3.1 Out of Crisis: Innovations in the 1980s and Beyond

Course Info

Instructor

Prof. Thomas A. Kochan

Departments

Supplemental Resources

As Taught In

Spring 2016

Level

Graduate

Topics

Business
- Industrial Relations and Human Resource Management
Social Science
- Economics
  - Industrial Organization
  - Labor Economics
- Public Administration
  - Social Welfare

Learning Resource Types

Lecture Videos

Online Textbook

Instructor Insights

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3 Innovations in the 1980s and Beyond

Video: Week 3 Introduction

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Sometimes strong, high-road employment practices don’t survive leadership succcession. When new leaders come in, the organization reverts to more traditional ways. Yet, there are ways to overcome this.

In this video section, Professor Kochan examines alternative business organization models that provide possible solutions to this problem.

Video: Alternatives to the Traditional Corporation

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Attentiveness Question

Benefit corporation check

Cooperative close

Non-profit organization close

Explanation As described in the video, Patagonia is a benefit corporation.

Companies can take the “high road” by providing good jobs and also earning strong returns to shareholders. In this video segment, Professor Kochan contrasts “high” and “low” road work practices, and examines companies characterized by these two models.

Video: High Performance Work Systems

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In this segment, Professor Kochan talks about the basic education system and the importance of high school, college, and continuous learning over the span of your career.

Video: High School and College: Necessary but Not Sufficient

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Today’s economy is global. Companies have divisions located in multiple countries and many depend on networks of buyers and suppliers located throughout the world. How can we hold corporations accountable for good, humane practices when they operate across different legal environments?

Professor Kochan examines these issues in the following video:

Video: Holding Global Corporations Accountable

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Attentiveness Question

Pressure from NGOs was essential in getting people to focus on the problem of providing decent work. close

Codes of conduct and audits were important, but only 50 to 60 percent effective in ensuring compliance. close

Management consulting helped suppliers comply with audit measures. close

Suppliers in countries with more corrupt governments had greater flexibility and therefore could more readily comply with codes of conduct. check

Explanation Suppliers located in countries that had less corrupt governments scored better on the audit measures.

The needs of organizations are in continuous flux. In the past, you could expect a lot of on-the-job training to stay in a company over the long term. This model is becoming less common, so it’s important to have a strategy to help you succeed in your career!

Professor Kochan offers some advice in this video segment: we have to move the rhetoric of life-long learning into a reality.

Video: Life Long Learning: Moving from Rhetoric to Reality

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Can you imagine workers protesting to support their CEO? In this video, Zeynep Ton examines the case of Market Basket, which relied on “high road” business practices.

Video: Market Basket Case with Zeynep Ton

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Attentiveness Question

Producers of low-cost goods and services need to rely on lean staffing in order to keep profits up. check

Even in a low cost setting it is not only possible but also profitable to create a business model that creates value for customers, employees, and investors at the same time. close

Explanation The Market Basket case shows that by having higher staffing levels than other low-cost supermarkets, workers can complete their jobs without errors while also spending more time addressing customer needs.

What role do CEOs play in leading corporations? As a follow up to our earlier video, Professor Kochan interviews the former chairman of CitiBank and the NY Stock Exchange, John Reed, for his perspective on the roles and responsibilities of corporations and corporate leaders.

Video: The Changing Role of the Corporation: Interview with John Reed

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Attentiveness Question

Greenmail check

Enron close

Ronald Reagan close

Explanation
John Reed cites greenmail as a crucial factor in the shift toward companies' focus on short-term stock price.

We saw in the last video the 1980s was a decade of profound shifts, many of which are still felt in today’s economy. Another shift that has occurred pertains to the very nature of the corporation: to whom should corporations be responsible? Should corporations be responsible only to their shareholders, or to employees and society as well? This question is highly controversial and, interestingly, ideas about it have fundamentally changed over time.

After watching the video and answering the questions below, move on to the next video, in which Professor Kochan interviews former executive John Reed for his view on these important and timely questions.

Video: The Purpose of the Corporation

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Attentiveness Question 1

Maximizing shareholder value at all costs close

Meeting needs of multiple stakeholders check

Attentiveness Question 2

Duty to stockholders check

Duty to employees close

Duty to customers close

All of the above close

This week’s videos explore innovations relating to the world of work.

In this video, Professor Kochan examines the rise and fall of Saturn, an automobile manufacturer that operated as a subsidiary of GM until 2009.

Please watch the video and then answer the question below.

Video: The Rise and Fall of Saturn

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Attentiveness Question

“Crowdsourcing” can create new, effective ways of working close

It is important to have a sustaining strategy for once champions move on close

Authoritative, top-down management is necessary when people disagree about strategy check

Explanation The Saturn case highlights the importance of collaborative solutions, including "crowdsourcing", as well as sustaining strategies that provide stability over time.

Last time, we saw that the Social Contract served the economy and workforce well from the 1950s through at least part of the 1970s. Many people thought this was the new normal and that things would stay this way forever. But they didn’t. Below, let’s look at what business, labor, and government leaders missed. The 1980s were a critical decade in the history of work – it marks the period when the “social contact,” discussed in earlier videos, began to decline. In the video below, Professor Kochan examines the 1980s and explains its enduring relevance to the issues we face today.