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How many slaves work in your supply chain?

Why Alexander the Great could run Procter & Gamble The Towering Inferno and the impossibility of fairness at work Forget economists. Start watching underpants

Work.

Because business is about people

Summer 2018

Work.

Because business is about people

In the 1980s, Del Monte launched an iconic ad campaign that came to be synonymous with quality. Confident, stylish and charming in his panama hat and white linen suit, the Man from Del Monte had us all trotting off to the supermarket to stock up on juice and tinned fruit when he said yes to a farmer’s crop. But did we ever consider what might happen if he said no? Thirty years ago, we were a lot less clued up about the implications of companies’ decisions on their supply chains, especially the relentless push for cheaper products. And while Del Monte itself might have strong reporting mechanisms, disasters such as the collapse of the Rana Plaza garment complex in Bangladesh, which claimed more than 1,000 lives, show the stakes involved. Tackling such abuses is not easy, as our feature on page 42 reveals, but the good news is business can make a difference.

Claire Warren, editor claire.warren@haymarket.com

Features in detail p4 Perspectives: distilled management thinking p6 15 minutes with… Caroline Michel p12 Who wins in the future of work? p14 Interview: Glen Dimplex chair Martin McCourt p24 Ancient Greeks and modern management p28 Q&A: Anders Bouvin on banking and bonuses p36 What lipstick can teach us about the economy p40 Focus on: the supply chain p42 All’s fair in love and war p54 Debrief: business research, reports and insight p62 Further reading p72 The off-piste guide to blockchain p74 Front cover Celestina, 1904 Pablo Picasso (1881-1973) Succession Picasso/DACS, London 2018; AKG Images Inside front and back cover Disassembled ATM Todd McLellan

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The future of work

Martin McCourt

Lessons from the Greeks

Sweden’s Handelsbanken

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Previous estimates that put the potential loss of jobs to technology at 47 per cent may have been overstated. According to the Organisation for Economic Cooperation and Development, a more modest 14 per cent are highly automatable, with 32 per cent likely to be significantly altered. But that doesn’t mean we can be complacent. While technology could unlock the opportunity to reappraise our notions of how and when we work, low-skilled workers could increasingly be left behind. Claire Warren speaks to management thinker Margaret Heffernan, economic historian Robert Skidelsky, authors Guy Standing and Tim Dunlop and CIPD CEO Peter Cheese to explore the possibilities that new technology could open up, and what we need to do to ensure we all share the benefits.

A good CEO doesn’t always make a good chairman, admits Martin McCourt, and he should know, having experienced both roles.

McCourt is probably best known for being CEO of Dyson, a role he held for 15 years during a period in which the business went from a niche UK brand to an international success story. Today, he’s on the board of Your Life, which promotes STEM subjects, and chairs several companies, including the Learning Curve Group and Glen Dimplex. “I was a ‘lead from the front’, communicative and energised CEO,” he tells Andrew Saunders.

“When I did my first chairman’s job I found it quite a challenge. I was very conscious of the fact that it was the CEO’s gig and that my role was to guide, nudge and assist.”

Would Alexander the Great make a stellar CEO? Could Socrates teach us to avoid groupthink? And could Xenophon help to challenge our narrow definitions of leadership?

In an age of exponential change, it’s easy to be distracted by fashionable management theories. Yet the central challenge of leadership, as John Kotter explained it – defining what the future should look like, aligning people with that vision and inspiring them to make it happen – was greater for all-conquering Alexander 2,400 years ago than it is for CEOs today. Drawing on the thoughts of Aristotle, Herodotus, Socrates, Xenophon and Plato, Paul Simpson discovers a civilisation that pioneered globalisation, mentoring, crowdsourcing, critical thinking and leadership models that are more nuanced than many of those we use today.

When Handelsbanken faced a banking crisis in the late 1960s, it found a novel solution that tapped into the knowledge and expertise of those on the frontline. The Swedish bank turned to a littleknown academic, Jan Wallander, who ushered in a new era of devolved leadership, empowering bank branches to make autonomous decisions.

Crucially, while the bank has a profit-sharing scheme, bonuses have been taken off the table.

As CEO Anders Bouvin tells Lawrie Holmes: “We never want to be suspected of putting our own interests before the customers’ interests.”

Handelsbanken’s strategy worked. It survived the Swedish banking crisis of the 1990s and, while other banks failed, it remained in good shape during the 2008 global financial crisis.

Andrew Saunders is an editor and writer. He was previously deputy editor of Management Today

Claire Warren is editor of Work. She was previously deputy editor of People Management

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Paul Simpson is a business journalist and has written books on football and Elvis

Lawrie Holmes is an editor and writer specialising in finance and business

Shutterstock, Getty Images, PA Images, PictureLux/Eyevine

FEATURES IN DETAIL

Economic influences

What’s in your supply chain?

In all fairness

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In the 1920s, American economist George Taylor suggested that women’s hemlines could be seen as an accurate indicator of the state of the national economy.

Surprisingly, there is some evidence to back up his theory, thanks to Dutch academics Marjolein van Baardwijk and Philip Hans Franses, who crunched the hemline data from 1921 to 2009. As Work. discovers, this is just one of many weird and wonderful alternative economic indicators that have been put forward over the years. Who knew, for instance, that sales of men’s underwear could be the harbinger of economic recovery (an idea mooted by Alan Greenspan, former chairman of the Federal Reserve) or that horror films seem to succeed when the economy takes a nose-dive (perhaps because they are relatively cheap to make).

Half of the world’s GDP goes through supply chains, yet 69 per cent of companies do not have full visibility of theirs.

It’s no surprise, then, to learn that there are serious abuses going on.

As Andrew Stone finds, estimates put the global numbers in modern slavery at between 21 and 46 million, while around 170 million children are thought to be engaged in child labour. Businesses, however, can effect change. Through its smart data networks, British consultancy Global Resonance hopes to improve life for organic cotton farmers in India, who are often left in the dark about demand for their crop. For them, clarity can be the difference between life and death: it’s believed that debt drives at least two farmers to suicide every day.

Give two children an unequal number of sweets and ask one to accept or reject the situation, and that child will give up their sweets entirely to prevent the other child getting more than them. Interestingly, Jane Simms reports, by about the age of eight they start to reject the unequal allocation even when they are given the greater share. By the time we reach adulthood our notions of fairness have been further shaped by other factors, such as context and background.

For employers trying to create fair workplaces it’s a tricky issue, further complicated by another dimension – fairness to individuals vs fairness to the group. Get it wrong and it can be costly, as Boeing discovered when a disgruntled employee cut electrical wires on a $24m helicopter.

Andrew Stone is a freelance business journalist and former enterprise editor at The Sunday Times

Debrief p62-71 Post-Brexit labour market

Even if migration restrictions are put in place, UK businesses plan to recruit EU nationals.

Human capital reporting

Firms improve information in annual reports but fail to develop a risk perspective on human capital data.

Ethics

Employees can react negatively when they think they are more ethical than co-workers.

Gender

Female leaders scored better than men in a test on leadership personality traits, but have a greater tendency to worry.

Stress

In certain situations, workplace anxiety can boost performance by helping employees to focus.

Perceptions of leadership

Wearing heavy make-up in the workplace can have a negative effect on whether women are seen as good leaders.

Discrimination

Senior leaders say gender inequality is prevalent across Asia but fail to see it as an issue in their own organisations.

Innovation

An economic slump can change the behaviour of creative staff.

Negotiation

In negotiations a moderate level of anger can be more effective in winning large concessions than showing no anger at all.

Employee attitudes

Jane Simms is a freelance management journalist and was previously editor of Financial Director

A positive affective tone reduces the number of staff sick days.

New CEOs

While 38 per cent of CEOs hired externally say they are fully prepared for their new role, only 28 per cent of internal hires do.

Workplace behaviour

Employees thrive under an abusive boss – but only if they have high levels of psychopathy.

Employee engagement

Ping pong games, office parties and teambuilding days may seem like fun for some, but feel like a chore for others.

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PERSPECTIVES MANAGEMENT THINKING DISTILLED

Q&A TAMMY ERICKSON

HR’s role in a more networked future

BY 2028, organisations will own far less and have fewer employees than they do now, predicts Tammy Erickson, adjunct professor of organisational behaviour at the London Business School. And that, she told the school’s recent HR Strategy Forum, means companies need to start redesigning their business models, work processes and organisational boundaries.

How will the businesses of the future look different?

We know from economic theory that there’s a relationship between business costs and firm size. If the costs of negotiating with suppliers, for example, are high, companies may choose to buy those suppliers. As technology brings costs down, it makes more sense to tap into resources when they are needed than to own them outright – or, in the case of people, to employ them full time. So instead of worrying about things like keeping permanent staff busy, you’ll be able to think about how 06

What impact will that have on how work is organised?

To take advantage of lower costs, companies need to operate more like networks. That’s about breaking down what they do into bite-sized pieces, so that various people and other businesses can contribute. It’s also about replacing top-down decisionmaking with experimentation and collaboration.

How can you encourage employees to collaborate?

Not by telling them to be more collaborative, but by establishing why you want people to collaborate and how they should go about it, which makes it easier for them to behave in this way.

Will HR still have a role in 2028?

HR will have a bigger, more important role than it has today, acting much like a film industry talent agency that pulls together the best team for each project.

That means identifying pools of talented people, developing relationships with them and getting them contractually set up in the organisation’s systems so that they can be taken on at short notice. One obvious way of finding these people is to look at the organisation’s alumni network. The chances are there is a great pool of people in their 60s or 70s who are available to come back to work part time.

Leaders fail to meet basic human needs LEADERSHIP EDUCATION should start in the mind of the leader, not by developing skills in strategy or people management, say Rasmus Hougaard and Jacqueline Carter. “By understanding how your mind works, you can lead yourself effectively,” they explain in their book, The Mind of the Leader. “By understanding and leading yourself effectively, you can understand others and lead them effectively.”

After surveying more than 35,000 business leaders, Hougaard and Carter conclude that disengagement is rife because leaders fail to meet employees’ basic human needs for meaning, purpose, connection and happiness at work. They argue that, to engage employees, leaders need mindfulness, selflessness and compassion.

But is it realistic to expect the ambitious people found in many top jobs to develop these traits? “The qualities of mindfulness, selflessness and compassion are not fitting for all leaders,” Hougaard admits.

“Mindfulness is about being focused in the moment, to enhance your performance. Selflessness is the courage to lead for the bigger impact. Bringing compassion to difficult situations is the hard choice, rather than the soft and easy. All three qualities require strength, courage and discipline.”

Rasmus Hougaard is founder of the Potential Project

Interfoto/Alamy Stock Photo, Johnson Photography Inc, Darden School of Business, Internet Archive Book Images

to find the very best person to perform a particular task today.

Words: Anat Arkin

Employee voice key to tackling abuse WHAT CAN EMPLOYEES DO to help stop abuse they see happening in the workplace? Answering this question at a roundtable discussion about recent sexual harassment scandals, Mary Gentile stressed the importance of supporting those on the receiving end of abuse.

Individuals, she said, could join or create employee affinity groups, call out good behaviours or advocate action-based training on how to raise concerns effectively. “Building an empowered and skilful employee voice makes it more difficult for such behaviour to continue in the shadows,” Gentile, author of Giving Voice to Values, said at Harvard Business Review’s Managing #MeToo roundtable.

Targets of abuse should not try to understand the motives for such behaviour, but should instead focus on stopping it, Gentile tells Work.

They can do this in various ways, from avoiding one-to-one meetings with the abuser to communicating to that person the impact of their words or actions.

None of this, she adds, absolves business leaders of the responsibility for making it clear that abusive behaviour is unacceptable, and enforcing this prohibition fairly, while supporting employees who have experienced sexual harassment or other forms of abuse.

Mary Gentile is a professor at the University of Virginia Darden School of Business

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PERSPECTIVES

Do unions have a future?

As the TUC marks its 150th anniversary, union membership continues to fall, with a shrinking public sector and growing gig economy often blamed for fuelling this trend. So are trade unions in terminal decline, or do they still have a role in a world their founders couldn’t have imagined?

EXPERTS’ VIEW GREGOR GALL

NICHOLAS FINNEY

Affiliate research associate, University of Glasgow

Industrial relations expert and senior policy adviser

Unions could have done more to protect their members’ interests after the financial crisis.

But given there isn’t any real alternative to union representation of workers, it’s what they can do in the future that’s important.

Trade unions will still be required in the future to maintain the balance of power between capital and labour. But unless they find a better way of doing that, they will struggle to survive. Some unions appear to recognise this, and are now considering strategies that do not involve strikes.

Although membership has fallen, unions are still the largest voluntary collective organisations in the UK. They have power that can be exercised, particularly through stopping production of goods or services, and this gives them the potential to do better in future years.

Realising this potential is hardest in the private service sector and among younger workers, where union membership is below the national average. But some unions have begun to tackle the problems of the gig economy, with victories against Uber and Deliveroo demonstrating that nominally self-employed workers are effectively employees. Other recent successes include winning restitution for blacklisted workers, and persuading many companies to change the way they deal with staff tips.

To build on these successes, union members need to organise themselves. Many see their union as there to provide a service – a mindset that needs to change if unions are to prosper. A change in the regulatory environment would also give unions a basis on which to rebuild their strength.

The drop in trade union membership in the private sector indicates that a lot of people just don’t feel the need to be part of a union. We are now in a full employment economy so, if you feel you are underpaid or exploited by your employer, the first thing you do is leave. The risk of losing skilled workers limits how badly most employers will treat their workforce.

When it comes to essential services, the law should impose restraints on union activities. The Trade Union Act 2016 needs to be strengthened to give the public greater protection from the damaging effects of strikes. And it’s the sick, the elderly and those on low wages – the very people the unions say they want to defend – who suffer most when essential services are withdrawn.

A price would have to be paid for taking away the right to strike from workers in essential services, but there are ways of protecting their interests, including compulsory arbitration.

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Radical innovation

Who’s doing it?

Arguably, the most sustained, successful radical innovator is Apple. The iPod and the iPad were premium products that weren’t cheap, but succeeded because millions of consumers loved using them. These technologically driven breakthroughs were created by a company culture that encouraged groundbreaking innovations – even if the iPhone, for example, assimilated and improved on components that were already available. Apple recruited the right talent to pursue this goal, notably designer Sir Jonathan Ive. As American consultant Jeffrey F Rayport notes: “The ultimate ‘brand manager’, post-purchase, is the product itself. A 30-second advert lasts, well, 30 seconds. Buy the car and the experience lasts for years.” Other techsavvy radical innovators include Salesforce, which pioneered the idea of selling software as a service way back in 1999. Even Amazon, a poster child for disruptive innovation, doesn’t always win on price. Alexa has found a profitable niche because consumers enjoy using the voice-activated digital assistant.

The bottom line HR should drive radical innovation.

Organisations need to hire people with the vision to understand where technology may lead and create a culture that ensures breakthrough ideas are not stymied by managerial myopia. Equally, companies that focus too narrowly on disruptive innovation may squander good opportunities. In a market where American venture capitalist Marc Andreessen says “software is eating the world”, hiring good people may be the best way to manage sudden, drastic change.

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Finding your feet in a group culture Use tech trends to identify skills needs STRATEGIC WORKFORCE PLANNING will not solve every organisational problem but, says Ross Sparkman, it can improve business performance by ensuring a company has the skills and people needed to support its strategy. In his book, Strategic Workforce Planning, he sets out how to analyse where a business is with its people now and where it needs to be in the future.

Sparkman admits that workforce planning in an ambiguous and fast-changing environment can be challenging. When organisations don’t know what jobs will exist in a few years’ time, gaining insights into future hiring requirements involves cross-functional collaboration and scenario planning, he says.

HR and business leaders, he explains, need to consider the key technological trends and what new skills, if any, future technologies will need. It’s then possible to identify the skills and roles the company may require in the future.

Sparkman argues that, if done properly, planning does not rob organisations of flexibility: “The key here is to utilise multiple scenarios in the planning process and make this process ongoing and continual.”

DANIEL COYLE DESCRIBES group culture as one of the most powerful forces on the planet. “We sense its presence inside successful businesses, championship teams and thriving families, and we sense when it’s absent or toxic,” he says in his latest book, The Culture Code.

To discover how this force works, Coyle spent four years researching some very effective groups, among them a special-ops military unit, an inner-city school and a gang of jewel thieves. He found that a strong group culture isn’t determined by fate, but comes about when members behave in certain ways. For example, they build psychological safety – using signals of connection, including physical proximity, eye contact and mimicry – to generate a sense of belonging, and they discuss their own vulnerabilities to create the mutual trust that drives cooperation. Members also focus attention on a shared purpose: repeating catchphrases, for example, to signal where the group is now and where it wants to go.

Coyle, whose previous books include The Talent Code, says group culture may look and feel like magic, but is in fact “a set of living relationships working toward a shared goal. It’s not something you are. It’s something you do.”

Ross Sparkman is head of strategic workforce planning at Facebook

Daniel Coyle is The New York Times bestselling author of The Talent Code

Scott Dickerson

What is it?

Essentially, radical innovations happen when new knowledge inspires the commercialisation of completely new ideas, products and/or markets. To excel at this, companies need the right organisational capabilities and human capital. Radical innovation can’t be incremental – it’s not a matter of upgrading something an organisation already does – and differs from Harvard professor Clayton M Christensen’s disruptive innovation, in which companies use new technology to enable different business models and enter markets at low price points. The Dollar Shave Club and Uber are classic examples of his theory.

PERSPECTIVES

ISAAC GETZ

Keeping hold of dual-career couples

COMPANIES THAT HAND CONTROL TO EMPLOYEES WILL BOOST ENGAGEMENT AND GAIN A COMPETITIVE EDGE

COMPANIES ARE STRUGGLING to retain future leaders because they don’t cater to dual-career couples, according to Jennifer Petriglieri. Writing in the Harvard Business Review, she says: “Companies tend to have fixed paths to leadership roles, with set tours of duty and long-held ideas about what ambition looks like.”

Rooted in a time when most executives had non-working spouses and remote working was not yet possible, executives are often required to relocate multiple times.

Those unwilling to sacrifice their partners’ careers by moving are seen to lack ambition, says Petriglieri, who, in a study with Otilia Obodaru of Rice University, interviewed more than 100 dual-career couples and heads of people strategy at 32 firms.

She makes a case for new ways of developing talent, including brief job swaps, short-term secondments and partially remote assignments. But for these approaches to succeed, cultural obstacles to flexibility need to be removed, argues Petriglieri.

Her work on dual-career couples suggests that reverse mentoring can help leaders understand the constraints facing today’s highpotentials – and stop thinking that if they could drop everything and move at short notice, so should the next generation.

IN THE 1930s, Nobel prizewinner Samsung took three weeks to decide.

Ronald Coase explained that firms Nokia is no longer a player. exist because workers coordinate The real issue is in the mistrust activities more efficiently than they and fear-based human relationships would collaborating as independent people suffer at work – problems contractors. However, a problem that, in general, they don’t emerged – the baby the advent of the experience with friends and family. firm threw out with the bathwater.

The good news is companies that A major coordination question transform relationships in their surfaced in the 18th century within organisation into natural ones can large manufacturers: ‘What is the become collaborative and agile. minimum number of supervisors I have studied 100 or so such needed to coordinate the maximum transformations in businesses of all number of workers?’ The answer sizes, geographies and industries. was a hierarchical tree.

There is no set model, This tree soon grew “The goal must be but all were initiated by into a bureaucratic to have the same a CEO who co-created baobab, as supervisors, natural relations at a new organisational tired of repeating the work as in life” mode with employees. same instructions, For example, every created regulations and procedures.

Michelin plant is co-creating its own In economic terms, even inflated trust-and-responsibility-based hierarchical bureaucracies have organisational system. The result? proven efficient. But since controlEngaged employees. based relations are unnatural, there Given the same tools, a ‘liberated has been collateral human damage company’ will also outperform its – lack of control over tasks is the command and control competitors. number one cause of work stress.

According to Gallup’s 2017 State of In the previously predictable the Global Workplace report, 11 per world, hidden economic costs such cent of UK employees are engaged. as absenteeism were outweighed by This compares to around 70 per cent efficiency. Not in today’s VUCA at the world’s most successful firms. world. The rigidity of bureaucracy People don’t live two lives – one can lead to vulnerability. Think of at work and one personal. The goal Nokia, which took nine months to must be to have the same natural decide whether to acquire new chip relations at work as in life because, technology from Qualcomm. ultimately, people have only one life.

