The Role of Hi-Tech Jobs in Puerto Rico's Development
This excerpt summarizes the research done by Arthur D. Little, Inc. (reported in Socioeconomic Aspects of Employment Opportunities in Puerto Rico's Pharmaceutical Industry, 1980) in investigating the contributions to Puerto Rico's balanced socioeconomic development made by sophisticated manufacturing industries (SMIs).
Sophisticated manufacturing industries (SMIs) are at the leading-edge in both the nature of the technology they employ and in the procedures they use to manage the people who make the technology work.
While they often use "state-of-the-art" technology in their operations, they are better characterized by their use of advanced manufacturing practice They tend to be capital intensive industries; they are often more maintenance-intensive than labor-intensive. SMIs give much more attention than most industries to quality control and the careful overall regulation of their management processes.
A prototype of SMIs are the US. medical goods and pharmaceutical plants whose manufacturing operations are carefully regulated by federal Good Manufacturing Practice standards.
The conclusions set forth below are based on field trips made by Arthur D. Little research teams, on surveys of 23 SMI manufacturing plants located in all parts of Puerto Rico, and on extensive interviews conducted with representative SMI employees and plant managers.
Summary of Findings
Our field research persuades us that SMIs are making a major contribution to Puerto
Rico's economic development, above and beyond their obvious contribution to the Puerto
Rican GNP. This additional contribution involves the creation of resources which Theodore
Schultz, the 1979 Nobel Laureate in Economics, calls "human capital."
In a pamphlet (Theodore W. Schultz, The Economic Test in Latin America. New York State School of Industrial and Labor Relations, Cornell University, Bulletin 35, 1956, pp. 25-26) which he wrote in 1956, Schultz discusses patterns of economic development in Latin America in general and makes several specific comments on Puerto Rico. Schultz calls Puerto Rico a model "in improving the quality of [its] people as productive agents."
He also comments on the role of industry in this process:
"Literally thousands of new plants have been established throughout Latin America and Puerto Rico during the last decade and a half, and each of these serves as a training center, preparing workers, managers, and others for the more complex jobs that go with development and economic growth."
"The countries closest to the United States seem to do better in this regard than do those that are more distant. United States business firms are important carriers of new techniques of production and many of these countries are aware of this fact and would like to see more United States firms bring to them new techniques, patents, and also let them have access to the research results of the laboratories of the parent company."
Human capital, together with physical construction and financial investment, is the critical driving force behind a region's development. Measuring human capital formation and specifying its direct links to an area's economic development are still largely uncharted areas of the social sciences. However, the empirical research described in this paper and the economics literature clearly suggest that ignoring the importance of human capital is a serious omission in any balanced analysis of the private sector's impact on development. Indicators such as direct contribution to GNP, cost-benefit ratios, and lost tax revenues are not adequate to judge the efficacy and impact of tax-induced investment by sophisticated manufacturing operations on a developing economy such as Puerto Rico's. Our work has identified a number of factors over and above those GNP-related ones that appear to be essential to consider in conducting a balanced analysis of SMIs' impact on Puerto Rico. These factors include the quality of job opportunities SMIs provide, the impact of these opportunities on the development of managerial and technical skills, and the ways these opportunities help create and focus the rising aspirations of Puerto Rican citizens.
The nature of Puerto Rico's human resource infrastructure has changed significantly in the past 20 years. The total number of employees in professional, technical, managerial and administrative jobs increased by almost 250% from 130,702 in 1960 to 325,348 in 1978. Our research findings indicate that the SMIs we studied are partly responsible for significant changes in the make-up of the islands workforce.and are enhancing the quality of the island's core of technically and managerially skilled people.
