MGM of business and society
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chapter_16.pptCopyright © 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
