Sunday, May 1, 2016

Working with Purpose…Not Just for the Productive

In April I had the pleasure of meeting Arthur Woods (@ArthurWoods), a co-founder of Imperative, who was in Minneapolis to speak at a couple of our events, including our annual HR Tomorrow conference. Imperative emphasizes working with purpose—creating a measure of purpose, identifying the importance of purpose, and helping companies facilitate purpose. In his presentation, Arthur eloquently articulated the meaning of purpose (“Purpose is something that we gain daily from relationships, doing something greater than ourselves, and from personal and professional growth”), and documented the value and importance of purposeful workers.

At the end of this stimulating and important presentation I commented that the only thing missing from his presentation was a picture of Karl Marx. It’s common to popularly associate Marx with communism, but first and foremost Marx was a profound social theorist of work whose concern with workers’ suffering led him to seek a more humane society. He thought that the commodification of work under capitalism leads to the loss of one’s essential humanness, a loss that Marx labeled “alienation.” In his Economic and Philosophic Manuscripts of 1844, Marx identified four ways in which workers are alienated under capitalism:
  1. Individuals are divorced from the product of their labor—the business owns and controls what the workers produce.
  2. Since business owners control how things are made, workers surrender control of their actions to someone else.
  3. Creative work is seen as an essential feature of being human so #1 and #2 deprive humans of their essential nature.
  4. Because people relate to each other through their work, they are alienated from each other.
If we set aside the fact that Marx’s alienation is inherent in capitalism and is not a subjective feeling of job dissatisfaction or a result of  undesirable job characteristics, in important ways the dimensions of alienation match Imperative’s emphasis on the importance of relationships, autonomy, and personal meaning in work. I think this is important because it reinforces the gravity of these issues, even if there are important differences. 

Imperative’s business case for organizations to embrace the importance of working with purpose is that purposeful workers are better workers. Since it is a business enterprise itself, I understand why Imperative makes this case. But there is an unsettling conundrum here in which the deep, non-instrumental importance of work is being justified on instrumental grounds. This seemingly implies that in cases where purposeful workers are not more productive, then imbuing work with greater meaning isn’t something important to pursue. Or that only purposeful workers are worthy of efforts to improve their working conditions. This is analogous to the problem with justifying corporate diversity programs solely by the business case (then these programs become subjected to the vagaries of executives’ perceptions of which employees, if any, are a source of competitive advantage, rather than diversity being seen as important for human reasons). From an industrial relations perspective in which labor is more than a commodity, the improvement of work (and diversity) is an important imperative for all workers, even when it doesn’t improve productivity or other instrumental outcomes.

Returning to Marx’s alienation, I raised this connection with Arthur as a way to emphasize that these are longstanding concerns in the world of work (so bravo!), and there have been numerous movements between Marx and now to try to give work and workers deeper meaning and respect (for example, the field of industrial relations). By bringing new data and case studies to the issue, I hope that Imperative can successfully expand upon earlier movements to embrace of the deep importance of work, which is also a goal of my book The Thought of Work. This is a deeply important issue, and a longstanding one. Unfortunately, history doesn’t seem to be on our side.

Happy May Day!

Friday, April 22, 2016

Everything you need to know about the employment relationship in one tweet

At the end of March, #ModernCollectiveNouns was a trending hashtag on Twitter. Here are some examples I saw:

A clutch of car mechanics.
A fraud of bankers.
A Kardashian of crap.
An avalanche of skiers.

My (ultra-academic) contribution to this was the following:

A market of economists. A unity of HR people. A plurality of industrial relationists. An alienation of Marxists.

My tweet probably didn't make much sense to most people, but students and other scholars should recognize this as capturing what I assert are the four key frames of references (or ideologies) on the employment relationship. I repeatedly return to these four frames of reference in my teaching and writing because they provide essential insights by revealing the roots of different views on labor unions, HR practices, and the like.

