Tuesday, 28 November 2017

The New Economy Heralds the

 Return of Taylorism

Given that the net has proven to be a superb tool for comparing consumer prices and obtaining cheaper products and services it, perhaps, should not be a surprise that the hidden costs of some of the fast growing businesses in the world amount to a return to Taylorsim as the people management norm. As I have noted elsewhere previously, this may be dressed up as talent management, but for the average employee it means low paid insecure employment, with exhausting targets, overbearing managers and pressure to conform to company policies. Amazon, SportsDirect, RyanAir, Tesco and others have all come under intense media scrutiny for their employment practices.

Ryanair, it seems runs league tables for pilots fuel loading, employs over 70% of pilots on zero hours contracts, makes ground and stewarding staff pay for their own uniforms and drinks (at airport prices). Whilst Channel 4s Dispatches reports pilots feeling under pressure to cut corners, to save money, whilst their feedback is ignored. So bad has it got at RyanAir that pilots are cooperating, via a WhatsApp group, to refuse to help the company to overcome a pilot scheduling error that is causing the cancellation of thousands of flights this winter. The energetic CEO of RyanAir; Michael O’Leary, makes no secret of the fact that it is a low cost company. However, one wonders how appropriate a pure hard HR model is in the airline business, given the paramount importance of safety, especially when that regimes extends even to the pilots. This does look like an accident waiting to happen.

Amazon, eBay and Starbucks have all become notorious for their aggressive approach to corporate tax, but Amazon, in particular, has come under fire for its employment practices. Recent reports in the Sunday Mirror and The Independent newspapers suggest that the pressure to achieve targets is causing employees to literally collapse at work. In common with Sports Direct, Amazon is timing toilet breaks, targeting employees to process a parcel every 30 seconds, and discouraging trade unions, in a focused effort to squeeze productivity to the limit. Both companies are also reported to be making extensive use of zero hours contracts in the UK, which offer no guaranteed hours and considerable insecurity, in exchange for (mostly) minimum wage earnings. Precisely the sorts of conditions which gave rise to trade unions and would be described as sweatshop conditions during the industrial revolution.

Such conditions gave rise to the emergence of the human relations school of people management, exemplified by the likes of Cadbury’s and Saltaire. In contrast to their competitors, the Cadbury brothers and Titus Salt saw their employees as a source of competitive advantage, rather than a cost to be minimised. For them quality (of product and work), not only price, was central to their business model. An investment in an employee wasn’t just about improving productive capabilities, it was about creating a more civic society, without which it was recognised that order breaks down, life becomes more brutal for most and those lucky enough to escape the daily grind are forced to abandon any sense of virtue, just to sustain their status and position.

One of the contradictions of the new economy is that the networked ability to search out the lowest price is really no more than a global means of identifying the most exploitative means of production and distribution. With electronic distribution costs close to zero, the pressure to lower the cost of any human interaction with value creation that can be standardised is immense in a global marketplace. Of course, wherever possible people will be replaced: with driver-less cars, drones, robots, or outsourced to cheaper locations. Even supposedly higher value functions, such as HR and finance, are now being outsourced, in so-called shared service centres in low cost locations around the world.

People are being squeezed financially and diminished morally, whether they be operational staff, with fewer rights, higher targets and kept in line through the fear of outsourcing, or Managers required to oversee this monstrous machine. Something that Marx could have described very well indeed is hardly something that we could proudly call the triumph of liberal capitalism, and we must hope is certainly not the end of history, as Fukayama infamously described the end of the cold war. Although The Conditions of the Customer Service Classes in Digital Land might be a good book title for our times…

A major part of management responsibility used to be mentoring more junior staff, not just as employees, but as civic people. Increasingly that responsibility is being discharged to professional coaches who focus upon the professional in good times and are there, on employees own tabs, when things are not so good. The reasons for this include the declining age of managers and the ambition of younger employees, who are in a hurry. However, intimately tied up with talent management, this is primarily about focusing upon the numbers earlier, faster and more efficiently. The job for life has died and so employers have no reason to even pretend to invest for the long term. Employment is now a purely transactional relationship, with less and less moral baggage to contend with in the search for bigger margins and lower costs.

It is not that globalisation is, in itself, a bad thing. However, just as occurred in the tail of the last economic long wave, during the 1930’s, the dehumanising consequences of rapid economic change re having social and political consequences. Our failure to come together and reject the pure hard HR model is symptomatic of our failure to learn from the 1930’s. Work needs to become more than just a source of income, with which to passively consume more branded goods. It needs to be a vehicle for each of us to grow as individuals and as a society. For the alternative: atomisation, widening inequality and the victory of utilitarianism over virtue will create a world so hollow that it will result in war. And not just a war for talent!

The seeds are already sown and the trends in place. A casual glance at the Brexit vote, the election of Trump, or the surge of support for LePenn are clear indicators of a rejection of the new order by those at the bottom of society. People want more than to be mindless consumers of whatever they can afford from the crumbs left from the digital pie. The zero hours part-timers are trying to tell the elites that they are sick of their reduced lives being used to bail out bankers. HR executives produce much hot air on the subject of leadership. Perhaps now is the time that they started to show some and remember that work can be a chance to express the development and growth of us, individually and collectively, as our output exceeds the sum of our parts. To do that means to go beyond league tables, targets and time clocks though and not be afraid to accept that the organisation of work is much a moral challenge as it is an economic one.

Friday, 24 June 2016

Brexit or Bust...!

Brexit or Bust...!

How did we get here?

