Workforce and Workplace Issues for the New Century

(Keynote address)
Industrial Relations Research Association.
Third Annual National Policy Forum
Shaping the Dialogue in Labor and Employment Policy
Omni Shoreham, Washington, D.C. June 7, 2001.

DR. MICHAEL MACCOBY: Thanks very much, Wayne, for that very generous introduction. I really am honored to be invited to talk to a group like this about the future of work, dealing with people who are deeply involved in a policy that is going to effect the future of work.

Now there are different ways to look at the future of work, starting with the science fiction writers like Jules Verne and H.G. Wells, who described a picture of work that’s based on imagination. The next way that most people describe the future is extrapolating the present. We know the weakness of that, because a lot of people tried that with the Nasdaq in the last year, and it's not always a great way to try to predict the future from extrapolating from the present.

This is a picture (pointing to an overhead chart) of the distribution of the U.S. labor force from 1840 to the year 2000. It’s very clear what we see. We were a farming society; now, 2 percent of the population produces enough food to export throughout the world. It's no longer farming as it was known in the 19th Century, it's an industrial mode of production. We see manufacturing leveling off and services, of course, here and in all the major industrialized countries, services are over 70 percent of the description of work.

But I think that can be a very misleading view. Before I say that, of course, there is another way of looking at the future, which is done by many corporations, and that is to look at scenarios in which you take certain variables that can change and you make a viewpoint of what would happen if this or that or the other thing occurred.

So we could take issues like this: What’s going to happen in terms of automation? What’s going to happen in terms of the role of the unions and other groups representing employees? What about the nature of leadership which is crucial? You can certainly see that in the airline industry.

The difference a person like Herb Kelleher makes to a whole relationship and a whole development of an industry. And the nature of work itself. You look at the nature of work in Southwest Airlines. It’s a different kind of work than people are doing in other airlines. In public policy, of course, we could make scenarios and then look at the future in those terms.

Now as an anthropologist, I look at the future somewhat differently; that is, I try to look holistically not just at the way jobs are named — a service or manufacturing — but the actual mode of production that has changed over time. If you look by mode of production, I mean the kind of tools people use and work relationships. You look at the craft mode. Tools are hand tools. In manufacturing, they are electro-mechanical mass production tools.

In the new age we’re getting to what I call the knowledge-service age. The tools we're using —the computers, the Internet and so on, are very different types of tools. The relationships are different. The customer/producer relationships are different. The meaning of what creates productivity is different and what creates quality is different.

So we are really at this discontinuity in the mode of production, really, which can only be looked at in a holistic way, not as just a description of a type: service, manufacturer, etc. If we were to look at the fastest growing occupation or those gaining the most workers (you have this all there in your notes, but I’m not going to go through it). What you will see when you look at this — when you have all this — is all these jobs are some combination of knowledge and service. There may be more pure services in health care. There may be more pure knowledge in computers. Or there may be some combination taking knowledge and making it into service, as in consulting service technicians. All kinds of jobs that combine the two.

So the way I look at the change in the nature of work, if we look at time on the X axis and productivity on the Y axis (on the overhead chart) is that in terms of these discontinuities. Just to give an example, if you go back to the craft world, say the time of Paul Revere. Paul Revere improves his productivity by training his apprentices, by using materials better, etc. So along in the 19th Century comes Revereware. There’s no way Paul can compete on a mass market, no matter what he does within a craft mode of production. That’s what I mean by discontinuity.

So we see a whole new mode of production emerging, with its own development. We see Frederick Winslow Taylor. We see Deming, Juran, Quality. The whole development of manufacturing to become more productive, better quality and suddenly we're in a new mode of production. Finally manufacturing itself becomes more like knowledge and service.

It’s no longer manufacturing. Manufacturing is no longer in many places under the manufacturing mode of production. For example, in a company like Lucent, a lot of what you’re producing is knowledge-service work, even in a world of manufacturing. Products can be customized. We're looking at co production between the producer and the customer.

