Upjohn Press Upjohn Press Collection 1-1-1988 Job-Saving Strategies: Worker Buyouts and QWL Arthur Hochner Temple University Cherlyn S. Granrose Temple University Judith Goode Temple University Eileen Appelbaum Temple University Elaine Simon University of Pennsylvania Follow this and additional works at: https://research.upjohn.org/up_press Part of the Labor Economics Commons Citation Hochner, Arthur, Cherlyn S. Granrose, Judith Goode, Eileen Appelbaum, and Elaine Simon. 1988. Job- Saving Strategies: Worker Buyouts and QWL. Kalamazoo, MI: W.E. Upjohn Institute for Employment Research. This title is brought to you by the Upjohn Institute. For more information, please contact [email protected]. JOB-SAVING STRATEGIES WORKER BUYOUTS AND QWL Arthur Hochner Temple University Cherlyn S. Granrose Temple University Judith Goode Temple University Elaine Simon University of Pennsylvania Eileen Appelbaum Temple University 1988 W. E. UPJOHN INSTITUTE for Employment Research Library of Congress Cataloging-in-Publication Data Job-saving strategies : worker buyouts and QWL / Arthur Hochner . [et al.]. p. cm Bibliography: p. Includes index. ISBN 0-88099-069-4. ISBN 0-88099-069-6 (pbk.) 1. Supermarkets Pennsylvania Philadelphia Management Employee participation. 2. Management Employee participation. 3. Employee ownership. 4. Quality of work life. I. Hochner, Arthur. HD5658.G82U65 1988 658.8©0683-dcl9 88-39650 CIP Copyright 1988 W. E. Upjohn Institute for Employment Research THE INSTITUTE, a nonprofit research organization, was established on July 1, 1945. It is an activity of the W. E. Upjohn Unemployment Trustee Corporation, which was formed in 1932 to administer a fund set aside by the late Dr. W. E. Upjohn for the purpose of carrying on "research into the causes and effects of unemployment and measures for the alleviation of unemployment." The facts presented in this study and the observations and viewpoints expressed are the sole responsibility of the author. They do not necessarily represent positions of the W. E. Upjohn institute for Employment Research. Board of Trustees of the W. E. Upjohn Unemployment Trustee Corporation Preston S. Parish, Chairman Charles C. Gibbons, Vice Chairman James H. Duncan, Secretary-Treasurer E. Gifford Upjohn, M.D. Mrs. Genevieve U. Gilmore John T. Bernhard Paul H. Todd David W. Breneman Ray T. Parfet, Jr. Institute Staff Robert G. Spiegelman Executive Director Judith K. Gentry H. Allan Hunt Louis S. Jacobson Christopher J. O©Leary Robert A. Straits Stephen A. Woodbury Jack R. Woods in Dedicated to the spirit of participation and collaboration IV PREFACE It was hard for the five co-authors to agree on a title for this book. It was not so much a disagreement among the members of our research group as it was a difficulty in coming up with a succinct title to convey the many aspects of the book and the study reported in it. While this book is indeed an in-depth study of the effectiveness of two job- saving strategies used to reverse the shutdown of supermarkets in Philadelphia, we believe it is much more, too. It compares worker buyouts and QWL (quality of worklife) programs two phenomena of great interest over the 1970s and ©80s to the public, the mass media, and officials in business, labor, and govern ment. It is a study that should prove interesting and useful to researchers in economics and other social sciences, to practitioners of management-labor rela tions, and to policymakers. In the book, we attempt to break new ground both theoretically and em pirically in the study of employee ownership and worker participation. Chapters 1 and 2 present a synthesis of previous research on these topics in order to develop a theoretical framework. We hypothesize and attempt to demonstrate in chapters 5, 6, and 7, in concrete terms, how employee ownership and worker participation are linked with economic outcomes for both workers and organiza tions. We link workers© attitudes to their firms© economic performance as we look at both the individual and organizational effects of innovative structures and operational practices. This study adds to a small but growing body of literature showing the im portance of ownership and participation for organizational performance. In fact, a very recent study by the United States General Accounting Office, which was released after the main text of this book was written, found that: "Those ESOP (employee stock ownership plan) firms in which nonmanagerial employees have a role in making corporate decisions through work groups or committees showed more improvement in our measure of productivity than firms without such participation" (USGAO 1987, p. 3). Though we wanted to reflect the multiple focuses of the study in the title, we eventually settled on the primary theme of job-saving strategies. Not only was job-saving the initial and overwhelming motivation of the workers, union leaders, consultants, and managers who dealt with the shutdown supermarkets and the innovative structures, but it is also a significant social, economic, and policy issue of our