Jennifer Petriglieri is an assistant professor of organisational behaviour at INSEAD

Isaac Getz is a professor at ESCP Europe Business School and co-author of Leadership Without Ego (forthcoming from Palgrave MacMillan)

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PERSPECTIVES

BEST OF Fresh thinking from the worldfamous incubator of ideas

AUDREY CHOI Sustainable investment expert The case for investing in change Capital markets are controlled by institutions that ultimately belong to us. And that gives us the power to make a difference, according to Choi. We need to vote with our savings and invest in companies that champion fair labour standards, sustainable production methods and healthy communities, she says. Citing research showing companies that care about these things can still make a profit and even outperform their rivals, Choi argues that we need to make our voices heard and invest in the change we want to see in the world.

SHAWN ACHOR Psychologist The happy key to success Most parenting and managing styles follow the formula: if you work hard, you’ll be successful and, if you’re successful, you’ll be happy. But Achor thinks this is back to front – that it’s when we’re feeling happy and positive that we’re most productive. And it’s possible to learn to see the world in a positive light. “By training our brains just like we train our bodies,” says Achor, “what we’ve found is we can reverse the formula for happiness and success and, in doing so, not only create ripples of positivity, but a real revolution.”

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Boards can no longer ignore bad behaviour GROWING DISTRUST of corporate elites could trigger a populist wave as disruptive as the one that has shaken politics on both sides of the Atlantic, warn Sir Cary Cooper and Marc Stigter. Their new book, Boards That Dare, urges boards to prepare for “anticorporate populism”, defined as: “A political style of action that mobilises a large alienated element of the population against corporations seen as controlled by a dysfunctional leadership elite that acts on behalf of its own corporate interests.”

As consumer and other interest groups become increasingly vocal and powerful, boards will no longer be able to get away with overlooking corporate wrongdoing, whether real or perceived, say Cooper and Stigter. But their research indicates that while boards face growing threats, they also now have an opportunity to future-proof themselves by reframing how their companies deliver maximum value – and for whose benefit. This process calls for courage, and needs to start from within. “Organisations need board directors who are bold,

venturesome, sometimes disruptive, who take calculated risk and confront immoral and unjust social and corporate practices,” Cooper tells Work.

Directors, he continues, need to be more engaged with the business, scrutinising both strategy and its implementation, instead of relying solely on information fed to them by senior management. They should be concerned not only about their company’s shareholders and customers, but also about society and the environment, the value systems they create and the quality of life of their employees.

Future-proofing is also about making boards more diverse by including more women, people from ethnic minorities, millennials and others. But will corporate boards really change in these ways?

Or, as the book asks, will they carry on doing what they’ve always done and, like their political counterparts, be taken by surprise by the new populism? “Futureproofing boards in a fast-changing world is a challenge,” Cooper replies, “but it is possible.”

Sir Cary Cooper is president of the CIPD

Ant Clausen

JASON SHEN Entrepreneur and talent expert Finding talent in the age of robotics As robotics and machine learning transform work, we should all expect to do jobs we’ve never done before and have nothing to do with what we studied in college, says Shen.

The biology graduate turned product manager, who now uses technology to help identify talent, urges business leaders to look for talent in unfamiliar places, and not rely on outdated 20th century hiring systems. “Let’s stop equating experience with ability, credentials with competence,” he says.

“Let’s stop settling for the safe, familiar choice and leave the door open for someone who could be amazing.”

PERSPECTIVES

IAN ICETON

A CHANGE IN MINDSET IS NEEDED IF WE ARE TO TRULY EMBRACE DIVERSITY AND HARNESS THE UNTAPPED POTENTIAL OF THOSE WITH HIDDEN DIFFERENCES WORKPLACE DIVERSITY has enjoyed much attention recently.

Most companies have made important changes to their policies, efforts that have been focused especially on recruitment practices.

Great attention is now put into how new entrant programmes, especially apprenticeships and graduate schemes, are advertised in a way that is gender and ethnicity neutral.

Furthermore, work across all stages of the employee lifecycle has been focused on all nine protected characteristics, with many examples of line manager education and training being rolled out to help promote more accommodating and understanding company cultures.

Given this progress, many in HR and the business community, while not complacent, must feel like their colleagues are much less likely to discriminate, but how fair are we really being? Could we be indirectly discriminating against both potential and actual employees?

Evidence suggests that in recent years, the level of autism spectrum disorder (ASD) diagnosis has increased significantly. Studies show that for these individuals, the process of finding and keeping meaningful employment can present significant difficulties. There is estimated to be half a million people on the autism spectrum in the UK; of these, more than 85 per cent are

believed to be unemployed or under-employed. In addition, given the high level of later-in-life diagnosis, many organisations probably have people in their business who have ASD, but may not have disclosed it. Finding ways to reduce this lost opportunity has huge potential economic value. It is also a moral imperative.

Businesses are potentially missing out on a significant cohort of talent because traditional recruitment techniques and job requirements “Finding ways to reduce this lost opportunity has huge potential economic value. It is also a moral imperative” that unnecessarily demand interpersonal skills discriminate against adults with ASD. Many with ASD find the interview process difficult to navigate and as a result don’t show their true potential. This is a challenge for HR functions, and questions existing diversity policies, which are typically too narrowly defined to assist those on the autism spectrum.

Recently, some enlightened organisations have started to change their HR processes to access this ‘neurodiverse’ talent. These process changes started in Silicon Valley, but there are now pockets of good

practice in the UK too, including Procter & Gamble and Deutsche Bank, both of which have autismfriendly internships.

In a 2014 MIT Sloan Management Review article, Robert Austin and Thorkil Sonne put forward an approach to help organisations better accommodate those on the spectrum. Known as the ‘dandelion principle’ because of the importance of context – in a lawn, the dandelion is a weed, yet it is an excellent source of vitamins – the method involves altering the entire HR approach to design, recruitment and training.

Methodologies like this require a mindset shift among HR and business leaders generally, but the change is worth the effort. A more inclusive approach significantly increases the chances of recruiting those talented individuals who have ASD, and is more likely to allow people with other hidden differences to thrive.

The evidence from those organisations that have started to make this mindset change is that not only do they achieve a greater diversity but, in forcing themselves to think differently and more inclusively for autistic people, managers improve their skills in managing all their people. So how inclusive is your business, really?

And what more could you do to be truly open to all?

Ian Iceton is managing director for talent, performance and reward at River and Mercantile Group, and founder of AutismInWork.com

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minutes with...

Caroline Michel The CEO of PFD on mavericks, mentors and nearly losing it all

On having great mentors Norah Smallwood, who ran Chatto, was extraordinary. She was a pioneering woman in our business and a tremendous influence. She said I should get out there and introduce myself to as many people as I could, so I did. Even today, no matter how busy I am, I hardly ever turn down an invite. It’s a chance to meet new people. I’m an eternal optimist – you never know who you could come away knowing.

On losing the mavericks A part of our business I miss is the people who had a real gut-feel for a manuscript. While it’s still there to some extent, it’s less so, because today there’s a lot more pressure to make books successful straight away. If we knew what made a 12

bestseller, we’d all be millionaires, so this business is still about managing risk. We receive hundreds of manuscripts a week, so I have to rely on my team. You have to trust them, knowing they may not get it right every time.

Sometimes authors don’t fly until their third or fourth book; that’s why when we believe in someone, we’re with them for the long haul – despite the pressure of the balance sheet.

On nearly losing it all Ten years ago, my arrival at PFD coincided with the loss of 82 staff – agents who left to set up their own rival business after years of dispute with our parent company, CSS Stellar. It was a sobering moment. The press was following our every move and there were people who thought we’d never be able to restore our reputation.

One of my first tasks was to build the business back up. That’s when I took on a bunch of graduates.

They didn’t know anything about our business and they probably didn’t realise how dire our situation was, but they came in with clear heads and clear hearts.

Now I would say they’re the best agents in the country.

On celebrating women in business I’m one of the judges on the annual Veuve Clicquot Business Woman Award because I still think it’s important to focus on

the successes of women. Some might say we should just be celebrating ‘business people’. I’m not a rabid ‘MeToo-er’ but, until we have true equality, we should be celebrating businesswomen.

On broadening out I’ve been fortunate to take on other roles alongside my day job, including being chair of the Hay Literary Festival and the British Film Institute (BFI) Trust. I thoroughly enjoy the challenge.

I’ve never missed a Hay Festival and, at the BFI, I’ve helped to turn around its archiving and financing. My advice to anyone thinking of taking on these types of roles is that you have to be clear about what you can add.

There’s no point sitting on a board for the sake of it.

On her work-life balance People often ask if I’m a workaholic. I wouldn’t call it that – more I’m terrible with my work-life balance. But I love my work, so sometimes you have to ask whether this is so bad. That said, my kids do tease me if I promise them I won’t look at my phone for an afternoon (because I often fail). When they were very young, I’d be reading manuscripts with them. At the time I thought if I was with them that was enough, but I’ve since realised I probably should have engaged with them more too.

Interview: Peter Crush. Portrait: Matt Munro/The Financial Times Ltd

On making your own luck I came into this business without an English degree, having never read Hardy – I still haven’t. I rode my luck getting a publicist job at Chatto & Windus [now part of Penguin Random House] after lying about being able to type, and genuinely thought I’d be sacked. But luck struck when they needed help promoting a book about Cardinal Newman. I happened to know a lot about him and I secured great coverage. It was a real buzz. That’s when I realised that to be successful you need to make your own luck.

Caroline Michel

Michel has been the CEO of literary and talent agency Peters, Fraser and Dunlop (PFD) since 2007, and previously headed up the William Morris Agency in London.

She is currently chair of the Hay Literary Festival and the BFI Trust, and a trustee of Somerset House.

FLAT agile working

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Solent News/REX/Shutterstock

HOUSE

…DISCUSS

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The robots are coming but will that mean mass job losses, especially for low-skilled workers, or could it free us all from the drudgery of the 9-5? Claire Warren asks the experts

O

nly a few years ago the future of work was, as author Tim Dunlop puts it, barely a blip on the collective consciousness. Today, it is “one of the most talked about topics in the public sphere, a hashtag on social media and the subject of everything from pub talks to international conferences”.

But the one thing we can be sure of is that we don’t really have an accurate idea of the impact technology is going to have on jobs. Just because something can be automated doesn’t mean it will – or should – be and it is difficult to predict how many new roles are likely to be created to offset those that go.

Forecasts for worldwide job losses have ranged from consultant McKinsey’s estimate (based on its mid-point and most rapid automation scenarios) of between 400

WHERE WILL TECHNOLOGY HIT HARDEST? Percentage of jobs at risk of automation 25.7 5.7 22.8 10.0 26.4 7.2 Risk of significant 27.5 8.0 change 27.0 10.2 (50-70%) 26.0 11.7 27.6 10.7 High risk of 28.7 11.4 automation 28.6 13.5 (>70%) 29.0 13.1 28.5 14.0 26.8 15.9 30.8 12.2 32.8 10.4 28.0 16.8 31.6 14.0 29.7 16.6 31.2 15.5 35.5 12.1 32.8 16.4 30.6 19.8 35.5 15.2 30.2 21.7 31.2 20.9 27.2 25.7 31.4 21.6 35.8 18.4 39.2 15.1 35.3 23.4 43.1 16.4 41.9 21.0 30.8 33.6

Source: Automation, skills use and training, OECD 2018

Norway New Zealand Finland Sweden USA UK Denmark Netherlands Canada Singapore Belgium Ireland Estonia Korea Israel OECD average Austria Czech Rep Russian Fed France Poland Italy Spain Cyprus Slovenia Chile Germany Japan Greece Turkey Lithuania Slovak Rep

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million and 800 million displacements by 2030, to futurist Thomas Frey’s more alarmist forecast that more than two billion jobs will disappear over the same period.

The latest Organisation for Economic Cooperation and Development (OECD) research puts the figure for highly automatable jobs at 14 per cent – more than 66 million workers – across 32 countries (ranging from 34 per cent in Slovakia to only 6 per cent in Norway), with an additional 32 per cent of jobs likely to be “significantly altered by technology”, creating a need for new skills.

The OECD’s figure is far lower than a previous estimate from Oxford academics Carl Frey and Michael Osborne that 47 per cent of US jobs are at risk, suggesting that fears of mass technological redundancy may be overblown. But that doesn’t mean we can be complacent.

According to the think tank, the most vulnerable workers are those in low-skilled jobs – a group many argue has already been left behind. These workers are more than three times less likely to have participated in on-the-job training and about twice less likely to participate in formal education, reducing their chances of being able to upskill to another role.

This disproportionate impact on low-skilled workers has prompted Bank of England governor Mark Carney to warn that mass job losses caused by advancing technology could lead to a rise in Marxism. At a recent event, reported The Independent, Carney said increases in AI, big data and robotics could create huge inequalities between the high-skilled workers who benefit from the advances and those who are sidelined by them. “If you substitute platforms for textile mills, machine learning for steam engines, Twitter for the telegraph, you have exactly the same dynamics as existed 150 years ago – when Karl Marx was scribbling the Communist Manifesto,” he warned.

However, while technology could have serious consequences for some groups of people, it also offers the opportunity to reappraise our approach to work: technology could remove the mundane elements of many roles and release us from the daily grind.

So how do we ensure that masses of people are not left behind by technology? The right to work is enshrined in the Universal Declaration of Human Rights, but does that mean we should all work? And for how long? How would we find purpose in our lives if we didn’t work and, if we do, how do we ensure that work is good work?

To start the debate, Work. asked five experts what impact they believe technology will have and what we should be addressing now if we are all to share in the economic rewards of new technology.

technology

Fast-food workers and sympathisers in New York march for a $15 minimum hourly wage

Guy Standing

Shutterstock/A Katz

Unless we act now, technology could exacerbate the rise of the precariat A PROFESSORIAL RESEARCH ASSOCIATE at SOAS University of London, Guy Standing warns that while technological change is unlikely to create mass worklessness, it is set to affect the nature of our class structure: exacerbating the growth of the ‘precariat’, increasing economic insecurity and changing the character of labour and work.

It no longer makes sense to talk about a homogeneous working class, he maintains. Instead, we have an emerging class structure, down in part to the “neoliberal economic strategy that went with globalisation”.

In the interests of competitiveness, governments of all kinds introduced labour market reforms that promoted flexibility, weakened regulation for banks and financial companies, strengthened property rights (physical, financial and intellectual) and granted tax cuts for the rich, as well as subsidies for corporations. The aim was to boost economic growth but the spoils, he says, have tended to fall into the hands of a small global elite, while a growing number of people are in casual, unstable and part-time

jobs, including those in the gig economy. Not only is their work precarious but they need to do a lot of ‘work’ for free, such as filling in forms, networking and updating their CV simply to maintain work or claim benefits. It’s timeconsuming work that can sap confidence and competence, does nothing to build an ‘occupational narrative’ and leaves people at the mercy of employers.

“The future of work is already here. It has been evolving over the past several decades in ways that are quite different from the mainstream models of the 20th century,” says Standing, whose best estimate puts numbers in the precariat at 30-40 per cent and rising.

“One of the worst features of the developments in the past 20 years is that the precariat is almost unique in having to rely almost entirely on money wages,” he says.

“Those wages have stagnated in real terms for the past 30 years. They’ve lost access to a pension, paid holiday, maternity leave, medical insurance etc. What this means is that most of the precariat are living on the edge of unsustainable debt.”

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We are unlikely to be able to is supposed to be in labour or stop the rise of ‘platform capitalmarried to someone in labour.”

“We must find a way to ism’. (Within the next five years, A founder member of the strengthen the bargaining says Standing, one in every three Basic Income Earth Network, position of people. The losers are Standing suggests that a universal labour transactions will be done already beginning to lash out” online rather than through a basic income would give people direct employer-employee relabasic security. It could be funded tionship.) What we must do is find through a levy on digital platform a way of strengthening the bargaining position of people companies and income from patents, copyright and other and their capacity to say no to exploitative relationships, intellectual properties, but it would not be a panacea. As or we will see the emergence of a political monster. The a society, we need to tackle the changing nature of labour losers, he adds, are already beginning to lash out. and work and the growth of rentier capitalism, which rigs “These trends are not going away,” he says. “There’s the system in favour of those who earn income from no one out there among policymakers and institutional physical, financial or intellectual property. leaders articulating an agenda that responds to this. Why “Imagine if everybody in Britain had a basic income – should it change with the robots coming?” it would encourage some people to spend less time in their Reconceptualising what we mean by work would help. job, and more time caring for their relatives, doing The 20th century, he says, was the only century when all voluntary work, retooling themselves and taking a bit forms of work that were not labour didn’t count as work: more leisure,” says Standing. “The need to slow down, to “You have this situation in our labour statistics, our participate in public life; to treat leisure in the ancient rhetoric, our politics and our social policy where everyone Greek sense is something we should encourage.”

Margaret Heffernan

Without better education, inequality will only get worse MANAGEMENT THINKER AND AUTHOR Margaret Heffernan isn’t given to prophesying, but tells Work. that this present time of uncertainty is the right moment to have a major public debate about what we want, to experiment and to equip the next generation for the future of work.

What issues do we need to be debating as a society and within business?

Forecasts that go much beyond a couple of years have no validity so we shouldn’t get too hung up on the numbers, but what we can be reasonably confident of is that technology is going to change the way we work. The crucial thing is not to think the future is already determined because it absolutely isn’t. Let’s have a really good public debate about what we want and let’s trial a lot of stuff and see what in the end is productive and effective for society as a whole.

The choices we face now are to do with how equal we want to be as a society. Do we want equal opportunities for people? Do we want equal opportunities for people at work? And do we want business to serve society or society to serve business? I think we are in the middle of a big power struggle that will be determined by who is willing to put their shoulder to what wheel. We 18

could either see a world in which institutional power determines private lives and careers, or one in which there is a much richer dialogue and interaction between work and life.

If we were given the choice, do you think we would choose to work?

We know that work gives incredible meaning to individuals and that the social aspect of work is important both to people and to work. People are very motivating to other people and make each other more creative and more committed.

All of the studies I’ve read and all of the research I’ve done suggests that people would like work to be part of their lives, but they would like it to dominate less. They want to spend more time with their families and more time doing things in the community. There is decades if not centuries of data that shows most people want to grow and that means they want the opportunity through work of all kinds to discover who they are and what they are capable of.

You have to be super-thoughtful when suggesting that lots of people having meaningless lives, because in many instances the work isn’t meaningless, but the way we manage people takes the meaning out of the work.

technology

Eugene Soh Zhuo Sheng

Why do you believe education is so important to the future of work?

I think the role of education now has to be to imbue students with a love of learning and a great expertise at learning, because we have no idea what people will need to know or what they will need to learn.

If everyone leaving school or university is a super-adept, passionate learner they will be able to do anything. That is specifically what we are not doing. We have taken 20th-century education back to the 19th century and I think the results have been catastrophic. Education has been allowed to become such a political football that we have now kicked it to death.

To be fair, we got caught in a trap that we didn’t understand at the time, which is that we started to standardise education because we wanted it to be fair. That was well-intentioned but I think maybe the desire for fairness had the unintended consequence of overweighting metrics.

What do you think will happen if we don’t change our approach to education?

We will find the bulk of our economy goes to low-level, low-margin businesses because we don’t have the intellectual and cultural infrastructure to support much else.

There is a really interesting parallel to be drawn with Singapore. In its first 50 years as a country, it was desperate to get the entire population literate and numerate and did a lot of regimented rote learning. Then maybe five years ago it started to move the education system towards something that would produce a much more high-value economy. It began to do all sorts of interesting experiments in terms of paying more attention to critical thinking skills, art/science collaborations and so on.

I just hope we wake up in time to realise that we need to make that change. Otherwise you might have some people with both the courage and backing to buck the system but others won’t, so the inequality that is so troubling now will just be exacerbated.

•

Singapore is moving its education system from learning by rote towards critical thinking and collaboration

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Would people’s tastes and aspirations change if the pressure of advertising was removed?

Robert Skidelsky

Work needs to be decoupled from wages for a fairer future WHEN JOHN MAYNARD KEYNES PREDICTED in 1930 that the working week would be drastically cut to, perhaps, 15 hours, he underestimated two things. He believed living standards would be substantially higher and that people would choose to have more leisure as a result. What he didn’t foresee was the growth in income inequality and the impact of consumerism.

“The average income has gone up but the spread of income is much greater than it was in Keynes’ day,” says economic historian and author Robert Skidelsky. “That has put leisure beyond the reach of a large fraction of the working population.”

Add to that the fact that the power of advertising has increased exponentially since Keynes’ time and it’s easy to see why we have become such a consumerist society.

As Skidelsky puts it: “Everyone is going to succumb if we are bombarded with it the whole time.”

