How Important Is Quality of Labor? And How Is It Achieved?

A new book by Gregory Clark identifies "labor quality" as the major enticement for capital flows that lead to economic prosperity. By defining labor quality in terms of discipline and attitudes toward work, this argument minimizes the long-term threat of outsourcing to developed economies. By understanding labor quality, can we better confront anxieties about outsourcing and immigration?
by by Jim Heskett

Summing Up

Among responses to this month's column, there was little disagreement with the premise that attitude trumps skills in the selection of new employees. C. J. Cullinane commented: "Attitude is all! … I have worked with a group of Cuban refugees in Newark … who have become very successful…. They came to the United States with nothing but a great work ethic and a great attitude." As Martin Klinzing put it, "Essentially this discussion boils down to the fact that you can teach someone anything except to care."

So much for labor at the individual level. A substantial discussion arose as to just what quality of labor is and how it can be measured and developed on the national level. To Nari Kannan, "Quality of labor is such a broad term. It all depends upon 'labor doing what?' … Also, quality of labor is not a static thing…. The biggest mistake any country can do is to assume that quality of labor is genetic…." Flavius Chircu said, "I would simplify the analysis by substituting 'quality of labor' with 'quality of output,' be that output a product, service, or mix thereof." In Sneh Asnani's words, "Labour quality cannot be defined by just two or three parameters like attitude and sincerity towards work; it should also measure domain knowledge, soft skills like leadership and managerial quality, creativity, and the ability to learn and adapt to the changing environment."

As for the implications that this has for the migration of jobs as well as labor, most agreed with author Gregory Clark's thesis that "labor quality," not just low cost, is a major driver of capital flows that leads to economic prosperity. This raised questions, though, about the impact of outsourcing and migration on labor quality and their implications for public policy. As for jobs and what has come to be known as outsourcing, Gaurav Goel commented, "Low-cost labor is not the deciding factor in the success of outsourcing … (vs.) … people with the right attitude…." Malvin Bernal elaborated, "Whether it's in India, the Philippines, or Brazil, companies should consider knowledge capacities and not price whenever they decide to use such ('cheap') labor…. The only companies that still look at labor through the same eyes as during the industrial age are sweatshops." Geetha Bellu added, "… it is not a question of fearing low-cost labor but rather fearing high-quality labor that comes at low cost." Regarding the migration of labor, Tayyab Rashid said, "High-paying work is knowledge work. That is not going anywhere." Hemant Rachh agreed, saying that "… it does matter who does a job efficiently with quality, not where he or she does it."

These comments raise added questions: Just how do "standards" for quality in labor get set? Is this something suitable for governments? Or should the market be left to set the standards on an ad hoc basis? Is effort better spent at the national level regulating against outsourcing, controlling borders to discourage labor migration, or training for "quality"—including attitude and skills as well as other attributes? What do you think?

Original Article

Over the past thirty years, several of my colleagues and I have tried to figure out why a handful of organizations are able to achieve true excellence. One of several things they all do is hire for attitude and train for skills. By "attitude," they typically mean the ability to identify with and "live" core values of the organization such as respect for others, being customer-driven, etc. Their managements have concluded that it is too difficult and costly to try to change the attitudes of adults. As a result, they release those unable to work and manage according to the organization's values and replace them with those who can.

All of this comes to mind in the face of the debate over immigration and outsourcing, essentially trade in labor. And it is prompted by a new book, A Farewell to Alms: A Brief Economic History of the World, by Gregory Clark that identifies what he calls "labor quality" as the major enticement for capital flows that lead to economic prosperity. He defines labor quality in terms of such things as discipline and attitudes toward work. This requires social beliefs and institutions that produce labor quality.

By implication, this largely rules out low labor cost as an important factor in such flows. Clark maintains that differences in labor efficiency justify large differences in labor costs. By extension, this argument minimizes the long-term threat of outsourcing to developed economies. If this is true, it may help explain why the U.S. is a favorite location of highly-skilled jobs "insourced" by companies headquartered in other countries. For example, one recent study suggests that outsourcing may impact up to 1.47 million U.S. jobs (out of more than 100 million). By comparison, the Organization for International Investment, which may admittedly have a biased point of view, estimates that foreign companies employ 5.4 million in the United States.

Clark is not optimistic about today's societies that have not had a long history of cultural foundations and functioning institutions that support the kind of formal and informal educational efforts that contribute to quality of labor. The kinds of changes he studies have taken place over long periods of time. And they run much deeper than such things as short-term educational reform or job retraining.

Why is it, then, that there is so much fear of outsourcing and immigration at a time when shop windows, at least in the Northeast U.S., are full of help-wanted signs? Is it simply the fear of change and uncertainty in a time of both job and labor migration? Can increased retraining of displaced workers really provide an answer to it, especially if one of the causes of unemployment is an "attitude gap"? Is a willingness to take the initiative to risk one's safety to cross a border to support one's family a positive indicator of the kind of "attitude" sought by high-performing organizations? If so, will private industry as a matter of course undertake the training required to help immigrants acquire necessary skills? And in the meantime, what should government do, if anything, to stem job and worker flows while maintaining the quality of labor of its citizens? What do you think?

