United States Department of Labor

	Trends and Challenges for Work in the 21st Century

Opinions and views in these papers are those expressed by the author(s). They are not to be taken as expressions of support for particular positions by the Department of Labor. Please do not cite these papers without prior permission of the author(s).

Rebuilding the Social Contract at Work:
Lessons from Leading Cases

Thomas A. Kochan
Institute for Work and Employment Research
Sloan School of Management, MIT

Task Force Working Paper #WP09

May 1, 1999

Draft in Circulation

This paper was prepared for the Task Force on Reconstructing America’s Labor Market Institutions with support from the Ford and Rockefeller Foundations.

The paper was presented at a symposium that was funded under a grant from the Office of the Assistant Secretary for Policy, U.S. Department of Labor. Views expressed in this paper are to be attributed to the author and do not necessarily reflect the views of the U.S. Department of Labor.

Table of Contents

1. Foreword
2. Abstract
3. Introduction
   1. Key Questions and Analytic Framework
4. Eastman Kodak
   1. Key Events
      1. Repeated Downsizings
      2. The New CEO: Refocusing on Core Products
      3. Major Restructuring Efforts and a Focus on Costs
      4. The New Social Contract Initiative
   2. Summary and Implications
5. Lucent Technologies
   1. Critical Events and Issues
      1. Lucent’s Formation
      2. Reorganization to the Business Unit Structure
      3. Current Employment Relations and Future Challenges
   2. Summary and Implications
6. Lucent’s Competitor: Cisco Systems
   1. Strong Culture and Values
   2. Bonus and Stock Option Plan
   3. Growth Through Acquisitions
   4. Cisco’s Social Contract
   5. Role of Contingents
   6. Summary
7. Xerox
   1. Key Events: 1980-Present
      1. 1980-82: Employee Involvement Program
      2. 1982: Wiring Harness/Outsourcing Issue
      3. 1983: Negotiations
      4. 1983-1994: Moving Beyond QWL to Team-Based Systems
      5. 1994: Negotiations
      6. 1998: Profit Sharing, Stock Purchase Plan, and Bonuses
   2. Future Challenges
   3. Summary and Implications
8. Saturn
   1. Key Events
      1. Joint Approach to Organizational Design: The Committee of 99
      2. Emergence of Co-Management
      3. Performance and Image
      4. Conflicts and Controversies
      5. 1998 Negotiations
   2. Summary and Implications
9. United Airlines
   1. Key Events
      1. 1985 Pilot Negotiations
      2. The ESOP Deal
      3. The 1997 Wage Reopener
      4. Passenger Service Agent Organizing Campaign
      5. Regional Jet Negotiations
      6. Flight Attendants’ Negotiations
      7. 777 Rest Issue
      8. Leadership Succession
      9. Renegotiation of Bargaining Agreements and the ESOP
   2. Taking Stock of the ESOP
   3. Future Scenarios
10. United’s Competitor: Southwest Airlines
    1. Employee Relations
    2. Summary and Implications
11. Cross-Cutting Themes and Lessons
    1. Define the terms of the contract clearly.
    2. Change the whole, not just the parts.
    3. Design structures that have staying power.
    4. Remember that leadership is important.
    5. Strengthen and reposition the role of human resources.
    6. Negotiate the boundaries of the firm and its community and labor market responsibilities.
    7. Look for potential solutions that lie outside of the organization.
    8. Include notions of social value in the calculation of value added.
12. Issues for Further Discussion
13. References