One company I worked with, ABB, instead of selling electrical transformers, customers were asking: how do we cut the cost of electricity and at the same time make it environmentally better? Now that’s not meeting a specification. That requires interaction and solution and co-production. It's a whole new way of producing by co-producing.

This is the world we’re moving into. You have here (referring to a chart) where I put down the factors influencing productivity in the three modes of production. For example, in the knowledge service industry, Wayne mentioned the Internet. One of the things the Internet does is reduce the transaction cost. But in reducing the transaction cost, of course, you’re reducing employment and you're changing the nature of work.

Also, with quality, we looked at quality in the modes of production. With Paul Revere, quality has to do with the use, ability and durability, and it has to do with imagination and skill. In manufacturing, it has to do with standardization and meeting expectations. Quality really has to do with making the parts fit perfectly.

I remember when — and I’ve been working many years as a consultant — once meeting with top management of Ford, where they had an agreement with one of the Japanese companies. Ford had not really gone into the quality world yet. They made an agreement with a Japanese supplier that they would have a 98 percent acceptable product. When the product arrived, there were two out of 100 in carefully wrapped boxes. Ford said, what’s this? The Japanese supplier said well, these are the two defects you asked for.

So, the whole way of thinking at that point, the Japanese were so far ahead of our industry, which has now caught up. So we are now, I think, where American industry understands quality. But we're moving into a new world, as I mentioned, where the logic has changed.

If we were to look at the nature of the knowledge-service workplace, which is what we’re moving into, it looks something like this (pointing to an overhead chart) if you look at knowledge on the Y axis and service on the X axis, and look at this in terms of the market value of skills, not making any implication about value in any human terms, just in terms of what people pay for in terms of employment. What you see are two dimensions, where you have inventors up here and down here you have exceptional performance, like an international fashion model who would not have to have a huge amount of knowledge for this highly paid service. But here on this vector, you have transactional work, consultative work and leadership, which puts knowledge and service together in some way that creates the productive result.

For the past two years, I’ve been studying the health care industry, looking at the best examples of leadership. When you’ve got a picture like this, you look at health care, which, by the way, is the largest single economic sector right now in our society. In terms of knowledge-service, you get a picture like this.

Now the interesting thing if we look at this workplace and look at it in a future play out, we see all these inventive people automating this transactional work. We've already seen that started with the ATMs, with operator service in telecommunications. But now the Internet is automating consultative work, so a lot of the medical consultations and financial consultations are being automated,

What we are seeing is a whole group of people trying to get rid of jobs in order to increase productivity and quality. But more and more, leadership becomes absolutely crucial in a way it was not in a manufacturing world as you bring all these different roles together into a knowledge-service workplace. You're dealing much more with empowered people who are dealing as free agents and co-producing with each other in teams and with customers. Leadership has the task of getting people to share goals and understand the purpose of what they're doing.

By the way, a lot of service work — I could have said this before — is really in the manufacturing mode of production. If you look at McDonald's, it’s much more a manufacturing mode of production than a knowledge service mode of production. So, again, these titles of service, manufacturing and so on can be very misleading in understanding the real nature of work as it develops in the 21st Century.

So far what I’ve been looking at and sharing is a view of how the nature of work is changing and how and what becomes the logic of creating productivity and quality in the knowledge service age. But as well as being an anthropologist, as a psychologist, from the start of my work 30 years ago, my goal has always been to understand how can we combine economic and human progress.

In terms of what motivates me in everything I’ve done — the work I’ve done — and also with my colleagues, including my friends from the CWA, our goal has been to see the possibility of combining economic and human progress. How do we look at human progress? Well, one way is to look at the changing needs that people have brought to work in terms of these three modes of production.

If we look at the farm and craft era-and this is what I saw when I studied very early in my career-people who were small farmers or craftsmen. These were the kinds of things that were important to them: ownership of the land, saving and reinvesting, good luck and social support. The satisfaction of these needs is mainly up to the individual and his family. We did see, of course, a beginning of craft unions and craft guilds that were set up to satisfy some of these needs.