    • Arijit Sengupta (HBS MBA '04)
    • CEO, BeyondCore, Inc.
    As a student of outsourcing myself, I agree wholeheartedly with the argument that "labor quality" is far more important than "labor cost." A simple thought experiment reveals the truth of this statement. Let us assume a bank requires $1 of labor to process a loan application. However, an error in processing that application can easily cost the bank $100 due to the cost of error rework, handling customer complaints, lost revenues, regulatory risk, etc.

    Assuming the error rate is 5 percent, on a unit cost basis this bank spends 5 times as much on correcting errors as on labor cost for processing the application. Thus, this bank would be willing to pay an employee up to twice as much if only they could just reduce their error rate from 5 percent to 4 percent.

    The problem I have with the book, though, is the vague definition of "labor quality." We need to move towards more objective measures of quality as a determinant of the Total Cost of Ownership.
    • Muder Chiba
    • SVP, TNS India
    There are two strains of thought in the article above. One is "micro," more to do with the firm, and the other (the book review part) deals with a larger, more "macro" perspective of larger bodies of labour and cross-border migration.

    The two streams are seemingly contradictory with the second seeming to suggest the primacy of trained skills over attitude.

    Anecdotally, immigrants have always tended to do well in the economies that they have migrated to with little by way of seed capital to start off with. The Chinese and Indian diaspora has done well whenever it has been compared to the general populace on socio-economic parameters. And all of them did not begin with a headstart in education or other skill-related indicators.

    This points to the fact that the can-do attitude that someone who emigrates has is possibly the key differentiator. In my book, attitude is king.
    • Paul T. Jackson
    • owner/consultant, Trescott Research
    In the brief of the book above (which I haven't read), it would appear that the onus is on the individual to come up with an attitude concurrent to the usefulness of the corporation, when in fact it should be, and likely is for those companies of excellence, that the companies create in the workers both a sense of belonging and a sense of responsibility by making the worker their offensive team, as it were. Quality workers will only be that, when they are part of what's going on, not just another body.
    • Bill Guest
    • Managing Director, Metrics Reporting, Inc.
    Workforce quality can be measured. The issues raised will drive us as a nation to define performance-based credentials to quantify the quality of the workforce on a region by region basis. We have been working with ACT, the college testing folks, to define goals and plans to utilize their new National Career Readiness Certificate as a basis to quantify workforce skills. We are looking to expand that credential set with soft skills tests and computer literacy tests soon. This will provide our students and workers with clear targets for their educational and self-improvement goals.
    • Nari Kannan
    • CEO, Ajira Technologies, Inc
    Quality of labor is such a broad term. It all depends upon "labor doing what?" If it means verifying if the Optical Character Recognition (OCR) part of scanning a document has recognized names, addresses, and social security numbers properly and manually correcting errors, someone in China with a passing acquaintance of English can do it. For that price, you can have a second person verify if the entries have been made correctly. So quality of labor does not matter much here.

    On the other hand, if it means designing and developing a back office settlements system of a stock exchange, quality of labor in that context matters a whole lot. An excellent systems designer and programmer can easily be 20 or more times more productive than a person with poor quality, as anybody who has managed technical people knows.

    Also, quality of labor is not a static thing. Experience and exposure could keep improving the quality of labor constantly. If your outsourcer in India is not capable of successfully doing such projects today, it does not mean they will not be capable of doing it five years from now.

    The biggest mistake any country can do is to assume that quality of labor is genetic or has something to do with the water you drink.

    Ten years ago, designing software and systems was a magic art open only to high priests of the mainframe and minicomputer worlds. The last ten years has seen increasingly openly available knowledge on how to design and develop systems on PCs, Microsoft, and open software around the world. The cost of entry keeps going down, constantly increasing experience and exposure.

    Yes. Quality of labor matters in certain cases but there again it is not a static thing.

    Just my 2 cents!
    • Cycle King
    • CEO, CytoKing Therapeutics
    Asia in general has seen a remarkable surge in investment, both foreign and domestic, in many industries including biotech, mainly due to the availability of a large, low-cost labor pool. In technology-based industries, the availability of abundant, low-cost workers is not enough for producing good results. Low costs are of little benefit if quality and innovation cannot be maintained. Quality and regulatory controls are equally necessary, not only for the successful development of a domestic biotech industry, but also to attract needed capital and scientific input from abroad.

    If biotechnology services in China were to match international levels, there would be great potential and opportunities for synergistic collaboration between the U.S. and Chinese biotech/pharmaceutical companies. Therefore, a key objective must address how to gain trust and how to build higher international standards. Hong Kong may play a role in raising the standard and can be a unique gateway to China since Hong Kong is a hybrid of the west and the east.
    • Kapil Sopory
    • Company Secretary, SMEC (India) Private Limited
    Labour cannot be taken for granted. The mere fact that the percentage of labour in any organisation is far more than the other groups -- supervisors, executives, managers, et al. -- must lead to understanding the importance attached to the quality of labour.

    Labour made to operate mechanically more or less like a robot will not utilise even its basic talent, which in course of time will create drudgery and frustration leading to flight to other employers as soon as an opportunity is in sight.

