Chapter 16 McGraw-Hill/Irwin© 2008 The McGraw-Hill Companies, Inc. All rights reserved The Changing Workplace This chapter takes a systematic look at the external and governmental forces changing the workplace.

Ford Motor Company Opening Case  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.  Henry Ford’s treatment of his employees led to unionization in  In the early 1980s the firm suffered disastrous losses due to heightened international competition.  Ford tried to change the company culture. McGraw-Hill/Irwin© 2008 The McGraw-Hill Companies, Inc. All rights reserved

Ford Motor Company Opening Case (continued)  Taurus rejuvenates profits from 1985 to  Chairman Alexander Trotman instituted a radical change program to prepare for an even more competitive global car market.  a new CEO, Jacques Nasser, attempts to remake Ford’s culture yet again.  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. This short history of Ford Motor Company illustrates how forces in the business environment have shaped the work lives of Ford employees. McGraw-Hill/Irwin© 2008 The McGraw-Hill Companies, Inc. All rights reserved

External Forces Changing the Workplace  Demographic change  Technological change  Structural change  Competitive pressures  Reorganization of work  Government intervention McGraw-Hill/Irwin© 2008 The McGraw-Hill Companies, Inc. All rights reserved

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.  Hispanics and Asians are increasing their numbers faster than whites and blacks are.  Since the 1970s women have increased their participation more rapidly than men.  The workforce is aging. McGraw-Hill/Irwin© 2008 The McGraw-Hill Companies, Inc. All rights reserved

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. McGraw-Hill/Irwin© 2008 The McGraw-Hill Companies, Inc. All rights reserved

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.  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. McGraw-Hill/Irwin© 2008 The McGraw-Hill Companies, Inc. All rights reserved

Historical Trend Lines for Employment by Major Industry Sector, 1800 to 2012 (Projection) Replace with Figure 16.1 (same title) McGraw-Hill/Irwin© 2008 The McGraw-Hill Companies, Inc. All rights reserved

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. McGraw-Hill/Irwin© 2008 The McGraw-Hill Companies, Inc. All rights reserved

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.  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. McGraw-Hill/Irwin© 2008 The McGraw-Hill Companies, Inc. All rights reserved

Reorganization of Work (continued)  Offshoring has fueled attacks on corporations for destroying well-paying jobs in developed nations out of greed.  In a recent one-year period 937,652 workers lost their jobs in mass layoffs, however only 31,089 were unemployed because their work left the country.  Outsourcing so far is a minor portion of the job gains and job losses of American workers. McGraw-Hill/Irwin© 2008 The McGraw-Hill Companies, Inc. All rights reserved

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. McGraw-Hill/Irwin© 2008 The McGraw-Hill Companies, Inc. All rights reserved

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. McGraw-Hill/Irwin© 2008 The McGraw-Hill Companies, Inc. All rights reserved

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.  Third wave – between 1986 and 1996, again broadened the scope of federal law to address additional, and somewhat narrower, employment issues.  State courts and legislatures have created additional rules. McGraw-Hill/Irwin© 2008 The McGraw-Hill Companies, Inc. All rights reserved

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. McGraw-Hill/Irwin© 2008 The McGraw-Hill Companies, Inc. All rights reserved

Erosion of the Employment-at- Will Doctrine (continued)  In addition, 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. McGraw-Hill/Irwin© 2008 The McGraw-Hill Companies, Inc. All rights reserved

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.  In Japan, the centuries-old Confucian tradition of harmony in relationships prevents a labor- management fissure, therefore unions never grew strong and unified. McGraw-Hill/Irwin© 2008 The McGraw-Hill Companies, Inc. All rights reserved

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.  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. McGraw-Hill/Irwin© 2008 The McGraw-Hill Companies, Inc. All rights reserved

The Trade-off in Labor Regulation Re-label as Figure 16.6 McGraw-Hill/Irwin© 2008 The McGraw-Hill Companies, Inc. All rights reserved

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 types of forced labor.  Abolish child labor.  Ensure equal opportunity and nondiscrimination.  Guarantee collective bargaining. McGraw-Hill/Irwin© 2008 The McGraw-Hill Companies, Inc. All rights reserved

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.  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. McGraw-Hill/Irwin© 2008 The McGraw-Hill Companies, Inc. All rights reserved