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Testimony of Eileen Appelbaum Before the Commission on the Future of Worker-Management Relations

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Federal Publications Key Workplace Documents 
January 1994 
Testimony of Eileen Appelbaum Before the Commission on the 
Future of Worker-Management Relations 
Eileen Appelbaum 
Economic Policy Institute 
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Testimony of Eileen Appelbaum Before the Commission on the Future of Worker-
Management Relations 
Comments 
Appelbaum, E. (1994). Testimony of Eileen Appelbaum before the Commission on the Future of Worker-
Management Relations. Retrieved [insert date], from Cornell University, School of Industrial and Labor 
Relations site: http://digitalcommons.ilr.cornell.edu/key_workplace/324/ 
This testimony is available at DigitalCommons@ILR: https://digitalcommons.ilr.cornell.edu/key_workplace/324 
Economic Policy Institute 
17 SO RHODE ISLAM") AVENUE. N\V • SUITE 200 • WASHINGTON. DC 20056 • 202,775-bMO • FAX 202/775-OS19 
Testimony of Eileen Appelbaum 
Associate Research Director, Economic Policy Institute 
Property of 
,„„ w im mn SCKOOI 
before the " E S ™ 1 « UW KUTIM 
Corne« University 
Commission on the Future of 
Worker-Management Relations 
January 19, 1994 
Mr. Chairman, Members of the Commission: 
Good afternoon, and thank you for the opportunity to testify. I am Eileen 
Appelbaum, Associate Research Director of the Economic Policy Institute. The 
purpose of today's hearing is to establish the facts about workplace employee 
participation as they relate to the legal aspects of participation under the 
National Labor Relations Act. I recently published a book, The New American 
Workplace, with Rosemary Batt in which we review and analyze nearly 200 
case studies and consultants' reports on workplace innovations in services and 
manufacturing. We were able to draw some broad conclusions about the nature 
of workplace transformations in U.S. firms. I believe that the framework we 
developed for classifying workplace changes will help the Commission sort 
through the many different types of employee participation that have been 
introduced in American companies. I hope This framework will enable the 
Commission to distinguish in a systematic manner between types of participation 
that fall within the bounds of current labor law requirements and those which 
easily shade over into illegal activities. 
One of the important conclusions that emerges from my research with Rose Batt 
1 
is that there are two distinct fully-developed models of high performance work 
systems that U.S. firms have adopted. (There are, of course, many examples of 
partial models or piece-meal adoption of one or another innovation.) While 
both of these fully-developed high performance approaches are reported by 
managers to yield substantial improvements in efficiency and quality, the 
outcomes for workers in terms of autonomy, empowerment, employment 
security, and a share in performance gains may be very different. The important 
distinctions between these two approaches to high performance often go 
unrecognized, and it is usually assumed that all high performance workplaces 
share essentially the same characteristics. As a result, discussions of workplace 
transformation end up evoking notions of worker empowerment that are 
characteristic of only one of these models and attributing them to all high 
performance companies. 
The vision evoked by the term "high performance workplace" is of a workplace 
in which distinctions between managers and employees are dissolved, 
supervisors are eliminated, and frontline workers get lots of training to enable 
them to perform multiple jobs and to take responsibility for their own 
performance. In the workplace, employees are organized into self-managed 
2 
teams with the authority to control the pace of work, make decisions about work 
methods, and resolve problems with work processes or customer satisfaction as 
they arise. Employees are involved in decisions beyond the shop floor the work 
site, participating as equals in committees that make decisions about training and 
new technology and providing input into decisions about investment or new 
markets. 
This is a model that does indeed exist, or is in the process of being 
implemented, at sites in a number of U.S. companies. I don't have to mention 
to this audience that the complex of Xerox plants in Webster,v New York was 
among the first to develop and adopt this high performance model. Other well-
known (and not so well-known) companies undertaking this type of 
transformation include Saturn, some of the Corning plants, National Steel, LSE, 
some of the Inland Steel plants, Bell South, U.S. West, AT&T, Champion Paper, 
Magma Copper, Goodyear Tire, some of the Hewlett-Packard facilities, Sew 
Special, and many others. 
