A New Workplace Contract

FOR a long time, many people in private industry believed that they were working under a widely understood social contract. Employees would provide satisfactory attendance on the job and demonstrate an acceptable level of effort and loyalty. Employers, in turn, would provide fair pay, fringe benefits, advancement based on seniority and merit, and, to varying degrees, job security.

Years of complacency under this social contract created high-cost labor systems with little incentive to produce high-quality products. This social contract often called for blue-collar and clerical workers to check their intelligence at the door and simply follow orders. Whatever form it took, this social contract - although never universal - is dead today. Waves of corporate downsizing have eliminated it and often devastated employee morale in the process.

Attempts to define a new workplace social contract are being made in the White House, Congress, executive suites, union halls, and by management consultants. House majority leader Richard Gephardt contends that if workers share the rewards as well as the risks, they will be more productive. The AFL-CIO has developed a new model for the workplace in which decisionmaking authority is redistributed from management to teams of workers. The rewards are to be distributed on ``equitable'' terms. A variation of that has been presented by Bob Shapiro, incoming chief executive of Monsanto Corporation: ``We think the answer must be that if employees are to share in greater risk, they should also have a greater share of the rewards - if we succeed together.''

The key to developing a new workplace compact is one that unlocks the door to high performance: trust and mutual purpose. The AFL-CIO says that ``distrust between labor and management ... is endemic to the old system... . The new system, in contrast, can function effectively only if those deep suspicions are dispelled and replaced by mutual respect.'' They are right.

It is up to management in each company to initiate the development of a new social contract suitable to its special situation. The motivation for businesses is that it reduces the likelihood that government will fill the void. A new social contract should begin with employer expectations of employees. The following five points are basic: The employee performs to the best of his or her ability; is committed to the objectives of the firm; actively participates, which includes making suggestions for improvements; is willing to be trained to improve productivity; and is ethical and honest.

Likewise, it is necessary to identify employee expectations: fair pay and benefits proportional to contribution to company success; job security tied to the fortunes of the company and ability to perform; respect for and recognition of the individual; opportunity for growth; a safe and healthy workplace; and access to timely information and openness on the part of candid leaders.

The most ambitious part of the new social contract may be three joint expectations: 1) partnering replacing paternalism, 2) viewing employees as value-adding resources, not merely costs to be cut, and 3) employees and employers both focusing on the customers' needs and desires.

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