The impact of technology has always been that machines take over some of the work previously done by humans, making some jobs obsolete or slimming down the human element, leading to a reduction in hours of work. The question is whether new technologies will rapidly speed up that process.

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People work fewer hours on average than they did 150 years ago but that hasn’t resulted in income loss, says Skidelsky. In future, however, he believes it may be necessary to decouple earnings from hours of work. If hours of work are falling and earnings drop pro rata, then that will have a devastating effect on some workers, while the owners of capital will see their profits rise because of the productivity gains of utilising technology.

“Unless there’s some method found of sharing that increased productivity you will have a big increase in poverty and distress and very strong resistance to the process. That will no longer be industrial resistance because the trade unions have been much too weakened, but it will be political and it will be populist.”

Skidelsky maintains that as a matter of human decency, we should pay attention to the welfare of everyone in society. He is a supporter of a universal basic income – accompanied by social housing and better public services – because it would give people more of a choice between work and leisure.

“I like the idea that the basic income should really be thought of as a national dividend paid to everyone as the national income of a society goes up, instead of being

technology

concentrated as it increasingly has been in the hands of a very small minority,” he says. “I would introduce it irrespective of how big a threat machines are to the future of work. You can regard it as a liberating thing because the burdensomeness of toil is being relieved. You should in theory look forward to a much better life.”

Being able to enjoy our leisure time, however, would depend on our ability to control consumption. “I’m not against restricting advertising by tax methods,” he says.

The more that materialism and the pressure to consume are removed from the way we live, he believes, “the more people’s tastes and aspirations would start shifting”.

The question then would be how many hours of paid work would we choose to do? More than half of the

Dutch working population, according to The Economist, work part time, a far greater share than in any other rich-world country. Part of that is as a result of Dutch women being relatively late to the labour market, but the Netherlands does consistently rank well on quality of life indices.

“I think we are a working species,” says Skidelsky.

“We don’t actually like idleness that much. We always find things to do, but the division of activity into paid work and something else that we call idleness – that’s a linguistic trap.

“The real question is how much is enough to lead an emotionally, physically, spiritually healthy life? Quite a lot less than the average hours we work now, I’d say.”

Peter Cheese

Nick Amoscato

Automation allows us to re-evaluate working practices A WORLD IN WHICH significant numbers of jobs have been lost to technology while wealth and power reside in the hands of a minority is not science fiction, warns CIPD chief executive Peter Cheese. But he remains optimistic that the future of work will be human.

“On the other side of the fourth industrial revolution we could end up in a place where the machines are doing everything and we are all wondering what to do,” he says.

“But on the positive end of that spectrum, automation and AI could take away a lot of the drudgery and the dull parts of our jobs and we could all be doing more interesting and value-adding things.”

Getting there will take a concerted effort when productivity is such a key concern for businesses. The British Retail Consortium, for instance, predicts that by 2025 up to 900,000 jobs could disappear as a result of technology and factors such as the rising minimum wage in a sector that employs one in six British workers.

“In the past when jobs have been displaced, new ones have appeared,” says Cheese. “But can you say with any certainty that a new job will appear to replace all the jobs that you can see getting displaced within the next 10 to 20 years? I think the answer is no.” The difference today, he says, comes down to the capability and ubiquity of technology, as well as the speed at which it is being developed.

Over the centuries a lot of work has been pretty awful and still is for many. Nevertheless, maintains Cheese, you can look at work, or at least good work, as good for society.

Modern work constructs – 9-5 working and the advent of organisations – may be a feature of the last couple of hundred years, but people have always worked.

“Good work gives me autonomy so I can have a voice and I’ve got agency in what I do,” he says. “It gives me a purpose and it allows me to develop my skills and

talents. It’s hard to see that we could immediately replicate all of that in the leisure activities that we have.”

In an age of automation, many of the standard norms of work that get in the way of good work – long-hours cultures, pressure to be ‘always on’ etc, not to mention the growing wage gap between executives and the average worker – could be rethought. So how do we ensure that the future of work is human? Cheese believes it will take a combination of bottom-up and top-down strategies.

“One of the really important things to realise is we all have agency,” he says. “We are not just victims of some vast faceless machine that’s churning out technology to take away our jobs.” HR and L&D have a significant role to play here. “We have to look at learning and development inside organisations as a truly strategic competence. HR professionals need to work with business leaders to educate them on this context, to map out and engage far closer on what jobs are being designed for the future.”

From a top-down perspective, as a society we need to look at some key strategic issues, from the distribution of wealth and the viability of a universal basic income, to whether education is equipping young people for the future world of work and how we can upskill and retrain significant numbers of people. These are systemic longerterm issues that require the input of multiple stakeholders, says Cheese. It’s a collective debate that Britain is struggling with, given the current focus on Brexit.

“The challenges we have today – growing work intensity and stress, imbalance of work and leisure, growing unfairness of reward – if you balanced all those things out better, you would still have the construct of work for most people. But it would be more balanced and more flexible, and the work itself would be good work in terms of its meaning and voice, etc. That’s a great goal to aim for.”

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Five-cent coins were deposited in Bern’s Federal Square as part of a campaign to introduce a universal basic wage in Switzerland.

The idea was overwhelmingly rejected by voters, but many still see it as a way to combat widening ďŹ nancial inequality

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technology

Tim Dunlop

The emphasis should be on fulfilling lives, not paid work IT’S EASY TO WALLOW in the convenient cynicism of ‘we are all doomed’ by technology, says Tim Dunlop, author of Why the future is workless, but it doesn’t have to be like that. We can use new technologies to create a future in which we are “liberated from the compulsion to work for a wage”.

Stefan Bohrer

Do you really think we won’t work in future?

There is nothing natural or inevitable about how things are now – it merely reflects contingent historical circumstances and the choices we have made. We are reaching a point with new technologies where wealth and the things we need can be created with far fewer people working the sort of hours people work today.

So while I don’t think work will disappear, there is an opportunity for paid work to become less central to our lives, and that we might have the chance to build a world where we can devote our time to something other than a job.

part of their self-image. It is also true that many people don’t – that they find their jobs meaningless and degrading and a complete impediment to their ability to live a free and full life. A recent YouGov survey in the UK found that a third of people feel their job makes ‘no meaningful contribution to the world’, and there are surveys like that throughout the developed world.

I am completely confident that if we decentred paid work in our lives and actually gave ourselves the space to do other things, we would find meaning in them. Our emphasis should be on fulfilling lives.

If for some people that is a job, they should be free to do that, but there are many other ways to make a contribution to society.

History shows us what is possible: the Ancient Greeks made slaves do all the heavy lifting but that didn’t mean they sat around and got drunk or watched plays. It meant they invented western civilisation, from democracy to architecture.

If we do work, what kind of What will it take to get to a work will that be? future in which we are less “We all know something has There is no point in trying dependent on work? to give, and work and new to compete with robots, with It will take an enormous technologies are central to machine learning and artificial shift in mindset and a huge whatever change is coming” intelligence. We will need political effort for us to realise certain skills, but any specific these sorts of changes. One of job training is likely to be the first things we are going to training in obsolescence. have to fight for is a universal Human services will become more important – basic income, a way of sharing the wealth that the from childcare to aged care to teaching. Making new technologies create. This will involve new things, fixing things and doing mechanical things forms of social ownership of the means of are likely to move into the realm of hobbies and production, with concomitant changes in tax pastimes. The future will involve soft skills, from an regimes at a national and international level. understanding of ethics to empathy. We are going to Few of us are happy with the way the world is at be knowledge workers, dealing with information, the moment, with the way our governments work, data and the things that go with them: with the levels of inequality. We are increasingly interpretation, analysis and imagination. We will distrustful of the way in which Silicon Valley is using need to be creative and be able to solve problems in new technologies and we want more say over how real time. We will need to be collegial, to be able to they function. We all know something has to give work with people and understand their needs. and that work and new technologies are central to Our advantage, our edge, is that we will be as whatever change is coming. un-robot-like as possible. Our most essential skills I’m often asked, mainly by parents worried about are likely to be political. We are going to have to their kids’ futures, what is the best thing they can do learn how to wield power and influence events. to prepare for the future of work? My answer is unequivocal: get political. Join a party, trade union or And if we don’t work, how would we find meaning other organisation and start demanding change. Don’t in our lives? leave it to the big end of town to set the agenda.

It’s true that many people derive meaning from For further reading, see page 72 the work they do, and that their job is an important 23

“If you’re not growing, you’re going” When he was a CEO, Martin McCourt liked to lead from the front but, he tells Andrew Saunders, as a chairman he’s had to learn to take a back seat Portrait

FROM THE SHINY RED Morphy Richards toaster and the Stoves cooker in the kitchen, to the classic Roberts radio and the surprisingly convincing coaleffect electric fire in the living room, the contents of Martin McCourt’s west London flat bear witness to the proclivities of its owner.

A man who has spent all his working life making things, or running companies that do, he’s particularly proud of the fire, which uses a clever piezo filter to convert tap water into wafts of fake smoke to complement the 3D virtual flames. “It’s a patented product – there is a lot of technology in that and it’s made in Dún Laoghaire,” he enthuses.

So why such an unusually in-depth knowledge of fixtures and fittings? He’s the chairman of the company that makes not only the fire, but the other products too.

Family business Glen Dimplex began life in 1973 as Glen Electric – seven blokes making electric radiators in Newry, Northern Ireland. Now, as well as an extensive brand portfolio, it’s also a major player in energy-saving technology (thrifty supermarket Lidl has signed up for a system that will recycle waste heat from its in-store freezers and turn it into electricity). “It’s a great example of how a company can be built in less than 50 years from nothing to a €1bn worldwide business,” he says.

McCourt’s been in the job since 2016, the latest in a long line of roles that include stints at Duracell (where he oversaw the Duracell Bunny TV ads), Toshiba and Mars, as well as a brief spell as a partner at Montagu Private Equity.

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Richard Cannon

There is probably a Dyson bagless vacuum cleaner lurking in one of McCourt’s cupboards somewhere too – he is perhaps best known for having been the CEO of James Dyson’s eponymous giant-killing firm. His 15-year tenure covered the crucial noughties phase when the business went from a one-product, niche UK brand to an international success story deriving 80 per cent of its income from 60 markets all over the world.

“It was a phenomenal experience. International expansion is risky – there is no rule that says just because a product works in the UK it will also work in Germany. But it can be done, and companies should be looking to expand and diversify because it’s a great way of building value,” says McCourt. “If you’re not growing, you’re going.”

If the pace at Dyson came as a shock for someone whose previous jobs had all been corporate – “Why take an eleventh-hour decision when there are still 59 minutes left to go?” – then so did the creativity and determination. “They were always endlessly seeking the best way to do something. I learned big lessons about innovation and communications there.”

The role also established him as a go-to guy for ambitious UK businesses looking for someone to help them hit the big time by cracking lucrative global markets. No surprise, then, to find he has strong opinions on murmurs of a post-Brexit renaissance for British manufacturing. “I believe the prospects are quite good – there is already some evidence that manufacturing is reviving in the UK,” he says. “It may

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only be a couple of per cent, but think about what we were saying a few years ago when it was in freefall.”

Although talk of a return to the days when manufacturing accounted for 20 per cent of economic output is “romantic and going too far” any growth in the sector should be welcomed, he says. Why? Because a better balance between manufacturing and services (which currently account for a whisker under 80 per cent of GDP) would be a good thing for the UK and its workers, many of whom live increasingly precarious existences in the so-called gig economy.

“It’s great if you want a cup of coffee – we have baristas coming out of our ears. And thanks to Deliveroo I can get anything I want delivered to my flat in 15 minutes. But I certainly wouldn’t want to feel it was the backbone of our economy, because there is nothing driving productivity or pushing companies to invest. The opportunities the gig economy creates for our youngsters just aren’t as enterprising as they should be.”

Now 61, with a portfolio of business interests in addition to Glen Dimplex and grown-up kids of his own, McCourt spends a good deal of his time pondering the career prospects of the nation’s children. He’s on the board of Your Life, which promotes the importance of STEM subjects to kids thinking about possible career paths and is chaired by Edwina Dunn, co-founder of

dunnhumby, the company behind Tesco Clubcard. He’s also chairman of vocational training business Learning Curve Group.

His conclusion? The problem begins, like so many things in life, at school, where science and maths lose out to the humanities and arts. “There are already 40,000 unfilled STEM jobs annually. By 2030, there could be 1.3 million. But it’s still OK for adults to say ‘I’m crap at maths’ when they would never say it about English.

“Loads of kids want to go into computer gaming or app development, but you can’t do coding without maths.

We’ve got to bridge that gap and make sure they don’t drop subjects that are vital to what they want to do.”

It’s a problem that not only limits opportunities for individuals, but has a damaging impact on the national economy: “Our productivity has dropped – it’s now 8.5 per cent lower than Germany, 11.5 per cent lower than France and a whopping 26 per cent lower than the US.” McCourt has also got a bee in his bonnet about the options available for school-leavers, believing that alternatives to university are limited. “In Germany, something like 40 per cent of youngsters enter work through apprenticeships, and their youth unemployment is half ours,” he points out.

In the UK, by comparison, McCourt believes that apprenticeships are under-resourced and incoherent:

While James Dyson never took his foot off the gas in terms of honing his product, McCourt’s tenure as CEO of Dyson covered a period in which the business successfully expanded internationally

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Getty Images

interview

“We’re trying to get it off the ground here, but the way being either independent or expert – a lack of company we are doing it is just pants. The apprenticeship levy knowledge on the one hand, or industry knowledge on launched last year is a great idea, but is heavy on rules the other hampering their real-world ability to check and cumbersome – it doesn’t incentivise employers. We executive power. need to spend more.”

But pick the right individuals and you can have both, With characteristic thoroughness he has followed says McCourt. “Three of the boards I chair have the string of this argument from one end to the other, independent NEDs and they are invaluable. The mentally untangling the knots as he goes. “Try putting chairman’s primary duty is to make sure they have the yourself into the shoes of a youngster – I have,” he says. right team working on the right business plan and with “It’s not easy to find out about apprenticeship opportuni- the right people and strategy to achieve it. And to do it in ties, but it is dead easy to explore university options. a way that keeps us all clean. Will the executive team do “If you want to be an engineer, you can do an that naturally? Not necessarily. That’s where they need apprenticeship with Rolls-Royce, for example. The pay help from the chairman and the NEDs to give them initially isn’t going to be great, but you will be working options and keep their feet on the ground.” and learning and you won’t have a student loan. It’s Problems can arise, he adds, when NEDs are hired to a viable alternative to university for many people, but it fill a gap that should be covered by an executive – witness is not being marketed properly.” the spate, a couple of years ago, of non-tech businesses As well as Glen Dimplex and his education and skills such as high street retailers hiring tech-savvy NEDs to interests, McCourt is also chairman of Stoke-on-Trent get the board up to speed on digital. “You have to be very pottery business Dudson, and VentureFounders, an careful about trying to compensate for an expertise gap equity platform for matching up angel investors with on the executive team. If that gap is highly relevant to growth opportunities. A pretty eclectic mix but a very the business, then you end up with a NED who becomes personal one too, he says: “I have chosen businesses that an executive. I don’t like that and it doesn’t work.” match my obsessions, almost Although the businesses he regardless of the management chairs are all private and don’t fee. I’m at the stage of life where face the same level of public “I wouldn’t want to feel the gig the big question for me is scrutiny that prevails in plc-land, economy was the backbone of more ‘is it interesting?’ I still it’s still vital to keep on top of hotwork hard, but I am doing the button governance issues such as our economy, because there is things that I choose to do. The rewards for failure and gender nothing driving productivity” right team is key. The CEO and pay balance. “On pay, the big sins executive team have to be people are allowing execs to be paid for I can respect and work with. My results that really aren’t that job then is to inspire and challenge them to raise the bar.” good. You’ve got to have a solid basis and criteria for But however interesting the companies he now determining pay, and certainly no gender differences,” chairs are, the no-nonsense Glaswegian admits that he he maintains. has had to work on his own skills to make the switch So what advice would he give to any ambitious from executive to non-executive positions. “I had to go executives – male or female – who have their eyes on through an adjustment phase – a good CEO doesn’t the boardroom prize? “If you really want to climb the always make a good chairman. I was a ‘lead from the ladder and run a business as the CEO, it’s a good idea to front’, communicative and energised CEO. I didn’t throw think and act as though you are already in the next people around the room, but I liked a good strong job up. It forces you to think beyond where you are debate,” he says. “So when I did my first chairman’s job I now,” he says, adding: “But remember to have fun, found it quite a challenge. I was very conscious of the fact don’t take it too seriously and always be a good, decent that it was the CEO’s gig and that my role was to guide, human being.” nudge and assist, and not to take over.”

Because, as McCourt himself has discovered, The major difference, he explains, is one of approach. once you’ve got to the top of the ladder the journey doesn’t “The chairman needs a calmer and more patient end and there are new challenges to face, and different disposition; there is a stronger coaching component. You kinds of reward: ‘‘I am at a new phase in my career now still have to be great at asking the right questions, but you and it doesn’t feel like I am working. The CEO of a global get a debate going and then you let others come up with business is the one who goes to sleep with their head the answers.” full of worries as it hits the pillow. I still wake up in the Being a chairman has also helped him cement his night and write down ideas – but it’s not because I am views on the vexed subject of non-executive directors. In feeling stressed, it’s because I am stimulated by what theory, NEDs are supposed to be independent industry I am doing.” experts able to hold the decision-making of the executive team to account. In practice, they are often criticised for For further reading, see page 72 27

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BACKSTABBING, DESPOTISM, CROWDSOURCING… WHY THE ANCIENT GREEKS INVENTED MODERN MANAGEMENT Socrates, Homer and Alexander the Great all confronted issues of ethics, leadership and strategy that, Paul Simpson writes, we still haven’t resolved today

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ould Procter & Gamble be in better shape if Alexander the Great was its CEO? It’s an unusual question, but one that Fred Smith, founder, chairman, president and CEO of FedEx, has pondered. Smith once declared that his own companytriestoemulatetheall-conqueringMacedonian’s approach when moving into new markets. “We have to deal with different cultures, attitudes and people. Doing that is part of our success,” said Smith. “Alexander was the first person to do that successfully. He didn’t just capture and enslave people – he was enormously successful at putting together a global empire because he was the first truly global thinker.”

In today’s jargon, you could say that Alexander was culturally competent, a quality that critics, particularly activist investor Nelson Peltz, have found lacking in Procter & Gamble. In a campaign that ultimately earned him a seat on the FMCG giant’s board, Peltz slammed management for insularity, lacking vision and failing to grasp how e-commerce and product premiumisation would change its business in China.

In his own inimitable fashion, Alexander the Great owed his unprecedented success to the way he managed three issues that face the CEO of any 21st-century multinational. The first was to decide where he wanted to compete. To which Alexander effectively responded, “everywhere”. Although he ruled more than nine-tenths of the known world, the 32-year-old was contemplating the conquest of Carthage and Rome when he died, probably of fever, in the city of Babylon in 323 BC.

After deciding where to compete, leaders must decide how they enter, or exit, that market. In his struggle with his greatest competitor, the Persian empire, Alexander positioned himself as a liberator, and was welcomed as such into Babylon and Egypt without a battle. Exiting markets didn’t interest him – any community he conquered had to remain under his rule. His vision of one global empire would only be undone by his death.

Deciding how to compete in that market is critical.

Building on military tactics deployed by his assassinated father, Philip II of Macedonia, Alexander was an innovative, unorthodox commander. He moved his armies faster than his rivals. He was, to quote a recent Harvard Business Review cover story, “agile at scale”, which helped him surprise opposing armies. (He won one famous battle in India by attacking at night, across a river, in monsoon season.) He built a team of experts around him and delegated to them (this was one reason that he was so effective at sieges). In battle, he strove to ensure he had numerical superiority at the critical point – in his epic confrontation with the Persian armies at Issus in 333 BC, Alexander’s elite troops attacked Darius III’s bodyguard, forcing the Persian emperor to flee for his life.

But ultimately, Alexander’s most significant success was that he rose to the central challenge of leadership, as defined by management thinker John Kotter in his book, Leading Change. He decided what the future should look like, aligned people with that vision and inspired them to overcome obstacles to make it happen.

