The CHANGING EMPLOYMENT CONTRACT

Since the 1970s, the increasing U.S. integration into & dependence on the global economy has been accompanied by a serious erosion in American employees’ social & psychological attachments to their firms

These trends are captured in falling job tenure, rising contingent labor force, and the transition from a traditional to a new employment contract linking employees & employers

Many large corporations downsized and restructured to create more flexible workforces with less lifetime job security, fewer benefits, and reduced pensions.

Professional, white-collar & blue-collar jobs are all now greatly exposed to the vagaries of external labor market forces.

Labor Markets TransformedAfter World War II, labor and business supposedly struck a deal to eliminate massive strikes in exchange for stable, full-time jobs & steadily rising incomes. This system collapsed in a generation.

Labor economists Peter Cappelli & Paul Osterman analyzed the labor market transformations of the 1980-90s that created today’s job insecurities. They identified converging workplace changes that severely weakened mutual loyalty and commitment between employers and their employees.

• Market-driven employment: skills and people highly mobile & poachable

• Firms invest less in training workers from fear of likely departure

• To stay competitive, companies hire outside short-term consultants

• Temporary staffing & outsourcing shifts power from workers to bosses

Cappelli, Peter. 1999. The New Deal at Work: Managing the Market-Driven Workforce. Cambridge, MA: Harvard Business School Press.

Osterman, Paul. 2000. Securing Prosperity: The American Labor Market: How It Has Changed and What to Do about It. Princeton, NJ: Princeton University Press.

Fig. 5.2. Changing J ob Tenure

Source: Bureau of Labor Statistics

AGE GROUPS

65+55-6445-5435-4425-3420-24

YE

AR

S W

ITH

EM

PL

OY

ER

2

1

0

-1

-2

-3

-4

-5

Men

Women

Increasingly Contingent Labor Force

Part-time employees (<35 hrs/week) have indefinite job duration, but retain some job rights and benefits similar to FTEs

Doubled 1957-1997 from 12% to 25% of U.S. labor force

Fastest increasing labor force segment; broad definition = 9.9% in 1997 (12.5M)

Contingent (nontraditional) workers lack “implicit or explicit contract for ongoing employment” (BLS)

Some orgs see an emerging of a 2-tiered workforce, pitting insecure younger employees against older workers with greater job security

The Traditional Employment Contract

EXTERNAL LABOR MARKET

EMPLOYEE

FIRM BOUNDARY

Job Security: Implicit Lifetime Employment Generous Fringe Benefits Internal Career Promotions Job Skills Training

Commitment, Loyalty, Longevity

  

                    

EMPLOYER

The New Deal at Work EXTERNAL LABOR MARKET Contingent employees Outsourcing Joint ventures Mid-level hires

EMPLOYEE

FIRM BOUNDARY

Employability: Project-length tenure Internal job reassignments Skills useful elsewhere

Intense short-term effort: “hustling”

  

  

                    

EMPLOYER

External contacts Job networking Skill training by community colleges, commercial vendors

High Performance Workplace PracticesMany mass-production org, such as auto assembly plants – but also many hi-tech & service companies – have implemented a diversity of high performance workplace practices (HPWP): sociotechinical systems

PARADOX: Why has the HPWP penetration been so limited inside many organizations, despite evidence of substantial productivity gains?

• Just-in-Time delivery & Quality Circles

• Self-managed work teams

• Cross-training in skills & job rotation practices

• Efficient physical work-flow designs

• Information technology & statistical process control

• Total Quality Management (TQM) & other fads

• Incentive pay: profit-sharing; group pay; pay for skills

Fig. 5.5. High Performance Practices

SOURCE: 1997 National Organizations Survey

HIGH PERFORMANCE PRACTICE

PE

RC

EN

T100

90

80

70

60

50

40

30

20

10

Any %

>49%

Teams: Worker Autonomy or Tyranny?Self-managing teams might overcome the mind/hand split that generates Marxian worker alienation

Because team members identify with co-workers & internalize the team’s self-enforcing norms, they are locked inside an iron cage of peer-pressured authority (“concertive control”)

James Barker’s ethnography of ISE Communications restructured teams shows how members self-monitored their performances and punished violators of the team norms (peer pressures changed Sharon’s persistent tardiness)

Teams allegedly foster autonomy and empowerment, participation in creative problem-solving, higher worker commitment and morale; thus greater production efficiency & corporate profits

But are teams also a sophisticated tool for indirect management control & coercion in the workplace?

Barker, James R. 1993. “Tightening the Iron Cage: Concertive Control in Self-Managing Teams.” Administrative Science Quarterly 38:408-37.

 Barker, James R. 1999. The Discipline of Teamwork: Participation and Concertive Control. Thousand Oaks, CA: Sage.