workwinter

Winter 2017

Work.

Because business is about people Talk to the hand: the complex contradictions of voice in the workplace Fake news obscures real troubles in Putin’s Russia Shakespeare, Cary Grant and Dadaism – the unlikely origins of the gig economy Why do we still have management consultants?

Work.

Because business is about people

When news broke that two youngsters, Alice and Bob, had invented their own language, the story was shared millions of times on social media. It’s not the first time children have developed a secret language but Alice and Bob weren’t human, they were a couple of chatbots developed by Facebook AI Research. That they could hold conversations that were unintelligible to us shouldn’t be a surprise – Google Translate already uses its own language – but it does remind us that we are in an age where AI can increasingly act without human oversight. We already have autonomous cars, AI can diagnose our illnesses and algorithms help determine who we hire. And, as our feature on page 30 outlines, that raises serious issues over how we teach technology to behave, how we use it and whether it will ever be able to make the kind of ethical decisions we humans face every day.

Claire Warren, editor claire.warren@haymarket.com

Features in detail p4 Perspectives: distilled management thinking p6 15 minutes with… conductor Gernot Schulz p12 Why workers need a voice p14 Interview: Labour peer Waheed Alli p24 Artificial intelligence and ethical dilemmas p30 The first freelancers p38 Q&A: Insead’s Gianpiero Petriglieri p40 Russia – a society of paradoxes p44 Are management consultants worth the money? p56 Debrief: business research, reports and insight p62 Further reading p72 The off-piste guide to risk management p74 Front cover I’m Dead David Shrigley, 2010 Taxidermy with wooden sign and acrylic paint Courtesy of David Shrigley and Stephen Friedman Gallery, London www.brightonfestival.org Photo by Ruth Clark

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Why we all need a voice

Interview: Waheed Alli

Can you teach ethics to AI?

Gig economy pioneers

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Time and again history has shown us that when companies fail to listen to their staff it tends not to end well. For many businesses, failure to tap into the ideas and knowledge of employees will result in missed opportunities but, as Claire Warren discovers, the consequences can be far more extreme. At Stafford Hospital, where appalling care caused the deaths of hundreds of patients, staff could see what was going on but failed to raise the alarm.

In today’s fast-moving business world, the strategic imperative for a more inclusive approach to voice has skyrocketed, says professor of business administration Jim Detert. Yet we still see many examples of “organisations in which large percentages of staff think it’s not safe or worthwhile to speak up”.

Ask Waheed Alli about his personal history and you’ll hear a classic ‘rags to riches’ tale. Forced to go out to work aged 16 to provide for his singleparent family, the Labour peer has left his humble beginnings far behind.

Today, he is estimated to be worth a not inconsiderable £201m, according to The Sunday Times Rich List, but on key issues like renationalisation, he is solidly behind Labour leader Jeremy Corbyn.

A tireless gay rights campaigner, he’s had many highs (and a few lows) along the way. As Matthew Gwyther finds out, he formed edgy youth TV company Planet 24 alongside Bob Geldof and his business partner Charlie Parsons, chaired Asos during a period in which its market capitalisation grew from £12m to £3bn – and has seen many advances in LGBT rights.

The pace at which we are creating technology is in danger of outrunning our ability to martial it. We’ve already seen fatal accidents caused by robots, but this doesn’t seem to have slowed the pace as we develop everything from autonomous gun turrets to cars that drive themselves. Meanwhile, in the workplace, AI is playing a growing role in the recruitment process.

But given that we program the software, there’s a danger that it exaggerates our own biases. Increasingly, says Simon Parkin, we will need to make difficult decisions about how we use technology – and how we equip it to make ethical choices. Either way, the questions are the same: who establishes the rules and who is accountable for them being upheld?

Uber didn’t invent the gig economy. The first ‘free lances’, mentioned in Sir Walter Scott’s novel Ivanhoe in 1819, were medieval mercenaries who fought for the highest bidder. Over time, the term was applied to people who didn’t require a spear to sell their services, such as poet, playwright and entrepreneur William Shakespeare; the most influential woman in the Dadaist art movement, Hannah Höch; and landscape gardener Capability Brown.

They didn’t think of themselves as ‘gig economy workers’, it was just what they did.

Exchanging security for independence is easier if, like Cary Grant in the 1940s, you are wealthy and famous. Even so, bucking Hollywood’s studio system was a risk – which initially backfired. Profiling eight notable trailblazers, Work. explores the prehistory of the gig economy.

Claire Warren is editor of Work. and has previously worked for the Independent and People Management

Matthew Gwyther is a freelance writer and broadcaster

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Simon Parkin is a contributing writer for The New Yorker and the author of Death by Video Game

Andrew Ferraro; Simon Fernandez; PA Images; Internet Archive Book Images

FEATURES IN DETAIL

Gianpiero Petriglieri

Focus on: Putin’s Russia

Management consultants

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Leadership, says Gianpiero Petriglieri, involves teaching and enabling others in the workplace – even when it seems easier to do the job yourself. Currently associate professor of organisational behaviour at Insead, Petriglieri is helping to grow a new generation of leaders through the business school’s executive education programme for emerging leaders.

Leadership development, he tells Georgi Gyton, was designed to make individuals stand out in organisations that were homogenous and had a shared culture. Today, that is not enough – businesses are a lot more fragmented and trust is a vital component of leadership. “If you just give people the skills to stand out, without the connections they need to be trusted, then it will not be effective,” he says.

In Vladimir Putin’s Russia, reports Paul Simpson, this is the best of times – if you are an oligarch – but the worst of times if you are one of nearly 20 million Russians who earn less than the $139 a month needed to live on.

This is an age where the state is wise enough to plough billions into high-tech education, but foolish enough to waste vast sums on such vanity projects as the 2014 Winter Olympics in Sochi, by far the most expensive Olympics ever staged. This is an age of strength – Russia has pioneered a new kind of misinformation war – and an age of weakness – its workers are the least productive in Europe, generating fewer dollars per hour of labour than those in crisis-stricken Greece.

Management consultants are more popular than ever – four million people are employed as consultants worldwide, while global revenue topped $600bn in 2016 – and yet they remain as polarising as ever. More than any other firm, McKinsey defines the profession. Founder James McKinsey is said to have been so effective that he once diagnosed a company’s problems from its letterhead, but it was in the 1930s, when he was replaced by Marvin Bower, that the company started to focus on trust. “The successful consultant,” wrote Bower, “has a personality that causes most people to like him.” Like them or loathe them, it seems consultants are here to stay. After all, if there were no value in what they did, they’d have disappeared long ago.

Georgi Gyton is associate editor of People Management

Paul Simpson is a business journalist and author, who has contributed to Wanderlust magazine and written books on football and Elvis

Debrief p62-71 Human capital

Countries could do more to develop their people’s skills and knowledge.

People data

Analysts use data on the quality of an organisation’s management to help them make investment decisions.

Online etiquette

Using a smiling emoticon in a formal work context can give a bad impression.

Executive education

Even though senior professionals see learning and development as benefiting business, it is not a top priority for them.

Corporate social responsibility

Investment in social initiatives could damage a CEO’s career if profits don’t rise.

Artificial intelligence

Despite being aware of the benefits of AI, many companies are failing to incorporate it into their business operations.

Work-life balance

Jobseekers are more likely to be attracted to an employer that offers work-life balance benefits.

Communication

Bad news from bosses can be more motivational for employees than no news at all.

Innovation

HR should push for higher levels of job quality as this aligns with higher levels of innovation.

Jeremy Hazlehurst is a freelance journalist who has written for The Wall Street Journal, The Times and The Daily Telegraph

Discrimination

Attractive individuals may be ruled out of less desirable jobs in the hiring process.

CEO pay

Bosses demand higher salaries in areas that are under threat of terrorist attack.

Team-building

Working with friends in a group improves performance on certain tasks.

Incentives

Non-monetary rewards such as status can cause people ‘to choke’ under pressure.

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PERSPECTIVES MANAGEMENT THINKING DISTILLED

Q&A YETUNDE HOFMANN

A culture of ‘love’ enhances creativity

THE GROWING FOCUS ON inclusion and now employee happiness doesn’t seem to be doing much good. In many organisations, staff remain highly stressed and show little of the commitment, let alone passion, that diversity, engagement or wellbeing initiatives are meant to unleash. What’s needed, says leadership and change consultant Yetunde Hofmann, is the presence of ‘love’ in the workplace.

What do you mean by love?

Love is both the greatest human need and the greatest gift, and it starts with unconditional acceptance of yourself – including your faults and foibles. When you fully accept who you are, you can also accept and value other people for who they are, and not just for what they do.

Why should that matter in a business context?

It’s amazing what people can achieve when they feel loved and accepted. In the workplace they 06

Why do we usually shy away from using the term love in business?

One reason is that traditional British culture emphasises self-restraint, and many people are taught from an early age not to show extremes of emotion.

Then there’s the stigma attached to the term love, which in the workplace is often reduced to the trivial – to the notion of illicit relationships between colleagues or bad behaviour at office parties.

How can you create a culture of love in the workplace?

Business leaders must have the courage to bring all of who they are to work and enable others to do the same. They must understand that people are more than their behaviour and more than a means to an end. It’s about creating a different kind of environment through the values you demonstrate and applaud, in the way you align your systems and processes, and through debate and development. The type of leaders you choose is critical. Leaders must also act as role models by demonstrating respect for their team members.