It is only fair to point out that Alexander enjoyed certain advantages denied to modern CEOs. Many of his

Even being condemned to death by a jury of his peers could not quell the fame of Socrates – and his relentless questioning – as this painting on a house in Pompeii shows

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employees believed he was a god, directly descended from experience of helping 10,000 Greek mercenaries to fight Zeus, a privilege not even extended to Steve Jobs. He their way out of Persia, he noted: “There is small risk a burnished his heroic credentials by claiming Achilles as general will be regarded with contempt by those he leads an ancestor. His prodigious success shielded him against if, whatever he has to preach, he shows himself best able to criticism, and few had the temerity to question his perform.” Alexander took that lesson to heart: his methods while he was alive. He also understood the conspicuous courage raised morale at Issus. efficacy of occasional, conspicuous displays of ruthlessness Xenophon knew – and wrote about – Socrates, who – he had Parmenion, one of the generals who had fought had exerted such an influence, direct and indirect, on alongside him at Issus, stabbed to death on Alexander’s other mentors. Why does this suspicion of treason. matter? Historian Bettany Hughes Even so, to inherit Macedonia and to eloquently explains the significance in her parlay that into an empire that stretched book The Hemlock Cup. “We think the way from the Balkans to Pakistan must make we do because Socrates thought the way he THE GREEKTRUMP him one of the most transformative leaders did,” she says. “Socrates’ belief that, as in history. In contemporary terms, it is as if individuals, we need to question the world A ‘brutal and insolent’ he had inherited a corner shop from his around us stands at the heart of what it speaker. The son of a tycoon who portrayed himself as father and turned it into Walmart. means to live in ‘modern times’. What is the challenging the political elite.

There were no business schools in point, he says, of warships and city walls and A ruler focused on building ancient Greece, but Alexander had the best glittering statues if we are not happy? If we walls who could not bear to be mentors his father could provide. Aristotle, have lost sight of what is good? His is a ridiculed. Sound familiar? one of the greatest intellects of the era, question that is more pertinent now than The first leader of Athens not to be born an aristocrat, tutored him as a boy. Aristotle had theories ever: what is the right way to live?”

Cleon was a demagogic about everything – his most famous books, In his most famous soundbite, Socrates genius who gained power in Politics, Poetics and Metaphysics, convey the observed: “The unexamined life is not a life 430 BC, partly through sheer vast sweep of his mind – and inevitably worth living for a human being.” His charisma. A dynamic man of some of them were wrong. Women do not, determination to leave nothing unexamined action, he was shrewd enough to enrich the poor and rally as he suggested, have fewer teeth than men.

– be it democracy, the gods or the judicial Athenians against a common Andeelsdonot,asheinsisted,spontaneously system that tried him – made him a hero to a enemy, Sparta. He taxed allies generate themselves from mud. few, a bore to many and an irritant to some. heavily to balance the budget Historian Plutarch wrote: “It would In the May 2018 edition of Harvard (a policy you could call Athens First). He sued Aristophanes appear that Alexander received from him Business Review, Alison Wood Brooks and for mocking him in a play. He [Aristotle] not only his doctrines of morals Leslie K John laud the “surprising power of built a new wall to protect the and politics but also something of those questions”, writing: “Most people don’t city and was successful more abstruse and profound theories which grasp that asking a lot of questions unlocks enough as a general to be these philosophers professed to reserve for learning and improves interpersonal hailed as a war hero. oral communication to the initiated.” bonding.” They quote with approval Dale Ultimately, Cleon proved too dynamic for his own good.

These theories probably included Carnegie’s advice in How to Win Friends and Ignoring a widespread desire Aristotle’s conviction that the world was Influence People: “Be a good listener. Ask for peace, he was surprised not governed by gods but by a universal set questions the other person will enjoy – and killed – in battle by of natural laws, which could be discovered answering.” Socrates did the exact opposite, Spartans in 422 BC. through observation, experience and invariably asking awkward questions that The US president may not reason. Alexander never lost what Plutarch people did not want to answer. know his Cleon from his Cleopatra, but his senior called “a violent thirst for learning”. On his The fact that Socrates’ eyes bulged so advisers are avid readers of conquests, which provided him with many much he looked as if he was perpetually Thucydides’ history of the opportunities to study these natural laws, staring seems metaphorically appropriate.

Peloponnesian War. They he always slept with two objects under his Casting his unforgiving gaze over Athens, might want to remember it pillow: a dagger and Aristotle’s corrected he understood that, sometimes, the most did not end well for the Donald Trump of ancient Greece. copy of Homer’s The Iliad. brutally helpful question you can ask is What makes Aristotle so intriguing as a ‘why?’ – a query that, asked forcefully and mentor is that he was Plato’s prize student. The young repeatedly, could have helped avert or ameliorate such Plato was, in turn, so devoted to Socrates that he offered to corporate scandals as Enron, Lehman Brothers and the pay the fine that would have prevented his idol, who had VW ‘Dieselgate’. been convicted of impiety and corrupting the youth of It wasn’t just the nature of the questions Socrates Athens, from having to drink that fatal cup of hemlock. asked but the way he asked them. He was especially adroit The conqueror also steeped himself in the writings of at what Wood Brooks and John call ‘switching questions’.

Xenophon, a historian, writer and soldier best known for On his way to the Agora, the marketplace where he liked urging “moderation in all things”. Drawing on his to lecture his young acolytes, he might walk up to a 31

XENOPHON AND THE TEN THOUSAND The Greeks saw no dichotomy between action and ideas, expecting their leaders to excel at both. That leadership model was exempliďŹ ed

by Xenophon, a historian, philosopher and mercenary who saved 10,000 Greek soldiers from becoming prisoners of Persia. His writings were studied by Alexander the Great.

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stranger, ask him where he could find some good meat and question: ‘What if?’ As he answered that by considering some good wine and then hit them with: ‘And where can I every possible permutation, he was scenario-modelling find some good men?’ thousands of years before the term was coined.

His habit of offending all the wrong people – or right Socrates was neither the first nor the last leader people, in his eyes – made him the perfect scapegoat to discover that, as Hughes writes, “when it comes to when Athens was stricken by plague, political strife and wholeheartedly embracing the new, mankind displays defeat by the detested Sparta. In ancient Athens, justice a poor record”. That still applies today in the worlds of was crowdsourced, so 501 citizens (all men), selected by business and politics, where visionaries are likely to lots, sat in judgement and convicted the most famous inspire as much distrust as adoration. philosopher of his, or any other, age of impiety and The media has chronicled certain visionary CEOs – corrupting young people. especially Elon Musk and Steve Jobs – in the kind of loving Socrates liked to say he had an ‘inner daimonon’ – detail hitherto reserved for movie stars, but they remain what we call intuition – that warned him when he was outliers (as, for all his success, does Jeff Bezos). If any one about to go astray. At his trial, it let him down badly. figure defines the template for the modern CEO – certainly Before proceedings began, defendants had the right to in North America – it is Jack Welch of General Electric. name the penalty. Socrates jokingly suggested that Welch was famed for what he did – restructuring GE Athens should reward him as if he were an Olympian and diversifying it – not for how he thought. The most hero. Outraged by such arrogance, the jurors voted for striking aspect of his business tomes is how few original the death sentence. But, as usual, Socrates had the last ideas they contain. At times, they seem platitudinous and word, saying, Plato tells us: “If you think that by killing hypocritical. “Treasure and nourish the voice and dignity people you’ll put a stop to anyone criticising you because of every individual person” is a case of do as I say not as you don’t live as you should, you’re not thinking clearly.” I do for a CEO who, in his 20-year reign, cut 100,000 jobs As a philosopher, Socrates confronted groupthink. As and perfected a system to rank employees so the bottom a defendant, he was condemned 10 per cent could be moved on. by it. Even before he was charged, Alexander never wrote a book he had been the victim of trial by called Winning, although he did “Like Socrates and Xenophon, media – being named as principal much more of that than Welch.

Alexander the Great understood villain in Aristophanes’ comedy But as an avid student of Homer, The Clouds. As Hughes notes, he would have been continually it was possible to be both a man Aristophanes’ summary of the reminded that, as Emily Katz of ideas and a man of action” character called Socrates is pretty Anhalt puts it in Enraged: Why blunt: “A bold rascal, a fine Violent Times Need Ancient Greek speaker, impudent, shameless, a Myths: “Leaders deserve our braggart, adept at stringing lies, an old stager of quibbles... respect, admiration and support for leading well. That is, a thorough rattle, a fox to slip through any hole, supple as for fulfilling their obligations and promoting the wellbeing a leather strap, slippery as an eel, an artful fellow, a of everyone in the community. Unlike a tyrant, a good blusterer, a villain, a knave with one hundred faces, leader cannot succeed at everyone else’s expense. Good cunning, intolerable, a gluttonous dog.” As denunciations leadership, as The Odyssey depicts it, requires and go, this – from a writer Socrates considered a friend – was promotes mutual respect and reciprocity.” the ancient Greek equivalent of finding your photograph The world of Alexander, Homer, Aristotle, Socrates on the front page of the Daily Mail with the word ‘traitor’ and Xenophon is very distant in time, custom and underneath in stark capital letters. technology, so what can we learn from them today?

Decades after Socrates’ fatal questioning of the Possibly that the similarities between our societies are shibboleths of Athenian democracy, Aristotle argued that more striking than the differences. Like Socrates, we the hierarchical warrior-greatness of Homer’s The Iliad can’t decide what it means to live a good life. If anything, was a better way to run society, a view enthusiastically we are finding it harder to define a good leader today embraced by the young Alexander. Like Socrates and than when Homer created his epic poems nearly 3,000 Xenophon, he understood it was possible to be a man of years ago. ideas and a man of action. Both Socrates, who had fought As for Alexander, he was both all-conquering emperor bravely for Athens in three wars, and Xenophon were and manager of a far-flung, multinational enterprise – proof that philosophers need not be pasty-faced wastrels. Conquest Inc, if you will – that depended on him for both Though less interested in pure theory than Socrates, its existence and sense of purpose, as shown by the Xenophon or Aristotle, Alexander was at ease with ideas organisation’s rapid dissolution after his death. The final, and intellectuals, rather than feeling threatened by them. slightly counterintuitive lesson from his story for today’s The knowledge, practices and beliefs of the many cultures CEOs is not to make themselves too indispensable. he encountered informed his strategies as a general and emperor. Like Socrates, he had a ‘go to’ brutally helpful For further reading, see page 72 34

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WE’RE NOT ASKING PEOPLE TO BE SUPERHEROES A dramatic shift in thinking at Sweden’s Handelsbanken delivered a bonus-free culture that, CEO Anders Bouvin tells Lawrie Holmes, has served the bank well through choppy times Matthew Stylianou

IT MAY NOT BE THAT WELL KNOWN in the UK, but Svenska Handelsbanken could teach British bankers a thing or two. It not only survived the Swedish banking crisis of the 1990s, but remained in good shape when the 2008 global financial crisis destroyed many of its counterparts around the world.

As other institutions sought to cut their losses by halting operations, or merged to survive, Handelsbanken, one of Scandinavia’s largest banks, continued to lend and even maintained its growth plan. The bank had 702 branches at the end of 2008, but by the end of 2017 it had extended its operation to 819 branches across 20 countries, with the UK home to almost a quarter of these.

The secret of Handelsbanken’s success can be traced to its own crisis in the late 1960s. Bloated through acquisitions and facing criticism from Swedish public authorities for its role in the takeover of a travel company and foreign exchange transactions that contravened strict 36

currency regulations, the bank embarked on a mission to address a collapse in profits.

A bold plan was hatched to bring in a little-known academic, the late Jan Wallander, who had previously steered small Swedish bank Sundsvallsbanken to profitability. His maverick ideas (for the banking world at least), which centred on developing a whole new culture of devolved leadership – in effect giving power to the branches – transformed Sweden’s oldest listed company almost overnight.

Wallander, Handelsbanken’s CEO from 1970 to 1978 and then its chairman until 1991, also revamped the bank’s financial model, raising the importance of relative profitability – using the higher return on equity (ROE) compared to peers, as opposed to simply trying to build greater business volume.

It worked: since the 1970s the bank has consistently achieved its goal, reporting an ROE of 12.3 per cent in its

Matthew Stylianou/Contour by Getty Images

Portrait

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2017 annual report and prompting analysts at German things, and he had the vision and the strategy that had investment bank Berenberg to comment: “Handelsbankbeen battle-tested in the other bank. en’s utility banking model, battle-tested over the past 45 years, remains the blueprint for banking in Europe... What was the idea at the heart of his methods? achieving its one and only target – an ROE greater than At the very core of his theories was his the peer average over a sustained period.” humanistic outlook – recognising fundamentally Key to the approach, says CEO Anders Bouvin, was that people want to do a good job. It is about putting developing a culture for the long term, but perhaps the your trust in human beings. biggest innovation was increasing the emphasis on cusWe’re not asking people to be superheroes. tomer service through empowering local branches to We accept and embrace the fact that people in the make autonomous decisions. “We wanted the model to be organisation are actually best suited to make all the coherent and consistent, so no one with responsibility for decisions that are important, within the area they customers or for risks taken within the bank gets a bonus,” are responsible for, be it a functional or says Bouvin. “Our devolved leadership model is hugely geographical area of responsibility. dependent on our local branches being perceived as trustJan asked the question: why not create an worthy, responsible supporters of their local community. ” organisation built around the majority rather Bouvin, a Zimbabwe-born Swede, developed his than one built on the exceptional minority? The career at the bank straight from university in 1985, branches took to this immediately – suddenly they working first in Sweden, then the US and Denmark before were important and empowered. They understood arriving in Britain and rising to become CEO of the group’s that they were now the bank and not just the UK business. It was the last stop before he was handed the distribution channel. top job in August 2016, a promotion that came at the Over many decades, we have seen that the expense of Frank Vang-Jensen who, it was feared, would quality of the decisions made is far better than what not be able to run the bank in the nuanced way demanded you can get in a traditional, command and control by the devolved model. “It is structure. The outcomes are possible to be an excellent leader better – both for customers “The quality of the decisions and manager – as Frank Vangand for the bank.

Jensen has been – but not fulfil the made is far better than what requirements of CEO of HandelsWithout bonuses, how do you can get in a traditional, banken,” said chairman Pär Boman you attract and retain the command and control structure” best people? at the time.

Nearly two years in to the top It’s important, if you are job, Work. talks to Bouvin about going to gain customers’ the bank’s culture, what it means for staff and the impact confidence, that you sell products they want and of devolved leadership on the role of CEO. need – not too many, not too few. If we were then asked ‘do you get bonuses?’ and we said yes, we Just how big a move was it to bring in a thinker wouldn’t be as convincing. We never want to be like Wallander? suspected of putting our own interests before the Jan’s disbelief in traditional budgeting and fixed customers’ interests. targets and profound faith in devolved leadership, To attract the best people, you’ve got to offer combined with an instinct for cost control, caught competitive packages. We do that at Handelsbanken their eye, but the board was very bold to accept a through an attractive salary, pension and profitperson who they knew was going to turn the pyramid sharing scheme. I think a lot of the people who join upside down, and then flatten it. Handelsbanken’s us are attracted to the humanistic outlook and the board fully understood what he was going to do but it confidence and trust we put in people to make was a big surprise to the banking culture of the time decisions. They feel valued so the whole element because of the speed of the restructuring. of bonuses actually goes away. When we recruit This is something you can’t do incrementally, it people, sometimes the bonus issue pops up at the has to happen in one go. That’s easy to say but not beginning, but I can assure you at the end it’s not that easy to implement. There was a very strong even there. After all, the world did spin before relationship between Jan and the board and the bonuses were invented. representatives of the trade union who helped him deliver on these aims, but he had to be tough driving Who runs the bank? these changes because a big chunk of middle I’m not joking when I say the branch managers management were going to lose their jobs overnight. run the bank. All customer responsibility – which I think he had a combination of both the customers we choose, the products we sell, credit determination and the force necessary to do these responsibility – lies with our branches.

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Obviously if you’re running a big company or Don’t you have to oversee what’s going on at a bank it goes without saying that there are certain a local level? functions you’ve got to have – risk, compliance, You have to make sure various parts of the central credit, etc – but you could say that head bank cooperate with one another. There are some office works for the branches. very good, very expensively put together football The role of the central functions is to support teams with large bonuses that don’t play very the branches, and the branches pick up their well as a team – while some pretty mediocre costs and they therefore have a big say in how teams can play very well. those departments develop. Every year People in Handelsbanken know what our the branches negotiate with the objectives are and they know how to reach SWEDISH central departments over their costs. those objectives. This creates a very strong BANKING FIRSTS So the branches have the power: they sense of ownership – that this is our bank. can say ‘I’m not prepared to pay for That’s very important in management. If this’. My role is to ensure that the system you can achieve it, you don’t have to have works and that people cooperate. a lot of other elements in place to steer the organisation in the right direction; things How do you think staff feel about your kind of take care of themselves.

Sweden’s first bank, Stockholms Banco, policy of devolved leadership?

We don’t need to put in place formal issued Europe’s first real One of the worst situations you can be structures for decision-making. If people banknotes in 1661. They in as an employee is that you know your have an issue, they will congregate and were a huge success, own business, you know what you need solve that issue in a natural way without but the bank failed. to do to be successful and you care about having to go via head office. your customers, but then you’re prevented from doing that because head To what extent is Handelsbanken’s office has imposed targets on you that model a reflection of Swedish or wider you know are not relevant.

Scandinavian culture?

I think living in that kind of culture I don’t think you’ll find the same takes its toll on people. If, on the other approach in other Swedish banks. Maybe Founded from the ruins hand, you live in an environment there is an element of the egalitarian Swedes of Stockholms Banco, Riksens Ständers where we say ‘we believe you are the – that generally speaking might be a bit less Bank – today Sveriges best person in the whole organisation hierarchical – but I have no proof of that.

Riksbank – is the world’s to make all the decisions that are Handelsbanken has more than 800 oldest central bank. relevant to your area and we can support offices in 20-plus countries. Most of these you to do it’, who walks to work on are in our home markets (Sweden, Norway, Monday morning the happiest? What Denmark, Finland, the Netherlands and is that worth? the UK) but we also have branch offices and representative offices around the What about your role – is that affected by world. Their main task is to support the the devolved model? bank’s customers in its home markets with As CEO I do not take ‘all the big their international business. decisions’ about customer/banking What we have learned is that the German merchant business – more than 95 per cent of fundamental values and principles are Eduard Ludendorff credit decisions are taken at a local really the same in our six home markets. opened Sweden’s first savings bank, Göteborgs level. Nor do I spend time thinking From a cultural point of view these Sparbank, in 1820 – up and then implementing new countries are very similar. When we choose without government business strategies, goals, organisational home markets we have to feel our model involvement. structures or management approaches. would work there; we need to feel we Instead, the CEO’s primary role is to have a competitive advantage and that steer the company in adapting to change, there is a stable infrastructure. both external and internal, in line with We’re not interested in going to faraway countries our existing model, strategy and that are culturally different just because there seems competitive advantages. to be a window for banking. We want to bank our Through continual dialogue with different parts way and therefore we only consider countries that of the business, I can help colleagues identify areas are culturally compatible in terms of the customer where our model can be implemented even more base and staff. effectively, in turn avoiding the ever-present risk For further reading, see page 72 of centralising tendencies creeping in.

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“Put on some lipstick and pull yourself together�

Elizabeth Taylor Cosmetics (not to mention noodles and underwear) may be our most reliable guide to the state of the global economy, says Paul Simpson

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economic indicators LIPS AND DIPS

WEARING THIN

After 9/11 deflated the US economy, lipstick sales doubled. The explanation – that in hard times consumers crave cheap, morale-boosting treats – seemed perfectly reasonable until some killjoy pointed out that lipstick sales hadn’t doubled at all. The claim was traced back to an interview with Leonard Lauder, chairman of Estée Lauder, who had said it was “selling more lipstick than usual”, suggesting the economy could be gauged by a ‘lipstick index’. In 2009, The Economist insisted the ‘index’ was an urban myth, citing data that showed sales also rose in prosperous times.

But American economist Lou Crandall says the idea is consistent with “all kinds of economic theory”. When budgets are tight, consumers turn to inferior products – buying tuna because they can’t afford salmon – or seek low-cost indulgences, such as lipstick, romantic novels (sales for publisher Harlequin jumped 32 per cent in 2008) or, during the Great Depression of the 1930s, Charlie Chaplin movies.

A similar effect was found in Thailand in 2004. With the economy looking ropey, sales of Mama, the country’s biggest instant noodle brand, soared by 5 per cent – and grew even faster in 2005. So whether it’s lipstick or instant noodles, maybe there’s something in Lauder’s idea after all.

In 1926, the idea that women’s hemlines were an economic indicator was mooted by American economist George Taylor. Simply put, his theory was that hemlines go up in boom times and down in a downturn.

