Introduction
With the likelihood of major infra structure programs coming on stream in the near future the attention of many participants at the recent meetings of LERA focused on the question: How can we be sure that the relevant stakeholders are involved in the process as one way of insuring that good jobs and good employment arrangements are realized?
Options and Concepts
Government would contract with newly established subsidiaries of existing corporations to undertake defined infra structure, energy and other designated projects. By encouraging the sponsorship of new ventures by the business community, crucial oversight and managerial accountability would be maximized. At the same time, the creation of new organizations would provide the opportunity to put in place state of the art (best practice) technology and work systems. The government (could be national, state or local) would insist as a condition of receiving the contracts that certain other standards by adhered to:
- good pay and benefits. One option could be to require comparability similar to Davis Bacon procedures in construction.
- training and skill enhancement. Existing apprenticeship and other joint union management training programs would be utilized as much as possible.
- For example, projects in the Detroit area could contract with the big three-uaw training institutes.
- governance. In line with the concept of creating new subsidiaries boards of directors would be required and it would be important that various stakeholder groups be represented on these boards. The majority of the seats would be reserved for the parent companies, giving them an important say in the choice of CEOs for the new ventures.
- executive compensation. Guidelines to establish proportionality would be appropriate and necessary.
- union representation. Fast track procedures would be in place to decide whether the workforce would be represented by unions.
Models
The funds would come from government but the implementation subject to certain standards and guidelines would be in the hands of the private sector. The launching of federally financed programs to deal with the economic crisis presents a unique opportunity to create organizations that can serve as models for the country.
Many examples exist where government has created new organizations (e.g the TVA) and funded special programs of national interest that have been managed by established corporations. The emphasis here is to require that a set of social standards (to parallel financial standards) be implemented as a condition of receiving government funds.
Article submitted by Robert McKersie on January 10, 2009.
Robert B. McKersie, Professor Emeritus of Management, Behavioral and Policy Sciences, MIT.
“Coauthor of Strategic Negotiations (Harvard Business School Press, 1995), McKersie researches strategies being pursued by different industries to bring about more effective organizational changes. He is also coauthor of The Transformation of American Industrial Relations (Basic Books, 1986) and Pay, Productivity, and Collective Bargaining (Macmillan, 1983).” -excerpt quoted from http://mitsloan.mit.edu/faculty/detail.php?in_spseqno=88&co_list=F.
1 response so far ↓
1 Bill Van Lente // Jul 6, 2009 at 6:07 pm
These are some good ideas. We should learn all we can about how best to organize in a sustainable and cost-effective fashion from the federal investment in economic stimulus. Balancing federal government scrutiny and standards with market forces will be important, both to ensure responsibility, accountability, and optimal investments. With the lax control in mortgage lending and financial institutions as a key factor in the economic meltdown we have seen, a more prudent balance of stakeholder interests with appropriate control in competitive markets will be essential.
It will be important to recognize organized labor as a stakeholder and ideally partner with management and investors. However, we must be careful to not turn back the pages of time and regress to excessively high labor costs with limited productivity and innovation. Costs must be correlated with value added in the context of global competitiveness. Linking labor rates and costs to any artificially determined, perhaps outdated standards, will not ensure maximum value and full economic stimulus, nor will it maximize the benefits to the largest number of potentially involved workers.
The principles and methods of interest-based negotiations and decision making among stakeholders offers much potential for balancing respective interests and ensuring the maximum advantage for all. The resulting shared discovery and learning, stronger relationships, and superior outcomes have the potential of creating synergy that provides lasting benefits from the economic stimulus spending, which we owe to future generations, as they will likely be repaying the debt.
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