The balance of power between employees and employers

Julie Battilana, Professor of Social Innovation at Harvard Kennedy School and Tiziana Casciaro, Professor of Organizational Behavior at the Rotman School of Management, join Yahoo Finance Live to discuss their new co-authored book, ‘Power, For All’, that debunks the fundamental power dynamics at play in businesses and in the economy at-large.

Video Transcript

- With the so-called great resignation now upon us, some are claiming workers are in the driver's seat at their jobs. Well, my next guests are challenging that theory. Julie Battilana is a professor of social innovation at Harvard Kennedy School, and Tiziana Casciaro is a professor of organizational behavior at the Rotman School of Management. They both co-authored the new book "Power, For All-- How It Really Works and Why It's Everyone's Business."

Professors, thanks so much for being with us. I appreciate it. And Julie, I'm going to begin with you. When you look at the landscape in the job market right now, we have the highest number of job openings in decades, something like 10 million. We keep hearing about the labor shortage, and businesses struggling to attract and retain talent. Don't you think that makes a good argument for saying that the worker does have the upper hand right now in the workplace?

JULIE BATTILANA: So I would certainly say that workers have slightly more power today than they did at the beginning of the pandemic. But I would also say that, inside companies, their power remains limited. You are right to say that they have more power. Look at the job market. Indeed, with more than 10 million job vacancies, workers who are searching for employment have more options. They have more bargaining power. We also have to say that the pandemic has made all of us much more aware of how critically important workers are, essential workers are to the well-being, to the resiliency, to the continuity of our society.

Now, that being said, think about what's happening inside companies. With less than 11% of American workers being unionized, and given that they do not have seats on the board of directors, the reality is that the control over strategic decisions inside corporations is still in the hands of shareholders, their representatives on the boards, and top managers. Workers have little to no say on critical decisions that affect their daily lives, their working lives, and their livelihood, which is why I'm saying that their power is still quite limited inside companies.

Now, that could change because the time is ripe and workers now demand to have a say on their working conditions, on their working arrangements, and on the future of the companies, because they care. And this is good news for everyone-- for their companies, for the workers, for the top managers and the shareholders. We can work together to change things.

- Certainly, Julie, we've seen some companies in Europe adopt what you were just talking about. Workers-- some workers do have a say on the company board, and there is more power for workers within sort of the infrastructure of the company. So Tiziana, I know in the book you talk about how the workplace can be, I guess, more democratic and share power, rather than concentrate it. What are some real things, tangible things businesses can do now here in the US to achieve that?

TIZIANA CASCIARO: Yes, well, the first step is to understand what power is made of. It's made of access to what the most valued resources are in an organization. So internally, one of the things you can do to ensure that people have more power is to give them access to what is most valued.

So you have the idea of representation on boards. It may seem far-fetched to an American audience because this is not a practice that has been utilized, but it is used very productively in Europe, and it allows for a more diverse set of voices to contribute to what an individual does, both internally, in terms of who does what and what kind of autonomy they have in executing their jobs, but also what kind of goals that the company pursues more generally. So what we know is that when you give more voice to the employees, you also pursue more diverse goals, so not only economic goals of profit maximization, but also social and environmental goals that are becoming much more relevant to the life of organizations.

So it's a process of ensuring that what matters most is actually access. So [? imagine ?] work allocation decisions-- who gets access to the best projects, the best clients, the best opportunities. In an old-fashioned organization, it's always the same usual suspects that have access to those prime opportunities. Democratizing the organization internally means making those opportunities available to a wider representation of workers, not just the same groups that have been privileged in the past.

- Right. And Julie, real quick, in the 30 seconds we have left, can you point to one thing the pandemic has done in changing the distribution of power in the workplace?

JULIE BATTILANA: It's early to say to what extent we're going to see sustained changes, but what we're seeing is that employees want to have a say, and they're getting organized to have a say. Think about the employees at Alphabet, for example, who decided to create a union. They want to participate in the key strategic decisions, and they want to have a say in terms of the working arrangements that will be the working arrangements of the future.

Now, it's up to all of us to work together to make sure that we create organizations that will be greener, more democratic, and fairer. But again, we have this opportunity. The pandemic created this opportunity that something good that could come out of the crisis. And I hope we'll work together-- again, shareholders, other stakeholders, workers, top managers. This is the time. Let's not waste that opportunity.

- Yeah, it does take a village. All right, again, the name of the book is "Power, For All." Julie Battilana and Tiziana Casciaro, thanks so much for being with us. We appreciate your time.