    The time has come when organisational success hinges on the totality of qualitative improvement of one and all, and no sections can be ignored. Staff involvement in decision making processes is now a reality, and ignoring the views of labour has disadvantages. Labour has to be nurtured by providing all possible opportunities gaining knowledge about improving perfomance quality, and this collective wisdom is bound to lead to better achievement of goals.
    • Firdaus Baderi
    • Journalist, Media Institute, Jakarta
    I think a professional worker is made of 80 percent attitude or behaviour and 20 percent skill. The workers must be supportive of knowledge management if everybody wants to succeed in their career path.
    • Frank
    Attitude and ability are two very important attributes that can lead to success; however, they do not stand alone. Each attribute has a complex origin that is acted out differently by each individual. Hence to simply say success will come when hiring workers with the "right" attitude, i.e. a willingness to work hard in meeting the organization's mission, and enhancing workers with training, is naive. The attitude equated with the motivation of leaving a society where at best you are able to keep food on the table with the attitude to work hard in your job is equally misguided. Each motivation is driven by very different emotions and is most likely capped by individual need and self-expectations.
    • CJ Cullinane
    Attitude is all! Environment, education, and capital are all major factors, but we all know people who have had all of these above-mentioned factors who still do not succeed in business or life. We also know or have read about people who start with nothing and succeed in business building large fortunes.

    I have worked with a group of Cuban refugees in Newark, New Jersey (not the growth capital of the world), who have become very successful. They now own their own businesses and are quite wealthy. They came to the United States with nothing but a great work ethic and a great attitude.

    Thanks for the opportunity to voice my opinion.
    • Flavius Chircu
    • CrEIRe
    There is an inherent difficulty of analyzing "quality of labour" given the amount of subjectivity surrounding the notion. I would simplify the analysis by substituting "quality of labor" with "quality of output," be that output a product, service, or mix thereof.

    Comparatively speaking, today's products and services are better than ever. In fact, we get so good at producing them that we can even make them cheap. However, cheap cuts both ways. On the one hand, it allows for ever-expanding markets (demand), while on the other it can become a management mantra that some interpret as "cut the corners," (supply). Taken market by market, outsourcing and offshoring are only giving a lease on life to the "cut the corners" approach because the demand and supply smarten up over time. At a different level of analysis, this is to say that one can register an inflation of the currency required in exchange for high quality of output. In other words, it is not a shortage of quality labour, but quality labour at higher costs.

    The importance of quality of labour goes without saying. Without it, labor supply at any level cannot survive the competition. In an advanced economy, to the extent that offshoring leads to a depreciation in the skills and quality of domestic labour, the government could impose standards of quality for all imported products and services.

    And this very last point is what separates and defines the U.S. vs. the E.U. The former entrusts the market, whereas the latter regulates. Only time can tell how and if the U.S. can still provide high quality labour while resisting inflationary pressures on the supply side, respectively how and if Europeans can find enough demand for an expensive supply of quality output.
    • Malvin Bernal
    • Consultancy Unlimited
    The term "Quality of Labor" is something that was used during the industrialization period of economic development. It basically stresses the importance of labor in the overall configuration of what makes up the mode of production. In the post-modern world, quality of labor zeroes in more on the quality of labor's knowledge. It's no longer an issue of cheap labor, but rather of the value that labor can create given the appropriate prices.

    Thomas Friedman's "The World is Flat" highlights the differences between how we see labor from the prism of then and now. Labor is no longer constricted by geography or contained by physical restriction. The overriding consideration would always be the best value for money. The where and why are things that have been accepted as factual eventualities.

    Whether it's in India, the Philippines, or Brazil, companies should consider knowledge capacities and not price whenever they decide to use such labor. Price would only be prioritized if everybody has attained a certain knowledge equilibrium.

    The only companies that still look at labor through the same eyes as during the industrial age are sweatshops.
    • Geetha Bellu
    • Senior Consultant, Infosys
    Having worked with world class organisations on both sides of the pond transitioning a whole lot of processes from high street banks to the back offices of Indian BPO companies, I've seen what a difference quality of labor can make to an organisation's bottom line. And there's no denying the importance of it.

    However, it is not a question of fearing low cost labor but rather fearing high quality labor that comes at low cost. Employees at offshore locations are smart enough to know that their jobs will be on the line if they don't measure up to the benchmark of their counterparts in developed countries.

    In many cases it is a war of quality versus quality + efficiency, not quality versus cost. As an Esquire editor has written, for many offshore employees "the right time to do the right thing starts NOW."
    • Gaurav Goel
    • PGPX II, IIM Ahmedabad
    Low cost labor is not the deciding factor in the success of outsourcing. The critical factor is that people with the right attitude are available at lower costs in Asia, Latin America, and Eastern Europe. In the developing world, individuals and families pursue education and opportunities as they can't just depend on their governments to provide them with "quality of life." Developing countries where governments have provided means to a good education for the masses are going to benefit from a workforce that is willing to work hard for a good quality of life.

    The right attitude is a critical factor in the performance of organizations and countries. Government needs to shift its focus from providing good quality of life to providing its youth with the right skills and a good way of thinking. There is a need to improve family ties, just like Tony Blair's "super nannies" scheme in the U.K.
    • Vasu Subbiah
    • NetApp
    By understanding labor quality, one can minimize the anxiety but not take it away.