We also believe that SMIs have an important place in the portfolio of industries Puerto Rico needs for sustained and balanced economic development. Comparisons across industries and examination of patterns of development in other countries reinforce the significance of the role played by a balanced portfolio of industries in helping a region move from a lesser to a more advanced stage of economic development. The comparisons suggest the importance of a relatively small cadre of technically and managerially skilled people in making possible this movement. The impact of these people tends to be far out of proportion to their absolute numbers. To the extent SMIs, or any other industry type, are serving as generators and sustainers of this cadre, the impact of their jobs is also greater than their absolute numbers would suggest.
Plant Survey Results
The results of our survey of 23 geographically dispersed Puerto Rican SMI plants indicate that the SMIs examined are:
1. Helping strengthen Puerto Rico 's human resources.
- These plants employ Puerto Rican nationals, rather than mainland expatriates, to an overwhelming degree. In 1978, less than 2% of the full-time work force in these plants consisted of mainland expatriates.
- Most plants show a decided preference for hiring employees at low skill levels and moving them into higher skill levels, rather than bringing in middle and high level employees from outside the firm.
- The surveyed plants are training intensive; twelve plant sites reported spending over half a million dollars in 1978 to provide formal training programs for 36% of their total work force.
- The plants are making widespread use of a number of management practices that provide opportunities for employee advancement and career development. All of the plants encourage their employees to advance through out-of-the-plant education funded by tuition reimbursement programs.
- The plants provide other fringe benefits substantially greater than those mandated by the Puerto Rican government.
- Because the plants offer opportunities for advancement, high quality jobs, good pay, and generally good working conditions, turnover is low and none are unionized.
2. Helping conserve Puerto Rico ~ natural resources. More than two-thirds of the plants surveyed reported meeting or exceeding all the federal and Puerto Rican environmental regulations regarding air and noise pollution. All the plant sites not meeting these regulations have programs under way to do so by 1980.
Twenty plant sites were able to cite instances of reductions they had made in energy and water usage.
3. Laying a base for future stable employment opportunities. The plants surveyed appear likely to continue to provide stable jobs in the future. This is because: (a) they are profitable, (b) they generally operate in buildings they have built and own rather than buildings provided by the Puerto Rican government, and (c) they have made a considerable investment in their buildings, land, and equipment. By the end of 1978, the 23 plants surveyed had invested over half a billion dollars in their Puerto Rican operations.
4. Promoting the development of Puerto Rican-based research, development, and engineering capabilities. More than three quarters of the plants cited ways they are helping encourage the use of advanced manufacturing technology outside their plants.
5. Helping start and strengthen Puerto Rican-owned businesses. Twenty-one of the plants reported ways they are providing spin-off benefits to Puerto Rico's economy by creating markets for local suppliers and service providers. Several SMIs have counseled these smaller businesses on technical and managerial problems, and .helped them develop products that meet the rigid quality specifications of the SMIs.
6. Contributing to a wide range of community activities. Twenty-two SMI plants reported 1978 donations totaling $357,138 to a number of institutions and volunteer groups in Puerto Rico.
7. Helping promote better health care for Puerto Ricans. More than three-quarters of these SMIs contributed to improving health care by sponsoring medical information programs or directing their charitable contributions to Puerto Rican hospitals and clinics.
8. Using investment portfolios to support Puerto Rico ~ development. Most SMIs have an investment portfolio in Puerto Rico of unrepatriated earnings. When asked "which of these investments.., are directly supporting public benefit programs in Puerto Rico," many respondents did not segregate their investment portfolio; a number of them have not been in operation long enough to accumulate significant unrepatriated earnings. Six SMIs specifically identified such investments. For these companies alone, almost a half billion dollars has been invested in ways that help support the Puerto Rican government, finance pollution control facilities, assist in financing mortgages for Puerto Rican homeowners, and help finance small- and medium-sized local businesses.
Employee and plant manager interview results
Based on our interviews with a cross-section of SMI employees and plant manager , we believe that:
I. SMIs are providing stable jobs and, compared to other opportunities on the island, superior career opportunities for Puerto Ricans. In particular, SMIs have provided some women with opportunities to obtain higher level jobs than were generally available elsewhere.