Solve problems by combining ideas WHEN THERE IS NO OBVIOUS right answer to a problem, most of us choose the least worst option.

Successful leaders, by contrast, do not choose between mediocre answers, says Roger Martin. Instead, they use what he calls ‘integrative thinking’ to consider opposing ideas and incorporate elements of each into new and better solutions.

Martin’s latest book, Creating Great Choices, co-written with Jennifer Riel of the University of Toronto’s Rotman School of Management, sets out a four-stage process for resolving problems. First, define the problem and identify opposing solutions; then examine those alternatives; next, explore ways of integrating elements of each alternative into superior solutions; and, finally, test the new solutions.

One of the examples used revolves around a turf war over control of a multinational company’s learning agenda.

Opposing ways of resolving this challenge include centralising or decentralising training. An integrative solution might be to capture the best of both ideas by centralising training design, while decentralising training delivery.

Integrative thinking is not a silver bullet, the authors admit, but when the options are not good enough, it can help create better choices.

Martin is the director of the Martin Prosperity Institute at the Rotman School of Management

Words: Anat Arkin

are likely to speak up, learn from their mistakes and come up with creative ideas. They will deliver far better results than people who work in a culture where, regardless of various networks and initiatives, people are not free to be themselves and are constantly anxious about how they will be judged.

Paul Demuth; Internet Archive Book Images

Power is no longer bound by status EVERY PERSON ON THIS planet has something of value to offer, Nilofer Merchant points out.

But until recently, she says, you needed the right credentials or an important job in a big organisation to stand any chance of making a ‘dent’ in the world. The internet has changed all that by allowing ideas to spread through networks, instead of hierarchies. Influence is no longer determined by status, but by what Merchant calls ‘onlyness’ – “that spot in the world only you stand in, a function of your distinct history and experiences, visions and hopes”.

From this vantage point, everyone can offer new insights and even groundbreaking ideas, and use networks to turn those ideas into reality. In her latest book, The Power of Onlyness, Merchant describes how ordinary people have made a difference and disrupted the status quo by joining forces with like-minded others.

They range from a group of teenagers who fought for equality for gay people in the US boy scouts movement, to a Hollywood insider who changed how the film industry picks scripts.

“While organisations and hierarchies continue to serve many useful purposes,” says Merchant, “we no longer need them to attain big goals.”

Merchant is an author and public speaker

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Do ‘blind CVs’ boost diversity?

As employers try to recruit from broader talent pools, many have started removing candidates’ names, ages and sometimes details of their education from CVs and application forms.

But do so-called ‘blind CVs’ really drive unconscious bias out of the recruitment process – and are they fair to all applicants?

EXPERTS’ VIEW KATE HEADLEY

DAN RICHARDS

Director of consulting, The Clear Company

Recruiting leader, EY, UK & Ireland

Removing information from CVs that can disadvantage certain candidates will definitely reduce bias. But if that’s all you do, it will just kick in later. You need to examine what you are really looking for and what ‘good’ looks like, make that clear in job descriptions and train managers to shortlist candidates against very specific criteria – and nothing else. That shortlisting stage needs significant work in most organisations, even those using blind CVs.

In 2015, EY stopped asking graduate applicants to disclose which university they’d attended and their class of degree. The firm also scrapped its minimum 2.1 degree requirement and no longer asks for details of relevant work experience, since only those with the right family contacts are likely to have this. Apprentices and school-leavers, too, do not have to list their A-levels or say where they were educated. All that assessors now see when they sift applications are candidates’ registration numbers and scores in a series of tests designed to assess potential.

You also need to train managers to avoid bias, not only when interviewing candidates in person, but during telephone or video interviews, which are now often used early in the hiring process. Finally, the organisation must welcome diversity. Otherwise, the candidates you’re trying to attract will either reject job offers because they can’t see themselves working for the company or they won’t stay long.

Withholding details of applicants’ education and academic achievements from recruiters is more complicated. Employers bravely and laudably experimenting with this approach are trying to recruit a broader social mix. But even though a degree is only one indicator of capability – which can be measured in other ways – we know how hard young people work to do well at university. And is it right to assume that everyone who went to a private school has a privileged background?

This process isn’t unfair to those who were privately educated or did well at elite universities. They’ve still got every opportunity to pass the firm’s assessments.

What the current approach has done is level the playing field, which has increased the number of new hires who went to state schools. In fact, people who would have been screened out at the first hurdle under the old system now make up 18 per cent of the company’s intake of graduates and apprentices.

You do have to work hard to recruit from the broadest possible talent pool. There will always be a tendency for people to select those who are like them, so EY has put all its recruiters through unconscious bias training.

If you use a robust process, you can eliminate some biases, though probably not all of them.

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Late radicals

Why do they matter?

Many companies have revamped their senior management teams to make them less male and pale, but, as Stubbings argued in an award-winning essay for the Institute of Practitioners in Advertising: “Ageism is the missing piece of the creativity puzzle.

People who would balk at an all-male creativity department think nothing of one staffed by people who are all 25-35.” Such initiatives as ‘30 under 30’ awards reinforce the message to older employees that they are unwelcome or overlooked. Digital technology has fuelled the myth that we have entered an entirely new corporate era, facing issues that anyone over the age of 35 will struggle to understand. But have the big questions facing companies really changed that much?

Most businesses still aim to do what they always did: create and protect value.

The bottom line Employers would do well not to ignore people aged 50 and over, who constitute 30 per cent of the global workforce. Motivated ‘late radicals’ can help shape culture, reduce churn, drive mentoring and give a business a longer-term perspective. In 2007, when the financial sector began to implode, they didn’t have to ask Google what a recession was, they had lived and worked through one. They can seem – and sometimes be – resistant to change, but their scepticism could be the key to creating a genuine diversity of opinion, making it easier to spot bad decisions and correct them. A blended, multi-generational workforce might benefit the business – and reassure staff in their forties that they might have a future within the organisation.

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Excellence + people = business success A start-up mentality is key to growth ARE START-UPS REALLY that different from established companies? Not according to Eric Ries, who argues that while older companies often try to develop an entrepreneurial culture to continue to grow, the challenge for start-ups is to maintain their culture as they grow.

An organisation of any size or age now needs a capacity for continuous innovation, says Ries, with teams looking for new sources of growth effectively acting as internal start-ups. A company must empower teams to experiment, while supporting the true entrepreneurs inside the organisation. It must also recognise when HR and other ‘gatekeeper functions’ get in the way of entrepreneurial behaviour, explains Ries in The Startup Way. He explains how GE’s HR function, realising the company’s venerable five-point employee rating system was not supporting new ways of working, experimented with different approaches. This resulted in a new performance measurement framework that “changed the way people in the company think of success”, says Ries. “And – just as important – they demonstrated that even HR can act like a start-up.”

“IF PETER DRUCKER ‘invented’ management, Tom Peters vivified it,” the late leadership scholar Warren Bennis once said. And in bringing management to life, Peters arguably invented the modern business book.

He is best known for his 1982 bestseller, co-authored with Robert H Waterman, In Search of Excellence: Lessons from America’s Best-Run Companies. Some of these companies went on to deliver poor results, and the authors were criticised for holding them up as examples of excellence. Yet it remains influential.

Peters believes its main achievement was to use the words ‘business’ and ‘excellence’ in the same sentence. Excellence, he points out, usually refers to something like an incredible operatic performance.

“We were trying to say that at some level business is a performing art too; that, at its best, business is about people who are growing and individually reaching new levels.”

Peters, who has just received a lifetime achievement award from the Thinkers50 ranking of management thinkers, hasn’t stopped looking for excellence. His latest book, The Excellence Dividend, due out in April, argues that a commitment to both people and excellence is the only way to cope with the tidal wave of change hitting business today.

Ries is an entrepreneur and author

Peters is an author and consultant

Nicole Cleary/Future Vintage Studio

Who are they?

Overpaid curmudgeons who are set in their ways, don’t ‘get’ millennials and probably try to rewind a DVD after they’ve finished watching. That is the clichéd view of older employees – yet this stereotype doesn’t square with Steve Jobs, who was 52 when he launched the iPhone; Pablo Picasso (55 when he completed Guernica); or John Goodenough (94 when he announced a new, improved version of the lithium-ion battery).

The cult of youth – exemplified by the hype surrounding Facebook’s 33-year-old impresario Mark Zuckerberg – blinds many employers to the potential of what Olivia Stubbings, strategy director at marketing agency WCRS, calls ‘late radicals’ – veterans whose mastery of their craft gives them the confidence to break the rules.

PERSPECTIVES

Blasting the myths of gender labels AS THE AUTHOR of Delusions of Gender, which argues that men’s brains are not that different from women’s, Cordelia Fine is sometimes asked if she also denies other differences between the sexes.

Fine tells this story in her latest book, Testosterone Rex: Unmaking the Myths of Our Gendered Minds, which won the Royal Society science book of the year.

Fine does not, of course, deny that men and women are physically different. But drawing on scientific research, she takes apart the view of the sexes having different natures rooted in an ancestral past that rewarded competitive, risk-taking men, and monogamous, risk-averse women – differences recreated in each generation by sex hormones, notably testosterone.

