Labor Force: The Center for Human Resources

By Meghan Laska

Industrial Research Department 1Founded as the Industrial Research Department, the Center has had long-reaching effects on labor and workforce issues.

The Center for Human Resources was the first research center of its kind among business schools, producing relevant research used by businesses and policymakers in government at a time when other business-school research centers were engaged in the writing of case studies.

Its impact has been far-reaching and impossible to extricate from 20th Century economic history, as well as current business practices. The outcomes of its research have affected virtually all labor issues ranging from the nation’s definition of unemployment to the establishment of affirmative action to changes in employee benefits. Today, the Center for Human Resources remains the home of cutting-edge research under the direction of Professor Peter Cappelli, the George W. Taylor Professor of Management.

Peter CapelliFounded in 1921 as the Industrial Research Department (IRD), its mission was to “study the economic and social problems of business.” Under the direction of Joseph H. Willits, a Wharton dean who worked with Herbert Hoover advocating for national employment service, and Anne Bezanson, the first female member of the standing faculty of Penn’s Graduate School of Arts and Sciences, the group gained an international reputation for pioneering research. Employer associations, government agencies, and international organizations looked to the IRD for timely and practical knowledge.

From the time of its founding, the center had many women on its team, whose research into the economic status of workers showed disparities in salaries and promotions for women and minorities. Female research associates working under Willits and Bezanson included Gladys L. Palmer, Eleanor L. Dulles, Marion Elderton, and Miriam Hussey. Future department chair and “father of American arbitration,” George W. Taylor, also was a notable member of this early team.

However, this workhorse of a group entered into a period of dormancy in the late 1950s and early 1960s due to budgetary problems and the illness or death of its leaders. Had it not been for an attentive secretary, it might have gone down in history as an interesting blip on the School’s timeline.

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Connections to Industry and Policy

In 1921, Bezanson’s article on promotion practices became the first product of the IRD, which Willits had founded in March of that year at the University of Pennsylvania. Bezanson continued her practical research in the early 1920s, writing a series on personnel issues, focusing on turnover, worker amenities, and accident prevention.

During the 1920s, about half of the country’s leading business schools had created “bureaus of business research,” according to The Pragmatic Imagination, a history of the Wharton School written by Stephen Sass (University of Pennsylvania Press, 1982). However, most were much smaller than the IRD and were limited to collecting case studies for classroom use.

At a meeting of business educators in 1926, Willits “frankly accused these bureaus of engaging in ‘kinds of fact-gathering which are hardly to be called research at all.'” He suggested that Wharton’s peer schools create research groups such as the IRD, as he said the “solution of the fundamental problems of business lay in ‘group thinking.'”

As the Great Depression took hold of the country, the IRD shifted its research focus to major studies on unemployment. The group conducted studies measuring the social and economic characteristics of unemployment in Philadelphia, including joblessness, transferability of skills, what jobs existed, and how workers found them. Professor Taylor’s research on unions and labor conditions in the hosiery trade in Philadelphia led him to become actively involved in the collective bargaining process during a bloody strike, one of more than 2,000 that he helped end, earning him the title “the father of American arbitration.” According to The Pragmatic Imagination, research associate Gladys Palmer, a 1924 Wharton PhD, became particularly known for her expertise in gathering and analyzing labor statistics during this era, leading government agencies such as the Bureau of Census and Bureau of Budget to seek out her work.

Bernard AndersonBernard Anderson, now Whitney Young Term Professor and Practice Professor of Management, says that this early work by the IRD had a tremendous impact, as it defined the term “labor force” for the country. Anderson, who belonged to the IRU’s research team as a graduate student in the late 1960s and as a professor in the 1970s, explains that “the way we measure the unemployment rate today is very different from the way it was measured at the time of the Great Depression. The research leading to the new measure—which has since been modified—was done by Gladys Palmer and her associates.”

After World War II, budget issues caused the department to become a unit of Wharton’s Department of Industry (now called the Management Department). Palmer was appointed director of the IRD, which changed its name to the Industrial Research Unit. With a grant from the Rockefeller Foundation, Palmer pursued her ground-breaking labor mobility studies, and other researchers continued work on local industries, pricing, and productivity.

A Close Call with Obscurity

However, by the late 1950s, the stream of research was slowing. There was no successor for Palmer, who was incapacitated by illnesses prior to her retirement in 1965. The unit’s offices were demolished to build the new Dietrich Library and much of the group’s research library was scattered. The work of decades was nearly lost forever.

Herbert NorthrupIn 1964, Herbert B. Northrup succeeded George Taylor as chair of the Department of Industry. The early research was boxed up, waiting to be thrown into a dumpster when Margaret (Peg) Doyle, who had been Palmer’s secretary and office manager within the group, brought it to the attention of the incoming department chair. Northrup saw the value of the unit’s research, beginning its revival.

After reviewing the research, a decision was made with the approval of the Wharton dean to revive the unit. A home was found for it in an old brownstone building on Spruce Street (former home of WXPN), the library was re-established, and former members of the research staff were brought back into the fold. Many in the center credit Doyle with saving the Center’s exhaustive data sets, which are now an invaluable resource to economists and historians of mid-20th Century United States.

Margaret DoyleBy 1968, under the leadership of Northrup and his colleague Professor Richard L. Rowan, the Industrial Research Unit had “become an active, vital organization again, contributing knowledge in its traditional fields of competence: industrial relations, labor market, manpower and industry studies,” according to a history of the center. It also became known as a prolific self-publisher on labor relations issues. In addition to contributing articles to professional journals around the world, the team also completed several book series that would have great impact.

