Upgrading the U.S. workplace: do reorganization, education help?

Upgrading the U.S. workplace: do reorganization, education help?

Laurie J. Bassi

Firms that establish workplace education programs and reorganize work report noticeable improvements in their workers’ abilities and the quality of their products

Pervasive foreign encroachment on markets that have historically been U.S. dominated, and falling real wages have led some workplace analysts to conclude that inadequacies in education have caused a decline in the quality of the U.S. work force.[1] As a result, public policy focuses increasingly on lifelong learning. However, other analysts suggest that little will be accomplished if workers learn new skills, and go back to the same jobs that they held before. They conclude that it is not only the workers who must change, but that the jobs must change also. According to this reasoning, the full benefits of skill upgrading will not be captured unless worker education is accompanied by the reorganization of work.[2]

There is no research that either confirms or refutes the hypothesis that skill upgrading correlates with worker education and reorganization of work. In fact, there is little research on either workplace education or the reorganization of work, and even less on how the two relate to one another. This article provides results from surveys conducted in 1992 on the incidence of workplace education programs and reorganization of work strategies implemented in manufacturing and nonmanufacturing firms. In particular, the research answers the following questions:

* What percentage of firms are engaged in workplace education and/or work reorganization?

* What is the nature of the reorganization of work and workplace education?

* What are the differences between those firms that have reorganized work and/or have workplace education programs and those that have not?

* Why do firms reorganize work and/or implement a workplace education program?

* What, if any, evidence can be found identifying the impact of workplace education programs and/or work reorganization on the worker?

For this research, workplace education includes any program that provides instruction for hourly workers – separate from regular job activities – in one or more of the following: reading, writing, mathematics, speaking and understanding English, preparation for the general equivalency degree (GED), problem solving, or development of interpersonal skills.

Reorganization of work includes changes in the nature of work or compensation for employees that are intended to boost productivity and profits. The specific changes could involve: implementing work teams or quality circles, implementing total quality management or maintenance, introducing profitsharing or gainsharing, reducing management layers or oversight, increasing responsibility for all workers (empowerment), integrating quality control into production, implementing just-in-time production’ or computer integrated production, and increasing training.[4]

Research design

The first stage of the research consisted of case studies of 72 firms, conducted during the summer of 1991.[5] This crucial first stage was important in understanding the complexities involved in workplace education and reorganization programs. The second stage, which is the focus of this article, involved mail and telephone surveys that incorporated the information gathered from the case studies. The mail-telephone surveys were conducted during the January-March 1992 period.

The case studies clearly indicated that no single database would, at reasonable cost, provide all of the needed information. Essentially, there were three obstacles to devising a data collection strategy. First, relatively large samples of firms had to be surveyed to locate enough firms with education and workplace reorganization programs to derive meaningful conclusions. The case studies indicated that firms with education programs focusing on basic academic skills disproportionately, appeared in the manufacturing sector. To provide a closer view of these firms, random samples of manufacturing firms were obtained from the membership of the National Association of Manufacturing,[6] and from a professional mail house.[7]

Second, the survey had to be fairly lengthy to obtain information on why firms decide to reorganize work and/or implement a workplace education program. This implies that the expected survey response rate could be fairly low, and in all likelihood, the response would be nonrandom. That is, those firms that were either considering, or engaged in, reorganization and/or workplace education would be more likely to respond than those that were not. To maximize the response rate, we needed a survey form for firms, asking basic background information; if, and why it was reorganizing; and whether it had a workplace education program. A telephone follow-up survey was conducted for firms that indicated they had a workplace education program, to find out more about the nature and effectiveness of the program and why it was implemented.

Third, the likely nonrandomness of the response to the mail survey implies that it cannot be used to estimate the incidence of workplace education and/or work reorganization. Consequently, a brief (approximately 3 minutes) telephone survey was made to a random sample of firms. The survey asked about the number of employees in the firm, the firm’s reorganizing methods (through a checklist of items), whether the firm had a workplace education program (a checklist determined the nature of the program), and for those firms that did not have a program, their reasons for not having one.1 The response rate for the short telephone survey was much higher than that for the mail survey.[9]

Research findings

Information relating to the incidence of workplace education and/or work reorganization is based on the telephone survey which, as stated earlier, had a high response rate; information about the process and impact of these programs is based on the mail survey, which had a low response rate, but provided much more detail.

Extent of involvement. Workplace education and the reorganization of work are not dichotomous phenomenon. Rather, they are best thought of as continua. Many firms do none of either or a little of one or both; relatively few firms do a substantial amount of either education or reorganization; and even fewer do a substantial amount of both. Further, the frequency of these phenomena varies with the type and size of the firm.

