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SURMOUNTING FIVE COMMON BARRIERS TO BUSINESS COOPERATION

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SURMOUNTING FIVE COMMON BARRIERS TO BUSINESS COOPERATION1
Marc Bendick, Jr.
October 2000
Bendick & Egan Economic Consultants, Inc.
4411 Westover Place, NW
Washington, DC 20016
Phone: (202) 686-0245 Fax: (202) 363-4429
bendickegan@mindspring.com www.bendickegan.com
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I. Introduction
The watchword today in public employment and training initiatives is cooperation among
the public, non-profit and private sectors. This approach is fundamentally correct, and it represents a
major advance from the “stand alone” efforts of previous decades. However, it forces us to confront
the difficulties inherent in cooperation between partners with organizational cultures as different as
private employers and public or nonprofit employment and training agencies.
The problem is not unique to public-private cooperation, or to employment and training
programs. The same issues abound in the current wave of mergers, acquisitions, and strategic
alliances among major corporations. Imagine the challenge in forming today’s Fleet Bank from 150
predecessor banks, making Mercedes and Chrysler one company, or ensuring uniform standards of
customer service in a strategic alliance of ten airlines. Among one sample of recent corporate
mergers and acquisitions, seven out of ten do not live up to their financial promise, and 73 percent of
respondents to a survey of participants cited cultural incompatibility as the largest single source of
this failure.2 Although I have no empirical data on success rate in encouraging private employers to
hire, retain, or advance low-wage workers, I would guess they are similar.
This paper explores five cultural barriers that public or non-profit employment and training
providers often encounter when encouraging business firms to hire, retain, or advance low-wage
workers. For each, I suggest ways that these barriers might be ameliorated by “learning to speak
business’ language.”
II. First Barrier: “The business of business is business.”
1An earlier version of this paper was presented at The Urban Institute in May 1999. It draws in part on research
sponsored by the Committee for Economic Development and the Ford, Russell Sage, and Primerica Foundations, and
insightful comments from Mary Lou Egan. However, all opinions and errors are my own.
2Robert J. Grossman, ΑCorporate Courtship: Irreconcilable Differences, HR Magazine (April 1999), p. 2.
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When we go to conferences, the luncheon speaker is often a public spirited CEO who
proclaims the importance of a well trained workforce to the nation’s future. But don’t let that fool
you into believing that the CEO’s company will create job openings because people need jobs,
modify its hiring requirements to accommodate ill-prepared workers, pay more than productivity
justifies, or invest unusual amounts in employee training or support services. That is because the
business of business is business. Firms have always faced competitive pressures to stay focused,
but technology, globalization, deregulation, consolidation, shifting demand, aggressive supply chain
management, and similar developments now make these pressures even more intense. Consider the
former regulated electrical utility now competing against HydroQuebec, the mom and pop grocery
store now that Safeway has discovered profits in inner-city retailing, or the manufacturing
subcontractor struggling to become ISO-9000 certified. Large or small, businesses are feeling
squeezed.
This principle implies that employers can be convinced to cooperate in your employment and
training initiative (e.g., hire your clients or coordinate with your support services) if they are
approached in a certain mode: The sales pitch must be that we offer to solve a problem for the
employer (“We can fill those vacancies that have been open for six months.”); it cannot be that we
ask the employer to solve a problem for us (“These people leaving welfare need jobs.”). For
example, suppose that our objective is to convince employers to create more career ladders that
encompass workers with very limited initial skills. It would not be very effective to suggest to
employers that these career paths would help workers escape poverty and dependency. However,
employers might be persuaded by the experience of New York’s Cooperative Home Care
Associates, where creation of career paths among home health care aides led to documented
improvements in staff turnover, productivity, service quality, and market share.3
III. Second Barrier: “I can only give you thirty seconds of my time.”
Traditionally, employment and training providers have worked with counterparts in
companies’ human resource functions. But in many large firms, HR departments are being
stringently downsized -- fringe benefit administration computerized, recruitment contracted out,
policy development nationally centralized -- leaving little counterpart local staff. In many small
firms, there never was a separate personnel department; HR is simply another informal duty of the
owner/manager or perhaps that owner/manager’s administrative assistant.
In such circumstances, user friendliness of our employment and training products (such as
potential employees, tax credits, and support services) is essential, not merely cosmetic. We must
have simple, clear documentation. We must offer to do the paperwork. Each firm needs a readily-
available single point of contact.
3Marc Bendick, Jr., and Mary Lou Egan, “Worker Ownership and Participation Enhances Economic Development in
Low-Opportunity Communities,” Journal of Community Practice 2 (1, 1995), pp. 61-85.
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In addition, we need constantly to update our products to keep them compatible with current
HR processes. For example, the monthly advance payment option can greatly increase the wage
supplementation effectiveness of the federal Earned Income Tax Credit, but it is currently used by
only about 1 percent of EITC claimants.4 Has anyone at DOL (or the Treasury) spoken to
PeopleSoft, makers of the nation’s most popular comprehensive HR software, to see whether the
advance payment option is incorporated in the software? A second example involves the rapidly-
growing HR role of the Internet. Why are there no hyperlinks from the home page of the Society for
Human Resource Management to DOL or Treasury information on, for example, the Welfare-to-
Work Tax Credit?
IV. Third Barrier: “Shoes are a very cultural business.”
Perhaps because we in the employment and training community are really only interested in
firms as employers, we often speak as if they were all simply “in business.” Companies do not
typically think of themselves that way. As business strategist Michael Porter formally states it,
The industry is the arena of competition.” A veteran shoe industry executive put it more pithily
using the words in this section title. What both are pointing out is that the companies in each
industry tend to rely on the same information sources, share the same production technologies, react
to the same environmental circumstances, draw on similar past experiences in forming their
judgment, and therefore see each other as their principal business peers.
