By Thomas A. Kochan
April 28, 2014

FORTUNE — In the 1987 movie Wall Street, Gordon Gekko’s memorable pronouncement that “greed is good” epitomized the worst features of American corporations that focus only on maximizing immediate shareholder returns without regard to the impact on their employees, customers, or communities.

That corporate caricature has continued to prevail. But recently, people ranging from Harvard University Business School Professor Michael Porter to leaders of the Sloan, Ford, Aspen, Hitachi (more here) and other foundations are putting forward the case that companies can provide great returns to shareholders and great jobs for employees.

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They point to companies such as Southwest Airlines (LUV) that for years have produced industry-leading profits, strong customer satisfaction ratings, and placement on
Fortune
and other lists as among the 100 best places to work. Kaiser Permanente is a similar operation in health care, as is Integrated Packaging in small-scale manufacturing; SAS in software services, as well as Costco (COST) or Wegmans in retail.

The list goes on. These real-life examples show it is possible to do both. And two decades of research carried out by Massachusetts Institute of Technology faculty and students and their peers in other universities (more here) have shown that these and other companies like them are productive, profitable, and provide good jobs with good wages.

We call this adopting a “high road” competitive strategy and using “high performance work systems and practices.” Based on this research, here’s what makes these companies and their employees succeed:

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  • It starts with values. CEOs and other top leaders value what their employees can bring to the competitive table. Rather than assuming that employees are slackers or mere factors of production that need to be told what to do and controlled by supervisors, they hire people for both their technical skills and their motivation to work together for the mission and goals of the enterprise.
  • These companies adopt business strategies that stress quality, innovation, customer service, and productivity as drivers of profitability as opposed to competing solely on being the lowest-cost and lowest-quality producer.
  • They implement employment and labor practices that combine investments in training and development, teamwork, employee engagement in problem solving and continuous improvement, and promote and sustain a culture of mutual trust and respect for all at the workplace.
  • This includes respecting workers’ decisions to be represented by unions if they choose to do so. But these companies also insist that unions work as partners in supporting a cooperative culture, promoting the success of the enterprise, and sharing the gains produced.

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But if we know how these great companies are able to succeed while offering great jobs, why don’t we see such high-road/high-performance strategies and practices spread across industries and dominate the economy?

My answer is that too many managers have been indoctrinated into the Gordon Gekko Wall Street mantra that focuses solely on maximizing shareholder returns, regardless of the consequences. Given the power of Wall Street and its corporate adherents, change will require a chorus of voices and reinforcing efforts from leaders in education, business, government, and labor. Business schools will need to move teaching of these high-road principles and tools from the fringes to the center of their curricula.

It is not enough to teach this stuff in HR courses. Evidence about how to build enterprises and manage in this high-road way must be incorporated into core economics, finance, operations, and marketing courses so the next generation of executives are fully equipped to lead high-road companies. Business leaders need to be proactive with investment analysts and their industry peers in promoting high-road principles. For years, Southwest and Costco and other companies like them were criticized by Wall Street analysts for “wasting” shareholders’ profits on employees.

Now some are realizing that high-road employment practices are what help produce the returns shareholders expect. More companies need to be proactive in communicating why they follow the high road, and they should encourage their peers to do the same. Government leaders need to embed high-road principles in their procurement and contracting practices, reward high-road firms with greater flexibility in enforcing workplace regulations, and create a level playing field by vigorously enforcing wage, safety, and labor standards in low-road operations and suppliers. It also wouldn’t hurt to bring other labor and employment policies into the 21st century — a topic for a future column.

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Labor unions need be the unambiguous champions of the high road and commit to working in partnership with employers to train and support employees in delivering industry-leading productivity, customer service, and innovation needed to justify and support great jobs. That’s what the unions at Kaiser Permanente, Southwest, Ford, and Costco do now. In return for the trust and commitment high-road companies put in them, the workforce must do its part by leading the charge for improved customer service, productivity, and innovations in how they do their jobs.

Entrepreneurial and tech-savvy young workers might think about developing “great company/great job” apps for iPhones or equivalent devices that tell each other which employers in their labor markets offer these practices and which do not. Glassdoor and similar websites are good starts in this direction. Startup techies take notice — here is a great business opportunity in waiting. Imagine a 2020 sequel to the Michael Douglas film. It could be called Main Street: “Greed is out,” the new Gekko would proclaim. “Great jobs are good.”

Thomas A. Kochan is a professor of industrial relations, work, and employment at the Massachusetts Institute of Technology’s Sloan School of Management. He is author of the book, Restoring the American Dream: A Working Families’ Agenda for America. More from Thomas Kochan:

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