There are, says Fine, no essential male or female characteristics, with studies showing that most people display a ‘mosaic’ of so-called masculine and feminine qualities. Research also shows that while genes and sex hormones influence brain development and therefore behaviour, they also interact with many other social and environmental factors.

These findings, says Fine, are awkward for anyone arguing that the sexes ‘naturally’ segregate into different occupations and roles.

Fine is a professor of history and philosophy of science at the University of Melbourne

TABITHA GOLDSTAUB AI CAN BE USED TO FREE UP STAFF TO FOCUS ON THE SOFTER SKILLS THAT MACHINES CAN’T REPLICATE YOU COULD SAY WE’VE currently used by around 600 entered a golden age of computers, firms to screen job applicants. What where the sheer volume of data and brands from Hilton to Mercedesvastly improved computing power Benz have learned is that machines have created the perfect conditions can do the heavy-lifting by for developing artificial intelligence. scrutinising interviewees for them.

What does the rapid growth of Candidates’ text and writing style AI mean for HR? In short, it’s can be examined in increasingly squeezing the profession on both sophisticated ways too. sides. It’s not just the industries it It’s crucial to take the ethical supports – from banking and considerations into account, professional services to legal and however (see pages 30-37). AI is marketing – where jobs are being not without its risks and responsible lost to automation, it’s companies must ensure the tools also happening within they use are based on “Machines can do HR itself. reliable, unbiased data. the heavy-lifting by It’s easy to be Using only existing scrutinising alarmed but the staff as a yardstick for interviewees” disruptive power of AI your next hire can be has many benefits too, dangerous. If an such as cutting out the drudgery of algorithm learns from the same, routine tasks in favour of more unvaried source material, it will valuable, human-facing activities. deliver the same, uniform In our research, we’ve identified candidates again and again. no less than 28 uses and 300 Ultimately, as the amount of AI AI-based products that can be solutions continues to grow, it’ll pay applied across the employee to stay ahead of the curve. Those lifecycle. We found that hiring tools, who do, and deploy AI in a which are offered by more than 100 measured, responsible way, will be vendors, are the single biggest area able to increase the capacity of for the deployment of AI. existing staff by freeing them from As recruitment is rule-based, the shackles of paperwork. This high-impact and, at times, will enable them to focus on the laborious, it’s a perfect fit with AI, softer skills that AI can’t emulate, which is adept at solving rule-based like empathy, which ultimately problems. A great example is video will put you in the best stead to interview analysis, which, win in an increasingly man/woman CognitionX research shows, is and machine age.

Goldstaub is a co-founder of CognitionX

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PERSPECTIVES

BEST OF Fresh thinking from the worldfamous incubator of ideas

ROSELINDE TORRES Senior partner, Boston Consulting Group Great 21st century leaders prepare for tomorrow’s possibilities In an ever-more global and transparent world, relying on traditional development practices will stunt your growth as a leader. Instead, ask yourself three questions. First, where are you looking to anticipate the next change to your business model or life? The answer depends on what you are reading and who you are meeting, but great leaders shape their future.

Next, consider your capacity to connect with people who can help you think differently.

Finally, ask yourself if you have the courage to abandon what’s worked in the past. “Great leaders,” says Torres, “dare to be different.”

ASHTON APPLEWHITE Author Challenging prejudice against our future selves It’s not the passage of time that makes getting older so hard. It’s ageism, which, like racism or sexism, pits us against others to maintain the status quo. But with ageism those others are our own future selves. Applewhite urges us to stop feeding ageism by trying to look like younger versions of ourselves. In the workplace, where age discrimination is rampant, we should challenge stereotypes about older workers – none of which holds up under scrutiny. Ageing is not a problem or a disease, she says. “It is a natural, powerful, lifelong process that unites us all.”

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We should all benefit from future tech TO UNDERSTAND THE future, we need to understand Uber, according to Silicon Valley futurist Tim O’Reilly. The ride-hailing service, he tells Work., has a lot to teach us about how technology is changing the world of work – for both good and ill.

It shows, for example, how networked platforms create employment by connecting people on both sides of a marketplace, and how workers can be ‘cognitively augmented’ by Google Maps or similar digital tools.

But with Uber’s critics questioning whether it delivers real economic opportunity to drivers or is mindful of the needs of cities, the company’s story also shows that the new marketplaces need to work for all participants, and not just their owners and customers.

O’Reilly, who is credited with popularising terms such as ‘Web 2.0’ and ‘open source’, believes it isn’t inevitable that people who find work through technology platforms will be low paid.

As he says in his new book, WTF? What’s the Future and Why It’s Up to Us: “It’s easy to blame technology for the problems that

occur in periods of great economic transition. But both the problems and the solutions are the result of human choices.”

So policymakers should stop shoehorning people into an employment model that divides them into employees or contractors, and find new ways of rewarding those with multiple employers.

Pointing to recent proposals from US think tanks for each of those employers to contribute pro rata to an individual’s pay and benefits, O’Reilly predicts that other innovative ideas will surface as regulators become more familiar with the new services. But he insists that when companies treat people as costs to be eliminated, that’s a choice – not the natural order of things.

He says businesses should work out how we can use new technology such as AI and big data to make us all richer in the future, in the same way the tools of the first industrial revolution did.

The robots will only take all the jobs, adds O’Reilly, if that’s what we ask them to do.

O’Reilly is the founder of O’Reilly Media

Ryan Lash/TED; Bloomberg/Getty Images

ALEXANDER WAGNER Economist Why it pays to put people first Each year, one in seven large companies commits fraud, but what motivates people in the other six to remain honest? According to Wagner, people do not always act in their own self-interest. They are willing to pay a price to uphold certain values, and feel better doing what they see as the right thing. Employers have a clear choice: they can use incentives to get employees to conform to organisational values – or save themselves a lot of trouble and money by selecting people who share those values in the first place. As Wagner says: “It will pay off to put people first.”

PERSPECTIVES

JONATHAN GUTHRIE TAKE PROFESSIONAL ADVICE, BUT DON’T ACCEPT IT WITHOUT CONSIDERING THE BIGGER PICTURE LAWYERS RANK HIGHLY IN the hierarchy of labour. Author Damon Runyon described how a New York Mr Big, fatally stabbed, demanded to see his lawyer before his doctor. He knew the medic could not save him. But the lawyer could extend his reach beyond the grave by altering his will.

Respect for a profession can create pitfalls, though. Professionals are as prone as other workers to ‘job conditioning’. This is the tendency of someone with a hammer to see every problem as a nail. When professional advice is too narrow, clients who follow it slavishly can end up with problems worse than the one they sought counsel on.

The mission of a business lawyer is to help the client maximise profits.

A focus on legal liabilities over all other risks is the job conditioning to which lawyers are prone. But there is no point keeping a tight lid on compensation claims if the reputation of the business is dragged through the mud.

Look at Thomas Cook’s handling of the tragic deaths from carbon monoxide poisoning of two children in a Corfu hotel in 2006.

Management, following legal advice, declined to express regret publicly.

This fuelled criticism, which reached fever pitch when a 2015 inquest jury ruled that the holiday company had failed in its duty of

care. The furore wiped millions off its shares. Fears that apologies might inflate compensation claims seem to have been why it was slow to act.

Legal advice can also result in a business confronting a problem too early. For example, Barclays settled with three regulators for alleged rigging of the London interbank offered rate, a lending benchmark, in 2012, well before other institutions were implicated in the scandal. The incentive was an early settlement discount on fines. However, the bank “Bosses can delegate decisions but not responsibility.

Not even to someone with a fancy diploma from Harvard Law School” – and presumably its lawyers – underestimated the impact of the incident and chief executive Bob Diamond was forced to resign.

Merlin Entertainments handled a crisis of its own rather more adroitly in 2015. When the Smiler ride crashed at Alton Towers amusement park, Nick Varney, chief executive of the group, visited the scene shortly after. His timely apologies tempered the backlash against the business during a subsequent successful prosecution by the Health and Safety Executive.

Lawyers who specialise in compensation cases say it is

relatively safe for a chief executive to express sorrow and regret at suffering caused by accidents or alleged employee misconduct. That is different to saying: ‘It’s all our fault – get your claim in quick.’

Management, however, has a habit of erring on the side of caution.

Venturing into the open from the safe corporate environment where you are top dog requires moral courage. Hierarchies of labour can further skew decision-making by weighting one kind of advice more heavily than another. The gossip in the City of London in the wake of the Barclays meltdown was that the board had taken the advice of its lawyers over that of PRs, who had advocated a wait-and-see approach.

(Many financial PRs would cheerfully admit they are bottom of the heap among corporate advisers.)

I once argued with a pension fund investment consultant, an even more obscure form of adviser.

Surely, I asked, recommending the services of asset managers, only to recommend they be fired when their investments fail, was power without responsibility?

“Advisers advise, but clients decide,” he retorted frostily. He was right. Bosses can delegate decisions, but not responsibility. Not even to someone with a fancy diploma from Harvard Law School. The buck has to stop somewhere.

Guthrie is the head of Lex, the premium financial commentary service of the Financial Times

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minutes with...

Professor Gernot Schulz The conductor on raising musicians’ energy, conflict and why learning never stops

On being a leader Conductors are often thought of as the very worst types of leaders – tyrannical dictators, who must be followed precisely at all costs.