But this is not the only high performance model that exists in the U.S. Far 
more common is a model in which the basic work organization is largely 
3 
unchanged. Workers may have received one or two days of training in 
"customer focus" or "quality," and may be authorized to push a button or pull a 
switch if they observe a defect or problem. But a visitor from Mars would be 
hard pressed to tell the difference between these work sites and traditional work 
sites in old fashioned companies. 
There are important differences, of course, between the employee involvement 
model of high performance and traditional work places, but they do not have to 
do with the organization of work or the empowerment of frontline workers. 
Instead they relate to the decentralization of decision making from top 
management to middle managers and to the participation of a small number of 
workers in discussions of selected issues that take place away from the work 
site. Middle managers in these high performance companies participate in 
Quality Council or other interdepartmental management structures in which they 
are empowered to resolve difficulties and coordinate production among 
themselves. They no longer need to send problems up the chain of command 
and wait for decisions to come back down. A small number of Frontline 
workers are involved in off-line problem-solving or quality improvement teams 
which meet weekly or monthly and which bring together employees and 
managers to address specific problems. While these workers are pleased to have 
their opinions solicited, are glad to contribute their knowledge, and enjoy the 
respect they receive when they participate in these kinds of teams, and while the 
company's decisions are undoubtedly improved by this participation, these 
workers have not been empowered. And most workers don't even have this 
opportunity to participate. There is little increase in the control or autonomy 
workers have in their day-to-day activities, and even less opportunity to 
influence company decisions that affect the continued viability of the work site 
or plant. Workers have no guarantees of employment security and no guarantee 
that they will share in the company's performance gains or that they will be 
compensated for learning new skills and taking on new responsibilities. 
The following chart ~ modeled on a table in The New American Workplace that 
was developed in order to classify the main foreign alternatives to the mass 
production model of work organization and industrial relations (in Japan, 
Germany, Italy, and Sweden) — formalizes these observations. In this chart, 
workplace innovations are classified in four categories: management methods, 
work organization, human resource practices, and industrial relations. It is 
instructive to observe the different places where employee participation can take 
5 
Fully Developed Models of High Performance Work Systems 
Management methods 
Employee 
Involvement 
Employee 
Empowerment 
Structure 
Decentralized 
Flat 
Quality Councils 
(Managers) 
Yes 
Yes 
Yes 
Yes 
Yes 
No 
Conformance quality 
Process improvement teams 
Process standardized 
Quality improvement teams 
Problem solving teams 
Design for manufacturing 
Interdepartmental 
task forces 
Work organization 
(frontline workers) 
Shop-floor Teams 
Autonomous 
Pace 
Methods 
Problem diagnosis 
Continuous improvement 
Jobs rotate/enlarge 
Cycle time per job 
Quality assurance 
Routine maintenance 
Administrative tasks 
Skills 
Vertical tasks 
Integration of horizontal tasks 
Depth of knowledge 
Flexibility in 
deploying workers 
Yes 
Yes 
Yes 
Yes 
Some companies 
As needed 
No 
No 
No 
No 
No 
Some Workers 
Traditional 
Some Companies 
No 
No 
No 
Some Workers 
Limited 
Some 
No 
No 
As needed 
As needed 
Yes 
As needed 
Yes 
Some-to-Full 
Some-to-Full 
Yes 
Yes 
Yes 
Long 
Yes 
Yes 
Yes 
Yes 
Yes 
Team characteristic, 
not individual 
High 
6 
Fully Developed Models of High Performance Work Systems (conf) 
Human resource practices 
Training 
Job skills 
Cross-training 
Customer focus 
Quality consciousness 
Group decision making/ 
problem solving 
Leadership 
Quality /statistical 
processes 
Team building 
Compensation 
All salaried 
Seniority-based 
Job-based 
Knowledge/skill-based 
Individual incentives 
Merit raises 
Group incentives 
Profit sharing 
Gainsharing 
Stock ownership 
Employment security 
Employee 
Involvement 
Yes 
Some Employees 
Yes 
Yes 
Some Employees 
Some Employees 
Some Employees 
Some Employees 
No 
Some Companies 
Some Companies 
Some Companies 
Some Companies 
Many Companies 
Some Companies 
Some Companies 
No 
Employee 
Empowerment 
Yes 
Most Employees 
Yes 
Yes 
Most Employees 
Most Employees 
Most Employees 
Most Employees 
No 
Some Companies 
Some Companies 
Most Companies 
No 
Some Companies 
Most Companies 
Some Companies 
Yes 
Trust Yes Yes 
Industrial relations 
Unions 
Guaranteed individual 
rights for employees 
Workers' and managers' 
status differences reduced 
Power sharing 
Joint consultation 
committees 
Joint labor-management 
committees 
Training 
Health & Safety 
Partnership structures 
for tactical and 
strategic decisions 
Yes/no 
Some Companies 
Some Companies 
Yes 
No, except some union cos. 