The first model of the employment relationship is derived from mainstream (neoclassical) economic thought and rests on a view of rational agents pursuing their individual self-interest in economic markets (because of the importance of self-interest, I label this the “egoist” model). Labor is viewed as a commodity, and only differs from other commodities in its tendency to avoid exerting full work effort (“shirking”). As labor markets are generally seen as perfectly competitive, they are embraced as the primary driver of the employment relationship. Under these assumptions, the egoist employment relationship is characterized by employees and organizations engaging in voluntary, mutually-beneficial economic transactions to buy and sell units of labor based on what the labor market will allow (and therefore outcomes are seen as fair), and abuses are prevented by labor market competition. HR practices largely implement what the market dictates, and unions interfere with the ideal operation of competitive markets.

In contrast, the unitarist model of the employment relationship views employees as psychological rather than economic actors. This model is most closely associated with scholarship in industrial/organizational psychology, organizational behavior, and human resource management such that the egoist model’s material economic interests are de-emphasized in favor of psychological interests such as satisfaction and esteem. Moreover, economic markets are seen as imperfectly competitive so profit-maximizing employers can choose their strategies for pursuing their organizational goals. And in the unitarist employment relationship, the optimal organizational strategies are those that align the interests of organizations and employees because a key assumption is that organizations and employees share a unity of all of their interests; thus, the label “unitarist” employment relationship. For example, jobs that are designed to be fulfilling will be rewarding to the employees, and the private or public sector organization will also benefit because these employees will be productive. High-road or high-commitment human resource management strategies are therefore key, unions are seen as unnecessary and as adding unproductive conflict.

An alternative perspective, the pluralist model, rejects the egoist model’s view of labor as a commodity traded in perfectly-competitive markets; rather, employees are viewed as human beings entitled to key standards and rights consistent with human dignity and citizenship. The pluralist model also rejects the unitarist view of largely shared organization-employee interests; rather, organizations and employees are seen as having a mixture of common and conflicting interests. That is, the pluralist employment relationship rests on a belief of a plurality of legitimate but sometimes-conflicting interests in the employment relationship. The classic example of conflicting interests is higher wages versus higher profits. These assumptions mean that institutional interventions are needed to better balance the bargaining power inequalities generated by imperfect labor markets, and to protect workers when organizations prioritize their own interests. Hence the important of industrial relations institutions such as labor unions and labor legislation to supplement high-road HR strategies.

The fourth and final alternative model of the employment relationship reflects radical, heterodox, and feminist scholarship in sociology, economics, and industrial relations is therefore labeled the critical employment relationship. Like the unitarist and pluralist models, this model sees labor as more than a commodity and also sees labor markets as imperfectly competitive. But where the critical perspective differs is in its emphasis on sharp conflicts of interests and unequal power dynamics between competing groups. Marxist and related perspectives focus on unequal power relations between workers and organizations, feminist perspectives focus on unequal power relations between men and women, and critical race perspectives focus on segregation and control along racial lines. In all of these critical perspectives, the employment relationship is seen as one piece of a larger socio-politico-economic system throughout which elites are able to perpetuate or reproduce their dominance, albeit with some accommodation of the interests of the weaker party in order to foster compliance and consent.

Returning to the #ModernCollectiveNouns hashtag, a friend of mine responded with "a propaganda of HR managers." Provocative! But for those who understand the competing frames of reference, this reflects an important critique from a pluralist or critical frame.

OK, maybe this isn't all that you need to know about the employment relationship, but it's an essential foundation. And maybe my #ModernCollectiveNouns tweet will help you remember this foundation.

If you want to see more applications of this framework, take a look at some of my earlier blog postings, such as:
Or for a more academic treatment, see my book chapter titled "The Employment Relationship" with Devasheesh Bhave from the Sage Handbook of Human Resource Management

Sunday, March 20, 2016

Questioning the Conventional Wisdom: Do Consensual Dispute Resolution Methods Produce Better Relationships?