This is far from the truth. All the things that are important for a performance – presence, sparkle, brilliance – are things that can’t be commanded – and I would say the same holds true in organisations today. I have to create the right conditions so that players ‘feel’ these feelings deeply from within. My role is actually about transformational leadership. Mostly I’m there to ‘move’ my players emotionally.

Orchestras in fact have totally transparent cultures; we have a 12

clear error management culture.

We rehearse and, if we make mistakes, that’s fine, because that’s why we rehearse.

On a lifetime of learning People think conducting is a repetitive act, where you literally ‘go through the motions’ time and time again. But there can be no presenteeism in this job. To conduct is to accept learning never stops. Even if I’m conducting a piece of music I’ve led 50, 100 times before, I still want to find a new piece of detail each time. I try to go as deep into a score as I can, to try and put myself in the same mental state as the composer. A score isn’t as detailed as people think. An instruction for a crescendo is just that. You need to work out if it’s a short, sharp one, or one that grows. Conducting is 80 per cent homework, 19 per cent practice and just 1 per cent playing.

On work’s most underrated skill I think the most important job I have is to be a ‘perceiver’ – of people’s energy. If energy goes down I have to raise it; sometimes I have to raise just one section of the orchestra, other times all of it.

That’s what everyone at work needs to do too. But what I also do is empower others to be perceivers. If they can pick up on the vibes of those around them, and think something needs to

change, I say do it yourself, because you know the desired outcome too.

On managing conflict At-work conflict is just as common in creative sectors as it is anywhere else – if not more so.

I once had two players who literally couldn’t stand the sight of each other. However, once the curtain came down, they played exquisitely. That’s because they understood that they were working towards a common outcome. When you have a strong sense of shared responsibility, conflict sort of manages itself.

On equality Statistics show female participation – as players but also as conductors – is shockingly low. But while it can often feel like progress hasn’t been made, it has. I can remember playing at venues where women weren’t even invited to be in the audience.

Part of the problem is young people nowadays wanting other, more ‘safe’ careers, which affects who applies to music schools. So where you still see that more than 50 per cent of trumpet, or trombone, players are men, you’re already at a disadvantage to make your orchestras equal.

But music equality waxes and wanes – some years there are more men, and some years there are more women.

Interview: Peter Crush. Portrait: Peter Spinney

On his ‘crazy’ career When I said I wanted to play the violin my teachers thought I was crazy, and urged me to do a ‘proper’ job. But I knew I had music in my blood. I was 12 when a critical moment in my life occurred. The Berlin Philharmonic Orchestra was playing at my local concert hall and I was desperate to see them.

Tickets had long sold out, but I knew someone who worked there, and I persuaded him to let me hide in a secret place. I still remember every moment. I knew then that this was the career for me. I’ve been a freelancer all my life, as that’s what working as a conductor really is.

About Gernot Schulz An orchestra conductor and former member of the Berlin Philharmonic Orchestra, Schulz was an assistant to Leonard Bernstein and Georg Solti.

He is now a sought-after guest conductor for orchestras including the Seoul Radio Orchestra and the Budapest Philharmonic, and is honorary professor at the University of Music and Performing Arts in Hamburg.

ONCE UPON A TIME IN COLORADO History tells us that when workers’ voices are not heard, the consequences can be detrimental for all. Claire Warren reports

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WHEN THE MINERS AT THE Colorado Fuel & Iron Company went on strike, John D Rockefeller Jr told the US Congress he was fighting to preserve the workers’ freedom, to stop them being coerced by outside agitators – ie trade unionists. Yet the subsequent massacre by company-hired militiamen – especially the slaughter of women and children – made Americans see Rockefeller as a remote, rapacious capitalist who countenanced bloodshed to ‘free’ his workers from union coercion. One newspaper even declared: “Mr Rockefeller has every reason to fear assassins. Assassins are the natural sons of Rockefeller’s business policies.”

Rockefeller initially tried to dodge the blame, insisting that he had little direct knowledge of labour policy in the mines or of the strike. In 1915, he resorted to paying the Hearst Newspapers empire to write nice things, ‘fake news’, about him and his business. Luckily for him – and the future of American industrial relations – he eventually listened to W L Mackenzie King, a Canadian politician who later, as prime minister, laid the foundations for Canada’s welfare state. King’s reforms – dubbed the ‘Rockefeller plan’ – included the creation of employeremployee committees to manage working conditions, grievances and health and safety.

King convinced the tycoon that company managers needed to listen to employees, and not, as bosses of the Colorado Fuel & Iron Company had done, refuse to even meet them. As Rockefeller would later acknowledge:

“Much of the misunderstanding between men is [down to] a lack of knowledge of each other. When men get together and talk over their differences candidly, much of the ground for disputes vanishes.”

As a man who was ultimately personally responsible for 1.5 per cent of US GDP, Rockefeller’s new approach echoed in the boardrooms of corporate America. The importance of the employee voice, according to economic historian Bruce Kaufman, acquired a “general provenance in managerial discourse”. In the 1920s, Hollywood producer Samuel Goldwyn gave a backhanded acknowledgement to the importance of listening, saying: “I don’t want any ‘yes’ men around me. I want everyone to tell me the truth – even [if] it costs him his job.” Twenty years later, Joseph Stalin, hardly renowned for listening to the grassroots, had suggestion boxes installed in every Soviet enterprise – though he had to order the KGB to threaten managers to make use of them.

Today, says Jim Detert from the University of Virginia’s Darden Graduate School of Business Administration, “the strategic imperative for a more inclusive, positive voice environment has skyrocketed”.

The sheer pace of change and disruption encourages managers to tap into the knowledge of employees. And the decline in union membership, especially in the private sector, allows companies to partner more informally with staff, albeit often at the expense of a 19

legalised procedural voice. Even so, Detert says: “We and enterprise social networks, some of which filter ideas still have many examples of organisations in which large through the use of employee voting systems using tokens percentages of employees think it’s not safe or or symbolic money. worthwhile to speak up.”

“One piece of reticence I often hear from leaders is ‘if Only in the past decade, Detert explains, have aca- I work hard to create an open environment for voice, we demics tried to demonstrate why voice matters. Common could waste lots of time hearing all the ideas’,” says sense suggests that businesses benefit if employees share Detert. “You have to think about which risks or costs you ideas and information that could affect the bottom line – want to incur. There are indeed some costs of having to and so does recent corporate history. hear a number of unusable ideas, but the alternative is In 2005, Hank Greenberg, CEO of US financial giant that employees overly self-censor to avoid ‘wasting your AIG, resigned after allegations of fraudulent accounting. time’, and you fail to get an idea or knowledge of a Staff may not have mourned his departure – his policy problem that was absolutely critical.” A simple online was that employees who didn’t deliver 15 per cent suggestion box saved British Airways $900,000 a year revenue growth, 15 per cent profit growth and 15 per when an employee pointed out that descaling toilet pipes cent return on equity would, in his words, be “blown up” could reduce the weight of its aircraft.

– but his exit didn’t change the management culture.

Many organisations, according to the CIPD positionJoseph Cassano, CEO of AIG’s financial products ing paper Have your say: alternative forms of workplace division, along with a dozen colleagues, committed the voice, are only interested in voice that benefits the busicompany to insure what turned out to be more than $1trn ness. The priority is to, adapting JFK’s famous phrase, of junk-quality loans held by banks. The wisdom of ask not what your company can do for you – ask what this strategy was never debated because, as one you can do for your company. employee put it, with Cassano’s bullying management “Whether it’s a working group to improve organisastyle, “the fear level was so high that, when we had tional processes or employee consultations to avoid these morning meetings, you conflict, voice is often not considpresented what you did not to ered in terms of outcomes for upset him”. AIG’s collapse helped employees,” says Louisa Baczor, “It is often just the loudest trigger a global economic crisis research adviser at the CIPD. and forced the US Treasury to “Voice is not only a means to voices that are heard, and rescue the business because it an end for the organisation, it is those that maintain the was ‘too big to fail’. important as an end in itself – and status quo” Corporate disasters of that as a fundamental human need.” magnitude can seem so excepVoice, she notes, can help tional that it is easy for managers employees feel that they are a to complacently assume they could never happen on legitimate stakeholder in the organisation, which, in their watch, but many businesses lose out because of turn, heightens their sense of wellbeing, nurtures the more mundane failures to listen to staff. Listening feeling that they are in control of how they do their job, became exponentially more difficult as large, global cor- encourages loyalty, improves staff retention and shapes porations flourished in the 1960s and 1970s, but even social identity. (In the 1970s, studies on group behaviour managers at Silicon Valley start-ups have often seemed by social psychologists Henri Tajfel and John Turner to have no ears to hear. identified that we are psychologically predisposed to The MacLeod report, commissioned by the British enhance the status of the groups we belong to.) government and published in 2009, identified voice as a In any organisation, some people’s voices are heard common factor in high-performing businesses. And, says more often than others. The CIPD’s research underlines Detert: “Our research on individuals and organisations the point that employees are not homogeneous, and confound, for example, that in some financial institutions ventional voice mechanisms do not reflect the range of there was better unit performance in places where more participants, so some people are overlooked and become voice made it to the leader.” alienated. “It is often just the loudest voices that are Yet many companies still don’t get the message. Detert heard, and those that maintain the status quo. People says we need to distinguish between improvement-ori- often only hear what they want to hear, but sometimes ented voice (comments about workplace problems or it’s those voices that are challenging or difficult to hear ideas that are intended to improve rather than criticise) that are the most important,” says Baczor. and a more general approach that makes staff feel they are In the football business, voice has become a contenbeing listened to and cared for. tious issue. In some countries, notably England and Many businesses concentrate on improvement- Spain, footballers are often blamed for getting their oriented voice using surveys, suggestion boxes – the first manager – often said to have ‘lost the dressing room’ – of which was installed at an American shipbuilder in 1882 fired by airing their discontent within the club or – and town hall meetings. Others create working groups leaking it to the media. In some instances, voices are 20

voice

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raised against newcomers. At one of Europe’s biggest clubs, an established star instructed team mates not to pass to a new signing whenever that player was in front of the goal. Cultural differences also influence the way voice is expressed. Dutch players love to dissect and debate tactics, while in Italy, when manager SvenGöran Eriksson tried to consult players, they effectively shrugged; such decisions, they felt, were his responsibility – an attitude encapsulated by the fact that coaches are still referred to as ‘Il Mister’ in that country.