There is anecdotal support for his theory – the mini skirt became popular during the prosperous 1960s – but do the stats stack up? In 2010, Dutch academics Marjolein van Baardwijk and Philip Hans Franses crunched the data for hemlines and the economy from 1921 to 2009 and confirmed that there was a correlation, albeit with a time lag. Three years after the economy changes, for good or bad, hemlines get shorter or longer. The index is still being debunked, often by people who haven’t understood the time lag.

Along with similar theories – such as the utterly unproven proposition that women prefer high heels in a recession – the hemline index has been criticised for portraying women as frittering away wealth, rather than creating it. And yet economic trends do exert a mysterious effect on what we wear. Laurie Pressman, vice-president of the Pantone Colour Institute, says: “Colour can cause physiological and psychological reactions that are outside our conscious awareness.

Psychologically, grey – the colour of granite, rock and stone – is very stable and, when economies plunge, many people become very practical and sober about what they’re wearing.”

PictureLux/Eyevine, Keystone Pictures USA/Alamy Stock Photo

NOTHING DOING In October 2009, 67 unclaimed corpses were stored in freezers in Detroit’s Wayne County morgue. With local unemployment approaching 28 per cent, neither the families nor the authorities could afford to pay for the funerals. (The cheapest option, cremation, cost around $695.) The problem was not unique to Detroit: Los Angeles County morgue had so many unclaimed bodies – 25 per cent more than in 2008 – it paid private crematoriums $135,000 to clear the backlog.

The global economic catastrophe of 2008 had forced many people to make hard choices about discretionary spending. For some, that meant leaving relatives in the morgue. The same impulse led British motorists to drive less. In the UK, vehicles travelled 314.1 billion miles in 2007. As recession bit, the collective distance covered fell for three years in a row – for the first time since the government started collecting figures in 1950.

Alan Greenspan, one of the US’s most influential economic administrators, believes the same motives stop men buying underwear. Resurgent underwear sales, he says, are a harbinger of recovery. Mintel’s research supports his theory, finding that sales dropped 2.3 per cent in 2009, the first fall since 2003.

THE TRUTH ABOUT GOLF, CATS AND DOGS In 1999, real median income in the US reached an all-time high. One year on, and the number of rounds of golf played

by Americans peaked. Between 2000 and 2011, as the average median income in the US slumped 8.8 per cent, the number of golf rounds played fell 5.6 per cent. When America started playing golf again in 2012, it was hailed as an augury of recovery.

Rick Newman, author of Rebounders, says: “Golf may be the ideal economic indicator since it requires money to spend, spare time and the optimism that the next round will be better than last one.” This raises the possibility that the 114 days

Donald Trump has spent playing golf as president (up to the middle of May 2018) are a subliminal message to reassure Americans about the economy.

Could it be that people have less time for golf in recessions because they are too busy stealing pets? In the first five months of 2008, the American Kennel Club estimated that three times as many dogs were stolen as in the whole of 2007. By this measure, the UK may be destined for hard times: 360,000 cats were believed to have been stolen in 2016.

ENIGMATIC VARIATIONS The Babylonians, Etruscans and Romans shared a belief that the future could be divined by studying the livers of sacrificed sheep and chickens. As absurd as they might seem, these rituals – like the enduring appeal of astrology – point to the fact that we are hardwired to be discomforted by uncertainty.

Poring over chicken entrails does tacitly recognise that the universe can be a scarily random place, as the results of American football’s Superbowl have shown since 1970. The sporting showpiece is contested by teams from two leagues: the National Football Conference (NFC) and the American Football Conference.

According to Snopes.com, a victory

by NFC has, with 80 per cent accuracy, prefigured a rise in the Dow Jones Industrial Average Index. Economists are yet to explain this correlation.

The suggestion that horror movies succeed when the economy turns scary is slightly less random. In the 1930s, Hollywood brought Dracula, Frankenstein, and the Mummy to the screen – and invented the zombie movie with White Zombie, promoted with the politically incorrect tagline: ‘With his zombie grip, he made her perform his every desire.’

In the 1970s, as the US economy was reeling from the 1973 oil crisis, Hollywood scared us to bits with The Exorcist, Jaws, The Texas Chainsaw Massacre and The Omen. The presumption is that audiences preferred to be terrified by a chainsawwielding maniac than by the parlous state of their finances. It’s true that horror films are perennially popular but, in times of economic uncertainty, studios love them because they are cheap to make. Costing a mere $300,000, The Texas Chainsaw Massacre raked in $30.8m at the box office.

It seems the mysteries of the economy and the way it influences our behaviour support Ezra Solomon’s suggestion that “the only function of economic forecasting is to make astrology look respectable”.

For further reading, see page 72 41

supply chains

WHAT HAPPENS WHEN THE MAN FROM DEL MONTE SAYS NO?

S

ome of the tuna fishermen had been kept in cages and whipped with toxic stingray tails. More than a third were victims of human trafficking, according to a 2018 Human Rights Watch report. One crew was said to have been kept at sea for five years. The revelation, four years ago, that slave labour was rife aboard remote Thai tuna fishing fleets shocked consumers, and the brands selling the fish were tainted by the scandal.

The story was a reminder that guaranteeing ethical sourcing is a complex and arduous undertaking. There is 42

nothing new about slavery at sea: the US State Department estimates that it is still prevalent in 40 other countries.

Nestlé, one of the buyers of Thai tuna, commissioned notfor-profit organisation Verité to investigate the possibility of forced labour in its supply chain. When it was found, Nestlé launched an action plan, signed off by all its suppliers, to eliminate it and enable the company to trace 99 per cent of wild-caught tuna back to the vessel.

But fishing is just one sector and tuna just one product – a drop in the metaphorical ocean. Tackling the abuses in

Zakir Hossain Chowdhury/Barcroft Media

A decision made at one end of the supply chain can have disastrous consequences at the other, as Andrew Stone discovers

Around 170 million children are engaged in child labour globally, according to the International Labour Organization. This boy was photographed in a vermilion factory in Bangladesh, working in hazardous conditions with powdered cinnabar, a toxic mercury compound

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supply chains, which account for 50.1 per cent of the world’s GDP, has been greatly complicated by the march of globalisation and the drive to outsource production and manufacture in search of the lowest cost. This model has, directly and indirectly, been responsible for such disasters as the collapse of the Rana Plaza garment factory in Bangladesh, which killed more than 1,100 people five years ago.

The supply chain cannot be fixed unless organisations get the measure of long, complex and opaque processes from raw material to manufactured product.

That complexity increases exponentially with economic growth and industrialisation. Transhipments of fish from unregistered vessels at sea hugely complicate the tracking of fish supplies, but this pales besides the task the electronics business faces in sourcing ethical rare metals that are intricately linked to the production of high-tech hardware.

The challenge is eloquently outlined by metals expert David Abraham in his book, The Elements of Power. He paints a picture of the journey of virgin ore that trickles down jungle creeks and changes hands between middlemen in militia-held territories from Colombia to the Democratic Republic of the Congo. There might be multiple levels of legality in a consignment of a metal.

Some could be recycled, some from virgin ore, some from legal sources and some from more dubious ones, perhaps involving child labour.

“It’s a murky world. Trying to find the reservoir the water from my taps came from – or the chicken that laid the egg I had for breakfast – would be easier for me than finding out where the palladium in my catalytic converter came from,” says Abraham.

Few sectors are immune. In the UK, where there are estimated to be 13,000 people working in conditions of modern slavery, the problem is particularly acute in car washes, hotels, nail bars and agriculture. As consumers, we also have to recognise the ethical consequences of the choices we make. Our demand for cheap clothes is one reason that, according to the International Labour Organization, millions of children across the world are forced to work in the garment sector – or that a Financial Times investigation found workers in the heart of England being paid well below the legal minimum to work in unsafe and unmonitored ‘dark factories’, turning out fashion items for high street chains. Equally, we cannot ignore the fact that the law of intended consequences will apply to our growing obsession with having products delivered to us within hours of purchase.

Challenging though it is, the imperative to clean up supply chains in general, and combat the use of forced labour in particular, is growing as governments all over the world draft new rules on the sourcing of goods and services. Legislation is requiring organisations to report their activities at the very least and, in some instances, is criminalising neglect or a failure to act. Few sectors are unaffected, for example, by the UK’s 2015 Modern Slavery Act, and there are new laws on child labour, corruption 44

and supply chains in France and Germany. In the US, there is the California Transparency in Supply Chains (TISC) Act, and increasing pressure for electronics firms to assess and improve their sourcing of conflict minerals (those mined in areas of armed conflict) as part of the Dodd-Frank Act. On many levels, concerned corporate citizens are also beginning to make a difference. Bristol-based social enterprise TISCreport is proof that smart collaboration can make a significant difference in a short space of time.

Its Modern Slavery Act Compliance Tracker is the world’s largest open-data register, committed to ending modern slavery and supply chain labour abuses. As well as a public database that enables any organisation to find out the compliance status of their suppliers, TISCreport provides registered companies with resources to help them improve and comply with legislation.

Since its 2016 launch almost 10,000 UK organisations, more than half of those required to comply with the Act, have published a statement with TISCreport and more than 100,000 have done so worldwide. The company now has knowledge of 500,000 suppliers in the system and new data sets will boost these numbers. As the gaps in the database are filled, a stronger and clearer picture of myriad suppliers emerges and the scope for evasion and non-compliance shrinks. “The more visible this stuff is, the more able we are to deal with it,” says Jaya Chakrabarti, TISCreport’s CEO. “We are slowly filling in the dots.”

Bringing information and the compliance status of so many suppliers into the open in such an accessible way means people are no longer afraid to tackle the issue or as inclined to hide it. “The database is creating the conditions for whistleblowers who have been ignored inside their own organisations to come forward,” says Chakrabarti.

Data and technology are emerging as key weapons in this ethical war. Work is being done to explore the potentialofblockchainanddistributedledgertechnologies in general. Blockchain trials have already been conducted in the fishing trade, in which fishermen register their catch via SMS messages and the identification is transferred to tinning processors and other suppliers that maintain a trusted digital record.

Given the increasing complexity of supply chains, business models, stakeholder relationships and multiparty transactions, involving distributed ledger and blockchain technology could help manage the situation more effectively. Such technology also promises to bring efficiency and reliability where documents, contracts and asset transfer slips are typically handled by multiple organisations in relationships often marked by mistrust and inefficiencies.

Much can be achieved, for example, by giving every product a digital ID that holds information about it from raw materials to retailer, creating a trusted and complete chain of data that can help prove the provenance of goods and guarantee certain manufacturing processes. Digital IDs can also form the basis of automated smart contracts

supply chains

among disparate partners or support a network gathering reluctant to share their supply lists, terrified that their data from IoT (internet of things) sensors, which could buyer will get another supplier or will find out their costs prove valuable for detecting poor working conditions and and push them to zero profit margins.” for health and safety checks.

Part of the problem is that supply chains are One of the British companies pioneering smart supply characterised by ancient, unwieldy communications chain data networks is IT consultancy Global Resonance. either by phone or email. This slows the exchange of The company is developing a platform to smooth the information – even simple clarifications can take weeks – progress of goods through the supply chain, connecting and enables those with a vested interest to hide brands and retailers to their producers. It believes an information. “Seventy-four per cent of supply chain injection of ethical thinking into the process can prevent businesses operate using nothing more than spreadsheets problems by removing the incentive to cut corners or and whiteboards,” says Geldart. “Imagine what this was underpay workers and suppliers. like during the horsemeat scandal.”

Its first big project is to collaborate with a group of An operating system to allow companies to share organic cotton farmers in India to ensure that farmers information securely and confidentially could transform with small or marginal holdings can make a decent, the ways suppliers and buyers operate and relate. But sustainable living. The current system leaves many creating enough trust to build such a system is another farmers in the dark about the demand for their product: challenge. Global Resonance is starting with the factory there are too many links in the chain between them and a owners by building them an app to measure key high street fashion retailer for information to be conveyed performance indicators within their businesses. swiftly and accurately. If anything goes wrong with an Many of the poor practices and abuses in the garment order, a farmer can be left destitute. supply chain, for example, occur because margins are Disaster can come in many guises: not enough, or too being squeezed in the factories. This happens, in part, much, rainfall (on which 60 per cent of Indian agriculture because the owners don’t have a proper understanding of depends), a plague of insects or an their processes and profitability. order arriving so late that the “They don’t know how long it desperate farmer has sold their takes them to make a garment “Many poor practices and crop locally at a huge discount. beyond rough estimates,” says abuses in a supply chain They may be able to survive one Geldart. “The app will allow them year’s failure – with the aid of a to price and plan so the factory occur because margins high-interest loan – but two in a remains profitable. They will are being squeezed” row usually means they lose their know how long it takes to make an farms. The shame is too much for item, how much to charge, when it some of them. CNN estimates will be in production and when it that at least two farmers in India commit suicide every will be done, so they can keep their customers informed. day. In some cases, the debts that drive them to this tragic “When combined with information from other decision are as small as $9. factories, that allows the retailer or brand to do The Global Resonance project is designed to change traceability and improve capacity planning. And by this, in part by improving communication with the end allowing for broader communications, you can get far customer so that farmers know ahead of time what the better outcomes. When people work more closely demand will be and that an order will be placed, enabling together, they tend not to screw each other so much on them to lock in a good price. The advantage for retailers things like price.” is that they know much more about their suppliers, what All this is a work in progress. In the meantime, there they can provide and when. This greatly improves the are practical steps that every organisation can take to efficiency of their procurement operations, cutting risk stamp out supply chain abuses. “Change only happens if and cost. Global Resonance believes that eliminating top managers across departments including CSR, HR, inefficiencies and poor communication in the modern procurement, compliance, group counsel and marketing supply chain could reduce costs by up to 20 per cent. buy into the initiatives required,” says James Allan, The next step is to use a distributed ledger to develop a director of consulting at Verisk Maplecroft, which helps collaborative platform that spans the entire supply chain. companies use data and tools to identify and manage Like blockchain, participants would agree to share certain such risks in their operations and supply chains. information, making it easier to track processes, spot “There is a need to increase awareness of these issues likely disruptions and improve efficiency, says Joe Geldart, with training among senior executives. Often they don’t the firm’s chief product officer and co-founder: “The main have the awareness of trafficking or other issues that they impediment to information-sharing is buyer/supplier need. Then roll that out to key departments. Buyers are confidentiality. Each party in the supply chain is looking the most important internal stakeholders around that.” out for their own commercial interests and wanting to The way corporate hierarchies are structured doesn’t avoid being cut out of deals or disrupted. Suppliers are help. Many supply chain heads are regarded as managing 45

process not policy, and are only called into the boardroom poverty, global warming – to name merely the most when something goes wrong. As one industry consultant obvious. In all these areas, progress is being made, puts it: “So far as the rest of the company is concerned, satisfactory for some, less so for others. Some of the good the supply chain leader is only as good as the last bad stuff gets overlooked, such as Unilever’s commitment to thing they did.” That is why it takes something like empower five million women through its supply chain rumours of modern slavery – or an embarrassing product with a raft of initiatives such as turning 70,000 women in recall – for the function to catch the CEO’s eye. rural India into entrepreneurs by giving them access to An important prerequisite to effective oversight is training and technology. the process of mapping your supply chain: defining However, equally, some issues have proved more product lines, particular markets and source countries intractable than expected. Despite sustained efforts by that are likely to be most material to the issues you are the companies that sell coffee and chocolate to create a tackling. It’s a major undertaking. In the electronics ‘living income’ for cocoa farmers, more than half of sector, pioneers including Apple and Intel have spent cocoa households live below the poverty line. The years mapping and understanding their ‘conflict’ confectionery industry generates $100bn in revenue, but mineral supply chains and establishing best practice. farmers only get $6bn of that (while $15bn goes to But it is necessary. governments in taxes). The most obvious way to rectify “You can’t do anything unless you know who your this is to pay the farmers more for their crop, but suppliers are,” says Allan. “It is time-consuming and it companies have claimed that anti-trust laws prevent takes more skills than companies may have in-house.” them from agreeing to do that.

One major UK retailer, its efforts mired in internal This has led critics to claim that the businesses are bureaucracy, abandoned the task after a £1m investment being reactive, rather than proactive, and are more and 18 months – and gave it to a small start-up, interested in their reputation than in genuinely changing which did the job in six weeks for a fraction of that sum. the system. That is slightly unfair – Hershey’s, for example, A data-driven risk assessment has pledged to invest $500m over can help define where the risks the next 12 years to help farmers are and which ones to prioritise. become more productive and “Venture capitalists don’t seem “The foundation for most ethical richer – but it does suggest that a to have much enthusiasm for sourcing programmes is going to more fundamental reappraisal of be a robust risk assessment that investing in technology that could the present supply chain model helps a company identify where might be necessary if all the ills lift millions out of poverty” their most material risks are,” are to be cured. says Allan. “Use that as the basis That feeling is strengthened for deciding which suppliers to by a recent study of Bangladesh’s engage with and which competitors to collaborate with.” textile industry by Pennsylvania State University’s Center Finding out what other organisations are doing and for Global Workers’ Rights. It found that, five years after joining sector-wide partnerships can offer shortcuts to the Rana Plaza disaster in 2013, the price of men’s cotton effective action. Apple and Intel, for example, share trousers being exported to the US had fallen by 13 per cent much of their legwork in conflict minerals with other and the price for T-shirts exported to the European Union businesses. “Most companies share a supply chain and was 5 per cent lower. most don’t have the clout to change it on their own. Work Technology could make a transformative difference. out where to collaborate and on what,” Allan suggests.

But the venture capitalists who rushed to pour money into A collaborative rather than a command and control Uber, the Dollar Shave Club and Tesla – and anything else approach to suppliers will build trust, says Geldart. “Think that makes an American millennial’s life slightly less of the supplier as a partner, not a necessary evil. Deliver inconvenient – do not seem to have the same enthusiasm value for both sides of the deal and you get better-quality for investing in technology that could lift millions out of output and better information so that you can make poverty by reforming the supply chain. decisions based on longer-term relationships. That way, And to be brutally honest, are we, as consumers, as when something happens, you will be able to respond disinterested as the venture capitalists? It’s possible, quickly, get ahead of the story, do root-cause analysis, find although surveys repeatedly reveal that millennial the problem and make sure it never happens again. consumers say they are more likely to buy from a company “Supply chains are unpredictable. When you uncover they believe is making the world a better place. It’s an issue, make sure everyone comes together to solve it, possible, too, that the media shapes our attitudes. Stories rather than it becoming a fight. If your suppliers refuse to about modern slavery appal us but never quite generate cooperate, it will take weeks to uncover.” the same media hysteria as the revelation that someone Supply chains are often blamed for various ills: has been smuggling horsemeat into our frozen lasagne. deforestation (and the destruction of the orangutan’s natural habitat), inflation, pollution, modern slavery, For further reading, see page 72 46

The Chef’s Table/Alamy Stock Photo

supply chains

The carrots that reach our dinner tables used to be mainly purple, yellow or white. In the 16th century, a strain with more beta-carotene (giving it its orange colour) was adopted

by Dutch suppliers, supposedly to show support for William of Orange. All modern carrots are its descendants

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FineArt/Alamy Stock Photo

•

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LightRocket/Getty Images

In 1841, obscure US painter John G Rand changed art history.

Up until then oil paints had been hard to produce and transport (in pigs’ bladders) and dried quickly. But his idea, a screwcap tin tube, freed artists like the Impressionists from the studio and gave them the ability to use many more colours

Cairney Down/Alamy Stock Photo

When green isn’t green: this isolated Brazil nut tree is all that remains of the Amazon rainforest in a soy plantation near SantarÊm, northern Brazil, where deforestation for global agribusiness is a prime example of how economic development can create environmental degradation

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Auscape/UIG/Getty Images

An early supply chain, the Silk Road was a network of trade routes that connected east and west by land and sea, playing a major part in the development of countries along its routes. Indigo was one of the most desired commodities traded.