If we move into the manufacturing era, we see very different needs, as we look at all the studies and all the experience that we’ve had in the workplace. This is what I saw in the 70s, working with the UAW and Harman Industries in the work improvement project in Bolivar, Tennessee. We observed needs for security, freedom from fear of layoffs, health and safety, due process, fairness in pay, benefits and seniority and freedom from over control. Furthermore, workers wanted a voice in how their work would be done.

If we look at our large unions — our industrial unions — they were built to satisfy these needs. The public policies they influenced were made to reinforce the satisfaction of these needs.

I think that’s very important to see as we move to a knowledge-service workplace where the needs are shifting. Here is one study from the Public Policy Center about workers today: the family becomes a top priority and there are demands for alternative work schedules. People are identifying themselves as free agents without loyalty to companies.

Of course, many people are being forced into the role of free agents. It’s not necessarily a matter of choice. They may be contingent workers who are put in this position without benefits. However, the studies show increasing entrepreneurial values on the part of workers wanting to share ownership in companies, more of an individualistic rather than a collective view of their needs. These new needs have become much more important, particularly for employees of the new generation, and the entry of women into the workforce has made a big difference in this regard. Flexible schedules and family, but also work itself. Not just having voice. People want to be part of meaningful projects. They want dialogue. They want transparency. A number of studies, particularly looking at the health care sector, have shown that distrust of management comes from a lack of transparency in companies. People don’t know what exactly is going on. Why do some people get this salary and that salary? What is the logic? Many health care organizations, particularly universities, have black boxes in terms of revenue and how it's been used. This has led to deep distrust, anger and hostility within these organizations. We also see also a need for marketability, professionalism, transferable skills, networking and so on. Now, of course, to some degree some unions have been able to meet some of these needs. I think of my daughter who is a member of the Screen Writers Guild. That's a union that is dealing with people just like this. And there are some others. But most of the unions that were created in the age of manufacturing don’t have such an easy time thinking in terms of this logic, dealing with these kinds of needs.

Now what I would like to do is focus on the role of unions in particular, because frankly without strong representation of unions, historically I don't see in this country or any other country the ability to meet these kinds of needs in the workplace. That’s something I’m hoping we’re going to have some discussion about, how you view this question: how we can both have economic and human progress in the 21st Century in the workplace?

But in all my experience and the reason I began to work on projects with union and management was because I saw that cooperation as the best way that these needs would be fully met. As I look at the union/management relationship that I experienced, I see a continuum in terms of on the X axis maturity and trust and on the Y axis value to both parties.

It ranges from resistance at the lowest level on both sides up through adversarial bargaining to a problem solving relationship, which has been very valuable in many organizations. I wrote an article for the Harvard Business Review, “Is There a Best Way to Build Car,” which discusses that. But also a higher level of participation where the union, as an institution, is involved with management in solving problems or making decisions before the fact from both a human and an economic point of view.

The AT&T/CWA workplace of the future was an attempt to create this kind of participation. And by the way, at the top, the strategic partnership is very rare. That was the attempt that Saturn has made. It’s a long story to discuss it. My personal view is it's not a sustainable type of union/management relationship.

The owners of unions are members and the owners of management are the shareholders and they absolutely have different bases of legitimacy and power. I think they need to recognize and respect those differences. But that can lead to good participation, and we've seen some good models, good problem solving like the NUMI (GM - Toyota - UAW) model, which is very different from the Saturn model, but I think much more sustainable on both sides.

But in that area, of course, from a knowledge service workplace point of view, one of the most interesting new attempts at cooperation is Kaiser Permanente, whose leader, Dr. David Lawrence, believes deeply that the participative relationship with 12 unions, which have been negotiated by Pete di Cicco for the AFL-CIO, is a basis for Kaiser Permanente's competitive advantage in the market. This is a good example of a leadership that is developing all of its management to support and sustain this kind of participative relationship.