Traditional voice mechanisms often don’t reflect the views of female, ethnic minority, disabled, part-time, remote or gig economy workers. But, according to a 2012 study by neuroscientists at the Massachusetts Institute of Technology, The power of being heard, these nondominant groups benefit most from having their say.

In an age of social media – and websites such as anonymous company review hub Glassdoor – aggrieved staff can easily express their feelings. The allegations of sexual misconduct against Harvey Weinstein, though originally made in traditional media, inspired the popular #metoo. A powerful protest against harassment on social media has kept the issue in the public eye and seen several careers wrecked – notably that of Weinstein, actor Kevin Spacey and Michael Fallon, the UK’s former defence secretary.

Earlier this year, Google engineer James Damore posted a memo critising the organisation’s diversity

initiatives to an internal discussion group that was then shared on social media. In it, he claimed, the lack of women leaders in tech was not driven by discrimination, but reflected their “higher levels of neuroticism”. His memo, written to highlight what he regarded as a leftwing bias that was silencing alternative views within the company, got him fired.

“When people don’t feel heard they will use sites like Glassdoor and other forms of social media to vent against their own firm. It is not in your interests for people to tell the world about their work problems or, for that matter, their ideas for improvement,” says Detert. “What these mechanisms really prove is that your internal processes are not working – people who feel heard and respected don’t want to damage themselves and others they care about by bashing their own organisation publicly.”

In most whistleblowing cases, Detert says, the problems were already known about, discussed and in some cases flagged up to managers at different levels of the organisation. The crisis at Stafford Hospital, where appalling care caused the deaths of between 400 and 1,200 patients in 2005-09, is a case in point. The subsequent public inquiry showed that staff could see what was going on, but failed to raise the alarm.

Sir Robert Francis, who led that inquiry and chaired the subsequent Freedom to Speak Up review, found that although many NHS organisations supported whistleblowers, employees didn’t speak up for fear of

Harvey Weinstein and Kevin Spacey are among those recently accused of sexual harassment.

When allegations against them started being publicised, it empowered others to speak out

21

victimisation or being ignored. One of his recommendations to resolve this was appointing ‘Freedom to Speak Up’ guardians in all NHS trusts, supported by a national independent officer.

“He was trying to make sure there was a failsafe, an independent person and an independent structure that people could go to if they felt their concerns were being dismissed,” says Danny Mortimer, chief executive of NHS Employers, “and to ensure that within every organisation someone was licensed to change the culture.”

The NHS had already been focusing on staff engagement, but Francis’ report underlined the urgency of the task. Today, according to the latest staff survey, 75 per cent of employees feel able to make suggestions to improve the work of their team or department.

“There’s now a huge service improvement and patient safety movement in the NHS. At the heart of that is staff voice, especially clinician voice. I wouldn’t pretend that we haven’t got a way to go, but we take this very seriously,” Mortimer says. “Carrying out patient safety conversations is now routine for NHS boards. Non-executive and executive leaders will visit a clinical area and talk to staff in small groups. There is very direct feedback to the dozen most senior people in an NHS organisation.”

Other sectors have striven to encourage whistleblowing – banks are now required to appoint a senior manager to champion whistleblowers – yet a recent survey by law firm Freshfields Bruckhaus Deringer found that 58 per 22

cent of British managers still believe that whistleblowing could damage their career or reputation. Within the NHS, Francis highlighted several issues that prevented people from speaking up. When individuals work in teams they may be reluctant to put the spotlight on a fellow worker, and the hierarchies that exist in a clinical context within and between professions can act as a barrier.

“One thing we’ve learned from other industries is to take a systematic approach to giving people voice,” says Mortimer. “The safer surgery checklist is commonplace now – at the beginning of an operation, the team go through a standard checklist and any member can raise a concern.

For staff to freely suggest how things could be improved, the culture has to be right. “You have to have a culture that emphasises to managers that part of their job is to routinely gather those ideas and contributions,” says Mortimer.

Baczor agrees: “A lot comes down to your relationship with your line manager. If they never ask how you are feeling or what you think, you are not going to have much opportunity to have your say. And that comes down to role models: are the people at the top actively encouraging and listening to people’s voice or just paying lip service to it?”

This matters because research suggests we are extremely adept at reading the subtle cues that suggest we are not really being paid attention to. This may explain

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A memorial gallery of patients who died at Stafford Hospital: the inquiry into the causes of high death rates and poor care at the hospital between 2005 and 2009 found that staff failed to voice their concerns

voice

why some of the biggest barriers to accessing voice are survival instincts mean we are acutely aware of the small erected by employees themselves. A report from the details that indicate who is the most powerful person in a Involvement and Participation Association (IPA) and room. Open-door policies, for example, are a step in the Tomorrow’s Company, Rethinking employee voice, found right direction, but employees still have to pluck up the that the most common factors preventing employee voices nerve to walk into the boss’s office and start what could from being heard were staff cynicism (54.3 per cent), staff prove to be a difficult conversation. buy-in (43.8 per cent), manager buy-in (40 per cent) and “An open-door policy can tilt the equation against lack of response to initiatives (39 per cent). voice because it makes you have the conversation on a Employees can be sceptical, believing, rightly or plain where all the power cues remind you to be careful, wrongly, that their views will be ignored. Managers don’t often unconsciously,” says Detert. “We need to replace always help. As one commentator, posting on a Tom Peters notions of bosses just being open, with bosses actively getblog on the strategic importance of listening, put it: “Most ting out of their office to have impromptu conversations bosses think they’re listeners, but their employees think with people on their own turf.” Is it time to revive the they’re interrupters.” Some staff also think their practice, common at Hewlett-Packard in the early 1970s responsibility begins and ends with identifying a problem, and later popularised by Tom Peters, of ‘managing by rather than suggesting a solution. wandering around’ (MBWA)?

Detert says employees often fear that speaking up The details that discourage staff from making their will be held against them, that they will become isolated voice heard can vary from the blatant – the boss who (because they’re no longer seen as a team player) or look takes his watch off, sets the alarm to ring in 10 minutes, stupid. Very occasionally, keeping quiet reflects actual and places it on the desk – to the subtle – pained facial physical fear. expressions. Other managers can be a hindrance, They may also suspect that such initiatives have a sometimes acting as a security guard, designed to hidden agenda. Sometimes, that fear is justified. Although prevent the CEO from hearing conflicting views.

Amazon has benefited from The shrewdest political leaders workers’ ideas – free shipping, have recognised this problem, one of the tools with which Jeff appointing a consigliere to fulfil “If your line manager never Bezos’s company has devastated the role played by Robert Duvall’s rivals, was suggested by an asks what you think, you are not Tom Hagen to Marlon Brando’s employee – it has also caused going to have much opportunity Don Corleone in The Godfather – tension in the workplace with the a reader of the tea leaves who can to have your say” Anytime Feedback Tool, enabling tell the boss what the troops will staff to anonymously praise or and won’t stand for. criticise colleagues. As The New In some cases, office furniture York Times reported: “Many workers called it a river of can deter debate. It may be hard to believe a CEO who is intrigue… they described making secret pacts with emphasising the importance of teamwork when the colleagues to bury the same person or to praise one photographs on the walls make their office look like a another lavishly.” Other companies, notably British personal hall of fame. Pixar used to have meetings around retailer Sports Direct, have reportedly used such a long skinny table before co-founder Ed Catmull realised mechanisms as a ‘How are you feeling?’ touchscreen – not that only the people at the centre of the table – in senior to gauge morale, but to reprimand staff who aren’t as positions – were truly involved in conversations. upbeat as management would like.

When even the shape of a table can signal who is in Organisations with fewer than 250 employees were power, how do you foster a culture that truly enables least likely to report problems with accessing voice in the voice? “There is no magic bullet,” says Detert. “We know IPA and Tomorrow’s Company research. This would not how to reduce those perceptions – does people having surprise evolutionary psychologist Robin Dunbar, who offices 10 times bigger than other people make sense? Are says that humans can really only maintain you using the right kind of venues for meetings? It’s really personal relationships with 150 people (Dunbar’s about recognising all the ways in which your power will number), whether that’s in hunter-gatherer societies, get in the way and being willing to do something about it.”

18th-century English villages or modern corporations.