    In my opinion, the main reason for worry is not the fact that the task or job is getting outsourced, but the fact that the attitude towards outsourcing has changed from a strategic advantage to defensive posturing to save jobs. So a developed nation's workforce, which had the right attitude and discipline to overcome all odds to begin with, is now lacking the same and hence feeding into the acceleration of outsourcing.

    Attitude matters. If that is lacking then quality of labor as measured by efficiency and productivity numbers will only take you so far. But mix the positive "can-do" and "go beyond" attitude with high quality + high efficiency, and then you have a employee base that cannot be beat no matter what the circumstance.
    • Appolo Goma
    • Warehouse Manager, Oando Energy Services Ltd.
    Attitude is key in determining the quality of a workforce. Someone might have the best skills in an organisation, but with a poor attitude the quality of his work or output will be low. It's agreed that some people with the right attitude might not have the right mental capacity to cope with the skill requirements of some jobs, but it's easier to build skills in someone with the right attitude than change the character and values of a highly skilled person with a poor attitude.

    Organisations therefore should evaluate the attitude of people before bringing them on and develop training programmes to improve their quality based on identified competency gaps at the point of recruitment.

    My belief is that you can get the right quality of people if your organisation focuses on attitude and builds skills through training; but the problem is that a good number of organiations prefer to poach from others rather than bulid their own people.

    Aa a result they engage people who are misfits within their organisations because even though they are highly skilled their values are in conflict with those of the organisation. The end result will be a low quality workforce.
    • Sneh Asnani
    • Asst. Systems Engineer (Trainee), Tata Consultancy Services Ltd.
    I completely agree that labour quality plays an important role in the success of any organisation, but the definition of labour quality given here is somewhat vague and incomplete. Labour quality cannot be defined by just two or three parameters like attitude and sincerity towards work; it should also measure domain knowledge, soft skills like leadership and managerial qualities, creativity, and the ability to learn and adapt to the changing environment.

    It is a subjective measure as it depends on the type of skillsets required by the workforce of a particular organisation, and is not quantifiable.

    As understanding labour quality is essential for outsourcing, a generic tool is very much needed to measure it.
    • Ulysses U. Pardey
    • Managing Director, Am-Tech, S.A., Panama, Rep. of Panama
    Let's remind ourselves that today's society, with its national champions and leaders, comes from big migrations in the past.

    Why do people cross the border? Why do some people not want them to cross the border? Who has the right attitude and on what basis? Truthful answers could help shape part of the solution. What if that learning of attitude and skills is provided in the countries of origin and destination, at all levels? This might favor legal migration. It could reduce gaps and generate a more suitable approach toward a common understanding, within both sides of the border, of the need for migration and its consequences--which is basically looking for a better personal life. I believe that the people from all over the world who know best about the need for migration and how to solve it properly are in beautiful USA, a nation of immigrants. I hope so.
    • Aniruddha M. Godbole
    • Executive Assistant, A.V. Rajwade & Co., Mumbai
    I am addressing the issue from the perspective of an emerging economy (as they constitute a majority of the world's population). It's in two parts.

    Part I: For domestic economies
    Gregory Clark writes in his book, "Despite fears that machines would swallow up men, the greatest beneficiaries of the Industrial Revolution so far have been unskilled workers."

    While I am inclined to agree that for the vast populace the world over, the standard of living is better today than ever before, I am hesitant to accept the picture painted by Clark of the 18th century and earlier times. Atleast in some parts of the world (example: India) there were times pre-1500 A.D. when things may not have been as bleak as suggested in the book.

    And, I attribute the best times for the vast populace in countries like India and China to higher agricultural productivity, quicker trade in the case of agricultural produce (when local crops have failed), military might(nuclear weapons and missile systems), and stable political systems as security and stability are a prerequisite for economic growth.

    I do not think that widespread high labour quality is responsible for the increase in standard of living in one-third of humanity (India and China). India has always had a certain number of skilled persons and there has not been so dramatic a change so as to merit such a large increase in the lifespan of an average Indian (doubling) in the last 50 years. Low-cost healthcare and NOT cutting-edge medical science is responsible for this success.

    My conclusion for Part I: There is a huge scope of improvement by further optimising costs. Often, high quality labour can mean lower costs ... so that is welcome. In all other cases it will help to focus on low-cost labour, and high-cost/high-quality [labor] may be deferred beyond the immediate future so that we extend the best times ever for a much larger proportion of humanity.

    Part II: For cross-border trade
    In my opinion, quality of labour is much more important in the long run and its importance is going to increase as customer expectations on quality rise. So, while the focus should be on low-cost on the domestic front, it has to be on high quality or else a country could face an adverse Balance of Payments (BoP) position as her exports would not be saleable abroad while her own citizens buy imported goods and services. The BoP problem would lead to economic and/or political instability.

    To combine these different approaches--for domestic economies and cross-border trade--is a challenge for leadership in emerging economies. And as a consequence of this: in emerging economies, the firms which are successful domestically are likely to be distinct from those successful in exports.
    • Heather Neary, CMCE
    • Executive Chef, MCCS
    The fear of outsourcing and immigration is a combination of lack of education and the feeling that if another group comes into the area and will work for less money, then the local people will never see an improvement in their quality of life. This is precisely the reason that unions were formed and have been fought against. The majority of people who find themselves in this situation of fear have not yet empowered themselves to be responsible for actually doing what is necessary to take the next step, break out and elevate, or lower themselves as need be.

