Working Papers

Below is a sampling of working papers by IWER faculty. IWER working papers generally have working paper numbers from IWER and MIT Sloan. Provided are abstracts and links to PDF versions of the complete papers, which are part of the MIT Sloan online working paper collection, hosted by the Social Science Research Network.

Labor and Corporate Governance: Initial Lessons From Shareholder Activism
Monami Chakrabarti
IWER #08-2003; MIT Sloan #4423-03

Abstract: The recent crisis in the financial markets has revealed serious, systematic flaws in corporate governance and has cost union pension funds billions of dollars. However, the labor movement has begun to take charge of governance reform by mobilizing their pension assets, organizing other investors and launching company-specific shareholder campaigns. Through a detailed comparative case study and a larger empirical study of labor’s 2002 shareholder campaigns, this paper examines and outlines the factors that influence the success of these efforts.
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Enriching a Theory of Wage and Promotion Dynamics Inside Firms
Robert Gibbons and Michael Waldman
IWER #07-2003; MIT Sloan #4324-03

Abstract: In previous work we showed that a model that integrates job assignment, human-capital acquisition, and learning can explain several empirical findings concerning wage and promotion dynamics inside firms. In this paper we extend that model in two ways. First, we incorporate schooling into the model and derive a number of testable implications that we then compare with the available empirical evidence. Second, and more important, we show that introducing “task-specific” human capital allows us to produce cohort effects (i.e., the finding that a cohort that enters a firm at a low wage will continue to earn below-average wages years later). We argue that task-specific human capital is a realistic concept and may have many important implications. We also discuss limitations of our (extended) approach.
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Labor-Management Cooperation on Teaching and Learning Cleveland Municipal School District
Nancy E. Peace, Co-sponsored by The Program on Negotiation at the Harvard Law School and The MIT Institute for Work and Employment Relations
IWER #06-2003; MIT Sloan #4313-03

Abstract: The Cleveland Municipal School District (CMSD) and the Cleveland Teachers Union (CTU) have established a collaborative relationship that has enabled them to work jointly on a number of innovative programs designed to improve teaching and learning in the schools of Cleveland. The educational standards set forth in Educating Cleveland’s Children are the foundation for much of this work. The challenges now facing the District and the CTU are to keep track of all these programs, assess their effectiveness with respect to teaching and learning, and ensure that the changes in organizational culture necessary to support this work are realized in each school.

The breadth and depth of change to which the parties have committed demands a tremendous investment of time, money, and energy. As CTU President Richard DeColibus noted, such a vast undertaking will require resources beyond what the Union and the District can contribute. It is fortunate that in Cleveland the schools have the support not only of the city administration, but also of parents, civic and business leaders, foundations, social service agencies, and other city employees. If the District and the Union can continue to engage these other entities, it seems likely they will be able to create a high-functioning learning community that is uniquely equipped to meet the needs of all of Cleveland’s children.
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Interest-based Negotiations at Kaiser Permanente
Robert B. McKersie, Susan C. Eaton, and Thomas A. Kochan
IWER #05-2003; MIT Sloan #4312-03

Abstract: In 1997 Kaiser Permanente (KP) and a coalition of 26 local unions representing nearly 70,000 Kaiser employees created what is now the nation’s largest and most ambitious labor-management partnership. In 2000, the parties faced the major challenge of negotiating their first labor agreement under the new Partnership. They designed and implemented what is also the largest and most complex interest-based negotiations (IBN) process carried out to date in the field of labor-management relations. We describe this case here, both to provide an historical account of the process and to explore the lessons that might be learned from how these parties addressed a series of generic challenges encountered when introducing IBN principles into collective bargaining.
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Out of the Ashes: Options for Rebuilding Airline Labor Relations
Thomas Kochan, Andrew von Nordenflycht, Robert McKersie, and Jody Hoffer Gittell
IWER #04-2003; MIT Sloan #4301-03
March 2003

Abstract: The crisis in the airline industry and its labor relations system creates a window of opportunity to introduce changes that are essential to successful industry recovery. This paper summarizes the results of our research on labor relations conducted as part of the MIT Global Airline Industry Project and proposes a set of improvement initiatives. We recommend that (1) companies negotiate a “recovery compact” with its employees that includes plans for improving the workplace culture and climate and for expediting and resolving collective bargaining contract negotiations, (2) government leaders specify a window of time for industry and labor leaders to agree on changes needed in the Railway Labor Act, (2) the National Mediation Board engage industry and labor leaders in a process of transforming the agency’s role to support the changes needed in the industry, and (4) industry, labor, and government leaders create a forum to support mutual learning and improvement.
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The Organizational Demography of Racial Employment Segregation
Jesper B. Sørensen
IWER #03-2003; MIT Sloan #4300-03
February 2003

Abstract: This article examines how workers respond to changes in the racial composition of their workplaces. An analysis of the job histories of new hires into multiple workgroups within a single firm reveals path dependence in the effects of group composition on turnover. Exit rates are inversely related to the level of same-race representation at the time of organizational entry, and increase when workers experience declines in representation. However, turnover rates do not decline in response to increases in representation. The challenge of workplace racial integration therefore lies not simply in eliminating discrimination in hiring, but also in managing the post-hire dynamics of changes in group composition. Implications of the asymmetric effects of compositional change for the literature on organizational demography are also discussed.
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Lean Transformation in the U.S. Aerospace Industry: Appreciating Interdependent Social and Technical Systems
Joel Cutcher-Gershenfeld
IWER #02-2003; MIT Sloan #4299-03
February 2003

Abstract: Lean practices and principles build on a half-century of successive initiatives aimed at transforming social and technical systems in organizations. While they are send as central to the revitalization of the U.S. aerospace industry, there is great variation in the degree to which lean initiatives emphasize just technical/manufacturing systems versus additional social and enterprise dimensions. Based on a national random sample survey of 362 U.S. aerospace facilities, this paper examines factors that account for the incidence of lean practices and the impact on outcomes relevant to key stakeholders. While structural factors such as industry sector, facility size and others have limited explanatory power, two process factors — organizational learning and the value placed on intellectual capital — do account for the increased presence of lean practices. In examining employment outcomes, facilities higher just on the technical/manufacturing aspects of lean have a significant and negative impact on job growth, while facilities higher around the social systems associated with lean have significant and positive employment growth. This finding is consistent with the views of critics of the more narrow technical, manufacturing-oriented approaches to lean as a threat to employment and it validate proponents of a broader value-creating approach to lean as a way of growing the enterprise. Enterprise dimensions of lean (including both social and technical aspects of lean) have a positive impact on productivity. Examining outcomes relevant to multiple stakeholders and various factor inputs produces a more complete understanding of the limitations and potential for lean transformation in the aerospace industry.
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Mutual Gains or Zero Sum? Labor Relations and Firm Performance in the Airline Industry
Jody Hoffer Gittell, Andrew von Nordenflycht, and Thomas A. Kochan
IWER #01-2003; MIT Sloan #4298-03
March 2003

Abstract: We examine competing theoretical arguments regarding whether union representation, shared governance, wage levels and two features of the quality of labor relations — workplace culture and conflict in negotiations — lead to better or worse outcomes for airlines and test them with a mix of historical and quantitative data from major U.S. airlines. Both the qualitative and quantitative results suggest that relational factors — conflict and workplace culture — are more important determinants of performance than the structural factors of unionization, shared governance, and wages. We conclude that efforts to recover from the current crisis in the airline industry that depend primarily on reductions in wages or union power will at best bring only short-term relief from immediate financial pressures. Sustained improvement in service quality and financial performance will require more fundamental improvements in the quality of labor relations.
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