Think of a dispute you’ve had with a person or entity that you have an ongoing relationship with, like a business, employer, co-worker, or neighbor. Was that dispute resolved between the two of you, or did it involve a third-party determination by a judge, arbitrator, superior, or some other authority? Do you think it mattered how the dispute was resolved? Would your behavior have changed if it was resolved differently?

Conflict resolution professionals and academics have long believed that voluntarily-negotiated agreements produce better long-run relationships than third-party imposed resolutions. This is because the participants can control their own destiny, tailor agreements to their liking, and feel greater ownership in the process and the outcome. Sounds sensible. But there is very little evidence beyond the parties feeling satisfied immediately after resolution. Maybe a formal procedure like a courtroom or arbitration hearing provides greater levels of due process, or the process doesn’t really matter for a long-term relationship because people forget what happened. More research is needed to find out if the conventional wisdom really is accurate.

So in a paper with my colleague Aaron Sojourner and a University of Minnesota human resources Master’s alum Jaewoo Jung, we analyze data from Major League Baseball to test whether voluntarily-negotiated agreements produce better long-run relationships than third-party imposed resolutions. Baseball players with between three (sometimes two) and six years of service are eligible for salary arbitration with their current team. In any given year, some go to arbitration while many settle voluntarily. If voluntarily-negotiated agreements are meaningfully better, then in the following season we would expect to see better on-field performance and more lasting relationships for those who voluntarily reached a salary agreement compared to those who went to arbitration and had a new salary imposed on them.

Indeed, in 1974 Minnesota Twins pitcher Dick Woodson won the very first arbitration hearing but was traded to the richer New York Yankees less than three months later. So the ability to tailor contractual outcomes to the fit the parties’ preferences can be constrained by the arbitration process, and as a result, the parties to a consensual agreement might be more satisfied which results in stronger on-field performance and a longer lasting relationship. But is this just an isolated example?

Using 24 years of data comparing players who arbitrated with those who settled just before arbitrating, we find partial support for the conventional wisdom. We find that relationships are more durable when the player and club negotiate a new salary rather than having a salary imposed by an arbitrator. Specifically, 11 percent of players who settle voluntarily are not with the same team by the end of the season. On average, this probability of a break-up increases by 10 percentage points when a player goes to arbitration, even after controlling for prior player performance and other factors. In other words, arbitration nearly doubles the likelihood of a player not being with the same team at the end of the season.

But do players who go to arbitration have lower on-field performance? Not that we can observe. There are no statistically significant differences in on-field performance between players who go to arbitration and those who settle voluntarily. This might be due to longer-term career concerns. Most arbitration-eligible players are early in their careers and their on-field performance is visible to other clubs. So they have incentives to set aside any residual feelings from the dispute-resolution process and to perform at a high level in order to position themselves for a lucrative, subsequent contract.

We are unable to observe the exact reasons underlying these results. It might be the case that financial concerns cause teams to trade or release players who win in arbitration, but it is harder to see how a purely financial reason would explain the result that the relationship is also less durable when the player loses and the club has to pay a lower salary. Rather, the pattern of results is consistent with scenarios in which the arbitration process harms the player-club relationship and negatively affects player behaviors that are hard to observe (e.g., clubhouse attitude, loyalty to the team), but career concerns and/or loyalty to teammates and fans causes a player to continue to publicly perform at his usual level. Such a scenario can be generalized into an hypothesis that could be applied to other settings—that is, the effect of a dispute resolution procedure will be smaller on dimensions of performance that are valued and easily observed by potential, future partners and larger where performance is harder for future potential partners to observe.

While the data come from the context of professional baseball, these results are important for dispute resolution researchers and practitioners with implications beyond professional baseball. The claimed superiority of voluntary dispute resolution procedures is neither uniformly rejected nor supported. Additional research and perhaps some re-thinking of longstanding assumptions are therefore needed.

Source: John W. Budd, Aaron J. Sojourner, and Jaewoo Jung (forthcoming) “Are Voluntary Agreements Better? Evidence from Baseball Arbitration,” Industrial and Labor Relations Review. Here is the full paper.