To characterize these continua, seven distinct levels of workplace education programs, which are cumulative in nature, were identified:

Level 1: the firm reports that it has a workplace education program

Level 2: level 1 plus two of the following three items – the education program is offered at the worksite, the firm provides employees with at least partial release time, the firm provides financial support for the program[10]

Level 3: level 2 plus the program teaches interpersonal skills or problemsolving skills

Level 4: level 2 or level 3 plus the program teaches any of the following: math, reading, writing, English as a second language, or general equivalency degree preparation

Level 5: level 4 plus the program is taught by a paid instructor (either from the finn or from outside the firm)

Level 6: level 5 plus classes meet at least once a week

Level 7: level 6 plus classes meet at least twice a week

Firms that have made a financial commitment to workplace education are those that are at level 2 or above. Firms with education programs that teach academic skills are at levels 4-7. At levels 5-7, the academic education is done by paid instructors, as opposed to volunteers; at levels 6 and 7 the classes meet regularly.

Similarly, the reorganization of work can also be characterized as a continuum. In this case, however, the continuum is not cumulative. Rather, the measure of the extent to which a firm is reorganizing work is simply the number of reported changes in the way work is done.[11] Firms responding to the telephone survey were asked about six specific methods by which work can be reorganized: using work teams or quality circles, implementing total quality management, introducing profitsharing or gainsharing, reducing management layers or oversight, increasing the responsibility of workers, and increasing training.[12]

The results from the telephone survey are summarized in table 1 and chart 1, both of which have been weighted[13] by firm size and by the Standard Industrial Classification (SIC) code. The estimates are lower bounds, because they are based on the assumption that all of the firms that refused to respond have not implemented reorganizational changes and do not have a workplace education program. This is probably a more realistic assumption about workplace education (which has a low incidence) than it is about work reorganization (which has a high incidence). Consequently, the lower bound estimate for work reorganization is probably quite conservative.

Table 1 indicates that 7.6 percent of manufacturing firms and 5.7 percent of nonmanufacturing firms report a workplace education program. Only 3.5 percent of the nonmanufacturing firms and 5.1 percent of the manufacturing firms have at least a level 4 education program (the minimum level at which academic skills are taught). Even fewer, 1.4 percent of manufacturing firms and 2.7 percent of nonmanufacturing firms have a level 7 program. Additional results indicate that larger firms are more likely to have a workplace education program, and the program is likely to be at a higher level along the continuum than is the case for smaller firms. For example, among firms with fewer than 20 employees, 3.2 percent of manufacturing firms and 3.1 percent of nonmanufacturing firms report that they have an education program, whereas comparable figures for firms with 200-499 employees are 15.3 percent in manufacturing and 23.6 percent in nonmanufacturing. Among the smallest firms, 1.8 percent of the manufacturing firms and 1.8 percent of the nonmanufacturing firms have programs that are at level 4 – 6, whereas the comparable figures for firms with 200 – 499 employees are 7.6 percent for manufacturing and 5.0 percent for nonmanufacturing.

Table 1. Percent of firms with workplace education

programs, by level, 1992

Although the differences are less statistically significant between nonmanufacturing firms that have and have not undertaken a substantial amount of reorganization, they more or less mirror the differences in manufacturing. One exception is that workers in nonmanufacturing firms that have undertaken a substantial amount of reorganization are less likely to be covered by a collective bargaining agreement than those in nonmanufacturing firms that have not undergone a substantial amount of reorganization.

Table 4 compares the attributes of firms with and without a workplace education program.10 Here too, a comparison reveals few differences. The differences that do exist more or less parallel the differences between firms that have and have not undertaken a substantial amount of reorganization.[21][TABULAR DATA OMITTED]

In comparison with firms that do not have a workplace education program, those manufacturing firms that have a program: are somewhat larger; are more likely to report that the basic skills of their workers are very important to productivity, profits, and domestic and international competitiveness; report a slightly higher percentage of their workers have problems with basic skills; 12 pay somewhat higher wages; are somewhat more likely to offer benefits, particularly pensions; spend a greater amount on worker training; and report that turnover is a somewhat less serious problem.

As is the case with the reorganization of work, the differences between nonmanufacturing firms with, and without workplace education programs are less statistically significant. They more or less mirror the differences in manufacturing with a few differences. Compared with nonmanufacturing firms without education programs, those with programs have a higher percentage of hourly workers; slightly lower benefits and entry level wages (although these differences are not statistically significant); workers who are less likely to be covered by a collective bargaining agreement; and experienced an increase in profits within the past 2 years.

Once again, the differences between firms with and without a workplace education program seem to indicate that firms with programs are more forward looking, in that they perceive the basic skills of their workers to be extremely important. Firms with education programs either have more or less comparable wage and benefits packages (in the case of nonmanufacturing firms) or better packages (in the case of manufacturing firms). Firms with education programs report that they are more likely to promote from within, and that turnover among employees is somewhat less problematic.

Reasons for programs. Table 5 summarizes the reasons that firms reorganize work and implement workplace education programs, as well as how these reasons between manufacturing and nonmanufacturing firms. because these questions were asked in checklist form, firms cited multiple reasons for implementing a workplace education program.