2. The quality of jobs provided by SMIs rates high on accepted measures. SMIs are regarded by employees as good places to work.
3. SMIs are demanding, challenging places to work. Some employees feel pressured because of quality control demands and comparatively long hours of work. SMIs have a mixed impact on Puerto Rican family life because the monetary benefits and sense of pride that stem from being employed by a "prestige" SMI company are somewhat offset by the demands of the job.
4. Because of their reputation as high-paying employers who offer good jobs with opportunity for advancement, SMIs have the potential to encourage former Puerto Rican emigrants to move back to Puerto Rico, and have indeed already provided jobs for returning residents.
Quality of Jobs and Careers Provided by SMIs
The interview data we collected in Puerto Rico indicated strong positive trends supporting
our hypotheses about Job Quality and Careers. Restated in full, these hypotheses are:
- The quality of jobs provided by SMIs rates high on accepted measures.
- The employment opportunities provided by SMIs lead to careers seen as more satisfying by those having them than other available work options, and to career structures that promote balanced socio-economic growth.
A. What is a high quality job?
Other aspects of Arthur D. Little's study about the contributions SMIs are making in Puerto Rico consider the quantifiable ways of characterizing good jobs. These include statistical measures of hourly earnings, total hours worked, total employee benefits, working conditions, unemployment rate imbalances, and appropriateness of the job for the emerging Puerto Rican labor force. These are important measures; SMIs tend to rate higher on them than most other Puerto Rican industry types, especially compared with the more labor-intensive industries. This part of Arthur D. Little's investigation is more concerned with the harder-to-quantify characteristics of quality in jobs. By their nature, these are more difficult and costly to measure. No pre-existing data banks are available comparing SMIs with more labor-intensive firms in the way we have done with statistical data. However, the responses given by the employees in our multi-plant interviews to questions such as:
"What sort of place is this to do your job?"
"How did you adjust to working here?"
"What do you like most about working here? What least?" "How do you move from job to job here?"
"How does this job compare to others you have had?"
"What does this company do to help take care of its employees?"
indicate some reasonably consistent patterns of high quality jobs, as described by the academicians who have studied job quality.
The first of these we consulted was Professor Eric Trist, a British social scientist who is well known for his lifelong research into the ways people and technology interrelate. At a meeting with us early in 1979, we asked Trist-based on his observations and research in a number of countries and cultures-to define the characteristics of a high quality job. He suggested six characteristics for us to examine:
1. The degree of variety and challenge the holders of the job see themselves having.
2. The opportunities they have to keep on learning while on the job.
3. The extent they are able to make decisions, have a measure of autonomy, use their discretion.
4. The degree of recognition and support they receive from their supervisors, peers and subordinates.
5. Their belief that the work they are doing is making some sort of useful contribution.
6. Their feeling that the job they hold is helping lead them to a desirable future.
Our reading of the verbatim responses to the interview questions indicates that the majority of our respondents describe their jobs in ways that touch on most, if not all, of these characteristics.
To ensure that we would not be limited to one conception of job quality, we examined the ways other scholars have examined the nature of jobs. Dr. Harry Levinson, starting from a psychological point of view, has identified three critical needs that jobs can meet for people. These are:
I. Helping employees meet their ministration needs: their needs to be taken care of, to have other people do things for them. Levinson sees these as very legitimate needs for mature adults to have.
Expansive employee benefit programs, high salary levels, and the maintenance of a working environment characterized by values of respect and dignity are ways we have observed SMIs meeting these needs. Levinson has noted that in many work situations, unions serve the psychological function of helping employees feel protected and secure about their jobs. The absence of unions in the SMI plants we visited is one indicator that these ministration needs are being met by the SMIs directly.
2. Helping the employees meet their maturation needs: their needs for opportunities to grow psychologically and intellectually, to acquire new skills and competencies.