Today, laptops are exported on the railway equivalent

OUT OF SIGHT, NOT OUT OF MIND Employers need to understand the human and environmental impact of their supply chains

$150BN

Since ancient times purple has been the colour of the elite, not least because it was so expensive to make (by boiling marine snails in lead vats). In 1856, a young British scientist accidentally created a cheaper dye while trying to make synthetic quinine, to shorten the supply chain of the latter from South America

34

21M TO 46M

Estimates of the number of modern slaves in the world today

69%

of companies surveyed by the Business Continuity Institute say they do not have full visibility of their supply chain

300,000 INFANTS

fell ill with kidney failure in 2008 after 22 Chinese dairy companies adulterated their milk with melamine

ONLY 6%

of the $100bn generated by the chocolate industry goes to cocoa farmers, according to the International Cocoa Organisation

2,339

3,261

3,804

5,145

NUMBER OF MODERN SLAVES REPORTED TO UK AUTHORITIES

50%

of the world’s GDP goes through a supply chain

1,745

Getty Images; Superstock; Library of Congress; World History Archive/Alamy Stock Photo; DACS, London 2018; PA photos, The Estate of Yves Klein c/o DACS, London 2018

The amount in illegal profits generated globally by forced labour

171,000 JOBS

2013 2014 2015 2016 2017 Source: National Crime Agency

were reshored to the US in 2017, according to figures from the Reshoring Initiative

A BRIEF HISTORY OF BLUE 3800-1700 BC EGYPTIAN BLUE

The Ancient Egyptians are thought to have made their blue by heating sand and limestone with a coppercontaining mineral to create a glass that could be ground and mixed into a paint or glaze.

1665 ULTRAMARINE

A rare pigment made from semi-precious lapis lazuli, it was first used in 6th-century Afghanistan. In Europe it was as pricey as gold until 1824, when an artificial version was created.

supply chains

63%

60 FOOD AND DRINK CARTONS

44 CENTS

of Unilever’s greenhouse gas emission footprint is accounted for by consumers

can be sorted for recycling per minute by ‘Clarke’, an off-the-shelf robot adapted for use by AMP Robotics and Alpine Waste & Recycling

in every dollar Americans spend shopping online makes its way into Amazon’s coffers

27%

by raw materials

9%

by its own manufacture, distribution and retail

THE TIERS

How countries meet the Trafficking Victims Protection Act’s (TVPA) minimum standards

Tier 1 – fully meet TVPA minimum standards Tier 2 – are making significant efforts to meet TVPA minimum standards Tier 2 Watch List – as Tier 2 but with significant number of trafficking victims Tier 3 – do not fully meet minimum standards and are not making efforts to do so Special Case – Libya, Somalia and Yemen

Source: US State Dept Trafficking in Persons Report 2017

17th and 18th centuries INDIGO

A dye not a pigment, indigo – popular in England for fabrics – was grown as a crop from India to the Americas.

The synthetic version used in denim was born in 1880.

2009 YInMn BLUE

1957 INTERNATIONAL KLEIN BLUE

1703 PRUSSIAN BLUE

More than a pigment in art, its sensitivity to light was used to invent blueprints. As a pill it’s a heavy-metal poison antidote.

An Oregon lab looking for new electronics materials found a mix of yttrium, indium and manganese went a new shade of blue when heated.

After safety tests, it was issued as a paint in 2016.

Mystic French artist Yves Klein painted almost totally in a monochrome blue, working with chemists to create his own matte shade of ultramarine with synthetic resin.

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Additional infographic sources: Independent Anti-Slavery Commissioner, Unseen, The Guardian, Unilever, Financial Times

GLOBAL EFFORTS TO TACKLE PEOPLE TRAFFICKING

All’s fair in love, war and films: to ensure neither was given top billing, Steve McQueen and Paul Newman’s names were diagonally staggered on the opening and closing credits and posters for The Towering Inferno

Silver Screen Collection/Getty Images, AF archive/Alamy Stock Photo

FIRST

AMONG EQUALS Unfairness can have a profound inuence on employees but, as Jane Simms discovers, pinning the concept down is far from easy

F

supply chain

our years ago, Ben Edelman, associate in her definition of fairness – ‘attributing to each his or professor at Boston’s Harvard Business her due’ – explaining that fairness is much closer to the School, was in the running for the dubious concept of equity than it is to equality. honour of ‘most disliked guy on the internet’.

She explains: “Everyone, ideally, should have equal He’d ordered a takeaway from a local family- access to healthcare, education, basic housing and run Chinese restaurant and expected the dishes to come information, but the ‘goods’ or ‘rewards’ – hospital to $53.35. When he realised he’d been charged an treatment or exam results, for example – should be additional $4, he berated the Sichuan Garden for not distributed according to need or merit.” updating its website to reflect the change in prices, and The notion of meritocracy – whereby, supposedly, rejected their apology and offer to reimburse the money those with the most ability rise to the top – is at odds as “an exceptionally light sanction for the violation that with this understanding of fairness, however, because it has occurred”. relies so much on luck, networks and class structures.

In an email exchange that lasted three days, Edelman It’s no accident that most advocates of meritocracy are demanded three times that amount to reflect “the those who’ve ‘made it’. As Stefan Stern, former director approach provided under the Massachusetts consumer of the High Pay Centre, commented wryly in the protection statute”, and informed them that he had Financial Times: “Are there so few women at the top reported the transgression to local authorities in the because of a lack of ability?” hope that the restaurant would “identify all consumers The assumption underlying Hobbs’ definition is that affected and provide refunds to all of them”. every individual matters. “They are more than just The emails went viral and the Twittersphere erupted a number; they are a separate bearer of dignity and in a cacophony of opprobrium, its tone ranging from ‘this rights,” she says. But organisations seeking to create fair is a good tale of elitism and privilege’ to ‘Ben Edelman is workplaces need to reconcile the tension between an officious, overbearing dick’. The scorn directed at fairness to individuals and fairness to the group – two Edelman was matched by supcontradictory ideologies based port for the Sichuan Garden and, on the respective philosophies a few days later, he apologised. of influential 18th century “‘Fair’ and ‘unfair’ This story may be karmic in thinkers Immanuel Kant and its symmetry, but not all Jeremy Bentham. Kant espoused denote a polarisation that instances of ‘unfair’ behaviour deontology, or duty/obligation/ belies the many shades are quite so clear-cut. Sport rules-based ethics, which holds of grey in between” informs much of the language of that actions are right or wrong in fairness: think ‘fair play’, ‘level themselves, regardless of the playing field’ and ‘moving the consequences. Bentham, the goal posts’. Australia’s recent ball-tampering debacle, for founder of modern utilitarianism, was a proponent of instance, traumatised a nation that defines itself by its ‘the greatest good for the greatest number of people’. sporting prowess – not so much because the players Governments, in particular, need to reconcile this broke the law, but because they violated the spirit of the tension in practice, rather than paying lip service to it, game. It just wasn’t cricket. says Hobbs, who highlights how frequently certain There was a time, not long before Sir Roger Bannister groups are adversely affected by new policies because of ran the first four-minute mile after doing his morning the distinct lack of a joined-up approach. The present shift at St Mary’s Hospital in London, when even training government’s treatment of the Windrush generation, was deemed to confer an unfair advantage. Today, a which it seems to have conflated with targets to eject sportsperson’s shoes or genetic make-up could, arguably, illegal immigrants, is a case in point. give them an unfair edge. Doping scandals, including The fact that the public was so quick to censure the those involving cyclists such as Chris Froome, hinge on government over its treatment of the Windrush complex and multifarious circumstances such as generation, even though it may have had nothing to do whether certain medications are medically necessary or with them personally, has its roots in evolutionary constitute unfair performance enhancements. biology. Numerous research studies show that a sense of In cases such as this, ‘fair’ and ‘unfair’ denote a fairness is hard-wired. One study found that experiencing polarisation that belies the many shades of grey in fairness produces reward responses in the brain similar between. People’s perceptions of fairness differ too, to those gained from eating chocolate. This presumably depending on factors such as personality, background explains the charitable impulse, which stems from a and context. So it’s not surprising that philosophers since desire to increase the ‘fairness quotient’ in the world, and Homer, in the 8th century BC, and Aristotle, four why ‘giving’ is one of the ‘five ways to wellbeing’ identified centuries later, have defined fairness in subtly different by the New Economics Foundation. By contrast, an event ways. Modern day philosopher Angie Hobbs of the perceived as unfair can generate a response in the limbic University of Sheffield synthesises centuries of thinking system as powerful as a blow to the head.

40 56

Brook Mitchell/Getty Images

Shame-faced cricketer David Warner arrives back in Sydney following allegations of ball-tampering in South Africa earlier this year. The former Australia vice-captain was given a year-long ban from international and state cricket

Some people do just take what they can, of course – albeit masquerading as some sort of meritocracy. Will Hutton, in his 2010 book, Them and Us, argues that “disregard for fairness” lay at the heart of the 2007-08 global banking crisis. “The bankers cast themselves as hunter-gatherers who owed nothing to anybody and could eat what they killed careless of tomorrow,” he writes. But the bankers were perverting the notion of hunter-gathering for their own ends: “The primitives knew that if you don’t run an economy and society fairly, it quickly becomes dysfunctional... When cave dwellers were unfair, they died. When capitalism is unfair, we have financial crashes.”

And bankers are not the only group to appropriate notions of fairness to serve their own agendas. Politicians do it all the time. Former chancellor George Osborne used the word 24 times in his speech about the 2010 comprehensive spending review (which ushered in the era of austerity), yet analysis from the Institute for Fiscal Studies showed that his changes would hit the poorest the hardest, while the proposed bank levy would amount to less than one-tenth of 1 per cent.

Our aversion to getting less than others may be innate, but our responses to other forms of unfairness seem to be informed by nurture. US psychologists Sarah Brosnan of Georgia State University, and Frans de Waal from Emory University, found that while a monkey in isolation is happy to eat either a grape or a slice of

cucumber, if one monkey sees her partner getting grapes and she’s left with the cucumber, she reacts angrily. But a decade of research into children’s fairness behaviour by three other US psychologists – Katherine McAuliffe of Boston College, Felix Warneken of the University of Michigan and Peter Blake from Boston University – highlights fascinating nuances in our responses to fair and unfair treatment.

The researchers went to public spaces in various cities and countries, selecting children at random to play a simple game: two children who didn’t know each other were paired up and given an unequal number of sweets.

One of the pair – the ‘decider’ – could accept or reject their allocation but, if they rejected it, neither child got anything. Most children would give up their own sweets to prevent their partner getting more than them.

What seems to be at stake here is status: the absolute number of sweets is less important than the relative share, because more sweets is seen as a sign of importance. However, there is another sort of unfairness – one where we get more than others. At the age of eight, the researchers found that children start to reject ‘the good deal’ too, and they will also intervene to prevent injustice between third parties, even if they have to sacrifice their own sweets to do so. That impulse played out earlier this year when a group of 700 Canadian doctors rejected a very healthy pay rise, requesting the money instead be invested in patient care and services. • 57 41

Most people faced with an unwanted job transfer might complain to HR, ďŹ nd a new position or take their frustrations out on the vending machine – but one Boeing employee was so distraught he sabotaged a $24m Chinook helicopter

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ACTS OF VENGEANCE History is littered with stories of people who have gone to extreme lengths to get even

Pierre Picaud, the 19th-century French shoemaker believed to be the inspiration for the main protagonist in Alexandre Dumas’ The Count of Monte Cristo, was falsely accused of being an English spy by his jealous friends after getting engaged to a wealthy woman. He was imprisoned for seven years but, on his release, exacted his revenge in a 10-year killing spree of the men who had betrayed him.

Richard Baker/In Pictures via Getty Images, CBW/Alamy Stock Photo

During a tour in 2008, Canadian group Sons of Maxwell saw their guitars being tossed onto a United Airlines flight. On discovering his $3,500 Taylor guitar had been broken, band member Dave Carroll began a campaign for reimbursement. United ultimately rejected the claim, so Carroll took revenge, recording a series of songs dubbed the ‘United Breaks Guitars’ trilogy. He uploaded them to YouTube, where they went viral, racking up more than four million views in less than a month.

In 2003, Michigan entrepreneur Alan Ralsky became known as the ‘spam king’ for sending out millions of bulk email come-ons. Described as ‘vermin’ for his business practices, Ralsky came unstuck when a local newspaper revealed his lavish lifestyle and critics signed his home address up for junk mail. It quickly spread across the internet, with Ralsky receiving hundreds of pounds of mail a day.

Lorena Bobbitt became famous overnight in 1993, when she cut off half of her husband’s penis while he was asleep and threw it out of a car window. It was later found after an extensive search and reattached. Bobbitt claimed she had suffered years of abuse and that night her husband had come home drunk and raped her. In her trial she was found not guilty because of temporary insanity and was ordered to undergo 45 days of psychiatric evaluation in hospital.

Further research shows that children’s willingness to cooperate and be fair depends on whether the others are part of an ‘in group’ – children as young as three are more likely to share rewards fairly with children they’ve collaborated with to ‘earn’ those rewards, than with those with whom they have worked in parallel.

“While we may think fairness is a universal principle, it’s actually quite flexible across different contexts,” says McAuliffe. Other work supports this. Research by David Rand, associate professor of psychology at Yale, demonstrates that if you live in a mutually beneficial cooperative society, cooperation becomes your default.

But behaving that way in different societies could mean you are taken advantage of, so your default is to be selfish.

Psychologist and behavioural economist George Loewenstein, of Carnegie Mellon University, has shown that people can be ‘nudged’ into acting more fairly and cooperatively. In experiments designed to determine people’s responses to ‘fair’ and ‘unfair’ financial rewards, he categorised people as ‘saints’, who preferred equality over everything, ‘loyalists’, who preferred equality in positive relationships but sought a better deal in negative relationships, and ‘ruthless competitors’, who always wanted more. The respective percentages were 24, 27 and 36. However, when Loewenstein gave research participants more context about the nature of the relationships with their fictitious business partners, the number of saints and ruthless competitors fell, while the proportion of loyalists rose to 52 per cent. Once they understood more about the relationships they were involved in, people were prepared to give up more to nourish and maintain them.

Behavioural economics expert Daniel Kahneman confirms that “judgements of fairness are susceptible to substantial framing effects”, pointing out, for example, that people are less resistant to the cancellation of a discount or bonus than they are to a wage cut. Twothirds of research respondents, Kahneman has shown, would switch their patronage to a drugstore five minutes further away, if the closer one raised its prices when a competitor was temporarily forced to close. A similar proportion would switch if the more convenient drugstore discriminated against its older workers.

Examples of individuals trying to ‘restore justice’ to a situation are legion. Ten years ago, a Boeing worker was so upset by an impending job transfer that he cut the electrical wires on a $24m Chinook helicopter. Another employee in a different organisation wiped all his department’s computer files after his boss took credit for a report he’d written.

But while such examples are costly, others have been far more tragic. Nasim Najafi Aghdam, the woman who opened fire at YouTube’s headquarters in a suburb of San Francisco, injuring three before killing herself, was said to be furious with the video website because it had stopped paying her for her clips. And Alek Minassian, the man accused of driving a van into a crowd of 59

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pedestrians in Toronto, killing 10 and wounding 15 requirement to publish pay ratios would serve “as a others, is thought to have been part of the ‘incel’ mechanism to bring about greater fairness and (involuntary celibate) community who believe the transparency at work and avoid the demotivating effects modern world is unfairly stacked against awkward or of unjustified pay gaps”. The gap between FTSE 100 CEO unattractive heterosexual men. pay and average pay stands at around 132:1 – up from 47:1 Professor Aaron Cohen, from the Department of 20 years ago.

Political Science at the University of Haifa in Israel, The same thinking underpins the new requirement says perceived fairness helps people deal with (as of April 2018) for organisations with at least 250 uncertainty. When uncertainty is coupled with clearly employees to publish gender pay gap data. The first data unfair treatment, he writes in his 2015 book, Fairness in revealed that nine out of 10 women work for a company the Workplace, “the individual will engage in self- that pays women less than men on average, possibly protective or even competitive actions, seeking to more given flaws in the reporting process. relieve the uncertainty by seizing control of his or her Given that hundreds of companies filed their data at own fate and identity”. Sometimes, he continues, “the the last minute, it is possible that some chose to do so in sting of unfairness becomes so strong [...] that negative the hope that their results would be hidden in a flood of affect drives people to frankly competitive actions in disclosures. But, says Cohen, any organisations hoping to which harming the organisation is as much a goal as do so were shooting themselves in the foot, given protecting the self”. that unfair procedures rather than outcomes determine In an organisational context, Cohen warns, psych- employees’ views of ‘fairness’. A growing body of work opaths, Machiavellians, narcissists and those high in also shows that perceived fairness in the workplace is an neuroticism represent the biggest threat – “and statistics increasingly critical determinant of success: people who show that 3-5 per cent of employees are psychopaths” – feel the organisation behaves fairly make discretionary but damage is increasingly being wrought by effort; those who don’t become largely transactional, rational humans who speak out retaliate or leave. And behaving publicly against unfairness befairly is about far more than pay cause their employers or other – it’s about justice, politics, trust “50 years ago, when your authorities haven’t taken their and the psychological contract. boss said ‘jump’ you would complaints seriously.

Many of these things have The #MeToo movement is a been undermined, claims Cohen, simply ask ‘how high?’, but classic example, as is Carrie by globalisation, competition today the answer is ‘why?’”

Gracie’s high-profile resignation and technological change, which from the post of China editor at have led to a situation where an the BBC: she claimed the broademployee is “only a relatively caster had broken equality laws and that she didn’t trust temporary resident in the organisational condominium”. management to deal with the problem. Gracie said she The new uncertainty in employer/employee relationwas offered a 33 per cent pay increase but rejected it, ships leaves many workers feeling that their company saying she wanted equality, not more money. The BBC’s has failed to meet its ‘reciprocal exchange obligations’. embarrassment was compounded when it was discovered Essentially, they are being less fairly treated than they that it had gagged other female presenters who offered used to be in an environment where individualism their support, and by the publication of jokey ‘off air’ trumps collective values. comments at Gracie’s expense by colleagues John There are plenty of examples to support his Humphrys and Jon Sopel, both of whom the BBC hypothesis. In May, McDonald’s workers in Britain took announced had accepted reduced wages, together with strike action over zero-hours contracts and working four others: Huw Edwards, Nicky Campbell, Nick conditions in action that, according to Tony Royle, Robinson and Jeremy Vine. professor of employment relations at the University of “Men have systematically benefited from gender York, is symbolic of the growing income gap, an increase inequality for decades,” points out Stephen Bevan, head in precarious work and a decline in independent trade of HR research development at the Institute for union representation. “Young workers in particular have Employment Studies. “Calls for ‘men’s rights’, support felt the brunt of the ‘flexible’ labour market and austerity for International Men’s Day and suggestions from government policies,” he says.

Conservative MP Philip Davies that white middle-aged Other gig economy players, notably Uber, Deliveroo men are an ‘oppressed minority’ miss the point. But as and Hermes, have been embroiled in struggles with the [American writer] Clay Shirky says: ‘When you’re courts and unions over whether their drivers and riders accustomed to privilege, equality feels like oppression.’” are entitled to employment rights. The evidence suggests Pay is one of the most emotive issues at work – that workers are winning – but the ground they gain is because, as research shows, reward confers status. The hard won. It took the death of a self-employed driver, CIPD and High Pay Centre argued in 2017 that the new who’d missed hospital appointments to avoid paying a 60

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Humans are not the only animals that take exception to unfair treatment. Normally capuchin monkeys will happily eat grapes or cucumber but, if they see another monkey getting grapes when they only get cucumber, they react angrily

£150 charge for skipping work, before parcels company DPD scrapped the charge and raised its pay. Tim Roache, general secretary of the GMB union, says: “Companies like Hermes and Uber hide behind terms like ‘flexibility’ to wriggle out of treating the people who make them their money with the respect they deserve. Guaranteed hours, holiday pay, sick pay and pension contributions are not privileges companies can dish out when they fancy. They are the legal right of all UK workers.”

And yet, for all the egregious examples of exploitation, things aren’t as black and white as many paint them, maintains Bevan. “For some people, at certain points in their lives, zero-hours contracts can work well,” he says.

What’s more, “gig economy players represent only 4 per cent of the total economy. It’s significant, but the idea of a ‘precariat’ (see page 17) is not happening as much or as quickly as people might think.”

The ‘echo chamber’ of social media makes it easier for people to feel hard done by, suggests Bevan, pointing out that it encourages confirmation bias and reinforces prejudices: “People are much less intellectually curious now because they seize the information at their fingertips, and not seeing the whole picture leads to a greater propensity to indignation.”

Nevertheless, perceptions of fairness are important because perceptions frame behaviours – and Bevan agrees with Cohen that positive perceptions are best served by transparency. While things like gender pay

gap reporting are “a crude measure”, he says, “it’s great that these things are being flushed out because the underlying issues will then be addressed”. And younger generations are exerting a positive influence: “They have a broader vocabulary to describe what they value about work and are less likely to just accept what they’re given than previous generations.”

So could we be on the cusp of a new wave of revolt against inequity? Hobbs is sceptical: “At the moment we have morally, intellectually and imaginatively bankrupt leaders – except perhaps in business. People like Bill Gates are really pushing for a fairer world.”

