Reinventing the Workplace: How Government Can Help

By David I. Levine

(Originally appeared in the San Jose Mercury News, December 25, 1995.)

Rule #1: The Boss is always right.

Rule #2: When the Boss is wrong, see rule #1.

In many American workplaces, this humor reflects much of reality. After years of rhetoric advocating that managers listen to their employees, millions of workers still check their heads at the door and work with their hands (or for many data entry clerks, just their fingers).

In a minority of workplaces, however, a fundamental shift in management strategy is taking place. In these workplaces, workers or work groups make meaningful decisions about how their work is done, jobs are designed for continuous learning, and employees are rewarded for their successes in improving the workplace. Such organizations have experienced impressive gains in productivity, quality, and worker satisfaction. Most importantly for managers, several recent studies also indicate they can improve profits and stock returns as well.

The problem is that these new work systems are rarely implemented well. While most large employers have experimented with employee involvement (or total quality management or empowerment or quality circles), few have succeeded in making the large-scale change.

It is in this regard that the often-benighted government may have a useful role to play, although not one of simply mandating how workplaces should be organized. The government's role is a simpler one of making it easier for employers, customers and investors to see which employees and suppliers are constantly solving problems.

This recommendation would provide coherence to the dozens of disjointed policies the government already has that affect the workplace, including accounting rules that fail to measure training as an investment, skills standards that define problem-solving differently in different states or industries, and procurement policies that emphasize low bids over quality. The win-win approach of measuring who solves problems can foster the goals of government, business, and employees.

In the last decade, many governmental policies have taken important strides toward making the nation's implicit workplace policy more friendly to high-skill workplaces. These efforts range from the highly-successful Malcolm Baldrige National Quality Award to creating a framework of voluntary skill standards that promote higher levels of training. Nevertheless, much more can be done.

In the computer industry, the saying is, "Standards are wonderful, there are always so many to choose from." Certifying what our students and workforce have learned is becoming as complicated as standards in the computer industry. Currently the electronics and retail industries (among others) and a number of states are each creating separate standards that measure skills in problem solving and working in groups -- the key skills employers say they need. Thus, someone who has good skills at solving problems in one industry might receive no credit for these skills when he or she moves to another industry.

Our skill standards should be created from a common set of building blocks that measure these key skills. Standards for measuring how well students work together in groups and solve problems have the additional benefit of helping schools. Clear standards in these areas would help schools understand what they need to do in their move away from "chalk and talk" toward making education both more interesting and more relevant.

Companies face the same problem as employees when trying to certify the quality of their goods or services -- a profusion of awards and certifications. A company that hires workers who solve problems, and that collects data from its customers to always improve its products and services is a good supplier. Nevertheless, it has to jump through different hoops to sell to a car company than to sell to an airplane company -- and different hoops again to sell to different parts of the U.S. government.

The federal government must work with other large customers to create standard certifications that measure which companies produce high quality and are organized to improve their quality. The good news is that the federal government is already beginning to copy the private sector's best practice; specifically, the government is starting to rely on existing supplier certifications as one factor when choosing suppliers. This move should improve the quality and lower the lifetime cost of the goods and services bought by our government. Suppliers of high-quality goods and services tend to rely on their workers for help in improving quality. Thus, buying higher quality should not only save the government money but also increase the quality of U.S. jobs.

Investors face the same problem as customers: How do they know if the company is investing in building a high-quality reputation, or if it is depreciating its customers' and employees' good will? Unfortunately, current accounting rules do not measure the investment managers make in building a high-quality workforce and in producing high-quality goods. Instead, in the short run, such spending shows up only as lower earnings.

The government should restructure its accounting rules to put investment in people and in quality on a more even footing with investment in plant, equipment or research. The government can work with industry and the accounting profession to create standard measures of workplace investments that are comparable across time and across companies. Only then can investors understand which companies are investing for the long term.

All of these changes can together begin to change the rules of the game:

Rule #3: Managers and employees, with a little help from government, can rescind rules #1 and #2 to create workplaces that make companies more productive, make work more satisfying, and increase Americans' standard of living.

David I. Levine is an associate professor of management and economics at the Haas School of Business, University of California, Berkeley. He is author of the new book Reinventing the Workplace (Brookings Institution, 1995).