How to Prepare Leaders for a
“Vibrant Economy that Works for All”
Thomas A. Kochan
MIT Sloan School of Management
Aspen Institute & Ford Foundation
Business Education Symposium
October 16, 2014
Espoused Missions of Business Schools
“Educate Leaders who
Make a Difference in the World”
“Prepare Principled Leaders
who Improve the World”
“Empowers the World’s Brightest Students to Act — to
take Steps that will Change the World”
A Universal Dream for our Children
Every generation should be able to
experience a higher standard of living
than their parents
What do we need to do
to deliver on this promise?
Vision-Reality Gap at Work:
Our Generation’s Legacy
• An Unsustainable Economy
– Insufficient Number of Good Jobs
– Unacceptable Levels of Inequality
• Failed Politics:
– 30 years of stalemate over how to update employment policies to
catch up with changes in work and the workforce
• Closer to Home:
– B-Schools dominated by the financialization of corporations, our
curriculum, our culture
America’s Persistent Jobs Deficit
Needed: Closing the Gap in Income Inequality
Source: Emaneul Saez, “Striking it Richer: The Evolution of Top Incomes in the United States
(Updated with 2009 and 2010 Estimates). March 2, 2012. http://elsa.berkeley.edu/~saez/saezUStopincomes-2010.pdf.
Needed: Closing the 30 year Gap in WagesProductivity Growth in the US
450
400
Index (1947 = 100)
350
300
250
200
150
Productivity
100
Household Income
50
Average Hourly Earnings
0
1945
1955
1965
1975
1985
1995
2005
What if your products were made in this Factory?
Rana Plaza, Bangladesh, April 24, 2013: 1,129
Workers Killed
The Good News: We Know What’s Needed
• High Road v Low Road Business Models
• Sustainable, Mission Driven Entrepreneurship
• Innovative Labor Strategies & Labor-Management Relations
• Local Level Innovations as Test-beds for the Nation
• Cross-class Coalitions for National Policy Changes
Three Levels of an Integrated HRM/Labor Relations
System in a Firm
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High Trust Workplace Culture
Employee Engagement
Flexible-Team Based Work Design
Training & Development
Fair & Contingent Compensation
Interest-Based Negotiations
Labor-Mgmt. Partnerships
Business Strategy
LR/HR Systems
Workforce Practices
and Culture
How to make it Work: For People & Profits!
Walmart
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Business Model
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Squeeze for lowest prices
Quality services
Loyalty
Employees
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Distributed – CEO as Model
Customers
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Low prices
High volume
Leadership Model
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Low wages
High turnover
Tight management controls
Suppliers
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Value comes in low prices
Employees
Business Model
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Top Down-Strong Founder
Customers
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Low prices
High volume
Leadership Model
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Market Basket
High Productivity
Good wages; profit sharing; bonuses
Long tenure – and proud of it!
Mutual respect, “sense of ownership”
Suppliers
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Long term relationships-partnerships
Making it Happen: Reinforcing Curriculum to Close
the Vision-Reality Gap
Subject Area
Principles
Economics and Corporate Purpose/Governance
From Shareholder Value to Stakeholder Accountability
Finance
From Financial Engineering to Investment tools to
Solve Critical Problems
Leadership
From CEO as Visionary to Distributed Leadership
Operations & Technology
From Lean Production to Integrated Technology,
Operations, Workforce Complements aka “Good Jobs
Strategy”
Marketing
From Price/Transactions to Value, Loyalty, and Trust
Labor
From Adversaries to Partnerships
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Making it Happen: Breaking the BSchool Boundaries
Education:
– Engage the next generation workforce
– Go beyond Executive Education to provide new options for life long learning for all
– Bring diverse leaders to campus to engage MBAs
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Research
– Study the local innovators—White House “Raise the Wage” Honorees
– Promote social-labor-community incubators
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Speak out/Reach out:
– Put all the social media to work when “teachable moments” arise!
– Let’s put our 30+ years of research to work!
White House Raise the Wage Champions: Local Innovators Around the Country
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Bene't Holmes is an advocate, leader and a mother. She works for Walmart and is paid $8.75 an hour.
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Saru Jayaraman is the Co-Founder and Co-Director of Restaurant Opportunities Centers United
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Naquasia LeGrand has emerged as a leader in the growing movement to achieve a living wage for all fast food workers
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Christine Owens is Executive Director of the National Employment Law Project
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Lew Prince is co-owner and Managing Partner of Vintage Vinyl Inc. in St. Louis and spokesperson for Business for a Fair Minimum Wage
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David Rolf is the President of the Seattle-based Local 775 of the Service Employees International Union, the fastest growing union the
Northwest representing 43,000 home care and nursing home...
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Paul Saginaw is Co-Founder and Chief Spiritual Officer of Zingerman’s Community of Businesses. The “community” is a network of 9
brand-connected, owner-operated run businesses
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Rafael Sanchez III is the second child of immigrants from Mexico. For as long as he can remember, Rafael has wanted to be a teacher.
Karla Quezada is a leader in the Good Jobs Nation campaign, a campaign of low wage federal contract workers