    Not everyone is the same and it is through that very essence of diversity that strengths are achieved. Businesses and governments that can recognize and utilize this will be the ones that develop true successes. As science and technology become more attainable for the masses it will in fact have the same effect on the people as the printing press did centuries ago. The internet is becoming available for remote areas; more and more people are exposed to the educational benefits of the virtual world at hand, creating a potentially educated larger workforce. Many companies see the future of this workforce and are creating a means in which to harness this great underdeveloped potential by investing in affordable laptops, subsidizing free computer programs, and so forth. Indeed, the very economic successes and growth will depend on not necessarily centralized businesses but a virtual theater in which real life takes place from a limitless global perspective.

    We all know that other countries, states, and even local economies may have lower compensation that motivates the higher quality, motivated workers to exit to areas of higher compensation. It is a universal situation, England with people from Turkey, America with people from South America, mass exoduses from war-torn areas to all over the globe. The real question is "What is the motivation?"-- cultural morays, quality of life, time for outside pursuits, monetary or need for ownership as rewards? This then is what the "attitude gap" really is. A successful company creates many motivating factors--creating diversity--that tie back into the mission of the company to get both the attitude and ability in its workers to achieve success.
    • Gustavo A.
    Personally, I believe in the right balance of attitude and skills. One can't live without the other. If I have to choose, I would prefer to say that labor quality won't be achieved without a 50-50 balance.
    • Biju Nair
    • PGPX II, IIM Ahmedabad
    The fear of outsourcing and immigration is definitely driven by the underlying fear of change and uncertainty. And it also has to do with the tendency to take a certain "quality of life" for granted and the subsequent wishful thinking of guarding this quality through transference of responsibility to external agencies like governments. In such a scenario, just retraining displaced workers or protecting them through legislations will only fall short. The real solution lies at an individual level when each and every one starts seeing the big picture and takes charge.

    How many "developed economy" workers are willing to move to an alien country in search of opportunities that they now feel are lacking in their local economies? I know that this is not happening in droves, but those who have been part of this new wave have definitely bargained for a quality and meaning of life that is unparalleled. And if this is not happening more, why not?

    Companies can't help but take notice of the initiative of people who are ready to risk everything they have in moving across borders, because that is the kind of "attitude" which, if tapped properly, can be converted into a passion for excellence and continuous improvement. The flow of capital towards labor quality is already indicating how companies are reacting to this trend. Initiatives like training immigrants to acquire the necessary skills and so on also cannot be far behind, especially for jobs that are geographically constrained and that do not find enough takers from the local pool. We can already see that happening for professions like nursing.

    I don't think governments have much to worry about in stemming job and worker flows. They are much better off making the processes for these more transparent and efficient so that everyone can participate and the markets can leverage this for wealth creation.

    But the issue of quality of labor has to be actively addressed by the respective governments through education and awareness about the attitude and aptitude changes that are needed to survive in today's flat world. Just making Thomas Friedman's book available for all literate people around the world could make a world of difference in getting them to see the big picture and scripting their role in it.
    • Anonymous
    Having a great attitude and skills means nothing if management blocks productivity. There is a reason the comic strip Dilbert is so popular: People understand that it precisely reflects their workplace. The major enemy of productivity is almost always management. I have seen this in every one of the fourteen jobs I've held, including the one I have now, where I've been for twenty-one years.
    • Geoff Seyon
    • COO & CFO (Ag.), Medullan, Inc.
    At Medullan, a Boston-area IT consulting firm, we have successfully been able to accomplish the best of both worlds by leveraging the Nearshore model in the English-speaking Caribbean, i.e. high quality, cultural alignment, and strong core values with overall operating cost savings.

    The result has been that our U.S. clients love working with our people who are distributed between our U.S. and Caribbean offices, but at the same time are thrilled that they can finally find an affordable fixed-time/fixed price software delivery vendor that they can rely on time and time again. Not to mention, they are keen to participate in design sessions in the Caribbean esp. during the winter months!
    • Dora Bonnet
    • HR: Human Development, Joerge Tadeo Lozano University
    Quality of labor in developing countries has as much to do with national standards as with organizational cultures. To reduce the idea to attitude and/or skills would be somewhat simplistic. I would say that much also has to do with how companies do or do not accept the capacity of individuals to produce new ideas and support their development.
    • Andy Farnum
    • Sr. Financial Analyst
    I think that an ethnographic valuation of work quality is a tough exercise. We are talking about people. Human life presents a rich cultural context and a complex teleology. By privileging a specifically commercial notion of productive capacity, and attributing the development of that capacity to the mythical sweep of generations, we can slip into the dialectical materialism or structuralism that our philosophical tradition passed quite some time ago. Also, we deny people their humanity when we value them based on economic output. This is true regardless of the subjects' residency status or geographic fortune.

