United States corporations seeking to improve productivity have

United States corporations seeking to improve productivity have largely relied on cost-cutting measures such as downsizing and outsourcing—replacing in-house labor with less expensive outside contractors or temporary workers—resulting in the erosion of workers' benefits and job security. But these measures appear to have been less successful than anticipated. Recent research has shown, for example, that manufacturing plants in which productivity increased but employment decreased accounted for just slightly more of the total increase in productivity from 1977 to 1987 than did successful "upsizers"—plants in which both productivity and employment increased. Studies of firms that have cut back their workforces since 1990 found that fewer than half raised profits and only a third increased productivity. Approximately 40 percent of executives at companies surveyed were unhappy with the results of their cost-cutting measures, and the surveys showed that productivity improvements from measures like downsizing may simply be limited because of their impact on company morale and the proportion of workers who subsequently leave the company. The remaining workers are often susceptible to burnout from increased workloads, particularly in periods of growth; such burnout may explain why the shares of firms that downsize outperform the stock market in the first six months, but tend to underperform after three years.

Recently, some corporations have begun implementing an alternative to downsizing in order to boost productivity: a new kind of corporate culture in which the interests of managers, shareholders, and workers are closely and deliberately linked through such devices as profit sharing and employee stock-ownership plans. These "collaborative" methods give employees increased decision-making responsibilities and link their compensation to performance. In many cases, workers are also given assurances that layoffs will be used only as a last resort; without such assurances, workers will be less likely to support labor-saving improvements. In the relatively small number of companies in which such measures have been tried, employees tend to be happier, more productive, and better paid. Despite their advantages, such arrangements are often difficult to implement, however. Not only must the workforce be reeducated, but managers must be persuaded to accept diminished authority, obstacles that may explain why many firms have instead relied on downsizing and outsourcing to boost productivity.

1. The passage suggests which of the following about employees in companies that implement collaborative methods?

A. Such employees are productive because they have a stake in the company's success.
B. Such employees' initial unfamiliarity with collaborative methods may make them reluctant to implement these methods.
C. Great decision-making responsibility is more likely to increase the productivity of such employees than is profit-sharing.
D. Such employees have high morale because they are assured that they will never lose their jobs.
E. Such employees often experience burnout because they are required to take on increased decision-making responsibilities.


2. According to the passage, research indicates which of the following about companies that have downsized since 1990?

A. They have been less successful at increasing productivity than have companies that downsized between 1977 and 1987.
B. They have tended to offer employees less desirable benefits packages than did companies that downsized prior to 1960.
C. The majority of them did not increase profits.
D. The majority of them tend to underperform in the stock market within a year after downsizing.
E. The executives at the majority of such companies have been satisfied with the results.


3. According to the passage, which of the following is true of labor-saving improvements in companies using collaborative methods?

A. Such improvements are more likely to achieve cost-saving benefits than are labor-saving improvements in companies that downsize.
B. Such improvements can help companies cut costs but tend to diminish employees' decision-making responsibilities.
C. Such improvements often have a negative effect on employees' morale even when employees have been reeducated.
D. Such improvements are more likely to be supported by employees who have confidence in their job security.
E. Such improvements are usually initiated by employees rather than by managers.


4. Which of the following best describes the function of the second paragraph?

A. It identifies weaknesses of an approach to solving a problem discussed in the first paragraph.
B. It explains why one method of achieving a goal has rarely been implemented despite certain advantages inherent in that method.
C. It presents a method that has the potential to be more successful than the method described in the first paragraph.
D. It describes the conditions under which a method of solving a problem is likely to be most successful.
E. It compares the effect on employees of two different methods of achieving a goal.


5. In the passage, the author is primarily concerned with doing which of the following?

A. Comparing two different approaches to a problem
B. Describing a problem and proposing a solution
C. Defending an established method
D. Presenting data and drawing conclusions from the data
E. Comparing two different analyses of a current situation