EDITORIAL: Study displays perils of bad labor relations

In early January, while the world was agog at the unfolding saga at Enron, a column-long news item found its way onto the front page of The Wall Street Journal. Headlined "The Hidden Cost of Labor Strife,

In early January, while the world was agog at the unfolding saga at Enron, a column-long news item found its way onto the front page of The Wall Street Journal. Headlined "The Hidden Cost of Labor Strife,

it didn't have the reach-out-and-grab-you qualities of the biggest drama to come out of Texas since J.R. was shot, but it may yet prove to have a similarly important message for the PR profession.

The article reported on a study conducted by two Princeton economists, Alan Krueger and Alexandre Mas, who took a thorough, university-funded look at the correlation between the worsening of labor relations at Bridgestone/Firestone's Decatur plant and the production of defective tires.

The study uses three different sets of data on the failed tires, one provided by Ford, one provided by the National Highway Traffic Safety Administration, and one based on internal Firestone engineering tests.

Their regression analysis of the first two sets of data by plant, year, and age show much higher failure rates for tires produced in Decatur during the labor dispute than tires produced before or after the dispute or in other plants. And the analysis of Firestone's own data shows the same pattern, highlighting the high production of defective tires at the exact time that workers started demanding concessions from management.

OK, that's enough with the academic-speak. The point is that this is one of the most compelling scientific, and more importantly, independent explanations for the failure of those tires and consequent tragic fatalities.

Simply put, grumpy workers don't perform to the standard of contented ones.

Firestone basically dismissed the study, saying it "doesn't believe labor strife to be a factor,

while the union that now represents the workers in question, the United Steelworkers, says it was not to blame, preferring to focus on the problems arising when replacement crews and recalled strikers were expected to work together on the assembly lines.

There is likely a middle ground in which many factors combined to lead to the tragic fatalities, but you'd have to be obtuse to ignore the Princeton economists' findings that unhappy workers, cajoled by brute force, can do serious damage to a corporation's products, brands, and bottom line.

This is hardly a revelation to most of us ground troops, and it shouldn't really be a revelation to CEOs. But it is exactly the kind of ammunition needed to chip away at those senior executives who pay lip service to the value they place on employees and employee relations, but give their PR staffs little of substance to communicate to the troops.

There has been surprisingly little hard evidence of the potential damage that bad employee relations can do to a company, perhaps because it's hard to measure the impact of a demotivated, disenfranchised staff. But for in-house PR pros and the growing number of internal communications firms, studies that spell out the facts are vital. On that front, it will be worth tracking Alexandre Mas, who is moving on from his work on Firestone to embark upon a new study into similar issues at Caterpillar.

As employees face up to the drudgery of a year in which they'll be expected to improve performance with fewer colleagues and smaller budgets, the best corporations will improve treatment and remuneration rather than beating them into submission with the cudgel that is a tough job market.

As Krueger and Mas found out, bullies suffer in the long run.

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