    Attitudes that privilege the modern work ethos so dear to business folks may come at the cost of attitudes that are more powerful drivers of human happiness. I am not saying that human attitudes are in binary opposition, but I do suggest that alternatives to labor quality, like relationship quality, creative quality, and leisure quality, may have a greater impact on sustainable human development and happiness.
    • Dave White
    • Supervisor
    I have rarely seen line people fired or disciplined for not being able to do the work. I have often seen them refuse to do what they are directed to do. This would indicate to me that attitude, not skill, is of primary importance.
    The attitude, however, is, I believe, a product of the environment. W. Edwards Deming said that adversity did not build character, it revealed it.
    • S. K. Kotwani
    • Asst. Vice President - IT, IndusInd Bank Ltd.
    A positive attitude and discipline in work is important for better performance and quality. Society and the community has a definite role to play in improving individuals' outlook, initiative, and approach. The government has a role to play in preparing a basis for education. Skill sets can be acquired by education and training.
    • Ellis Baxter
    • CEO, High Fidelity SSS
    This is the topic for the next one hundred years. If the U.S. is to have a lasting impact and still be here to write the history in a hundred years we must work at the very core of what labor is. As a small manufacturer and design/build electronics firm, labor is the value we add. Labor should be in the lead, not a second thought. In my own case as one who started the line as a company of one, the labor is the core of this company.

    In our industry we are said to overpay our labor staff. This is issue #2: let labor lead, but well paid labor. It is what I call "executive labor": everyone manages him- or herself, no meetings last longer than 15 minutes around the coffee table.

    How important is labor? Well-paid labor will lead on their own, leaving a flat management system to focus on finance, growth through reasonable means, and new ideas. Great ideas are worthless if you do not have great labor to make them work.

    If we lose the value of labor and the ability to make stuff we are not going to be here in a hundred years.
    • Hemant Rachh
    • Student, NMIMS, Mumbai
    In this fast-changing world, fear of uncertainty is definitely a cause of concern especially for labour in economies like U.S. due to their basic nature of high "uncertainty avoidance." To solve such problem there are two options.

    Look at Swatch, how it reduced the cost of labour to 1/10th of total cost in a high-labour cost country like Switzerland and beat all competitors that had low-cost manufacturing advantage. Swatch did it efficiently and it survived.
    Second, companies should leverage the benefit they got in their bottom line due to outsourcing to relocate their freed resources to new growth areas for increasing their top line.

    Whatever companies choose to do, a basic principle of economics tells us that "self reliance" does not mean "self sufficiency" and it does matters who does a job efficiently with quality, not where he or she does it. That was the only reason why Britain, with no cotton production, had a strong textile industry.
    • Anonymous
    I am but a lowly Human Resources person. And I have been a college instructor. Maybe my opinion doesn't count for much, but I am the one seeing applicants come through and I was the one helping to instruct people entering the workforce. There will be no change until we start teaching our culture that quality DOES matter and that those who are unwilling or unable to produce quality will not succeed. Those who ARE willing and able WILL succeed. This has to happen at home, in school, and in the workplace.

    Those who need help should get help long before they come to employers looking for a job. As businesses, what can we do to make that happen? Give me someone with the attitude that they can succeed, the desire to succeed, and the knowledge that failure isn't acceptable. Then let me put them in a supportive culture and give them all the tools and rewards they need, and a way of moving them on if they don't fit.

    Around 20 to 30 percent of applicants with our organization never re-read their applications to check for misspellings or capitalization. Where did they learn that this was an acceptable first example of their work? And, again, what can we as businesses do about it?
    • Louis Soares
    • Executive Director, National Work Readiness Council
    Labor quality is not so much elusive as it is exclusive. Firms with unique values and core missions seeking to provide differentiated offerings for customers invent what the right mix of attitude and skills are for their business model. Labor quality by definition implies "attitude and skills" in action.

    Most of the tools and tests we use to manage the transition from education or training and work are too focused on the content of the sending institution, not the needs of the receiving employer. This has created an unvirtuous loop in which employers use credentials as a "check box" in their process and not a meaningful indicator of quality.

    What is needed is a resource that provides a platform for firms to be able to innovate labor quality as their business models evolve; monitoring and coaching in real time is the key.

    The National Work Readiness Profile and its underlying assessments are among an emerging set of tools to assist employers to assess and invent "attitude and skills" in action. Teaching the ability to learn culture and competence while at work is complicated for firms. These tools simplify this process.

    With the increasing role of knowledge work, the sheer size of the service economy (with its need for productivity enhancement), and changing labor demographics, firms need to move to a model of work and learning on the frontline that creates customer value while increasing the quality of labor.

    The premise of Clark's book is right on. It requires a new way of thinking and doing in the area of human capital, one that firms refuse to embrace to their peril.
    • Emanuel Dass
    • Business Adviser, ABMC Mortgages PL
    The key determinant of labour quality is attitude, because with this comes innovation, creativity, and the scope for self-management. However, it would be too simplistic to say that the right attitude is a given that couldn't be "worked on" at work. The cultural setting in successful organisations has, I am sure, an important relationship with attitude.
    • Nimon
    • Band & Orchestral Head Division, PT. Citra Intirama, Jakarta
    I believe wholeheartedly that in labor, attitude quality makes a big impact on skill quality. I believe that if people have a ratio of 80-20 attitude to skills, the ones with 20 percent skills are two steps ahead of those who are 50-50. Skill quality made from attitude is real, pure, high-quality skill.

