Sadly, too many corporate leaders still believe that the way to boost productivity and profits is to continually reduce salaries, benefits, and training expenditures, a strategy that can be taken only so far. At a certain point in a developed society, salaries and benefits can't be slashed further and, in the long term, comparative economic advantage then must be realized through the effective mobilization of an educated, engaged, and loyal workforce.

In the 80s, Ford's successful introduction of the Taurus was, in large part, due to productivity gains resulting from the setting aside of outmoded work rules. Yet, inexplicably, union leaders ignored such efforts to foster employee involvement, much as unions largely stayed on the sidelines with regard to the equally promising practices of employee stock ownership and gain-sharing.

Managers who assume that higher profits drive better working conditions may have their logic backwards. Contrary to conventional wisdom, our research identified companies in virtually every industry that are profitable because they provide good jobs.

Value-based leaders believe in democratic workplaces in which employees participate in decisions.

Motorcycle manufacturer Harley-Davidson is a prime example of an American company that uses employment conditions to boost productivity. Current CEO James Ziemer - who started with the company while in high school has negotiated imaginative contracts with the unions representing Harley's workers, agreeing to keep production in the U.S. in exchange for constantly reducing total labor costs through automating tasks and changing work rules. Because Harley regularly reassigns workers whose tasks have been automated to other parts of the company.

Sadly, at Ford, General Motors, and Chrysler sales continually trend downward, manufacturing costs rise, and employment declines. As the result of the decrease in the number of cars produced by American manufacturers, membership in the United Auto Workers has dropped from a high of over 1.5 million thirty years ago to less than half a million today.

In a nutshell, the ability of American companies to compete in world markets depends on creating conditions in which workers can add sufficient value to justify their higher wages and benefits, much the Japanese auto manufacturers have done in this country. Until unions and mangers understand the necessity of effectively employing the nation's most important resource, the American worker, we are destined to have more Detroits.