Ultimately, we need to ask ourselves what is more “The Hutterites illustrate rather clearly just what’s valuable to the organisation – rewarding those at the top involved,” Dunbar wrote in the Guardian. “They deliber- of the hierarchy or creating a more egalitarian culture in ately split their communities once they exceeded 150 which people at every level share their ideas? We also individuals because, they maintain, you cannot run a need to remember that the second worst thing businesses community of more than 150 people by peer pressure can do is not listen to employees. The worst thing they can alone: instead, you need a police force.” do is listen to them and do nothing.

Top-down command and control management can For further reading, see page 72 silence the very voices that companies need to hear. Our 23

“Being black and gay in the Labour Party was easy…

Portrait

24

Andy Gotts

‌compared to being rich�

Entrepreneur Waheed Alli has come a long way since he was forced to go out to work as a teenager to support his family. Matthew Gwyther reports Portrait

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n 13 April 1999, following more than six hours of debate on lowering the age of sexual consent between men, the youngest member of Britain’s scarletgowned and ermined House of Lords got to his feet and declared: “I am openly gay. I am 34. I was gay when I was 24, when I was 21, when I was 18 and even when I was 16. I have never been confused about my sexuality. I have [only ever] been confused about the way I am treated as a result of it.”

The sense of drama was palpable, for the 34-yearold was not only gay but also black and Muslim. The words ‘sinful’, ‘disgraceful’ and ‘dirty’ had been used during the debate by those who opposed the change. “I was feeling absolutely sick to my stomach,” Baron Alli of Norbury recalled afterwards. He lost the vote but that particular battle was already won. By the following year, Tony Blair had invoked the parliament Act to force through measures to reduce the age of consent for same-sex relations between men to 16.

In the 1990s, Waheed Alli, together with his business (and then life) partner Charlie Parsons, was the hippest and most happening person pulling the strings in UK TV. He was a founder of Planet 24, which produced edgy youth TV like The Word and The Big Breakfast. He was also the mastermind behind the birth of reality TV with Survivor, and was once accused by a newspaper of perfecting television “presented by morons for morons”.

An Islington-ite living next door to Labour MP Emily Thornberry, Alli, now 53, was the epitome of Cool Britannia and Blairism. In the thick of it with former Spice Girl Geri Halliwell and her Union Jack dress, Britpop and Euro 96, as one of the New Labour inner circle, he worked hard on the campaign to install Tony Blair as party leader.

The new dawn of 1997, when Blair and his family first pulled into Downing Street in their Ford Galaxy, was a good time to be in politics. But Alli never took a frontstage role, preferring to influence from the wings before being offered a seat in the Upper House in 1998. His politics have always been those of sexuality and equality.

As he hit his mid 30s, Alli shifted industries from entertainment to fashion, but maintained a foothold in the former. His media business, Silvergate, makes children’s TV programmes, including Octonauts, for global markets and, as a sideline, he’s even a talent agent for just two clients: Paul O’Grady, aka Lily Savage, and Ross Kemp. (No CVs, please – his book is closed.)

He chaired online fashion store Asos from 2000 to 2012, seeing its shares rise 60-fold over that period and its market capitalisation go from £12m to £3bn. “The beauty of having worked in the media is that you’re an instant expert,” he has said about his diverse business interests. After stepping down from Asos, he started a digital fashion platform in India. Currently turning over 26

£19m but loss-making, koovs.com is growing at 87 per cent annually with an AIM listing in London.

Alli’s backstory is fascinating, an almost Dickensian parable of social mobility and possibility. He was born in South London to a Muslim father from Guyana and a Hindu mother from Trinidad, and his father walked out when he was 16. At the time his older brother was at university. “It was self-evident that one of us had to go out to work. And that was me,” he recalls. His mother and younger brother were put in single-room emergency council accommodation and Alli stayed with friends.

After a trip to the Job Centre, Alli and his nine O-levels found a job on Planned Savings magazine doing rudimentary analysis on performance tables for investment funds. He earned £3,000 per annum and was good at it, progressing quickly. “It was a job. And my job was to rebuild my family,” he says.

“I got a call about another job from Save & Prosper’s head of UK investment research. I had an earring, an orange streak in my hair as a result of trying to dye it blonde and no suit. I had three pounds. So I went to Burton at King’s Cross and bought a second in a white/ grey colour. I walked all the way to the City.”

The interview went well and he was given the position. But then his interviewer asked if he could see Alli before he started the job. “He said I couldn’t dress like that and gave me £100 to buy two blue suits, some M&S shirts and some black shoes. That was the sweetest thing if you think about it. The City had no black people in those days.”

The psychology of money interested him. What led to confidence or the lack of it in the investment community. His fascination with politics – both geopolitical and domestic – grew. He climbed the management ladder and by the age of 23 was running the publishing division. “It was a weird environment: I didn’t participate socially. I never went to the pub because the money wasn’t there. Then one day my salary arrived in the bank and it was an awful lot of money. My mother had a new house, and my little brother had left school. I was no longer obliged to support them with 80 per cent of my take-home and thought ‘I’m done now’. So I left.”

Having never had one, he considered taking a holiday, but instead joined his boyfriend, Charlie, in a TV production company start-up, 24 Hours Productions, which then merged with Bob Geldof’s Planet Pictures to become Planet 24. Within a couple of years they were the largest independent in Britain.

Planet 24 was eventually sold to FTSE 100 giant and ITV franchisee Carlton, where Alli met Michael Green and his comms man, one David Cameron. Alli remains fond of Cameron despite their ostensibly different politics: “He was so much more than a PR man.

David is super smart. And he could really make you laugh. People don’t see that side of him. He’s funny, funny, funny.”

WireImage/Getty Images

interview

Alli left Carlton to help Labour with the 2001 more than just a trade deal. The EU has been the last election, becoming bag carrier for Margaret McDonagh, bastion of hope against the rise of nationalism.” then party general secretary. The Labour majority at 167 But he hasn’t given up on making things in the UK. was the second highest since the Second World War. But “When I chaired Asos we made it a goal to manufacture his time among the party faithful was not always easy, as 20 per cent of what we sold in the UK via our private many members of the now reviled ‘metropolitan liberal label. We moved our main warehouse from Hemel elite’ have found.

Hempstead to Barnsley. I have never bought the idea “Being black in the Labour Party in the early 90s was that British workers are lazy and unreliable. And the pretty tough. The unions didn’t want you. Likewise, success of Barnsley proved that.” being gay in the Labour Party in those years was pretty Alli’s CV is not one of entirely unalloyed success. He hard. But, let me tell you, both of those things were a walk suffered a major hiccup in the noughties with Chorion, in the park compared to being rich in the Labour Party.” an entertainment rights outfit established in 1996. It was Few people it appears – either now or then – took best known for owning the rights to big-name children’s heed of Peter Mandelson and titles such as Enid Blyton’s his notorious entreaty that Noddy and The Famous Five Labour should be “intensely series, and Roger Hargreaves’ relaxed about people getting Mr Men books. It also had filthy rich”. “And now it’s even ambitions for expanding its tougher,” says Alli. “There’s a literary estates division, home suspicion that you are part of a to Agatha Christie as well as rigged system in which you Georges Simenon’s Maigret are a beneficiary.” novels and Raymond ChanAlli does not strike one as a dler’s Marlowe mysteries. natural Corbynista. He comes As chair, Alli took part in from a generation of Labour an £111m management buyout success that is now reviled by supported by private equity the likes of left-wing political giant 3i in 2006. However, organisation Momentum. In its with the business overloaded election manifesto, Labour with debt and suffering proposed increasing income faltering sales following the tax to 45p for earnings above financial crash, Alli quit £80,000 and 50p for each Chorion in 2011 after disagreepound earned over £123,000. ments with the company’s So how much of wealthy peolenders. He probably personple’s money does he think any ally kissed goodbye to a Brian Paddick, Simon Fanshawe, Sir Ian McKellen future Labour government substantial chunk of the £7.4m and Waheed Alli at a reception in 2006 for The Albert could legitimately take away in that the management had put Kennedy Trust, a service for homeless LGBT youth income tax? “I think there’s into the buyout. When asked something in the British psyche that feels it’s unfair taking by the FT how that felt, he was sanguine: “Whatever you anything above half someone’s income away from them in do in business, if you buy at 14 times [earnings] and sell at tax,” he replies. “Above that I’d certainly resent it.” seven times you’re never going to make money.”

He’s behind Corbyn on much of the renationalisation Many of his business interests lie outside the UK and programme mooted. “Railways and public utilities he is constantly in the air and in business lounges. He should be back in public ownership. Water privatisation frequently visits India, New York, China and Scandinafelt wrong to me at the time and even more so now – the via, where he has an interest in a headphone company way in which they put prices up and reduce their costs linked to legendary loudspeaker-maker Marshall. but then simply return that to shareholders rather than “I am worried because in the years following the to their employees or the community. It’s a human Great Crash we’re lacking a proper economic and right to get decently priced running water. And what are industrial strategy. [Alli was interviewed before the we doing building nuclear power plants that will be government launched its new industrial strategy.] I owned by the Chinese? BT and the Ordnance Survey? fear that the only thing we have going for us at the Government shouldn’t be running things like that.” moment is low asset prices. There are going to be some Doesn’t he miss those Blairite years of optimism? pretty beautiful companies snapped up on the cheap.”