    The problem is that not everyone understands what attitude is. Honestly, "the attitude gap" at organisations happens everywhere, depending on personal background and culture based on the environment. So what can businesses do if they get a "bad" culture from the environment?

    One of the extreme answers is to pass by one generation to build a better next generation that has good attitudes and is efficiency minded, honest, and hardworking.
    • Uzma Mukhtar
    • Career Counsellor, St. Michaels Convent School
    Reading through the article and comments posted above, I noticed that though business can and will continue to benefit from the "right attitude" of workers, this has to be reciprocated by the administration and management itself. How to inculcate and objectively measure has been an issue of controversy, perhaps from early human history. Self-discipline and motivation, in my humble opinion, have a beginning at home. If we have a tradition and culture of encouragement and praise balanced with accountablity, we definitely will reap the gains of "quality of labour."
    • Brahim Varol
    • Business Development Manager, Gategourmet USA
    We need a balance between attitude and skills. The important point is the goal of the organization and how you can match this with personal attitudes and skills. Changing attitudes is a tall order for managers. If you invest in this, you need to justify the return of investment by keeping this investment in the company. The ability to bring about results in the short term is also important. The perfect mix will be an effort that leads to this result. The quality of labour is based on being able to use this perfect mix of attitudes and skills in the right position.
    • Santhanam Krishnan
    • Chief Course Architect & Dir. (Courses), National School of Banking
    Quality is a result of attitude in any field. More so in labour, as consumers have an expectation and the right to it. What is of paramount importance is how well one is able to consistently manage this in oneself as well as in others in an organization/activity over a period of time. This is a factor that sets apart leaders from laggers.
    • Jim Garrettson
    • Founder and President, Potomac Officers Club
    Obviously, quality of available labor significantly impacts the workforce bottom line. I perceive a bubble brewing in the labor market today. This quality bubble has been created by the adoption of sub-par employees lowering standards during times of low unemployment. The cumulative effect lowers the efficiency of the organization.

    As nationwide unemployment figures are currently at 4.5 percent, just outside of Washington, DC, the Northern Virginia market's unemployment rate hovers around 2 percent. In this region, where the best talent for the job is not always readily available, employers are obliged to fill positions with lesser-qualified candidates than they would typically hire. These temporary solutions create permanent problems, and the pressure to maintain a quality workforce can never truly be balanced with a fully employed workforce. What reactions will occur when the quality bubble bursts?
    • Pradip V. Mehta
    • Principal, Mehta Consulting, LLC
    As a quality management expert, it is great to see "quality" of labor being addressed formally in the form of a book! Labor quality has given nations competitive advantage: Japan, South Korea, Singapore, Taiwan are just familiar examples. Therefore, countries that wish to take full advantage of globalization need to clearly understand how important the "labor quality" component is in the rest of the competitiveness puzzle.
    • Tayyab Rashid
    • Assistant Registrar,
    The U.S. economy is evolving from an industrial economy to a knowledge economy. It is the "United Brains of America" now instead of United States of America that will dominate the world stage. High paying work is knowledge work. That is not going anywhere.

    It is in the interest of the U.S. if some countries stay in the agricultural age while others move on to the industrial age. These nations will continue to do the leg work, grabbing a bigger share of the low paying jobs.

    Nike is a good example of this phenomenon. Their footballs and shoes are stitched all over the world but none of these manufacturers have the knowledge and brand power to ever threaten Nike's dominance of the market. The critical advantage is not in the factories but in the brains that make Nike.

    Starbucks is another example of a knowledge company based on nations that are stuck in the agricultural age.

    I am sure that policymakers in the U.S. know this, and the paranoia about the shifting of jobs overseas is intentionally created hype.

    I hope the U.S. can retain the flexibility and the freedoms that make it so attractive for the brains of the world, sustaining the United Brains of America.
    • Ashutosh Tiwari
    • Business Development Officer, International Finance Corporation
    Labor has two parts: completing routine tasks in a repetitive manner, and completing fairly non-routine tasks by using degrees of cognitive skills.

    It's the second part that's becoming more and more important in today's world, and which drives the quality of labor everywhere.

    Owners of companies that manufacture ready-made garments in many developing countries, for instance, want their factory-floor workers (who usually come from markedly lower social/economic classes) to simply complete routinely set tasks in a repeated manner. They do not want anything more from their workers. As such, they see workers contributing nothing more than their labor, day in and day out, to produce shirts or pants and the like.

    But in the face of global competitive pressures, we see more and more of this sort of routinized job being farmed out to machines to do things better, faster, and with higher efficiency. This process is leading to worker unrest and insecurity in many developing countries, where the quality of workers has not risen higher than [the ability to] merely complete routine tasks.

    In developed countries, the challenge is somewhat different: It's attracting workers who rise above and beyond the level of machines to think, imagine, and do things that add value to the task at hand. A hotel clerk who helpfully recommends things to do in the city; a waiter who happily explains how a particular dish is prepared and from where the ingredients are sourced, etc . . . these are activities which will not be in anyone's specific job description, but they add tremendous value to the experience of the customers and ultimately to the bottom lines of the companies.

