MIT expert calls for investing in employees
Thomas Kochan discusses two very different approaches to profitability, the relevance of unions and of college degrees, and more.
This story is from the 2016 Top Places to Work issue. You’ll find the full list of winners on BostonGlobe.com on Thursday evening.
THOMAS KOCHAN WORRIES ABOUT the mess his generation made of the American economy and is leaving behind for their children. These concerns led the 69-year-old George Maverick Bunker professor at the MIT Sloan School of Management to write a book released last year, Shaping the Future of Work. He hopes to start conversations about a new social contract that outlines what society should expect from employers and about work more broadly.
The Globe talked to him about how businesses are run today, how they need to be better, and what the next-generation workforce wants.
You classify businesses as “high road” and “low road.” What do you mean by that, and why is the distinction important?
Business executives have a choice in how to compete. They can compete by holding wages as low as possible, tightly controlling the workforce, having high turnovers. And businesses can be profitable and serve the shareholders that way. That’s the low road. In the same industries, there’s another way to compete, by investing in one’s employees and encouraging long-term employment relationships so employees can achieve high productivity and therefore can support good jobs and good wages. High-road businesses can be profitable and serve shareholders in the long run, too.
What high-road companies do you admire?
Market Basket is one example that you can have low prices and still achieve good jobs and good returns to shareholders. In airlines, the favorite example is Southwest Airlines. Since it was founded, it believed in building a successful enterprise but also to work with its employees to engage them, to really make them feel part of the business. Costco, as a competitor to Walmart, pays good wages, has higher customer service, productivity, and returns to shareholders. In health care, Kaiser Permanente’s integrated model has really built a partnership with its employees’ unions.
Are unions still important?
A vibrant democratic society needs employees to have a voice in shaping the terms and conditions of employment. We need to see the next generation’s organizations, call it a labor movement, unions, whatever you want, be effective in providing workers voices. The Fight for $15, the $15 minimum wage, is an example of a new way of mobilizing. There are also organizations like Coworkers.com that help workers create petitions or mobilize [to express] concerns to their employer.
What are some sources of bargaining power today?
The ability and willingness to go on strike is a less viable source of bargaining power, so we’ve got to invent new ones. Information, education, and skills are very important sources of individual bargaining power. Workers who have skills that are in high demand can raise their wages. We are [also] using technology; there are all kinds of apps. The best known one is probably Glassdoor, where employees can rate their employers. This provides a body of information for people to say, “If I’m not happy on my job, what are my alternatives?”
Are college degrees worth the soaring costs of higher education?
College education is essential. The rate of return to college degrees is still very positive, even with the high rate of debt that students today are generating. But there’s variability, and the returns are greater in majors that use science, engineering, technology, and math skills. So one has to be a bit more careful about what one studies or supplement the undergraduate degree with more technical skills once one graduates.
What does the next-generation workforce want from their work and personal life?
One, they want to do meaningful work, to feel that the organizations they are working for are committed to addressing problems. Secondly, they want some control over when, where, and how they work. It doesn’t mean they don’t want to work hard, or even to work long hours, but they want balance. Third, they want to be treated fairly and be compensated fairly. They may not put [money] at the top of their lists, but they do want fair compensation and good benefits.
What can employers do to engage and hold onto this workforce?
They can listen to their employees. Ask them, “What is it going to take for you to be productive here and to find this is a place you want to stay for a reasonable period of time?” Having some voice in how the workplace is shaped creates an environment that motivates and gives employees a real sense that they belong there.