One implication of this principle is that channels of effective communication and persuasion
are industry specific. Many managers who pay little attention to the generic business press (Business
Week, the Wall Street Journal) may avidly absorb employment and training coverage in their
industry-specific trade press (Iron Age, Progressive Grocer, Aviation Week). They may also be
reached through sessions at industry conferences and trade shows, particularly by presentations
based on the experience of firms in that industry. Industry-specific outreach is more painstaking and
resource-intensive than disseminating generic information, but it is likely to have more impact.
A second implication concerns the design of service delivery systems such as “one stop
shops.” Employers often find programs or institutions tailored to their industry are particularly
useful, and reciprocate with greater cooperation. One impressive example is WIRENET, a publicly-
funded technical assistance/staff training/ joint marketing service that works exclusively with small
metalworking manufacturers on Cleveland’s Near West Side.
V. Fourth Barrier: “That’s just the way we do things at Microsoft.”
Individual firms also have very strong corporate cultures, formally defined as the
interdependent system of beliefs, values, and ways of behaving that are common to a workplace and
informally defined simply as “the way we do things around here.” Some researchers try to
4Welfare Reform and Beyond: Making Work Work (New York: Committee for Economic Development, 20000), p.
37.
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rationalize all corporate personnel practices as uniquely efficient decisions made under stringent
competitive pressure by thoughtful, well-trained managers.5 But in reality, these practices mix that
sort of efficiency and rationality with generous doses of irrational risk avoidance, ignorance,
stereotypes, “group think,” and simple inertia.6
One implication is that a high degree of tailoring to the circumstances of individual clients is
often the key to obtaining cooperation (“Join ‘em, don’t fight ‘em.”). For example, one skill
upgrading initiative in Los Angeles’ Koreatown sought to increase the productivity and widen the
employment alternatives of non-English speaking restaurant personnel. To obtain employer
cooperation, ESL training was delivered at a restaurant during the slack period between lunch and
dinner.7
A second implication concerns the importance of no-risk trial periods in overcoming
employers’ resistance to hiring the clients of employment and training initiatives. Social
psychologists call it cultural contact, while commercial employment agencies call it temp-to-perm,
but the principle is the same: Employers’ stereotype-based aversion to your clients often can be
surmounted by arranging for firm to get to know individual clients in their actual work situation.
For example, to encourage employers to hire welfare recipients, America Works offers employers a
four month period of trial employment during which clients remain on America Works’ payroll with
employers reimbursing their salary but not payroll taxes.8 During this period, the employer avoids
personnel costs, paperwork, and potential legal liability if dismissal proves necessary.
VI. Fifth Barrier: “You just want a job placement;
we want a supplier relationship.”
Often, the goals of employment and training agencies’ job development staff are defined in
stark numerical terms: Place X number of job seekers per month in positions paying at least $Y per
hour that will last at least Z months. That approach tends to emphasize one time transactions over
the building of long-term relationships, making hard work for the job developers who have to re-
create a constant flow of such one-time transactions. It is equally unsatisfactory from the point of
view of many employers, who are used to dealing with vendors from whom they procure goods or
services on a long-term basis. As part of developing and maintaining those long term relationships,
these client firms pay attention not only to vendors’ costs but also their quality, dependability, and
adaptability. They often demand that vendors participate in a continuous process of adaptation,
5See, for example, Edward Lazear, Personnel Economics (Cambridge: MT Press, 1995).
6Marc Bendick, Jr., Mary Lou Egan, and Suzanne Lofhjelm, The Documentation and Evaluation of Anti-Discrimination
Training in the United States (Geneva: International Labour Office, 1998), especially pp.10-11.
7Marc Bendick, Jr. and Mary Lou Egan, “Linking Business and Community Development in Inner Cities,” Journal
of Planning Literature 8 (August 1993), pp. 3-19.
8Welfare Reform and Beyond, p. 33.
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based on feedback about the supplier’s performance and shared information on the user’s changing
requirements.9 Thus, vendors have to invest in making these relationships work. In particular, they
must carefully screen individuals they recommend for placement, to guard against erosion of their
reputation (sometimes referred to as brand equity). But the rewards are often substantial – access to
a continuous flow of employment opportunities, often including higher-quality openings, and often
assistance from the buyer in strengthening the vendor’s capabilities.10
In the low-wage employment and training community, perhaps the premier practitioner of
such relationship marketing is the Center for Employment Training in San Jose. This organization
has enjoyed close supplier relationships with numerous industrial clients for twenty years or more.11
CET trainees in large numbers move smoothly into well-paid employment with these client firms.
In turn, the firms provide advice, equipment, and other assistance to help CET better serve the firms’
needs.
One implication of this perspective is that, in establishing performance criteria on which
employment and training agencies will be judged and payments based, credit might be given to
actions that build long-term supplier relationships, separately from the immediate placements they
generate.
VII. Conclusion
My intention in this paper has not been to provide a “one minute MBA,” but only to
convince you that understanding businesses’ way of viewing the world is essential before trying to
enlist them as partners. The employment and training community -- federal, state, and local -- needs
an explicit strategy for developing and maintaining this understanding and needs to invest resources
in such efforts. Don’t underestimate the potential returns.
9Mary Lou Egan and Ashoka Mody, “Buyer-Seller Links in Export Development,” World Development 20 (3,
1992), pp. 321-334.
10 American Workers and Economic Change (New York: Committee for Economic Development, 1996).
11Welfare Reform and Beyond, p. 49.
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