    So, yes, quality of labor does matter--for a company to offer higher value to its customers, and to make workers feel that they are sharing useful, appreciated information and knowledge with others to raise everyone's understanding of better ways to do business.
    • Anonymous
    Labor quality is extremely important--it outweighs most other topics. Without the proper communication, education, training, procedures, and the solid foundation of commitment to following those procedures, labor quality is poor. And the environment surrounding poor labor quality produces bad customer experiences, as well as angst and morale issues within the organization itself.

    Corporate America made a poor choice by allowing labor quality to lag in support of low costs. In reality, labor costs have increased due to poor labor quality--over expenditures, rebuilds, errors, etc.
    • Martin Klinzing
    • Client Business Manager
    Essentially this discussion boils down to the fact that you can teach someone anything except to care. The above brief, "One of several things they all do is hire for attitude and train for skills," points to a characteristic of the higher performing individuals I have hired and worked with. Every task they were assigned or took responsibility for was performed as if it were the most important thing they could possibly be doing. The technical aspects of the task may have fallen outside their comfort zone, but they made the effort to learn as they completed the task and delivered the highest quality product possible.
    • Vishal Kumar
    • MBA, School of Management and Computer Application, NIT Durgapur
    I believe that quality outranks quantity. In the case of labour, quality matters, but more than that it is the attitude and motivation that matter. Someone with quality labour is an asset to an organisation, but high quality means high costs.

    It is not necessary that someone with quality labour will always be loyal to the organisation. He may leave the organisation when he gets a better opportunity, thus proving himself a liability.

    The right mix of both quality and attitude is required, and for that people need to be motivated from time to time.
    • Prasanna Rambhatla
    • Technical Account Manager, Mentorware
    An attitude "gap" and cultural differences do contribute a lot to the quality of labor. I don't agree with Clark on the cost difference being attributed to labor efficiency. Outsourcing began with migrating more assembly line or mundane processes to the cost-effective parts of the world. Parameters of standards do get transferred to enable "quality" outsourcing. As labor evolves with the seasoned processes of the quality world, and as leaders and managers moving back to their countries of origin also infuse the quality standards, it takes time, but it is definitely not light years away.

    People need to be celebrated, and quality in every detail should be celebrated as behaviour that gets rewarded. The price of quality is always less than the pain of regret. One should take time to explain what quality means and how it is measured, and then start measuring the improvement on a regular basis.
    • Deepak Alse
    • Project Leader, Wipro Technologies
    Quality is a measure of the degree of ownership and involvement that an individual or team puts into a project or mission. Economics will decide the shift of jobs. Systems that may not have been there in societies till today can be put in place by change. The basic tenets of any successful human congregation remain unchanged--willingness to invite change, the ability to dream and aspire to a higher order of living, and the desire to put in hard work.

    That is the real story about quality of labor. The United States was built on sweat, toil, and ingenuity. Today there are other countries that are doing the same. Any nation in this networked world needs to get its labor to collaborate with labor from across the world. That is the essence of what China and India are doing today through globalisation and outsourcing.
    • Hemanshu Joshi
    • Team Leader, GIT, Dubai, UAE
    Quality of labour is an outcome or result of factors which can be seen from the perspective of organization and society.

    In an organization, quality of labour is the result of attitude, skills, clearly defined responsibilities, accountability, and environment. No matter how skilled employees are, they will not perform unless they have the right attitude and vice versa. Employees with the right skills and attitude will perform only if they have a correct sense of direction which comes in the presence of a clearly defined responsibility and accountability structure. Finally, the right environment in an organization will allow quality labour to grow and perform even better repeatedly.

    At the level above organization is the society. What are the driving factors of the society? Employees in developing countries put a lot of effort into rising up the ladder. Some of these efforts are circumstantial rather than based on free will as in several developed economies. Education and a successful career is a basic requisite to quality of life. Employees know that if they don't produce quality output they will be left behind in the race.

    Therefore, quality of labour should not be evaluated in isolation.
    • Sudip Bose
    • Sales Executive, Madhya Bharat Papers Ltd.
    Even marginal contributors in developed economies share a good, comfortable quality of life along with more assertive participants of economic activity. While these positive, assertive workers either seek ways and means to make their enterprises more competitive or re-orient their outlook in a changed scenario, the marginal players fight to prolong the status quo that they are comfortable in.

    By contrast, in developing economies there are no guarantees of a good quality of life even for effective participants to economic activity. This explains the migration of quality labor from developing to developed countries. Migrants carry loads of value along with them, and work very hard to realize their potential. The peer group in the host country is the first body to observe and acknowledge this fact.

    Juxtaposed with the issue of migrant labor, the issue of outsourcing is different.

    In this scenario the sufferers have no opportunity to directly measure their competitors. So, healthy respect towards peers is never generated, which in turn leaves room for discontent. Outsourcing is thus a perceived threat to developed economies.

    True, this perception would turn on its head if capital followed quality labor, as proposed by Gregory Clark. But it leaves one question unanswered: Would an influx of capital alone improve the ephemeral quality of life in a developing country? The very question should encourage further studies on principal factors, besides capital, that inhibit growth of good housing, nutritious food, social security, quality education, and assured health services in developing economies. Otherwise Clark's proposal would remain half-baked.