MGM of business and society

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chapter_16.ppt

Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

McGraw-Hill/Irwin

Chapter 16
The Changing Workplace

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Ford Motor Company

Ford sold 15.5 million Model T’s from 1908 to 1926

In 1927 failure to observe market trends forced the plant to close for 7 months while the Model A was designed

Henry Ford was a obstinate man, obsessed with power, iron-willed, dictatorial, and cynical about human nature

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Ford Motor Company

Henry Ford’s treatment of his employees led to unionization in 1941

In the early 1980s the firm suffered disastrous losses due to heightened international competition

Ford tried to change the company culture

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Ford Motor Company

Taurus rejuvenates profits from 1985 to 1995

1994 – Chairman Alexander Trotman instituted a radical change program to prepare for an even more competitive global car market

1999 – a new CEO, Jacques Nasser, attempts to remake Ford’s culture yet again

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Ford Motor Company

2000 – Ford Explorer tire failures cause disaster

2001 – Henry Clay Ford, Jr. restructures

2006 – New CEO Alan Mulally announced the need for one more reorganization

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External Forces Changing the Workplace

Demographic change

Technological change

Structural change

Competitive pressures

Reorganization of work

Government intervention

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Demographic Change

Population dynamics slowly but continuously alter labor forces

Overall labor force growth is slowing

The number of workers in some demographic categories is growing faster than in others, producing incremental but significant changes

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Table 16.1 – Three Snapshots of the American Labor Force (in thousands)

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Technological Change

Technical change has many impacts on work

It affects the number and type of jobs available

Automation has a turbulent impact on employment

Automation causes significant job loss in less-skilled manufacturing and service occupations

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Structural Change

Structural change is caused by processes of job creation and job destruction that continuously alter the mix of productive work in every economy

Three long-term structural trends:

The agricultural sector has declined from predominance to near insignificance as an occupation

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Structural Change

The percentage of workers employed in the goods-producing sector is now in long-term decline

There is explosive growth in the service sector

Structural change is a critical factor in the decline of labor unions

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Figure 16.1 - Historical Trends for Employment by Major Industry Sector: 1800–2018

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Table 16.2 - Comparative Employment Structures in Nations at Varying Stages of Development

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Competitive Pressures

Recent trends have intensified competition for American companies

Customer demand

Deregulation of large industries

Global competition

By global standards, American workers are extremely expensive

Companies in some industries now contract to have manufacturing done in a foreign country

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Table 16.3 – International Wage Comparison

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Reorganization of Work

Corporations alter business processes as they adjust to environmental changes, primarily competition

As transport costs have fallen, manufacturers more often separate production from consumption by sending their manufacturing to low-cost countries, then shipping products back to customers

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Reorganization of Work

Because of communication technology, service work can now be sent to low-cost locations

Trade in services between nations is growing, creating fears about job loss from outsourcing

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Reorganization of Work

Outsourcing: The transfer of work from within a company to an outside supplier

Offshoring: The transfer of work from a domestic to a foreign location or to a foreign supplier

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Figure 16.2 - Quarterly Private Sector Job Gains and Job Losses: 1993–2010

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Development of Labor Regulation in the United States

Historically, a strong laissez-faire current in American economic philosophy made governments at all levels reluctant to interfere with the employment contract

Today, government intervention is extensive and growing, but this is a twentieth-century trend

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Liberty of Contract

Before the 1930s, government intervention on behalf of workers was very limited

In the late 1800s and early 1900s, strong majorities on the Supreme Court upheld the liberty of contract doctrine

The great flaw in the liberty of contract doctrine was that it assumed equal bargaining power for all parties, whereas employers unquestionably predominated

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Waves of Regulation

First wave – Federal workplace regulation in the 1930s, which established union rights

Second wave – Between 1963 and 1974, moved federal law into new areas, protecting civil rights, worker health and safety, and pension rights

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Waves of Regulation

Third wave – Between 1986 and 1996, again broadened the scope of federal law to address additional, and somewhat narrower, employment issues

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Figure 16.3 - A Chronology of Major Workplace Regulations

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Erosion of the Employment-at-Will Doctrine

Employment-at-will was traditionally defined as an employment contract that could be ended by either party without notice and for any reason – or for no reason

Federal and state laws take away the right to fire employees for many reasons, including union activity, pregnancy, physical disability, race, sex, national origin, and religious belief

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Erosion of the Employment-at-Will Doctrine

State courts have introduced three common-law exceptions to firing at will:

Employees cannot be fired for complying with public policy

Employees cannot be fired where an implied contract exists

Courts in 11 states limit the employer’s ability to fire when an implied covenant of good faith is breached

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Work and Worker Protection in Japan

Elsewhere in the developed world, workers benefit from similar and even greater welfare guarantees than in the U.S.

Japanese males, called salarymen, enjoy virtual lifetime employment in major firms

Japanese workers are very committed and sometimes work themselves to illness or death

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Work and Worker Protection in Japan

In Japan, the centuries-old Confucian tradition of harmony in relationships prevents a labor-management fissure, therefore unions never grew strong and unified

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Work and Worker Protection in Europe

In the aftermath of World War II, many countries adopted a social welfare model of industrial relations to protect their populations against the ravages of depression and unemployment

Forces of global competition now strain this social welfare model

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Work and Worker Protection in Europe

European workers are so expensive to employ that job-creating investments go elsewhere

In much of Europe, the results of lavish social safety nets and protections are persistent, high unemployment and slowed economic growth

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Labor Regulation in Perspective

The bare minimum for labor market regulation is compliance with four core labor standards set forth in international labor conventions

Eliminate all forced or compulsory labor

Abolish child labor

Eliminate employment discrimination

Guarantee the right of collective bargaining

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Figure 16.5 - The Tradeoff in Labor
Regulation

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Concluding Observations

The combined impact of the six forces changing the workplace creates both uncertainty and opportunity

Demographic and structural changes are uncontrollable but also slow and predictable

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Concluding Observations

Technological change is a disruptive force but it has always created new jobs to replace the ones it destroys

Competition and work reorganization are reshaping labor markets everywhere

Experience suggests that workers fortunes will be mixed