Bevan is more optimistic. “David MacLeod [the employee engagement expert] recently pointed out that 50 years ago, when your boss said ‘jump’ you would simply ask ‘how high?’, but today the answer is ‘why?’.

And it’s a reasonable question. Organisations have to come to terms with being asked ‘why?’ more often, about all sorts of things – pay, promotion prospects, career progression, decision-making – and the more they have to explain, the more difficult it is to justify unfair behaviour and outcomes.”

The Darwinian forces that have perpetrated so many inequalities in our society could become architects of their own downfall, predicts Bevan. Nowadays, he says: “It’s about survival of the fairest.”

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BUSINESS RESEARCH, REPORTS AND INSIGHT

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POST-BREXIT LABOUR MARKET

Firms want free labour movement

Even with migration restrictions, UK employers remain attracted by the work ethic of EU nationals

K businesses plan to continue to recruit EU nationals post-Brexit where possible – even if migration restrictions are put in place, a survey has revealed.

More than a quarter (27 per Despite protests, migration restrictions could still be a reality after the Brexit transition period cent) of employers said they would continue to hire from the EU, while better work ethic/motivation, The survey also found that 17 per cent would look outside the better job-specific or technical employers would not be seeking to EU to bring in new workers. These knowledge and greater attract more applicants by raising views on Brexit featured in the commitment to fit with the pay. Only around one in 10 CIPD and The Adecco Group’s organisation’s values and employers said they would increase Labour Market Outlook report for expected behaviours. wages and improve conditions. winter 2017-18, in which 2,066 HR If migration restrictions were Gerwyn Davies, senior labour professionals and senior decisionintroduced, the most popular market analyst at the CIPD, makers were surveyed. policy – cited by 41 per cent of explains that employers value the The majority of employers (54 employers – would be to implement contribution EU nationals make, per cent) favoured a UK-wide which is why any additional “Such investment may immigration system continued free bureaucracy or cost isn’t putting provide a timely boost movement of labour, with preferential them off continuing to employ to participation in adult arrangements to although there were these workers. learning in the UK” regional and sectoral employers based on However, he warns that a large variations. Perhaps national labour or number of organisations are very unsurprisingly, organisations that skills-shortage occupations. much in denial or are in a ‘wait and employed EU nationals were more So beyond continuing to recruit see’ mode about the very real likely to show a preference for free EU nationals where possible, what prospect of migration restrictions. movement of labour than those options will employers consider if “They need to acknowledge the that didn’t. When asked why they restrictions are introduced? workforce challenges they face employed EU nationals, the largest Almost a fifth (19 per cent) said once the transitional period ends proportion of employers, 38 per they would seek to recruit an in 2020,” he says. “There is room cent, said they were merely increasing number of older for improvement in relation to choosing the best person for the workers, 16 per cent to hire more skills investment, reward or job irrespective of nationality. graduates and 16 per cent to invest recruitment and retention Eighteen per cent admitted, in training and upskilling the strategies. The hope is that any however, that they experienced domestic workforce. migration restrictions put in place difficulty in attracting UK-born “Such investment may provide could be a catalyst for improving applicants to fill unskilled or a timely boost to participation in best practice in the UK, which semi-skilled jobs. Other reasons adult learning in the UK, which is has been lagging behind our for recruiting EU nationals that significantly below that in most international competitors.” bit.ly/LabourMarketOutlook came high on the list included other EU countries,” the report says.

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HUMAN CAPITAL REPORTING

Annual reports lack clarity on workforce risk HR should work with management to ensure it has relevant data

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eporting on workforce data is on the increase among FTSE 100 firms, recent CIPD research has shown. But the quality of the information presented in relation to corporate risk has worsened, calling into question how transparent or meaningful it is.

Hidden figures: how workforce data is missing from corporate reports revealed a 9 per cent rise in human capital reporting in annual reports between 2015 and 2017, following a larger increase (19 per cent) between 2013 and 2015.

However, despite the growing quantity of information disclosed in annual reports, the study found that businesses are failing to develop a risk perspective on human capital (HC) data or recognise how wide ranging the risks could be. “Understanding the risks associated with human capital can be extremely complex,” says the report. Nevertheless, there has been a push from stakeholders, including investors, to “understand how these more intangible organisational aspects are reported upon in an organisation’s annual report”.

Researchers analysed FTSE 100 companies’ annual reports by counting the number of sentences making reference to five HC categories: knowledge, skills and abilities; employee welfare; HR development; employee equity; and workplace risk. The final category included issues such as leadership succession and employee turnover.

The results show that while organisations are taking HC risk

seriously, there are deficiencies HR departments ensure annual in reporting around employee reports provide a thorough account innovation, employee relations, of all HC elements and work with employee turnover and the senior management to make sure contingent workforce. Although they have all the workforce succession planning for senior roles information and metrics they need, was reported, overall HC risk including those related to risk. reporting decreased in the 2016-17 The report was written by financial year.

Dr Martin McCracken, Professor To uncover whether companies Ronan McIvor, Dr Raymond Treacy were “simply offering a censored and Tony Wall, all from Ulster snapshot of their corporate risk University Business School. bit.ly/WorkforceDataReporting profiles”, the team analysed content of FTSE 100 annual reports against workforce-related news reported in ETHICS three media outlets: the BBC, the Financial Times and The Economist during 2016-17. They examined how firms reported on job losses or the Employees who do the right thing risks posed by Brexit in their may resent colleagues who don’t annual reports compared to the media. This analysis found that less hile behaving ethically is than half (46 per cent) of all HC generally regarded as good risks reported in the media were for business, a study has revealed recorded in annual reports. “It that there are significant risks is clear that there is real room for behind it too. improvement in relation to the Doing the right thing can be transparent disclosure of people onerous for employees, as it takes risk information,” the report says. up their time and energy. And if they Ed Houghton, CIPD senior think they are more ethical than research adviser for human capital their co-workers, this can provoke a and governance, says the research negative reaction that is potentially shows that few organisations report detrimental to themselves, their consistently and transparently on colleagues and the organisation. workplace issues: “With regard to In the paper “If Only My Coworker reporting against big issues such as Was More Ethical”: When Ethical and Brexit, only 12 per cent of FTSE 100 Performance Comparisons Lead to companies reported on skills shortages, and 21 per cent reported on skills gaps.

Yet we expect organisations to talk about those risks more openly.

It demonstrates that annual reports neglect key information about the contexts organisations are working in.”

The study Serge Lambermont of tech company Aptiv, which has been voted one of the world’s most ethical companies for the last six years recommends that

Negative ethics

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Negative Emotions, Social Undermining and Ostracism, researchers reveal the complexities of “upholding ethics within organisations”. They show that an employee who feels ethically superior to a colleague can also feel dislike or disdain for them. This negativity grows if they perceive their peer to be a higher performer, and can lead to the co-worker being belittled or ostracised.

So why do workers who see themselves as upstanding behave unethically towards colleagues?

Where performance is all-important at work, ethical but lowerperforming employees may resent less ethical employees who reap the rewards of higher job performance, Female leaders like Angela Merkel may be more effective in the top roles than male colleagues the study explains. This triggers a GENDER test). They were then informed fight or flight response, say Matthew whether their ethical decisionJ Quade of Baylor University, making and task scores were Rebecca L Greenbaum of Oklahoma higher or lower than those of State University and Mary B a comparison classmate.

Mawritz of Drexel University.

There were four experimental The team carried out two studies conditions. In the more ethical, to explore the effect of employees’ lower-performance condition, ethical comparisons. In the first, Female leaders do better than men participants were told 310 pairs of employees “It is important to in personality traits survey that although they (working in reward both scored higher in comparable positions, omen may make better performance and ethical decisionwith similar education leaders than men, according ethical conduct” making, their lower and tenure) were to a personality traits survey. score on task surveyed. Each pair Professors Øyvind L Martinsen performance meant their peer, consisted of a ‘focal employee’ and a and Lars Glasø of the BI rather than themselves, would ‘comparison co-worker’.

Norwegian Business School receive a monetary reward. They Focal employees compared carried out a survey of more were then asked to rate their themselves with their co-workers than 2,900 leaders, measuring for responses towards their co-worker. in relation to perceived ethics and personality traits as these play a Both studies found that “ethical performance. They rated their levels bigger role in how effective they and performance comparisons of negative emotions (disgust, are at their job than in most other interacted to predict negative contempt or tension) towards the positions, they say. emotions and fight and flight comparison co-workers.

The model uses five traits to build behavioural reactions”. To avoid this The comparison co-workers rated a picture of personality. These are outcome, organisations should not how often they experienced ‘social emotional stability, openness to celebrate higher performance undermining’ behaviour (insults, new experiences, agreeableness, achieved through questionable or spreading of rumours) and ostracism extraversion and conscientiousness. unethical behaviour, the paper (being ignored, avoided) from the concludes, adding: “It is important focal employees.

Previous research has shown for organisations and managers to In a second study, 121 students that most skilled leaders reward both performance and were invited to respond to ethical achieve high scores for all of ethical conduct.” dilemmas and complete a bit.ly/EthicalCoWorkers these traits and, based on that, performance task (an anagram

Women score well on test of leadership

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the five characteristics of effective leaders are: • Ability to withstand job-related pressure and stress (a high degree of emotional stability).

• Ability to take initiative, be clear and communicative (a high degree of extraversion).

• Ability to innovate, be curious and have ambitious vision (a high degree of openness to new experiences).

• Ability to support, accommodate and include employees (high degree of sociability).

• Ability to set goals, be thorough and follow up (be very methodical).

Participants in the survey of Norwegian managers came from both private and public sector organisations, and included a mix of men and women. As well as personality traits, the study also measured work motivation and work commitment.

The results revealed that female leaders scored higher than men in four of the five traits. Women are better suited for leadership than men when it comes to clarity, innovation, support and targeted meticulousness, the study suggests.

On the other hand, female leaders had a stronger tendency to worry (emotional stability). Nevertheless, say Martinsen and Glasø: “Disregarding the worrying (emotional stability), it could be legitimate to ask whether women function better in a leadership role than their male colleagues.”

In the study, leaders in the public sector scored higher in innovation, support and targeted meticulousness than those in the private sector. “Can the best leaders really be found in the public sector?” the researchers ask.

The research, originally written in Norwegian, appeared in an article published online by Martinsen called Personality for Leadership. bit.ly/PersonalityForLeadership

STRESS

The positive side of anxiety A moderate level of stress can be harnessed to good effect

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nxiety isn’t always detrimental to work performance and can offer a boost, according to a study

by Bonnie Hayden Cheng of the Hong Kong Polytechnic University and Julie M McCarthy from the University of Toronto Scarborough.

They point out that previous research has in the main presented workplace anxiety in negative terms: after all, it can result in low performance, trigger unethical behaviours or even lead to psychological disorders. But in some situations, workplace anxiety can boost performance by helping employees focus and self-regulate their behaviour, say the researchers in their study, Understanding the dark and bright sides of anxiety: A theory of workplace anxiety.

To reconcile these seemingly contradictory findings and gain a more accurate perspective on the effects of workplace anxiety, the researchers developed a new model that sets out the triggers for workplace anxiety, and how and when this can have both negative and positive effects on job performance. The Theory of Workplace Anxiety (TWA), as they call the model, draws on and advances existing research and theories on anxiety and stress.

The model makes a distinction between two types of workplace anxiety: dispositional and situational. The first relates to individual differences in feelings of nervousness or unease about job performance. The second concerns a transient emotional state reflecting nervousness or unease about specific tasks or ‘episodes’ in

an employees’ daily work life, such as meeting a deadline.

The model outlines how both types of workplace anxiety can, in certain situations, produce beneficial effects.

A moderate level of anxiety can lead employees to engage in ‘self-regulatory processing’ – monitoring their own progress on a task and focusing their efforts towards performing that task, ultimately boosting performance.

Conditions that can help prompt this response include motivation, emotional intelligence and ability.

Cheng explains that workanxious employees who are motivated are likely to harness anxiety to help them focus on tasks. Those who are emotionally intelligent are adept at recognising their anxiety and so use this to regulate their performance. Those who are experienced and skilled at their job are also less likely to let anxiety affect their performance.

“Clearly, anxiety is more complex than how it has been modelled in the past,” the research paper says.

The TWA model, it adds, has practical relevance for personnel selection practices, employee training, goal-setting initiatives, work-life balance programmes and leadership development strategies. bit.ly/TheoryOfAnxiety

PERCEPTIONS OF LEADERSHIP

Time to ditch the war paint?

Too much make-up can affect workplace opportunities

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that make-up use has a negative effect on judgements of leadership.”

Co-author Dr Christopher Watkins says: “This research follows previous work in this area, which suggests that wearing make-up enhances how dominant a woman looks.

“While the previous findings suggest we are Wearing make-up hasn’t impeded Lady Gaga’s career inclined to show some roles – it is, for example, linked to deference to a woman with a tip earnings in the service industry good-looking face, our research – the benefits do not extend to suggests that make-up does not leadership positions, researchers enhance a woman’s dominance by from Dundee’s Abertay University benefitting how we evaluate her in have found. a leadership role.”

Their study explored whether The other authors of the paper the use of make-up and the Negative effects of Makeup Use on quantity worn affects perceptions Perceptions of Leadership Ability of leadership ability. A total of 168 Across Two Ethnicities are Esther people, a mix of men and women, A James and Shauny Jenkins. bit.ly/MakeupAndLeadership some with African and others with Caucasian ethnicity, took part in the research. They were asked to DISCRIMINATION view a series of images featuring the same women without cosmetics and then with make-up applied for a ‘social night out’.

Computer software was used to manipulate the amount of make-up worn by the women in the images.

Each participant completed a face Asian businesses fail to take perception task, judging 16 pairs of responsibility for inequality faces – eight Caucasian and eight African. They were asked to ender inequality is prevalent in indicate which face they judged to workplaces in Asia, according belong to the better leader and how to a survey of male and female much better a leader they felt they senior leaders, but it’s not being were, compared to the other one. acknowledged as a reality in the “Regardless of the participant’s companies they work for. This sex or ethnicity, make-up used for discrepancy could partly explain a social night out had a negative why not enough is being done to effect on perceptions of women’s address the issue, says a report leadership ability,” the research on the survey from the Insead paper concludes.

Emerging Markets Institute.

“Competence (intelligence) is Eighty-six per cent of survey an important trait-dimension in respondents said they felt gender leadership and our data suggests

Companies pass the buck on gender bias

discrimination was still common in the Asian corporate workplace, and 74 per cent that it remained a problem in their industry. Despite this, only 40 per cent said genderbased discrimination was a reality in their own companies.

The gender discrimination faced by women is “mostly unconscious, with no intention to discriminate”, the study found. Three out of four women said they had faced unconscious discrimination, with examples including men interrupting women; inappropriate language; women being expected to do the office ‘housework’; and women receiving feedback mainly around personality, rather than performance. This unconscious bias is “more dangerous because it is hidden”, with both the victim and perpetrator unaware of its adverse impact on careers, says the report, Gender equality in Asian corporate leadership: distant dream or achievable ideal?

However, it is not just men who demonstrate an unconscious bias against women. Half the women interviewed admitted to having exhibited bias against female colleagues by, for example, being tougher on them than on male employees or less flexible in terms of work-life balance.

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Trailblazer: Arundhati Bhattacharya, the former chair of the State Bank of India

INNOVATION

A creative house of cards Innovative employees are less productive when house prices fall

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A fall in house prices can lead to many creative employees losing their innovative mojo

The report was based on 42 transformative change to take in-depth interviews with women place, action is necessary at in senior leadership roles, women individual, organisational and in mid-level positions and men in government levels. senior posts who were identified as ‘advocates for change’ by female Based on interviewee responses, colleagues. All worked in technology the study says companies should: and financial services.

• implement ‘global“Half the women Almost all the plus-local’ HR interviewed admitted respondents (93 per policies that set out exhibiting bias against a minimum cent) said training female colleagues” would be effective in requirement across countering all countries, but with unconscious gender discrimination flexibility to adapt to local cultures; by making individuals more aware.

• continue to create women’s However, any training provided networks; and would need to be repeated.

• acknowledge that gender inequality On a more positive note, the at work is not just a problem for research found that younger women. Male champions who are generations (millennials and powerful agents of change and take generation Z), who are less tolerant responsibility for structured of any form of discrimination, are advocacy programmes are needed. bringing change to the workplace.

“Younger managers are more The study also recommends that sensitive and less likely to be guilty Asian governments address the issue of unconscious bias, in the opinion through national-level training of most responders,” says the schemes and by imposing quotas. bit.ly/GenderEqualityInAsia report. Nevertheless, for

hen house values fall, so does worker innovation, according to a US study, which found that an economic slump can cause a change in the behaviour of the most creative employees.

Following a ‘housing wealth shock’, employees are less likely to pursue innovative projects, particularly those that are highimpact or complex. These effects are strongest among employees who suffer the largest housing price falls, and they translate into innovative employees generating less economic value for their firm.

Workers in the bottom quartile of house price changes produce 15 per cent less economic value for their firms than workers in the top quartile, says the report, Do Household Wealth Shocks Affect Productivity? Evidence from Innovative Workers During the Great Recession.

Researchers Shai Bernstein and Timothy McQuade of Stanford Graduate School of Business, and Richard R Townsend from the University of California, San Diego, compared employees who worked at the same firm and lived in the same metropolitan area, but experienced different housing wealth declines during the 2008 financial crisis. The output of innovative workers was measured by the number of patents they produced. To gauge the value of those patents, researchers used a measure based on the stock market’s reaction to the announcement of patent grants.

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wealth shock produce fewer patents and patents of lower quality based on citations,” says the report. These workers began “pursuing more incremental”, less innovative work.

What causes this change in behaviour? It is most likely that workers are worried about defaulting on their mortgages and, the more they worry, the less likely they are to successfully pursue innovative projects, particularly those that are high-impact, exploratory or complex.

Bernstein says workers who were being pushed closer to defaulting on their mortgage during the financial crisis “backed off from risks” because they didn’t want to lose their jobs too.

The findings shed light on innovation generation within firms, the researchers’ paper concludes.

While previous studies have emphasised the importance of organisational factors and strategy set by the senior team, these results demonstrate the role of lowerranked employees in influencing innovation. bit.ly/HouseholdWealthAndProductivity

NEGOTIATION

Strategic anger management Expressing anger can be beneficial but consider how you go about it

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xpressing some anger during negotiations can yield benefits – although getting too heated can lead to a less favourable outcome.

Researchers from Rice University and Northwestern University found that a moderate level of anger can be more effective in winning large concessions than showing no anger at all, because the negotiator is perceived as tough and threatening.

However, exhibiting intense anger is 68

perceived as inappropriate and can fail to elicit significant concessions.

Even worse, it can also trigger negative feelings that can harm longterm relationships, the study found.

Scholars have repeatedly asked if it is good or bad to express anger in negotiations, says the paper, Everything in moderation: The social effects of anger depend on its perceived intensity. Authors Hajo Adam and Jeanne M Brett add: “The current research indicates that negotiators should not just contemplate whether or not to express anger toward others, but also how to express anger toward others.”

Two studies were carried out to explore how anger intensity can shape negotiation outcomes. The first involved 226 US students who worked in pairs to conduct face-toface negotiations. One student in each pair was told that anger can obtain better outcomes in negotiations, and was given instructions on how to express anger. The second participant was not given any anger instructions.

The next study, involving 170 people, was a computer-mediated online negotiation that aimed to manipulate anger intensity. During negotiations, participants received messages from their computersimulated ‘counterparts’ that conveyed either no anger, lowintensity anger, medium-intensity anger or high-intensity anger. The high-intensity condition included statements such as: ‘What the…?!?!?!

This offer makes me EXTREMELY ANGRY!’ Participants rated the extent to which they thought their counterparts expressed anger or frustration, were tough and threatening, and were inappropriate.

The results show a curvilinear relationship between the intensity of anger and the concessions, with high-intensity anger leading to smaller concessions than moderate anger.

The authors suggest that further research could explore how the “social effects of anger”, and emotions in general, play a critical role in customer service roles and leader-follower relationships.

“Factors such as intensity may affect how much money is left at the negotiation table, how likely customers are to make repeat purchases and how motivated employees are at work,” they say. bit.ly/AngerInModeration

EMPLOYEE ATTITUDES

Consumer focus counts The industry you work in may have a direct effect on your mood

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ow employees feel at work may be rooted in their company’s industry. Consumercentric sectors such as retail are more likely to feel positive than firms in industries such as manufacturing, says new research.

Organizational Affective Tone: A Meso Perspective on the Origins and Effects of Consistent Affect in Organizations found that a positive ‘affective tone’ reduced the number of days employees took sick leave.