Influential Empirical Research on Status of Black Workers

Richard RowanAnderson recalls working on one of those book series as a member of the research team led by Northrup and Rowan in the late 1960s when he was in the PhD program at Wharton. Northrup—who was well known for researching controversial issues of his time—received a major grant from the Ford Foundation to conduct a series of studies on the status of black workers industry by industry, which turned into a multi-industry series called “Negro Employment in American Industry.” Anderson led the study on public utilities, which became his dissertation.

Anderson explains that after the Civil Rights Act of 1964 was passed, Title VII of that Act prohibited employment discrimination and created the Equal Opportunity Commission. “This opened up a vast change in the allowable policies and practices of this country with respect to race, but no one knew what the situation was with respect to employment in various industries because no one had studied employment of minorities in American industry,” he said. So when Northrup received the grant, the series was born.

Anderson says that this became the “definitive work on the status of black people in American industry. It had a profound effect on our understanding of race in industry and provided the background and foundation for the formulation of enforcement policy that was relied upon by the EEOC and later the Department of Labor in crafting their enforcement mechanisms.”

He says that the series even had an impact on the creation of affirmative action policy. Anderson explains, “Assistant Secretary of Labor for Wage and Work Standards Arthur Fletcher, now known as the father of affirmative action, used the research done at Wharton as the basis for formulating the Philadelphia Plan for the construction industry, which later became the standard methodology for establishing goals and timetables which are the bedrock of affirmative action employment policy in this country today.”

The Negro Reports established for the first time the empirical basis for determining the underutilization of members of the African-American race, says Anderson, who later held the same position as Arthur Fletcher as assistant secretary of labor for employment standards during the Clinton administration. Anderson credits Northrup with gaining the trust of so many companies. “He had been a vice president at General Electric before he came to Wharton. Northrup had excellent contacts and was highly regarded in the private sector. He had the trust and confidence of people in the corporate sector who were prepared to give him and his team of researchers information on their employment and we could not have gotten that information otherwise.”

That series of studies had enormous impact on government policy, employment policy and litigation. They started in 1966 and ran through the late 1970s, constituting a major research effort of the Industrial Research Unit.

By the mid-1970s, another labor issue was moving into the public eye—the persistently high rate of unemployment among minority youth, particularly in urban areas. Anderson says that the government was devoting additional funding to this issue through manpower programs intended to improve employment opportunities for minority youth. So the Industrial Research Unit—then co-directed by Northrup and Rowan—shifted its focus to research the impact of those government manpower programs.

“We looked at all the literature, critically evaluated what was known about impact and looked at what the conditions were in various cities. We published a book that became a classic on the impact of manpower programs with reference to minorities and women, which became another major series of work,” says Anderson.

Anderson notes that some of the federal government’s approach to the formulation of policy designed to advance the problem of unemployed youth was influenced by that study.

Continuing the Legacy in a Changing Workforce

In 1990, the Industrial Research Unit was renamed the Center for Human Resources. Peter Cappelli and Rowan were co-directors of the Center until Rowan’s retirement in 1997, when Cappelli assumed the directorship. He explains that the name changed to signal that the group’s interests were broader than just labor relations. “We are interested in contemporary developments in the workplace and how employment has changed.”

Under Cappelli’s leadership, the center has continued its legacy of hands-on practical research. He points to a five-year research program with the U.S. Department of Education, called the National Center on Educational Quality for the Workforce. “We were instrumental in advancing the idea of improving the connection between school and work and looking more generally at employer training initiatives and high-performance workplace initiatives.”

He says that the center also did some of the first research on how the restructuring of U.S. businesses from the 1980s through the 1990s has shifted much of the business risk onto employees. The project, called Change at Work, was in collaboration with the National Planning Association. “Our research became part of a collective voice on how things have changed. There is a lot of interest in the concept of having employees adopt more risk, but we were the first to document it,” says Cappelli, noting that the center also has published a book on the relationship between employer management practices and business strategies.

Perhaps one of Cappelli’s best known works, a book titled The New Deal at Work, was a continuation of those earlier projects. The book focuses on how the relationship between employers and employees has changed. “There is more of a market-based relationship now and less of a psychological contract. The model of people staying at the same company for an entire career where the company managed your career for you and pointed you in the right direction has changed,” he says. That book has since been translated into Japanese, Chinese, and Spanish.

In addition, Cappelli notes that the center has been doing recent research on employee issues associated with temporary work. And the group continues its work on a series of studies on career management issues. One of those studies, which appeared in Harvard Business Review this year, looked at the attributes of people running Fortune 100 companies now versus 20 years ago. Another study analyzed data from search firms about executive turnover.

In addition to research projects, the center is an active organizer of conferences on topics such as leadership, retirement, and careers. In June, it held a multidisciplinary conference looking at how careers have changed and what new factors are determining career choices.

The center also comprises four major groups for research and information services: the Council on Employee Relations (founded in 1946 as the Labor Relations Council), the Research Advisory Group, the Multinational Research Advisory Group (founded in 1974), the Financial Employee Relations Study Group.

“We get employers involved through these conferences and groups because things are changing more frequently than research can keep up with—the changes are way ahead of what people are studying. So we bring people together because it is the only way to let the academic community know what is going on,” says Cappelli. He adds that “the center has always been concerned about the applied workplace problems from the early studies in the 1920s about wages and unemployment, which were absolutely new at the time. We hope to continue that type of cutting-edge research in years to come.”

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