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.

American managers often say they would like to pay their employees more, they argue that they can't afford to do so and, at the same time, keep the prices of their products competitive. As one CEO recently explained, "I would treat my employees as well as Starbuck's treats theirs, if I could charge the equivalent for my product of three dollars for a cup of latte!"

Manufacturing productivity is greatly determined by the design of jobs and how workers are rewarded.

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.

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.

If America is to compete effectively in world markets, its corporate leaders must strategically position their companies in the right businesses, and then manage their workforces in the right ways. However, the nation has a shortage of business leaders who understand the importance of utilizing human capital to gain competitive advantage, let alone the know-how to do so. In the future, that shortcoming promises to be exacerbated because few business schools today teach aspiring executives how to create the kind of high-involvement organizations.

Leadership always contains far more down cycles than ups. Lincoln, Jefferson, Washington, Wilson, and both Roosevelts experienced setbacks that would have discouraged (the) less resilient.