The chapter discusses several external forces that are changing the workplace, including demographic shifts, technological advances, structural economic changes, competitive pressures, the reorganization of work, and government intervention. It provides examples of how each force has impacted organizations like Ford Motor Company and the labor market over time. The chapter also compares approaches to labor regulation and protections in different countries.

1. Chapter 16
The Changing
Workplace
McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Ford Motor Company
o Ford sold 15.5 million Model T’s from 1908 to 1926
o In 1927 failure to observe market trends forced the
plant to close for 7 months while the Model A was
designed
o Henry Ford was a obstinate man, obsessed with
power, iron-willed, dictatorial, and cynical about
human nature
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3. Ford Motor Company
o Henry Ford’s treatment of his employees led to
unionization in 1941
o In the early 1980s the firm suffered disastrous losses
due to heightened international competition
o Ford tried to change the company culture
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4. Ford Motor Company
o Taurus rejuvenates profits from 1985 to 1995
o 1994 – Chairman Alexander Trotman instituted a
radical change program to prepare for an even more
competitive global car market
o 1999 – a new CEO, Jacques Nasser, attempts to
remake Ford’s culture yet again
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5. Ford Motor Company
o 2000 – Ford Explorer tire failures cause disaster
o 2001 – Henry Clay Ford, Jr. restructures
o 2006 – New CEO Alan Mulally announced the need
for one more reorganization
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6. External Forces Changing the Workplace
o Demographic change
o Technological change
o Structural change
o Competitive pressures
o Reorganization of work
o Government intervention
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7. Demographic Change
o Population dynamics slowly but continuously alter
labor forces
o Overall labor force growth is slowing
o The number of workers in some demographic
categories is growing faster than in others, producing
incremental but significant changes
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8. Table 16.1 – Three Snapshots of the
American Labor Force (in thousands)
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9. Technological Change
o Technical change has many impacts on work
o It affects the number and type of jobs available
o Automation has a turbulent impact on employment
o Automation causes significant job loss in less-skilled
manufacturing and service occupations
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10. Structural Change
o Structural change is caused by processes of job
creation and job destruction that continuously alter
the mix of productive work in every economy
o Three long-term structural trends:
o The agricultural sector has declined from
predominance to near insignificance as an occupation
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11. Structural Change
o The percentage of workers employed in the goods-
producing sector is now in long-term decline
o There is explosive growth in the service sector
o Structural change is a critical factor in the decline of
labor unions
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12. Figure 16.1 - Historical Trends for Employment by Major
Industry Sector: 1800–2018
16-12

13. Table 16.2 - Comparative Employment Structures in Nations
at Varying Stages of Development
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14. Competitive Pressures
o Recent trends have intensified competition for
American companies
o Customer demand
o Deregulation of large industries
o Global competition
o By global standards, American workers are extremely
expensive
o Companies in some industries now contract to have
manufacturing done in a foreign country
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15. Table 16.3 – International Wage Comparison
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16. Reorganization of Work
o Corporations alter business processes as they adjust to
environmental changes, primarily competition
o As transport costs have fallen, manufacturers more
often separate production from consumption by
sending their manufacturing to low-cost countries,
then shipping products back to customers
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17. Reorganization of Work
o Because of communication technology, service work
can now be sent to low-cost locations
o Trade in services between nations is growing,
creating fears about job loss from outsourcing
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18. Reorganization of Work
o Outsourcing: The transfer of work from within a
company to an outside supplier
o Offshoring: The transfer of work from a domestic to
a foreign location or to a foreign supplier
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19. Figure 16.2 - Quarterly Private Sector Job Gains
and Job Losses: 1993–2010
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20. Development of Labor Regulation in the
United States
o Historically, a strong laissez-faire current in American
economic philosophy made governments at all levels
reluctant to interfere with the employment contract
o Today, government intervention is extensive and
growing, but this is a twentieth-century trend
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21. Liberty of Contract
o Before the 1930s, government intervention on behalf
of workers was very limited
o In the late 1800s and early 1900s, strong majorities
on the Supreme Court upheld the liberty of contract
doctrine
o The great flaw in the liberty of contract doctrine was
that it assumed equal bargaining power for all parties,
whereas employers unquestionably predominated
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22. Waves of Regulation
o First wave – Federal workplace regulation in the
1930s, which established union rights
o Second wave – Between 1963 and 1974, moved
federal law into new areas, protecting civil rights,
worker health and safety, and pension rights
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23. Waves of Regulation
o Third wave – Between 1986 and 1996, again
broadened the scope of federal law to address
additional, and somewhat narrower, employment
issues
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24. Figure 16.3 - A Chronology of Major
Workplace Regulations
16-24

25. Erosion of the Employment-at-Will
Doctrine
o Employment-at-will was traditionally defined as an
employment contract that could be ended by either
party without notice and for any reason – or for no
reason
o Federal and state laws take away the right to fire
employees for many reasons, including union activity,
pregnancy, physical disability, race, sex, national
origin, and religious belief
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26. Erosion of the Employment-at-Will
Doctrine
o State courts have introduced three common-law
exceptions to firing at will:
o Employees cannot be fired for complying with public
policy
o Employees cannot be fired where an implied contract
exists
o Courts in 11 states limit the employer’s ability to fire
when an implied covenant of good faith is breached
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27. Work and Worker Protection in Japan
o Elsewhere in the developed world, workers benefit
from similar and even greater welfare guarantees than
in the U.S.
o Japanese males, called salarymen, enjoy virtual
lifetime employment in major firms
o Japanese workers are very committed and sometimes
work themselves to illness or death
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28. Work and Worker Protection in Japan
o In Japan, the centuries-old Confucian tradition of
harmony in relationships prevents a labor-
management fissure, therefore unions never grew
strong and unified
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29. Work and Worker Protection in Europe
o In the aftermath of World War II, many countries
adopted a social welfare model of industrial relations
to protect their populations against the ravages of
depression and unemployment
o Forces of global competition now strain this social
welfare model
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30. Work and Worker Protection in Europe
o European workers are so expensive to employ that job-
creating investments go elsewhere
o In much of Europe, the results of lavish social safety
nets and protections are persistent, high
unemployment and slowed economic growth
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31. Labor Regulation in Perspective
o The bare minimum for labor market regulation is
compliance with four core labor standards set forth in
international labor conventions
o Eliminate all forced or compulsory labor
o Abolish child labor
o Eliminate employment discrimination
o Guarantee the right of collective bargaining
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32. Figure 16.5 - The Tradeoff in Labor
Regulation
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33. Concluding Observations
o The combined impact of the six forces changing the
workplace creates both uncertainty and opportunity
o Demographic and structural changes are
uncontrollable but also slow and predictable
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34. Concluding Observations
o Technological change is a disruptive force but it has
always created new jobs to replace the ones it
destroys
o Competition and work reorganization are reshaping
labor markets everywhere
o Experience suggests that workers fortunes will be
mixed
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