What does he think has gone so wrong? “Well business He need not be concerned for himself, however. The has stopped talking about values,” he says. “Be Sunday Times Rich List calculates his net worth at transparent. Tell us the truth! I think re-finding that £201m, which he doesn’t go out of his way to dispute. He confidence outside Europe will not be easy. It’s so much feels no need to apologise for his wealth. “Well, I live off 27

interview

my salary and I live within my means. But if I want something extravagant I can afford it. I like having a nice sofa, I eat out a lot, I travel first class and one of my indulgences is that the bathrooms in my house are overheated. I know what it’s like to wash every day in a very cold bathroom.”

He is small, neat in Prada and scrupulously tidy.

There isn’t a single piece of paper visible in his office on London’s Kingsway, where the bookshelves are organised according to the colour of the spines. “I’m a great planner and the thing I’m good at is strategic thinking. I’m very organised,” he says with his puckish charm. He is surrounded by individuals quietly beavering away from his various businesses – “It’s not a creative hub of production but I know I can bump into all the people I need to in the corridor.” At which point, as if on cue, Ross Kemp wanders into the office to enquire about his agent’s teeth following a visit to the dentist.

Nothing has been resolved. They are still hurting.

Alli’s got a certain controlled poise that is common among the wealthy and successful. His personal relationship with Charlie Parsons ended a while back but the two remain very close. (Alli has a new partner who is Canadian.) “Charlie remains my best friend and soul mate. We share everything. He’d run my businesses if anything ever happened to me.”

It has been far from plain sailing in the years since Alli’s House of Lord’s speech for those in the LGBT 28

community, but there have been steady improvements in parliament’s attitude to gay rights with, among other things, votes for the right to adopt (2005), to openly serve in the military (2000) and for same-sex marriage (2013). Such changes were hardly conceivable when Alli became a life peer.

After 15 years without contact, Alli eventually saw his father, who remarried, and has a half-brother with whom he gets on. How did his father react to his son’s sexuality? “Well, if your father leaves your mother for somebody else you’re not exactly in a moral position to condemn,” he smiles. “He’s an 80-year-old Muslim man, driven by his experiences in life.”

The FT described Alli as the “outsider who became the consummate insider”. He doesn’t think that his work defines him. “Work isn’t the emotional centre of my life,” he says. “I am. I’m not defined by work or by politics. I like creative things. My two favourite activities are watching TV and going shopping.”

He is, however, always conscious of his good fortune, recently taking his mother to India to find the village their ancestors left for the Caribbean many years back.

“I think you have to get up every morning and say thank you. I have been very lucky. I’m not the smartest in the world or the best looking. People like my mother, who was a nurse, work far harder than me.”

For further reading, see page 72

Getty Images; PA Images

The Stonewall Inn, birthplace of the modern gay rights movement: in 2016 police provided security for customers after 50 people were killed in a hate crime in a gay nightclub in Orlando

ROUTE TO RIGHTS Key dates in the progress of lesbian, gay, bi and trans equality over the last six decades

1960 1967

1969

The Sexual Offences Act decriminalises sex between two men over 21, but it remains illegal in Scotland and Northern Ireland until 1980 and 1982 respectively.

The Stonewall riots, sparked by a police raid on the Stonewall Inn in Manhattan, trigger the modern LGBT liberation movement in the US and beyond.

1974 Maureen Colquhoun comes out as Britain’s first openly lesbian MP.

1988 Section 28 of the Local Government Act is introduced, prohibiting the intentional promotion of homosexuality. It is later abolished in 2000 in Scotland, followed by England, Wales and Northern Ireland in 2003.

1977

19%

One in five lesbian, gay and bi employees have experienced verbal bullying from colleagues and customers because of their sexual orientation over the last five years.

26%

Gay News is successfully prosecuted by Mary Whitehouse for blasphemous libel.

1989 Denmark becomes the first country to give legal recognition to same-sex partnerships.

2000

1992 The World Health Organisation declassifies same-sex attraction as a mental illness.

10% 2004

The UK Sexual Offences Act reduces the age of consent for same-sex relations between men to 16.

The Civil Partnership Act is passed in the UK.

More than 10 per cent of trans people have been verbally abused at work, while 6 per cent have been physically assaulted. As a consequence of harassment and bullying, a quarter will feel obliged to change their jobs.

2010 Gender reassignment becomes a protected characteristic under the Equality Act.

2003 The Employment Equality (Sexual Orientation) Regulations become law in the UK, making it illegal to discriminate against lesbians, gay and bi people in the workplace.

2013 Alan Turing is given a posthumous royal pardon for his conviction for gross indecency, which saw him chemically castrated.

2013 Source: Stonewall

One in eight LGB employees would not feel confident reporting homophobic bullying in their workplace.

The UK government lifts the ban on lesbians, gay men and bi people serving in the armed forces.

2000 A quarter of LGB workers are not at all open to colleagues about their sexual orientation.

13%

An act legalising same-sex marriage is passed in England and Wales (Scotland, 2014). In 2015 the US follows suit and Ireland becomes the first country to vote for same-sex marriage via a referendum.

2017 A US federal judge temporarily blocks Trump’s presidential memo barring transgender people from the military.

2020

29

If a fatal traffic collision is unavoidable, would you prioritise saving one child over two adults?

Yes

17%

No Don’t know

35% 29%

Not prepared to answer 19% Source: Work. survey of 179 HR professionals

artificial intelligence

It’s a harsh question, but if we can’t answer it how can we teach our robots to make difficult decisions?

Simon Parkin looks at the ethical issues that are cropping up as AI becomes increasingly sophisticated

artificial intelligence

WANDA HOLBROOK, A 57-YEAR-OLD robotics technician from Grand Rapids, Michigan, was working at the sprawling auto parts factory where she had been an employee for 12 years, when a robot wandered into her workspace. The machine had malfunctioned. It had been programmed to work in Section 130, part of an 800 sq ft area where robots welded plates onto truck bumpers. Holbrook did not notice the machine trespass into her area, Section 140. While her back was turned, its mechanical arm swung unexpectedly forwards and loaded a trailer attachment assembly part onto her head.

When Holbrook’s co-workers found her, she was unresponsive. Forty minutes later, she was pronounced dead at the scene.

The tragedy was unlike most other workplace accidents that involve humans and machines; this robot was semi-autonomous, able to independently choose its actions and movements according to the rules laid down by its creators. Holbrook’s husband, Bill, has been unable to stop wrestling with the question of who is to blame for his wife’s death. In March 2017, almost two years after the accident, he filed a lawsuit against each of the five companies that co-created the robot. Bill believes that the negligence of those who designed, built, tested and monitored the machine led to the accident and he wants to know what went wrong.

Stories of robots-gone-rogue have obsessed us for almost a century. Human anxiety is baked inside the word ‘robot’ itself. Karel Čapek’s 1921 science fiction play, R.U.R., credited with introducing the word to the English language, depicts a cyborg labour force that rebels against its human masters. The Czech origin word ‘robota’ means ‘forced labour’. It is derived from the word ‘rab’, meaning ‘slave’. When it comes to robots, our slavemaster-esque fear of an uprising is fundamental.

When robots and AIs begin to think and act for themselves – a field of scientific study now known as ‘strong AI’ – a new question looms: how do we teach our robots to behave? Is it a case of writing up a vast list of commands, directions to cover every eventuality, to which the robots can refer, like a soldier checking the rules of engagement in a warzone? Or, if that is an impossibly huge task, what principles do we program into our machines that will allow them to reason for themselves, and reach a decision that favours, rather than jeopardises, humanity? And when it all goes wrong, who is to blame?

In his 1942 short story Runaround (written a decade before Alan Turing penned his famous essay on whether 32

or not it was possible for a computer to think for itself), author Isaac Asimov established the Three Laws of Robotics – principles intended to moderate the behaviour of robots to act in the interest of human beings. Among Asimiov’s laws was the golden rule that a robot may not injure a human being or, through inaction, allow a human being to come to harm. It’s a law that robots have already broken in actuality. In October 2007, a semiautonomous robotic cannon deployed by the South African army killed nine of its brothers-in-arms and wounded 14 others.

The term ‘artificial intelligence’ is only a handful of decades old. Yet in that time it has transformed our world. AI now flies our planes, controls our traffic lights and runs our banks. It diagnoses our illnesses, fills our social media feeds and animates our video games with characters we grow to love. These escalating developments are converging on the creation of robots that are independent from any direct human oversight, and whose potential impact on human wellbeing has been, until now, the stuff of science fiction.

We have entered an era where robots and AI have the capacity to act autonomously – choosing how to behave according to principles, rather than merely carrying out commands. Self-driving cars roam our roads, making tens of thousands of self-directed decisions that affect the safety of other human roadusers. Since 2000, the US military has deployed thousands of autonomous robots equipped with M240 and M249 machine guns, each one able to locate and aim at targets on the battlefield without the need for human involvement. South Korea’s border is currently defended by autonomous gun turrets able to fire on targets while unsupervised by human operators.

Over recent years, the engineers have outpaced the philosophers, who are still grappling with the implications of this major shift. ‘Is the world truly ready for a vehicle that can drive itself?’ asks a television advert for a semi-autonomous Mercedes car, broadcast in early 2017. For Mercedes, at least, our answer to the question doesn’t matter much. ‘Ready or not, the future is here,’ it concludes. Ready or not, indeed.

