Economists are saying that American workers’ wages are stagnant and have been for quite a few years now despite working longer hours and being “on call” all the time through technology. That doesn’t mean that business is lagging though, since corporations, their CEOs and other high-level managers are doing quite well in that department. Our guest says that work and the way we compensate the rank-and-file workers needs to change to bring up wages and add benefits to make the work environment more equitable. We discuss why this inequality exists, look at some companies who are bucking that tide and find out ways that the system can change through education, government action and community empowerment.
- Thomas A. Kochan, Professor at the MIT Sloan School of Management, and author of the book, Shaping the Future of Work.
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16-13 The Future of Work
Marty Peterson: President Ulysses S. Grant said that a worker is “the author of all greatness and wealth.” Many of us who go to work each day would probably agree with that assessment, although we might come up a little short on the “wealth” end. Today’s workers seem to be gaining less wealth from working than they did just a few years ago. According to the Economic Policy Institute, if you compare 2014 wages with those in 2007, before the recession, hourly wages for most Americans were either flat or falling, in spite of never really being away from work very much…
Thomas Kochan: We take our work with us. It travels on our iPhones or on our laptops and it used to be said that a farmer’s work is never done, well I think that seems to apply to too many of us.
Peterson: That’s Thomas A. Kochan a professor at MIT’s Sloan School of Management and author of the book, Shaping the Future of Work. Kochan says that no only does the technology affect how we work, employer-worker relationship has changed over the decades as well…
Kochan: In the 60s and 70s there tended to be a very clear place where work was done and where work wasn’t done – at home and so on. You had a very clear idea of who you worked for in the sense of “I work for IBM” or “I work for General Motors” or “I work for the department store down the street” and you knew who the employer was and you knew your role in that organization. And you tended to stay a longer period of time than people do today. Today, the definition of the employer is sometimes a little bit blurred, “Do I work for Uber or I work for myself?” or “Do I work for MIT or am I an independent contractor in an IT department or a temporary employee working for some temp agency?”
Peterson: Kochan’s book addresses the issues of how corporate structures and priorities have changed over the years to maximize profits by keeping rank-and-file workers’ wages low and benefits at a minimum – if they exist at all. How did we get to this point? And what do we need to do to level the work-wage playing field? There are a number of reasons why corporate structures changed: Junk bonds and corporate raiders in the 1980s broke up and decimated many businesses; people began to think that corporations were legally required to maximize shareholder profits at any cost including wholesale lay-offs – which is a myth. Then came the aggrandizement of CEOs — which Kochan says is partly the fault of business schools like his own…
Kochan: Over the last 25 years we’ve elevated the CEO to a godlike figure: charismatic, transformational leaders. You can buy books by just about every CEO that was successful in the 90s and the 80s and up to today with their leadership tips for how to do this. So we’ve lost sight of the fact that underneath those CEOs is a team of managers, executives, frontline employees that generate the ideas and the productivity and get the job done.
Peterson: Kochan says that universities and businesses need to educate executives in just how the workforce contributes to the overall success of the corporation…
Kochan: We don’t teach enough of the teamwork of distributed leadership of the value of building high productivity, high quality workforce strategies among all employees in the organization. Instead we kind of segregate that to people at the top. So we’ve got to change how we teach in business schools so the next generation of managers knows how to get value out of everyone and knows how to invest in everyone. We’ve stopped training, we’ve reduced the amount of training particularly that large firms have historically done. So we’ve got to get back to some of those very basic things we know are successful in building high-road firms where not only the share owners can benefit, but employees and their customers can benefit as well.
Peterson: Kochan says that universities, post-high school programs and life-long learning strategies need to be created collaboratively with business so that future employees can become real assets to industry throughout their working lives…
Kochan: We do have to start to figure out where’s the investment in education and training on a life-long basis going to come from? If it’s not going to come from inside the firm then it better come from staying current with one’s skills, keeping current using ongoing education and training from universities and technical schools, using the online tools of education and training on a lifelong basis, and encouraging firms to work together to train people so that we know that when labor and management get together to create apprenticeship programs for people in construction trades or in manufacturing or in the IT area, they can create skills that people can then come in and apply in different organizations because they have some commonality of training and credentials.
Peterson: The public and the workforce can have a role in how businesses are structured these days. Kochan talks about how employees and customers of a 100-year-old, family-owned business in New England – Market Basket grocery stores – banded together to keep the business from changing their model. The third generation of the family was taking over and there was a faction that wanted to cut wages and benefits for the 25-thousand employees in their 71 stores to maximize profits for themselves. The store employees, drivers, managers and the communities where they were located revolted…
Kochan: All non-union but they said, “Look, you’re going to destroy our company. This is our company. We built it this way. We have a CEO who knows how to get the best out of us and who respects us and now you’re going to destroy all that?” And so they revolted and for six weeks they essentially went on strike and the community supported them, the public their customers supported them because they said, “These are our stores. We get our prices at 20% or 15% lower than any other grocery chain and now you’re going to take all that away from us as well.” And so in the end, the board of directors had to sell the business to the CEO who had been loyal to this business model. The business came back, it’s going strong. The public resonated with this business because they said, “That’s the kind of business that we would like to see in other areas. We believe that this is the kind of business that you can build in this country, be proud of, have people stand up for it, serve our customers well, serve our communities well, serve the owners and the investors well but also serve the employees.” I’ve been studying this stuff and working with labor and management for over 30 years and I never saw anything like Market Basket, so that’s why it was a teachable moment.
Peterson: Kochan says that the Market Basket model isn’t the only one where loyal employees and customers enjoy a good product and customer service. Southwest Airlines and Costco are two others. Business schools, Workers and customers are only part of the equation. Kochan says that government has a role to play in making the workplace and the economy stronger and more equitable for all….
Kochan: Yes we’ve got to rein in Wall Street and we’ve got to regulate, you know, the Dodd-Frank regulations are a step in the right direction. We’ve got to make sure that we start to regulate hedge funds and start to treat hedge fund workers the same as regular income. We’ve got to make sure that we limit the power of Wall Street to dictate the short-term pressures on business. And we can do that by having a transaction tax to create incentives for longer-term income streams. And we’re seeing some movements on Wall Street to move by some in this direction. Then we’ve got to fundamentally transform our labor and employment policies to reflect the changes in the economy where we now have two family members in the labor force so we need more flexibility. We need a paid leave policy so people can take care of their family and their work responsibilities.
Peterson: He says we also need to modernize labor laws to fit today’s work environment, and build partnerships where workers can contribute to improvements and productivity and also reap rewards for their contributions. Also, labor unions should be training workers with the skills they need on a lifelong basis. Kochan says that young people are the key to pushing these changes forward…
Kochan: They’re hungry for a new approach and they want to address big problems in society, they want to address how are we going to save our planet and climate change and all of those. They want to address poverty and healthcare but they also want respect and they want to have a decent standard of living and they want to have a personal and professional life, whether it’s traditional family structures or alternative ways of spending their personal time. But they want to use technology, they want to use entrepreneurship, they want to hold others accountable for a fair share for everybody. And I’m very, very optimistic about the next generation.
Peterson: You can find more information on how corporations, workers and communities can move toward a more modern and equitable work environment for all in Thomas Kochan’s book, Shaping the Future of Work, available at a discount on his website at Speakupforwork.com. For more information about all of our guests, log onto our site at Viewpointsonline.net. You can find archives of past programs there and on iTunes and Stitcher. Our show is written and produced by Pat Reuter. Our production directors are Sean Waldron and Reed Pence. I’m Marty Peterson.
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