| BUSINESSWEEK ONLINE : MARCH 5, 2001 ISSUE | |||||
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| ECONOMIC TRENDS
Flexibility Is No Key to Stability Workers are just as likely to be fired Conventional wisdom says that giving nonsupervisory employees greater independence and responsibility is good for both them and their employers. Companies that place workers in self-managed teams, rotate jobs, and encourage employee feedback, it's believed, achieve greater workplace flexibility, higher productivity, and better business performance. The benefit for employees is greater job stability, because these practices should make their companies more successful, so they don't need to lay off workers or use temps. But a study just released by the National Bureau of Economic Research finds that such practices usually yield quite a different result. According to its authors, Peter Cappelli of the University of Pennsylvania and David Neumark of Michigan State University, flexible work practices reduce layoffs and employee turnover only in the shrinking manufacturing sector, not in the rest of the economy. What's more, employees do not show any additional loyalty to nonmanufacturing employers that use these practices: Workers usually quit or retire at a higher rate in those companies. Cappelli and Neumark based their review on a 1997 Census Bureau survey of more than 1,800 plant and business managers. They concluded that flexible work practices were most successful in manufacturing because of the nature of the work. Jobs are more narrowly defined in manufacturing, so flexible practices, especially job rotation, produce greater improvements in a factory than in a retail store, Cappelli says. Overall, the authors find that flexible work practices are being used in combination with layoffs and temporary employment, not as a way to avoid them. Even manufacturers increase the use of temporary help while using practices that make work more flexible. Offering greater job stability might make workers more loyal, but that doesn't seem to be a big consideration for most companies that are using these work practices. Instead, the goal seems to be to employ workers so that ''just the right amount of labor is fit to the exact amount of demand,'' says Cappelli. And this goal isn't likely to change any time soon. As the U.S. economy slows, companies are likely to face increasing pressure to transform their payroll expenses from a fixed to a variable cost. By James M. Mehring EDITED BY CHARLES J. WHALEN _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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