Table 5. Reasons for workplace reorganization and

implementing education programs, 1992

Another assessment of workplace education compares workplace education programs by the amount of time they have been in place at the firm. Programs are differentiated by those that were more than 2 years old in 1992 and those that were less than 2 years old in the same year. Not surprisingly, in most cases, data indicate that the effects of workplace education programs are more substantial when the programs have been in place over the longer period.(23) Compared with firms having newer workplace education programs, those with older programs are significantly more likely to report improvements in workers’ ability to solve problems, advancement in the company, retention with the firm, and productivity, as well as improvements in customer satisfaction.(24)

Perhaps the most interesting aspects of these findings are the results on worker retention and advancement in the fin-n. Firms that have had an education program in place for more than 2 years are significantly more likely to report improvements in worker retention and advancement than are firms that have had a program in place for 2 years or less. Firms with newer programs do, however, report small improvements in worker retention and advancement. Taken together, these results indicate that workplace education programs do not cause an increase in turnover. In fact, just the opposite appears to be the case; firms report that workplace education causes a decrease in turnover and an increase in advancement within the firm.

Finally, additional tabulations that distinguish between firms that have undergone a substantial amount of reorganization of work and those that have not indicate that the positive effects of having a workplace education program are significantly more substantial when it is accompanied by reorganization. In particular, firms that have undergone a substantial amount of reorganization along with workplace education are significantly more likely to report improvements in workers’ ability to solve problems, work independently and as a team, use new technology, and solve mathematical problems. In addition, these firms are significantly more likely to report improvements in the quality of their product and in scrap, error, or rework rates.

Research indicates that a substantial amount of work reorganization is underway. Increased demand for quality and increased competition appear to be the most important reasons for firms to reorganize. While small firms and nonmanufacturing firms are less likely to make the changes, than are large firms and/or manufacturing firms, there is still a significant amount of activity in these sectors. Workplace education programs for hourly workers, while much less common than work reorganization, nonetheless, are implemented by a noteworthy percentage of firms. Furthermore, the two strategies – work reorganization and workplace education – are typically pursued simultaneously. Firms that have implemented both a workplace education program and work reorganization are significantly more likely to report positive outcomes than are firms that have done one without the other.

TABLE 6.

Reported effects of workplace education, 1992

Item Nonmanufacturing Manufacturing

(14) Once again, these are lower bound estimates.

(15) Additional results from the mail survey indicate that 64.4 percent of the manufacturing firms and 38.6 percent of the nonmanufacturing firms report that they have integrated quality control into production. and 37.5 percent of manufacturing firms report that they have implemented just-in-time or computer integrated production. However, because the response rate in the mail survey was much lower than in the telephone survey, these figures are not comparable with those reported in the tabulation.

(16) See Paul Swaim. “Are American Workers Undertrained?” paper presented at the Eastern Economic Association Meetings, Washington, DC, March 1993. Swain reports that between 1983 and 1991, the percentage of workers who indicated that they had received skill-training at their current job increased from 36 to 42 (a 17-percent increase).

See also Paul Osterman, “Workplace Transformation,” 1993, which reports that 35 percent of establishments with 50 or more employees have achieved “substantial use of flexible work organization,” which he defines as the work organization affecting at least half of the employees. Using the number of reorganizational changes (as opposed to the percentage of employees affected by them), the results reported here indicate that 40 percent of firms with 100-499 employees have implemented at least three forms of work reorganization.

(17) The remainder of this section is based on the mail survey of firms and the telephone follow-up calls of firms that identified themselves as having a workplace education program.

(18) A substantial amount of reorganization is defined to have occurred if at least four forms of reorganization have been implemented.

(19) The fact that more statistically significant differences emerge within the manufacturing sample, than within the nonmanufacturing sample may, in part, be the result of the smaller sample of nonmanufacturing firms.

(21) Unlike the reorganization of work strategies, which many firms report that they have undertaken some, only a small fraction of firms indicate that they have a workplace education program. Consequently, the comparisons reported in table 4 are simply based on the attributes of firms with a workplace education program and the qualities of those without a program.

(21) This is to be expected because the results from cross-tabulations indicate that those firms that undertake a substantial amount of reorganization of work are also more likely to have a workplace education program.

(22) This difference, which is relatively small (38.6 percent, versus 32.3 percent), may simply result from a greater level of awareness of skill deficiencies among firms that have implemented an education program.

(23) These tabulations are not shown in this article, but can be found in Laurie J. Bassi, “Smart Workers, Smart Work,” (Washington, DC, The Southport Institute for Policy Analysis, 1992), p. 39.

(24) Of the 17 firms in the sample that had terminated a workplace education program within the last 2 years, only 1 reported turnover as one reason (among others) for doing so. The most frequently cited reasons for terminating a program were that the program had achieved its purpose and that there was inadequate interest among workers.

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