Philosophically the Anglo-American model of the State is quite different from the European State. Derived from Hobbes and Locke, it is rooted in a belief that man is, at core, evil and government exists primarily to protect us from ourselves. For the British relationships with the State are based upon a contract, whereby citizens grant authority to the government in exchange for guarantees to protect life, liberty and property. As Margaret Thatcher discovered, whilst trying to impose a new tax upon property, governments that are perceived to have failed to honour this contract swiftly pay the price. There can be no doubt that a large number of people perceive the EU as a threat to their liberty. This contrasts with the European model, derived from Rousseau, who believed that people are basically good, but corrupted by their environment. Thus the job of the European States is to manage and improve the society, with individual rights taking second place to the achievement of that objective.

Sociologically, Britain exhibits an island mentality, characterised by a resistance to distant authority. As maps of how different regions voted have shown, however, the strength of this feeling and the direction of its expression has revealed a highly fractured country. London voted to continue its leading international role. Scotland expressed its preference for rules made in Brussels to those made in London. Northern Ireland voted for continued EU financial aid and an open border with Eire. Whilst England Wales, beyond London, both turned their back on Brussels and revealed the disconnect between London and its governing elite, which increasingly are perceived to have more in common with elites in other global cities than with their own people.

As a Guardian columnist wrote immediately before the vote whilst it may be true that East Europeans are willing to do jobs for the minimum wage that the British are not, does that say something about the need for immigration or the exploitative nature of capitalism. Instead of bringing immigrants, he argued, we should consider paying a more realistic wage to start with.

Historically Britain has had a foreign policy based upon keeping out of European Affairs, only entering the fray when one state tries to dominate others. A cynical observer, such as that best captured in the satirical comedy Yes Minister1, might describe such an approach as divide and rule. Unable to make any further mess of the project from the inside the British have decided that the utility of membership has expired! True, or not, alongside the rise of scepticism across the continent combined with a series of overlapping crises, the British have drawn a line under the period of ever deeper political integration.

For both the Euro crisis that engulfed Greece and the immigration crisis flowing from the Middle East are rooted in the same problem. You cannot have a open borders policy or a common currency without a common policy on immigration and finance. To imagine otherwise has been shown to be folly. Yet such policies would be highly political in nature and could only work with some sort of federal agreement. It is this; a United States of Europe, led by an unaccountable self-serving elite, rooted in a communitarian view of the State that the British have turned their back upon. A willingness to trade freely and cooperate they have not. However, such was the awful level of the debate served up by Britain's leaders that such nuances were lost in the reactionary mud slinging of false and exaggerated statistics.

What does this mean?

Although he was mocked for raising this point during the campaign the one thing that Cameron did get right was the historical fact that whenever Europe has not been united the result has been conflict. Let us hope we have leaned our lesson!

For the Union of nations that is the United Kingdom, it is hard to escape the feeling that this is the end. Scotland will get the referendum it seeks and it will vote into the EU and out of the UK. Whilst Republicans in Northern Ireland are demanding unification with the South and Unionists will be forced to choose between their historical allegiance to London and their immediate economic interests in EU subsidies and grants. Brexit may yet have achieved what 30 years of conflict in Ireland could not – national unity. Yet equally it could be sufficient to re-ignite the conflict.

For business, in the short term, nothing much will change, beyond a devalued Pound, which will suit British exporters anyway. In the long term it simply isn't clear. As Britain is primarily a service based economy now, the EU has more to lose from a trade war and anyway access to London as the leading centre for global finance cannot be ignored. Equally Britain needs access to European markets to sell its services. I am minded of an article that appeared in The Independent newspaper arguing that the result of the referendum would make little difference: depending upon your point of view Britain will only need to accept EU rules where it wishes, or alternatively Britain will have to follow the rules without being able to influence them.

For education things are more clear cut and the news does not look good. EU students will be very unlikely to gain access to the British student loans scheme to cover their fees. There will be significantly less Erasmus exchanges and the ability of British Universities to participate in large pan-European research projects will be far less. Equally the EU will lose direct access to the second largest group, after America, of premier league Universities. British Universities, that have sought to become global education providers and invested heavily in European recruitment, are deeply concerned about how they will make up the shortfall in in finances and student numbers.

Alternatives for the UK

The simple model, as suggested above, is that nothing much changes and Britain, like Norway and Switzerland becomes a sort of adjunct member of the Single Market. However, this does assume a level of goodwill and vision from the EU that is unlikely in the present circumstances. Not least because it would encourage other truculent member states to follow the British Example. Although it may be the best possible outcome for all.

Forced to go it alone the British would need to define their competitive advantage in the global market place. Given the centrality of services, especially financial services, to the British economy they may well decide to leverage their economic flexibility to become a low tax home from which to invest into Europe and suck profits out at lower tax and bureaucratic cost. A sort of giant Jersey, or for those of a more left wing disposition a race to the bottom!

One of the ideas that was mooted by Eurosceptics at the time of the Maastricht Treaty was to join join existing alliance like NAFTA, to create an Atlantic Free Trade Area. Whether the US, Canada, or Mexico would welcome this, or Britain could accept an inevitably junior role, is far from clear. However, the British do share a common language, culture, system of government and law with the US and Canada.

Alternatively the British could try to form new trading alliance, based upon the old EFTA around the North Sea, with other Eurosceptic countries like Norway, Iceland, probably Denmark and possibly Holland. With more ambition, an attempt could be made to resurrect some form of the old Commonwealth, most likely with more developed English speaking nations such as Australia, New Zealand, South Africa and possibly India. This would take a gigantic leap of faith and require Britain to surrender much of its leadership role, but is not impossible.

What is most remarkable of all is that the Leave campaign was won without ever outlining any kind of positive vision of the future for Britain. It was an entirely negative campaign. This does not make it wrong, but it does create a vacuum, which some sort of new vision of the future will be required to fill. We can only hope that it does not come from the likes of Mr. Farage.