time. How can our society and economy deal with the pervasive restructuring and dislocation which affects so many workers? That question loomed very large in the early 1980s when the events recounted and analyzed in this book took place. In Philadelphia, the scene of the O&O worker buyouts and the creation of Super Fresh with its programs of worker involvement in decisions and prof its, the late ©70s and early ©80s brought month after month of shutdowns, layoffs, and job loss. Was it just a short-term crisis? The acuteness of the problem in 1982, when the Great Atlantic and Pacific Tea Co. (A&P) announced the closing of its Philadelphia stores, was highlighted by the context of a deep national economic recession. Labor force statistics, however, showed a long-term pattern of dislocation and change, especially in the manufacturing sector where an average net reduction of 1,000 jobs a month had taken place over a 10-year period. Even now in the late 1980s, with the Philadelphia economy relatively robust and the unemployment rate lower, corporate restructuring and interregional and international competition continually threaten the jobs of those in former ly well-established industries. The question of dislocation and unemployment may not get so much mass media attention as it once did, but it has not gone away. In 1988 the U.S. Congress passed a bill, which President Reagan op posed but did not veto, calling for prenotifiation to workers and communities by firms considering shutdowns or large layoffs. Regardless of which political party is in power, a major issue in coming years will be how to prepare for the economy of the future. We hope that a major thrust of the emerging debate will be how to better use our human resources. We must ask: What kinds of management skills and structures will be suited to maintaining prosperity and productivity? What role will workers and their union representatives have in maintaining workplace conditions and enhancing the fair distribution of income and wealth? How will we ensure that basic democratic principles do not get lost in the drive for efficiency and profitability? These questions are not restricted to the context of job-saving, but cover a whole range of management, labor, and economic development themes, even in the context of economic expansion. In the few years since their initiation, both innovations reported in this book have been expanded to other organiza tions. Two original O&Os, which were worker buyouts, have now spawned experience with four other O&O supermarkets, as described briefly in chapter 4. The Super Fresh experiment started in Philadelphia has now spread too. At the 1987 A&P shareholders meeting, chairman James Woods praised Super Fresh as a model for the entire retail grocery chain. The model has been ex tended company wide to 243 stores (Palley 1987). The stories of the O&O and Super Fresh supermarkets, humble and limited as they might be, help in the emerging discussion of the issues. Other pieces of evidence are being gathered in studies of the results of alternative forms of work organization (Rosow 1986), of the role of unions in raising produc- VI tivity and fighting mismanagement (Freeman and Medoff 1984; LeRoy 1987), and of the changing global context of American industrial relations and the importance of worker participation to industrial change (Kochan 1985). Together, these studies share the view that labor-management cooperation is indeed required for the future economy, but they warn of the dangers of un balanced and nonreciprocated acts of cooperation. Power sharing between labor and management is called for, but is much more easily advocated than accomplished. This study was also, significantly, an interdisciplinary one. In the field of employee ownership and worker participation, such an approach is often ad vocated but rarely put into practice. Dialogue among behavioral scientists and economists is often difficult, owing to differing definitions of theoretical "modeling," differing methods, differing approaches to statistical methods and differing degrees of reliance on them, and differing standards of proof. For example, economists often seem to favor systems of equations based on variables that can be measured with high degrees of reliability and accuracy. On the other hand, behavioral scientists, looking for patterns of behaviors and social interactions, often construct models for heuristic as contrasted with predictive purposes. Behavioral scientists look at measures of structures and behaviors as desirable, but are willing to accept the messiness of human percep tions, attitudes, and self-reports, with all of their potential error, bias, and unreliability. Even among social scientists, differences in theoretical orienta tions and methods between, say, anthropologists and psychologists may in hibit cross-fertilization of thinking and research. These obstacles may have been minimized in this study because, like the worker/owners we studied, we can together in this group in part through in terpersonal linkages.