At CWA, Morton Bahr asked me to facilitate a study by members of the executive board of number of examples around the country in the telecommunications industry of attempts at union/management cooperation. Out of that came a report which said participation could be very positive for the union. The CWA report stated that union participation could be a new stage of collective bargaining, building on the earlier stages of collective bargaining, to allow the union to better represent its members in the knowledge-sevice workplace.

For example, the need for continual education and training. CWA and AT&T developed an alliance to support the marketability of its members by opportunities for training and education.

If you look at AT&T when this process began, part of it was in the manufacturing mode of production. Part of it was already moving into the knowledge-service mode of production, particularly service technicians and network techs where you needed a different kind of management. You needed a different way of thinking. It needed a different logic to it, and the union was helping management to transform from a manufacturing mode of production — Tayloristic, rigid rules — to a knowledge-service mode of production, which allowed co-production and empowerment of the technicians.

At the height of Workplace of the Future, management said that union involvement was adding value in all these ways. This was a direct statement from AT&T management on the part of the company — there were really two parts of the company — that had developed participation with the union. One was the network and the other was business communication services. In both of those business units, the work was mostly within the new mode of production, which I think is not at all a coincidence. It is very important to understand that Workplace of the Future fit the needs of this new world and of the workers in that world. The results allowed much greater productivity in a number of different ways, including making radical changes that affected employment and work which could never have taken place without cooperation.

So given all of that, why is it not still going on? Why is it not developing? Why is it not being copied? I mean, it’s amazing! I remember John Dunlop once said to me, you know, if you have a good innovation,everybody in the market is going to take it and use it, so you don’t have to push it at all.

That has not been my experience in relation to a number of very positive developments. I don’t think civilization works like a pure market economy. One of the things that we thought from the beginning was that you could not create this kind of participation unless at least you had three elements. One was it wasn't feasible for management to move production due to capital investments. In other words, you can't move the AT&T network to Taiwan — at least then. Maybe now they’ll learn how to do it. But you can’t move Kaiser Permanente out of northern California over to Mexico.

So when you’re dealing with organizations that are “there” which includes, of course, the airlines, they’re there, you can’t move the planes someplace else. That’s one criteria. The other is management believes the union has the power to help or hurt. Now the problem with that is there is a catch-22 here and the catch-22 is the following: “management only pays attention to an adversarial union but management doesn’t want to collaborate with an adversarial union.” That's the catch-22 that explains why most managements pay no attention to the union. I’ve had the unique opportunity to be a consultant both to the CEOs of companies and to work with union leadership, I can tell you, the CEOs pay no attention to the union. They don’t even think about it. They think that’s something way down that somebody else should think about, except in rare cases. So if they pay attention, it’s only because the union is causing such trouble that they’ve got to pay attention to it. But if you have the union causing all that trouble, why do you want to cooperate?

The third thing you need is visionary leadership of both union and management and there is no substitute for that. In every example that we’ve seen of good relationships, whether it’s participation or whether it’s just a good kind of relationship that Southwest Airlines has, you can see it. The leadership pays attention to it and cares about it.

The Economist said the only two airlines with good union management relationships were Southwest and Continental, and they happen to be the only two airlines making any money. In both cases, you have leaders who understands that it's important to maintain a relationship, not just when there is trouble. Not just to react to trouble.

Now what we find, however, is even when we develop a participative union/management relationship, we have problems of sustainability on both the union and management sides. This is not a one-way ramp.

What we see from the union side is — it's a political risk for leaders. It’s much easier to get up and run against management, particularly if you're in a corporation and then suddenly the management changes, and somebody new comes in and stops things and you're dead meat politically. We saw that happen with

CWA. We saw a lot of very cooperative leaders in this process get defeated. So why should you go into it? Second of all, there are probably many unions with decentralized power. We saw that particularly with the IBEW working where the locals really are not controlled nationally.

But the more they’re decentralized, of course, the more they may just look out for what is good for them at their location and not be concerned with the whole. So the whole process breaks down. How can you be at a strategic level with the union if they can't really determine what their locals are going to do and say.