Again, the data we have collected in the interviews and plant survey indicate that SMIs are providing a wide variety of options for employees to meet these needs. And responses to our employee interviews indicate the employees perceive these options as available, and that they value and are taking advantage of them.
3. Helping the employees meet their mastery needs: their needs to pull together the different facets of their personality and come to terms with their environment. The word frequently used to describe these needs is "efficacy": the ability for a man or woman to advance his or her own goals, rather than being dominated by forces created by more powerful people or nature. The recent work of Inkeles and Smith (Alex Inkeles and David Smith,Becoming Modern, Harvard University Press, Cambridge, 1974) also considers this as a critical characteristic of people in societies that are becoming less "traditional" and more "modern."
While our interview data contain a number of statements from employees about their feelings of being able to control their job environment, or be more effective in their outside-work life, this is not as strong a pattern as we noted regarding the ministration and maturation needs. Part of this might be due to the nature of the government-regulated production processes that characterize the SMIs we studied, part might be due to the Hispanic-Puerto Rican historical tendencies to be a culture characterized by fatalism. It is reasonable to speculate that SMIs are driving forces to replace feelings of fatalism with efficacy, but this is an area we have not been able to examine closely.
Finally, as a way to help us draw together these accepted definitions of job quality, we built on the framework used by Dr. Frederick Herzberg in his research over 25 years about what aspects of people's work lead them to be satisfied with what they are doing, and what aspects cause dissatisfaction. Very briefly, Herzberg's research indicates that one set of job characteristics relates to the level of dissatisfaction an employee has with his job. These we call "Maintenance Factors." They tend to relate to the situation in which a person works. They include:
1. Company policy and administration: these factors often determine much about where an individual works and under what conditions.
2. Supervision: the quality of the direct supervision a person receives
3. Interpersonal relations: all the forms of interpersonal relationships the person experiences at work.
4. Working conditions: the cleanliness, safety and other features of the environment in which a person works.
5. Salary: the amount of direct compensation and fringe benefits received.
6. Status: the ways the person is treated that relate to his feeling good about his place in the factory's hierarchy and informal "social system." This criteria, for the purposes of our research, can also include the employee's feelings about respect and dignity.
7. Security: the degree to which the employee feels a sense of stability in his employment, that he is not constantly faced with the possibility of losing his position or his employment at a particular firm.
Herzberg contrasts these characteristics of a job with others that relate more to what the employee is actually doing than to the context in which the work is done. We call these "Growth Factors." They include:
1. Achievement: can the employee develop a sense of accomplishing something while on his job? Does he feel he is in a work situation where his education and skills are being utilized to a great extent?
2. Recognition for achievement: are these achievements being noticed by his company and co-workers or is recognition given only for his ability to follow the rules and not cause problems?
3. The work itself: does the employee see it as intrinsically interesting, challenging and worthwhile?
4. Responsibility: does the employee have clearly defined areas of responsibility for which he is held personally accountable?
5. Advancement: does he feel his job is contributing to his "going somewhere?" Does he have opportunities for professional or career advancement? Does his job provide ways to become involved in newer, possibly tougher, activities?
6. Growth: does the employee feel that he is growing on the job? As a Puerto Rican, does he feel that his sense of being a "unique individual" is becoming enhanced by the work he does?"
Herzberg has developed and tested in a number of cultures ways of measuring the extent individuals feel their jobs are meeting or not meeting these needs. He has also developed ways to profile entire plants and corporations using these factors as criteria. For our research purposes, we have used these as factors to listen for in our interviews, but we have not formally measured the extent each is present in each SMI we visited. Nevertheless, we believe our interview material shows that, on balance, these SMIs are providing jobs seen by the interviewees as containing a high level of both "Maintenance" and "Growth "-related factors.
In summary, our research indicates that, applying a number of accepted and well-researched qualitative tests of job quality to our data, these SMIs are providing jobs of high quality to our interviewees.
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