No, except some union cos. 
No, except some union cos. 
No 
Usually 
Yes 
Most Companies 
Yes 
Yes 
Most Companies 
Most Companies 
Yes 
7 
place and where, in the two models of high performance, it does take place. In 
the employee empowerment model the work process itself is reorganized so that 
the work group exercises considerable decisionmaking authority over the pace 
and methods of work, and is held responsible for group performance in reducing 
defects, raising throughput time, minimizing equipment downtime, increasing 
customer satisfaction, or otherwise reaching performance goals. Work groups 
and managers may agree to establish problem-solving teams to meet off line to 
deal with particular problems, when appropriate. And workers or their 
representatives participate in operational, tactical, and strategic decisions—such 
as decisions to reengineer the work process—that take place beyond the shop 
floor. Partnership structures are a common feature of the employee 
empowerment model. In the employee involvement model, in contrast, a small 
number of frontline workers take part in decisionmaking mainly through their 
participation in quality improvement or problem-solving teams initiated by 
managers to address particular issues whose parameters are, in general, 
established by management. In unionized settings, joint labor-management 
committees may address training or health and safety concerns. 
I am not a lawyer, of course, but my reading of the NLRA and Section 8(a)2 
8 
suggests that changes in work organization and the empowerment of frontline 
employees via shop floor or work site teams do not violate current labor law. 
Employee participation in the category of "work organization" and the employee 
empowerment high performance model in general should not pose any legal 
problems for U.S. companies under the NLRA. 
Management may choose to carry out its management functions by creating 
teams of managers and employees to reduce defects or errors and improve 
conformance quality (quality improvement or problem-solving teams), to 
improve manufacturing design or job design, or to deal with general problems of 
job satisfaction or employee morale. This participation comes under the heading 
of "management methods." In principle, such teams can operate within the 
framework of current labor law. In practice, it may be difficult to separate 
discussions of process improvements from discussions of job assignments and 
conditions of work, or discussions of quality training from discussions of pay 
for skills and compensation. Drawing these lines often proves to be difficult. 
While participation in discussions of pay or conditions of work is legal in a 
unionized context and with appropriate union involvement, it is illegal 
otherwise. Allowing management to appoint both workers and managers to 
9 
these discussions of wages or conditions of work, is not a solution in a 
democracy. How to provide workers who are not unionized with enforceable 
rights to be represented, to receive accurate and timely information, and to 
express their opinions in these discussions without fear of reprisal is a thorny 
problem which the repeal of 8(a)2 does not resolve. 
Finally, industrial relations that encompass joint employee-management 
structures in which information and power over decisions beyond the shop floor 
or work site level is shared between employees and managers — structures for 
communication and information sharing, for designing training programs and 
selecting workers to receive training, for designing methods for producing new 
products or reengineering the work process — are legal in union settings where 
the union is a partner and probably violate the NLRA otherwise. The question 
of legality hinges on how employees who participate in these structures are 
chosen. It is difficult indeed to imagine how such partnership structures can be 
established outside a unionized context, and in fact they occur only rarely in 
non-union settings. 
If the Commission agrees that employee empowerment is the key not only to 
10 
high performance companies but to rising skills and living standards-and this is 
the conclusion Rose Batt and I reached in our research as have many others who 
have previously testified before you--then labor law will have to be reformed to 
remove the impediments workers now face in obtaining representation in 
decisionmaking and protection for the free expression of ideas in forums set up 
to elicit employee input. A strong case can be made that a major obstacle to the 
diffusion of the empowerment model of high performance is the low level of 
unionization in many industries. This high performance model is diffusing most 
rapidly in precisely those industries, such as autos, steel, and telephone services, 
which still have high rates of unionization. 
11 


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