A negative tone, however, increased employees’ emotional exhaustion, and this could increase absenteeism in less consumercentric organisations.

However, affective tone is also partly brought about by how centralised an organisation is, and to what extent HR practices, such as recruitment, take emotion into account – for example, by assessing candidates on their enthusiasm.

Andrew P Knight of Washington University in St Louis, Jochen I Menges of WHU – Otto Beisheim School of Management and Heike Bruch of the University of St Gallen

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proposed that employees at Southwest Airlines, where consumer-centric activities are prevalent, would likely report a more positive affective tone than those in less consumer-focused companies. To test this and other hypotheses, the researchers analysed data from 24,015 executives, HR managers and employees of 161 German companies. They also gathered information about the nature of the firm’s activities, its performance, personnel practices and absenteeism. Employees were also asked about four factors: positive and negative tone; how openly employees felt they could express emotions; the firm’s design in terms of features such as centralisation; and emotional exhaustion.

“We found that the more an organisation engages in consumercentric activity, the more positive and less negative its organisational affective tone,” say the researchers.

Emotion-focused personnel practices and centralisation are mechanisms that partly “perpetuate organisational affective tone”, they explain. Positive affective tone is also associated with lower workforce strain, while negative affective tone is associated with higher workforce strain.

The study suggests that customer-centric firms in the service or retail industries may be more upbeat because they place greater emphasis on emotions and have a closer connection with consumers.

These findings may have implications for merger and acquisition processes, which often fail because of culture clashes between companies. Affective tone may add a new dimension on which organisations could clash. However, further research is needed to examine this aspect of M&As, the study concludes. bit.ly/AffectiveTone

The boy scouts taught them to be prepared, but CEOs fail to take the lesson into the boardroom

This may be because “it’s harder for internal hires to make the shift from being an equal member of an executive team, to supervising former peers and creating followership”, notes the report, They may have the top job, but few The CEO: A Personal Reflection – CEOs are ready for the big time Adapting to a Complex World, produced by executive search firm ow prepared do CEOs feel Egon Zehnder. One respondent said when taking on their role? Not he wished he had been trained in very well, a survey has found, with “leading from the top”. only 32 per cent of respondents The survey of 402 leaders from 11 saying they felt fully countries and various “Today’s leaders see prepared, and 48 per industries aimed to a link between self cent that they were identify the ‘human’ and organisational ‘somewhat’ prepared. challenges CEOs face transformation” Nine per cent said they and offer an overview were either somewhat of how it feels to take or completely unprepared. on this responsibility.

The survey findings also highlight In terms of preparation for the differences in confidence between role, the report says, CEOs clearly internally and externally recruited need more guidance on the “human business leaders. While 38 per cent side of leadership” than they are of CEOs hired from outside said they receiving. In particular, responses were fully prepared for their new to open-ended questions reveal that role, only 28 per cent of those CEOs wish they had known more internally promoted agreed that about the ‘being’ aspect of the role. this was the case.

For example, when asked what they NEW CEOS

It pays to be fully prepared

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wish they had known or been trained in before taking on the position, one CEO remarked: “That you may become a role rather than a person.”

Respondents were also outspoken about needing more experience and skills training, and help with communications and media and board relations. To be successful in the job, the majority of respondents (79 per cent) said they needed the capacity to transform themselves, as well as the organisation.

“Today’s leaders see a link between self-transformation and organisational transformation – and believe that both are required for an executive to find success in the top role,” says the report. “Yet they know this is no easy task.”

The report calls for more help for leaders in adopting a mindset of constant personal growth: “They must embrace curiosity, learning, adaptability and the ability to influence culture and build strong teams.”

WORKPLACE BEHAVIOUR

Bad bosses spawn more bad bosses Abusive managers may empower those who can withstand them

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ome employees thrive under abusive bosses – those with high levels of psychopathy who are themselves ‘bad’. This is the conclusion of a study showing that ‘primary psychopaths’ have the personal resources to withstand the stresses of difficult managers – and even benefit from it.

“There are primary and secondary dimensions of psychopathy,” explains the study, Are “Bad” Employees Happier Under Bad Bosses? Differing Effects of Abusive Supervision on Low and High Primary Psychopathy Employees. Both dimensions are associated with anti-social Other survey results include: behaviour, but people who score • Half the CEOs found driving high in primary psychopathy lack cultural change a more difficult task empathy and are cool-headed and than they had expected (74 per cent fearless. They don’t react to things of Japanese executives thought this, that cause other people to feel compared with 21 per cent of stressed, fearful or angry.

Swedish executives).

Secondary psychopaths, however, • 47 per cent found are more hot-headed developing their “In the workplace, and impulsive. senior leadership employees respond In the workplace, team more difficult differently to abusive employees respond than anticipated, management styles” differently to abusive compared to 13 per management styles, cent who found it easier. in part because of their varying • Most CEOs get their inspiration for levels of psychopathy, according to new ideas from talking to people the study. Compared to their peers, outside the company. While 54 per primary psychopaths are cent said this overall, this is the case unaffected by abusive behaviour. for 75 per cent of UK CEOs. They feel less anger and are more • Only 51 per cent use their senior engaged and positive under leadership team as a source of managers who mistreat them. honest feedback. Almost a quarter “People high in primary said they simply rely on their psychopathy are motivated by own judgement. social conditions that are typically bit.ly/CEOReflection detrimental,” says the research 70

paper by Charlice Hurst of the University of Notre Dame, Dante Pirouz from Western University, Lauren Simon of the University of Arkansas and Yongsuhk Jung from the Korea Air Force Academy.

The team conducted two studies involving 419 working adults. In the first, participants were asked to react to profiles of managers depicted as transformational or abusive. There were no differences in anger between high and low primary psychopathy participants, but those high in primary psychopathy reported feeling happier after imagining themselves working for an abusive manager.

In the second study, participants rated how abusive their own supervisors were. They were asked about behaviours such as rudeness, gossiping about employees, not giving proper credit for work, invasion of privacy and breaking promises. Those high in primary psychopathy reported feeling less angry, and more positive and engaged.

The resilience of primary psychopaths may have a “negative collective impact” on organisations, and contribute to an unethical or abusive environment, the research warns. For example, these individuals’ capacity for success may lead them to rise to positions of power and status. In addition, while other employees can’t cope with a bad boss and eventually leave, “primary psychopaths hired to work under abusive supervisors may be more likely to remain, eventually leading to an accumulation of similar others also more likely to engage in unethical interpersonal behaviour”.

With this in mind, companies need to be concerned not only about the people who abusive supervisors are demoralising, but also about those they are empowering, the study observes. bit.ly/BadBossesAndEmployees

fun in the workplace. In the short term it could help an employee make a new connection or learn something new, for example.

Long-term benefits include resilience, stronger social relationships, increased creativity and optimism.

Crucially, the framework takes account of how individuals assess a fun event before, during and after it. The more enjoyment or positive feeling they gain, the more likely they are to reap benefits.

Ping pong may help engage some employees, but not everyone appreciates the diversion EMPLOYEE ENGAGEMENT

A matter of perspective Research shows fun for one employee is a chore for another

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ompanies such as Google, which incorporate fun into the workplace, do so in the belief that it brings benefits ranging from increased engagement and creativity, to greater job satisfaction and trust among employees.

But when do ping pong games, office parties, teambuilding days or ‘happy hour with the boss’ start to feel less fun and more like a chore for staff? A paper authored by researchers at Loyola University Maryland, Pennsylvania State University and Texas Christian University explores how and under what conditions fun in the workplace is most beneficial.

“We contend that fun in the workplace is largely in the eye of the beholder and more work is needed to systematically understand how individuals determine what is fun or

not,” say John W Michel, Michael J Tews and David G Allen.

A clear explanation is also needed as to why organisations should emphasise fun in the workplace, and how engaging in fun benefits individuals, they say in Fun in the workplace: A review and expanded theoretical perspective.

A review of previous research led them to define workplace fun as: “Characteristics or features of the work environment of a social, playful and humorous nature, which have the potential to trigger positive feelings of enjoyment, amusement and light-hearted pleasure in individuals.”

They conclude that fun in the workplace has a “consistent favourable relationship” with job attitudes, but that its impact on employee performance and retention is mixed. However, a key theme that emerged was that “fun in the workplace may not always be fun” and is context-dependent.

The researchers put forward a theoretical framework to help explain how individuals may interpret fun, and both the short and long-term benefits of creating

A favourable assessment depends on a range of factors, says the study. These include: • The extent to which a manager supports individuals engaging in fun at work. Employees may look to their boss for cues as to whether it’s acceptable or not.

• The activity itself. Events involving food, celebrations of milestones and outings were most preferred by participants, while events that were more eccentric in nature were least preferred. Another influencing factor is whether an individual feels they will be successful at the activity.

• Other participants. Individuals are more likely to think favourably of events attended by those they know and like.

• Work demands. When workload is heavy, a fun event may feel like a burden. However, once employees are participating in the event, it can be welcomed as a much-needed break from a busy schedule.

• Compensation. Employees paid hourly and attending a fun event ‘on the clock’ may feel more positive about it than salaried employees, for whom it can feel like another job demand.

• Person-organisation fit. If an individual and organisation are compatible in how they perceive fun in the workplace there will be greater benefit. bit.ly/WhatIsWorkplaceFun

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Further Reading

Future of jobs p14

Ancient Greeks p28

Jobs lost, jobs gained: Workforce transitions in a time of automation McKinsey & Company, 2017 bit.ly/WorkTransitions

Alexander the Great by Robin Lane Fox Penguin, 2004

How Much is Enough?

by Robert and Edward Skidelsky Penguin, 2013 Racing the Machine bit.ly/RacingTheMachine Why the future is workless by Tim Dunlop NewSouth Publishing, 2016 Why The Future Is Workless: Interview With Tim Dunlop bit.ly/FutureIsWorkless

The Hemlock Cup by Bettany Hughes Vintage, 2011 What the Ancient Classics Can Teach Us About Leadership The Wall Street Journal, 2017 bit.ly/ClassicsAndLeadership Ancient Greek wisdom for today's leadership crisis The Conversation, 2017 bit.ly/WisdomForLeadershipCrisis Wittiness: Aristotle’s take on management bit.ly/AristotleOnManagement

Basic Income by Guy Standing Pelican, 2017

Socrates, for pleasure and profit The Economist, 2000 bit.ly/SocratesPleasureAndProfit

The Corruption of Capitalism

by Guy Standing Biteback Publishing, 2017 The Precariat by Guy Standing Bloomsbury Academic, 2014 The road to good work CIPD, 2018 bit.ly/RoadToGoodWork Wilful Blindness by Margaret Heffernan Simon & Schuster UK, 2012 A Bigger Prize by Margaret Heffernan Simon & Schuster UK, 2015 Beyond Measure by Margaret Heffernan Simon & Schuster UK, 2015

The World In The Model by Mary S Morgan Cambridge University Press, 2012 The Undercover Economist by Tim Harford Abacus, 2007 Freakonomics by Steven D Levitt and Stephen J Dubner Penguin, 2007 Economics, Peace and Laughter

by John Kenneth Galbraith Penguin, 1975 Return of the Mac The Economist, 2018 bit.ly/EconomistMac In Defense of the Dismal Science The Harward Crimson, 2016 bit.ly/DefenseOfTheDismalScience

Anabasis of Alexander Books I-IV: Vol 1

by Arrian Loeb Classics, 1989

Doughnut Economics by Kate Raworth Random House Business, 2018

Power Ambition Glory by Steve Forbes and John Prevas Three Rivers Press, 2010

The Cartoon Introduction to Economics

by Grady Klein and Yoram Bauman Hill & Wang, 2014

The Greek Way by Edith Hamilton W.W. Norton & Company, 2017

The Harried Leisure Class by SB Linder Columbia University Press, 1969

The Histories by Herodotus Penguin, 2014

Martin McCourt p24

Work: The Last 1,000 Years

by Andrea Komlosy Verso, 2018

Leading edge: I love it when the buzz is electric The Times, 2011 bit.ly/TheBuzzIsElectric

The Future of Work is Human CIPD bit.ly/FutureOfWorkIsHuman

Proposed Revisions to the UK Corporate Governance Code bit.ly/UKCorporateCode

37% of British workers think their jobs are meaningless YouGov, 2015 bit.ly/JobsAreMeaningless

Have you got what it takes to be a non-executive director?

Financial Times,2018 bit.ly/BeingANonExec

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Economic indicators p40

Handelsbanken p36 Handelsbanken chief has no intention of changing ‘self-managed’ ethos Financial Times, 2016 bit.ly/SelfManagedEthos Stopping a Financial Crisis, the Swedish Way The New York Times, 2008 bit.ly/TheSwedishWay History: Riksbank Sveriges Riksbank bit.ly/WorldsOldestCentralBank The History of Handelsbanken bit.ly/HistoryOfHandelsbanken

WORLD'S BEST BOSS

Work.

Because business is about people Be good or be rich: debunking the paradoxes of ethical business Has Netflix killed performance management?

Matthew Lieberman on the neuroscience of effective leadership Nixon, Chewbacca and the art of better decision-making

Supply chains p42

Fairness p54

Was Your Seafood Caught With Slave Labor? New Database Helps Retailers Combat Abuse NPR, 2018 bit.ly/SeafoodInSlaveLabour

The changing contours of fairness CIPD, 2013 bit.ly/CIPDFairnessReport

How blockchain is strengthening tuna traceability to combat illegal fishing The Conversation, 2018 bit.ly/BlockchainTuna The Elements of Power by David S Abraham: the rare metal age The Guardian, 2016 bit.ly/ElementsOfPower The Elements of Power

by David S Abraham Yale University Press, 2017 Fairphone ‘first to use Fairtrade gold’ Supply Management, 2016 bit.ly/FairphoneFairtrade Modern slavery in supply chains: an introduction for procurement professionals CIPS bit.ly/ModernSlaveryInSupplyChains Principles of Good Governance for Securing Equitable and Sustainable Fisheries Environmental Justice Foundation, 2018 bit.ly/PrinciplesOfGoodGovernance The True Costs of Cotton: Cotton Production and Water Insecurity Environmental Justice Foundation, 2012 bit.ly/TrueCostsOfCotton Human Rights Outlook Verisk Maplecroft, 2017 bit.ly/HumanRightsRisksBusiness The Global Slavery Index 2016 bit.ly/GlobalSlaveryIndex Governance gaps in eradicating forced labor: From global to domestic supply chains Wiley Online Library, 2017 bit.ly/EradicatingForcedLabour

Two Monkeys Were Paid Unequally: Excerpt from Frans de Waal's TED Talk YouTube, 2013 bit.ly/TwoMonkeysUnequalPay 21st Century Workforces and Workplaces

by Stephen Bevan, Ian Brinkley, Sir Cary Cooper and Dr Zofia Bajorek Bloomsbury Publishing, 2018 Fairness in the Workplace by Aaron Cohen AIAA, 2015 Them and Us by Will Hutton Abacus, 2011

Brought to you by…

Work. is published on behalf of the CIPD by Haymarket Business Media. Registered office: Bridge House, 69 London Road, Twickenham, TW1 3SP claire.warren@haymarket.com Editor Claire Warren Art editor Chris Barker Production editor Joanna Matthews Picture editor Dominique Campbell Sub editors Helen Morgan Ian Cranna

The fairness factor in performance management McKinsey & Company, 2018 bit.ly/FairnessFactor

Senior editor Robert Jeffery Editorial director Simon Kanter Editorial consultant Paul Simpson Account director Jenny Gowans Senior account manager Julia Saunders Deputy production manager Alex Wilton CIPD Publishing Sinead Costello

How Workplace Fairness Affects Employee Commitment MIT Sloan Review, 2016 bit.ly/FairnessAndEmployeeCommitment

CIPD members can get free online access to leading HR, L&D and management journals. cipd.co.uk/knowledge/journals

Do Kids Have a Fundamental Sense of Fairness?

Scientific American, 2017 bit.ly/KidsAndFairness

Work. – ISSN 2056-6425 Printed by Stephens & George Print Group, Merthyr Tydfil. © All rights reserved. This publication (or any part thereof) may not be reproduced, transmitted or stored in print or electronic format (including, but not limited, to any online service, any database or any part of the internet), or in any other format in any media whatsoever, without the prior written permission of Haymarket Media Group Ltd, which accepts no liability for the accuracy of the contents or any opinions expressed herein.

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CIPD is a registered charity – no. 1079797

The Spirit Level by Kate Pickett and Richard Wilkinson Allen Lane, 2009 Fairness as a Constraint on Profit Seeking The American Economic Review, 1986 bit.ly/FairnessAsAConstraint

Fair's Fair The Atlantic, 2009 bit.ly/FairsFairTheAtlantic 10 Ways Intelligent People Get Revenge Hankel Leadership bit.ly/IntelligentPeopleGetRevenge How We Learn Fairness The New Yoker, 2016 bit.ly/LearningFairness

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) TE S E I T H F- P T O F (O I DE GU

BLOCKCHAIN

Rhymer Rigby ponders the true usefulness of the latest must-have technology For the last year, it’s been a kind of digital philosopher’s stone. Want to appear knowledgeable and at the bleeding edge? Talk about blockchain. Want to make your digital offering appear enticing?

Add blockchain. It works for anything – from enormous infrastructure projects and selling your time by the hour, to authenticating legal marijuana and supplanting iffy national currencies.

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One little episode tells you a great deal. In December last year, the Nasdaq-listed Long Island Iced Tea Corporation (which, yes, made soft drinks) changed its name to the Long Blockchain Corp. Its shares rose by 500 per cent. A cigar maker pulled a similar stunt and enjoyed a (very brief ) 2,000 per cent increase in its value. That’s the magic of #blockchain.

Sounds familiar? Ah yes. Remember how everyone was desperate to add .com to the end of their company name in 1998? Well, blockchain is this decade’s big load of digital hype.

It’s true that it’s a lot harder to understand than websites. But it is worth remembering that loads of dot-com companies turned out to be worthless. And the ones that survived were generally sensible businesses that effectively leveraged the new technologies.

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So what is blockchain? It’s a decentralised ledger kept on a network that powers cryptocurrencies like Bitcoin. According to blockchain community Blockgeeks, it’s analogous to a spreadsheet that’s duplicated across millions of computers. It’s publicly accessible and the network updates the spreadsheets regularly, making it easy to verify and hard to mess with.

The key buzzwords here are: decentralised and transparency. Very now.

Interestingly, the thinking that spawned blockchain first appeared in the early 90s. But the idea of a block chain (as it was then, with a space between the words) was conceptualised in 2008 by one Satoshi Nakamoto. We say one but it could be a group of people. Nakamoto has claimed to be a 40-something Japanese man but no one knows for sure.

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Apart from powering cryptocurrencies that are great for speculators, many are rather cynical about blockchain’s usefulness. So let’s take cryptocurrencies, its one well-proven use. Warren Buffett says it’s gambling and “there’s something wrong with it”. Others have noted that bitcoin mining – the complicated process of adding transactions to the ledger and releasing new bitcoin – now uses more energy in Iceland than homes do, and that the total global energy use of bitcoin mining is the same as that of Ecuador.

And then there’s speed. Ethereum (the second most valuable cryptocurrency), says the Guardian, can only process about 15 transactions per second compared to Visa’s 2,000.

So it’s not a cure for all evils (yet). As commentator Kate Bevan quipped when someone tweeted that blockchain could bring services to the homeless: “Write out 1,000 times: there is no problem that a blockchain can solve any better than existing structures.”

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Still, there has to be something in all the talk of smart contracts and blockchain supply chains and traceability. So keep cracking the blockchain jokes while using blockchain slides to pad out your PowerPoint presentations. But cover yourself by occasionally saying: ‘Perhaps it’s a bit like the laser – that was a solution in search of a problem for years.’

Celestina, 1904 – Picasso Pablo Picasso’s blue period could have taken on a distinctly different hue if it wasn’t for the work of dye-maker Jacob Diesbach. While mixing a batch of cochineal red, he used potash that, unbeknown to him, had been contaminated with animal blood.

The result was a deep blue that was produced by a chemical reaction caused by the rogue ingredient.

Diesbach had created the first modern synthetic pigment, Prussian Blue, a cheap and stable colour that would revolutionise an art world that had previously reserved blue for religious pictures.

The discovery and dissemination of new products has become more complex – and a lot more opaque – since the early 18th century, but our supply chains remain equally susceptible to unintended consequences. Millions of children, for example, are working in the garment sector because our love of fast fashion blinds us to the injustices we know remain prevalent. Perhaps we all need to care more about where things come from.

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