For much of the past century, U.S. companies feared that unions would hurt shareholder value and innovation, so they responded to organized labor with one strategy: Fight, at all costs. This was brutally effective. Companies perfected the skill of union busting-so much so that most business leaders now have little experience with organized labor. But owing to an array of forces, including the pandemic and inflation, the landscape is shifting. Workers today feel less secure in their jobs and more uncertain about the future, and not surprisingly, a growing number of them are organizing. In fact, worker interest in joining a union, and public support of organized labor, is at its highest in decades. If business leaders stick to their old playbook, they risk permanently disenchanting their workforce and harming their brands. Instead, they must begin to reinvent corporate America's relationship with organized labor, working with, rather than against, unions and other formal and informal structures. Indeed, in the next 20 years, the skill of leading an organized-or organizing-workforce may well become the critical leadership skill.

A prototypical high-road company the author cites is Southwest Airlines Co., which has been the most profitable airline in the U.S. over the past 30 years and has also often been rated as one of the best places in the U.S. to work. Also mentioned is Market Basket, a family-owned grocery store chain headquartered in Tewksbury, Massachusetts. In the summer of 2014, Market Basket's legacy of low prices, good customer service, and good-quality jobs was highlighted when a family feud broke out among members of its board of directors and the family member who had been serving as CEO and was popular among employees was fired. After a six-week "strike"by nonunion employees and managers that had broad community and media support (it caused an astounding 92% reduction in the company's revenues), the board agreed to sell the business to the ousted CEO, whose reinstatement employees had sought. Standard economics argues that the higher labor costs are as a proportion of total costs, the more important it is to control these costs. However, the author explains, high-road companies take another view, relying heavily on practices including screening employees for their strong technical, problem-solving, and collaborative skills; investment in training and development of the full workforce; compensation systems that align employee and company interests through profit sharing and/or payment for attaining higher levels of skills; and labor-management partnerships.

Nearly half of new job openings from 2010 through 2020 will be middle-skills positions in fields such as computer technology, nursing, and high-skill manufacturing. They require postsecondary technical education and training, and they're increasingly hard to fill. As federal funding for job training declines, Kochan, Finegold, and Osterman urge companies to take the lead in closing the middle-skills gap. Getting there, they argue, will require local business leaders to work with one another, educational institutions, and in some cases, unions. Available models include apprenticeship programs, such as those spearheaded by the Center for Energy Workforce Development; partnerships like those between Kaiser Permanente and its employee unions; sector-based regional initiatives, such as Boston-based SkillWorks; and collaborations with higher-education consortia that embrace strong ties to industry. Effective collaborative training programs involve employers in designing and funding the initiatives and in finding jobs for graduates. They integrate classroom education with opportunities to apply new skills in actual or simulated work settings. And they start graduates down a clear career path. These best practices, with leadership from the private sector, should be the cornerstones of a national job-training strategy.

What's good for individual U.S. companies is no longer automatically good for business nationwide, for U.S. workers, or for the economy. That, coupled with the failure of business, government, and other institutions to engage in productive dialogue and ultimately cooperate, has led to a crisis of human capital in the United States. In short, badly needed investments in the workforce are not being made, thereby threatening the country's future competitiveness and living standards. So argues Kochan, of MIT's Sloan School of Management. He explains precisely how the U.S. currently undervalues human capital; how exceptional companies such as Southwest and Kaiser Permanente buck the "maximizing shareholder value" trend with what researchers call "high-road" human resources strategies; and how labor unions and schools have a role to play in setting the nation's workers and the companies that employ them on the right path. Kochan's call to action for U.S. corporations and business schools emphasizes apprenticeship programs, technology-education partnerships, infrastructure investments, and a host of other practical ideas for jump-starting and then accelerating the journey on the high road. His jobs compact for America advocates a systematic approach, not a fool's errand to find a panacea. But it nonetheless has the urgency of now.

This is an MIT Sloan Management Review article. With real wages stagnating and job security elusive for many U.S. workers, the American dream of an improved standard of living for each generation is in jeopardy. The author argues that, although many companies seek to become competitive primarily by reducing costs such as labor, there is another option. A substantial body of research indicates that companies that invest in their workforces to build knowledge-based organizations can achieve a return on their investment through higher productivity and profitability. Cites the example of Continental Airlines Inc., which after an era under Frank Lorenzo that was marked by wage cuts and bankruptcy, experienced improved performance and reputation under a new leadership team with a more collaborative management approach. Southwest Airlines Co. and JetBlue Airways Corp. are also examples of airlines that pursue a high-trust, knowledge-based strategy, while Toyota Motor Corp. and Kaiser Permanente are examples from other industries. Executives interested in building knowledge-based organizations can create momentum for their initiatives in several ways: by carefully documenting the gains from knowledge-based strategies, by encouraging employee representation in corporate governance matters, and by working with other leaders to approach problems that no single company can solve alone.