Third, the union official is depending on a manager’s personality and values which can shift quickly, particularly when management does not really integrate and develop this way of thinking as a part of their whole policy.

On the management side, you see managers staying in a job for a couple of years. There are short term rewards. Participation takes time to build and develop. Why should they worry. They’re going to get their bonus. They’ll get their reward and they’ll be out of there. We’ve seen that for years and years. Second, if they allow the union to have more of a say in decisions, they feel they're losing power, but they still have the accountability. The union doesn’t have it. They have the accountability to manage, and yet they’re giving away power. Third, again, their own personality and values, in many cases, they just don’t believe in it. And they have not been educatied in business schools to participate with unions.

Now I’m not going to take too much more time. But I want to raise a question, and I hope it’s a question that you will discuss. Given the fact that we are seeing a weakness in many of the unions in many industries with less than 10 percent of employees represented in the private sector. Of course, transportation, communications and public utilities have a larger percentage of employees, but in finance, insurance and real estate unionization hardly exists-where you have a lot of the knowledge-service workers.

My first question is, is it meaningful to you that our goal should not be just to predict the future, but to try to create a future of work that is positive in both economic and human terms?

Is that a goal that is shared in this room? How many would share that goal in terms of meeting the needs that workers bring to work as I’ve described? Meeting the needs to legitimately — and I would consider legitimate needs like balance in life, family balance, being part — having skills that are marketable, having benefits that you can take with you from job to job.

There are still many people who work who have no health insurance in this country. Is that a legitimate goal to try to look at combining both economic and human progress in the workplace? Is that something we would agree to? How many would agree to it?

MALE SPEAKER: What’s the alternative?

DR. MACCOBY: The alternative is to say we’re going to look at what economically makes sense and people can take care of themselves. That meeting these needs should not be a matter of public policy. We don’t have to worry about unions. It’s up to the individual employee to make the best deal she can.

The goal of policy can just be, how do we maximize trade? How do we maximize economic growth where the result is a huge discrepancy in income? We have many people who are left out. Many people with no health care. That is a goal that some people think is okay. I mean, they think that it is a goal that motivates people. They shouldn’t be given too much. Public policy should not be too soft or we won't have a motivated workforce.

So I don’t think it's obvious. I don't think it’s an obvious question. I do think once you do accept both economic and human progress as a goal, there are a number of alternatives. Let me just go through those alternatives as I see it. It can be any kind of combination of these.

For example, what is the best way? Is the best way to further, in every way we can, union participation in management, like the Workplace of the Future, like what Kaiser Permanente is trying to do with SEIU and other unions? Is that an idea, or is it a more participative management or just a more enlightened human resource management with a supportive union. This I think is basically NUMI, basically Southwest Airlines and a number of other companies I’ve seen, where the union is not a participant.

The union is seen as an insurance policy, a legal protector and a bargainer for basic benefits and rights. Really, a kind of contractual service organization. You have a management that is a very participative, enlightened management which understands these needs and tries to respond to them.

Is the best future a really enlightened management without a union? There are a lot of people who would say that. I mean, that’s basically what is taught at business schools to create an enlightened human resource management that deals with employee needs. Deals with due process in the workplace. Deals with questions of justice and voice. All the things that unions did, but doesn’t need a union to do it. Does it because it’s the best way to get sustainable success — competitive success.

What is the role of public policy in this in supporting what you think is the best approach? Certainly in the manufacturing era, without the National Labor Relations Act and collective bargaining, we would not have had these needs as satisfied as they are. There's no question about it.

What is the public policy that is needed for our era? For the knowledge service era? It certainly is not the same exactly as what we achieved in the '30’s for the manufacturing era. What should it be ideally? And then finally, how can — and should we, all of us here — what is our role in moving to what we consider the best approach for reaching these goals.

We’re not going to solve these problems today. But I hope you'll join me in really wrestling with them.

Thank you.


(The presentation was concluded.)

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