source: Mishel, Lawrence, et al. 2000. The State of Working America 2000-2001. Economic Policy Institute. Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

15. Poverty Rate, Families With Children, 1979-98 Source: Mishel, Lawrence, et al. 2000. The State of Working America 2000-2001. Economic Policy Institute. Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

16. Labor Management Relations Efforts to Transform the New Deal Model of Labor Relations Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

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

18. New Deal Model--1930s-70s • Workplace: Tight, narrow job definitions, grievance procedure for input, • Collective Bargaining: Centerpiece of the system; “take wages out of competition” • Strategic Level: Left entirely to management--outside the influence of workers and unions Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

19. Efforts to Transform, 1980s • Workplace: participation, teams, flexibility • Collective Bargaining: work rule flexibility, job security; new pay systems • Strategic Level: Info sharing, consultation, joint governance, employee ownership • Current estimates: 1/3 relationships have significant efforts to change in place • Limited by business-labor political impasse Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

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

21. Isolated Alternatives • Labor-Management Partnerships – Saturn – Kaiser Permanente – New York Hospitals and Health Care Union – San Francisco Hotels & Hotel Workers Union – Airlines: Southwest & Continental • New York City labor-management community post 9-11 Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

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

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

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

25. Case of the Part-Time Partner So, didn’t we solve this problem? Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

26. Summary Pts: Employees • 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 Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

27. Summary Pts: • Flexible work: Benefits to the Firm – 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 Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

28. Summary Pts: Challenges • 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 Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”