As AI’s capacity has increased, so too has humanity’s sense of dread. German philosopher Thomas Metzinger has argued that the prospect of increasing the amount of suffering in the world is so morally awful that we should cease building artificially intelligent robots immediately. While some might decry his warnings as scaremongering, it’s obvious that, as

What about three adults?

Yes No

Don Yes

Not

11%

No

40%

Don’t know The use of artificial Intelligence enables autonomous cars to ‘see’ the world, but can we really program them to make life-or-death decisions?

32%

Not prepared to answer 17% Source: Work. survey of 179 HR professionals

33

artificial intelligence

machines gain independence, the potential for greater lecturer at the Georgia Tech College of Computing in disaster increases.

Atlanta and a robo-ethicist who has worked with In March 2016, Missy Cummings, director of the the US Military for decades, is exploring the use of Humans and Autonomy Laboratory at Duke University ‘guilt’ algorithms, based on human models of the in North Carolina, gave testimony to the US senate emotion, as a way to help moderate robot behaviour warning that our progress in the engineering of when things go wrong. autonomous cars had outstripped their computational Machine learning is a crucial tool in this work but, ability to “reason on the road”. Two months later, she of course, the tools that humans create inevitably was proved correct when a 40-year-old driver, Joshua reflect our own biases and blind spots. The data that is Brown, was killed while watching a Harry Potter film fed to AIs to learn from reflects the social, historical when his Tesla Model S struck the side of a truck while and political conditions in which it was created. When driving in autopilot mode along Florida’s Route 27. The AI systems ‘learn’ based on the data they are given, car did not choose to kill its driver; it killed its driver by this, along with many other factors, can lead to biased, failing to deal with an unexpected obstacle. But there inaccurate and unfair outcomes. are scenarios in which autonomous vehicles, when faced Foreseeing these risks, in January 2017 LinkedIn with an unavoidable crash, may soon have to decide founder Reid Hoffman and eBay founder Pierre Omidyar whose life to prioritise. each contributed $10m to a new fund intended to prevent Not everyone shares Metzinger’s sense of doom, but the development of AI applications that could harm today most researchers, engineers and ethicists agree society. The fund, which has a total value of $27m, is being that robots should be able to monitor and regulate their administered by the MIT’s Media Lab and Harvard’s behaviour with regard to the harm their action or Berkman Klein Center for Internet and Society, and inaction may cause human beings. As robots become will sponsor research into how socially responsible more sophisticated and their ability to function in differ- artificial intelligence can be designed to ensure fairness ent contexts and environments when it is used in fields ranging expands, the need for ethical subfrom education to criminal routines grows. Like young justice. MIT Media Lab director “Like young humans, robots humans, robots will increasingly Joi Ito said that one of the most need to learn to parse the world, critical challenges is how do we will increasingly need to in all its capriciousness and make sure that the machines we learn to parse the world, complexity, and to act with ‘train’ don’t perpetuate and in all its complexity” dignity, care and etiquette. amplify the same human biases To help in this goal, many that plague society? academics and engineers are For those who work in employing machine learning to teach robots – and the recruitment, where technology increasingly plays a algoriths that instruct them – to learn how to behave. crucial role, the issue of algorithmic bias is particularly Trying to pre-program an AI with instructions on how pressing, especially at a time when it’s easier than ever to deal with every situation is an impossibly vast for recruiters to find out a great deal of previously private undertaking, according to Gary Marcus, cognitive information on candidates through search engines and scientist at New York University (NYU) and CEO and social media accounts. Many large companies already founder of Geometric Intelligence. “How, for example, use software to autonomously sift through the thousands do you program in a notion like ‘fairness’ or ‘harm’?” he of job applications they receive. “These algorithms will asks. Neither, Marcus points out, does this hard-coding look for certain keywords such as ‘empathy’ or approach account for changing beliefs and attitudes. ‘collaboration’, or search for particular educational “Imagine if the US founders had frozen their values, background and make basic judgements on whether allowing slavery, fewer rights for women and so forth? people should go forward into a shortlist,” says Peter Ultimately, we want a machine able to learn for itself.”

Cheese, chief executive of the CIPD. In Prague, a group of engineers has developed AI-hiring routines have the potential to eliminate GoodAI, a company that describes itself as a ‘school for some of the conscious or subconscious human bias that AIs’. The team there, led by Marek Rosa, views AI as a recruiters might introduce when they, as Cheese says, child, a blank slate onto which basic values can be sift out a candidate with a surname that has a particular inscribed, and that will, in time, be able to apply those ethnic identity. However, software can also replicate principles to adapt to unforeseen scenarios. GoodAI and accentuate those biases according to the AI’s author polices the acquisition of values by providing a digital or owner’s beliefs. “AI and ethics is a hot topic at the mentor, and then slowly ramps up the complexity of moment, but it’s not just limited to questions such as situations in which the AI must make decisions, while what decision a self-driving car should make when faced providing feedback to tweak the behaviour, much like a with an unavoidable crash,” says Cheese. “Somebody parent would with a child. Ron Arkin, meanwhile, a also has to write the rules in AI applications like those 34

HOW DO YOU FEEL ABOUT DRONES WITH GUNS? With advances in technology forcing us to address difficult issues, Work. asked HR professionals how they would answer these ethical dilemmas

Should autonomous robots be equipped with weapons?

Yes

The overwhelming vote for ’no’ is unsurprising, but robots have already been deployed in battlefields. This drone has been built to hold a machine gun

4%

No

88%

Don’t know

7%

Not prepared to answer

1%

Do you believe that artificially intelligent machines are capable of making ethical decisions, either now or in the future?

Yes

32%

No

The employer

60%

The manufacturer of the robot

27%

52%

Don’t know

If a workplace robot kills or injures another employee, who is responsible?

Don’t know

12%

16%

Not prepared to answer

1%

If a medical application could tell you exactly when you were going to die, should it?

… If it could tell you information that would enable you to make lifestyle choices that could prolong your life by a couple of years – should it?

Yes

Yes

24%

No

64%

56%

No

28%

Don’t know

Don’t know

Not prepared to answer

Not prepared to answer

10%

2%

14%

2%

If humans are, say, 50 per cent biased for or against specific groups when making recruitment decisions, is it OK if recruitment algorithms are also 50 per cent biased?

SuperStock; Duke Robotics

Yes

9%

No

81%

Humans are subject to various levels of bias; AI could be a way of overcoming it in recruitment but, as it is people who create the algorithms in the first place, can we really expect them to outperform us?

Don’t know

9%

Not prepared to answer

1%

35

we increasingly use in HR. When it comes to ethical “This is not something that a technical ‘fix’ can questions around inclusion and diversity, the questions address,” says Meredith Whittaker, another of the are the same: who establishes the rules and who is NYU report’s co-authors. “Bias issues require considaccountable for their being upheld?” eration of underlying structural inequality and Our legal frameworks must urgently account for historical discrimination.” these advancements to ensure that companies carry out For Cheese, this is all part of a broader cultural shift due diligence and implement adequate oversight within HR, where considerations around social systems and, essentially, remain responsible for their demography, diversity and inclusion, which “started off behaviour. The MIT has recommended that every as rather peripheral” are becoming ever-more algorithmic system needs to have a person with the mainstream in management thinking. “This inevitably authority to deal with its adverse individual or societal leads to the ethical debate,” he says. “Layer on top of that effects in a timely fashion, and that algorithms should how technology is influencing individuals, what we be developed to enable third parties to probe and review know about each other and the social side of technology, the behaviour of an algorithm. and it’s clear that it’s all accelerating at a huge rate.”

Cheese’s concerns are echoed in a recent report pubWhile search engines and social media accounts lished by NYU, Google and AI Now, a research institute enable recruiters to find out with relative ease whether dedicated to understanding the social implications of an applicant is, for example, an active union member or a artificial intelligence. The study’s authors provide 10 routine party-goer – information that may have a recommendations for companies that use or intend to subliminal or explicit effect on their chances of a job offer use artificially intelligent systems in the workplace. As – developments in AI may soon be able to reveal a far well as arguing that automated decision-support sys- greater amount of information about us, simply from a tems should be subject to “rigorous pre-release trials to photograph. A study from Stanford University, published ensure that they will not amplify biases and errors” and in September, claimed that a computer algorithm could “accountability standards”, the correctly distinguish between report addresses the use of AI in gay and straight men 81 per cent HR and hiring practices. “More of the time, and 74 per cent “AI is increasingly highlighting, for women, from a still shot of research and policy-making is needed on the use of AI systems the faces (human judges, by particularly in HR, things we in workplace management and contrast, accurately identified should have been considering monitoring, including hiring and sexual orientation only 61 per more deeply in the first place” HR,” it states. “Specific attention cent of the time for men and 54 should be given to the potential per cent for women). impact on labour rights and pracThe machine intelligence tices, and should focus especially on the potential for tested in the research was based on a sample of more behavioural manipulation and the unintended rein- than 35,000 facial images that men and women publicly forcement of bias in hiring and promotion.” posted on a US dating website. It identified certain The lack of legislation is already a gross oversight, trends – such as the fact that gay men in the sample according to Kate Crawford, one of the report’s authors typically had narrower jaws, longer noses and larger and co-founder of AI Now. “People are already being foreheads than straight men, and that gay women had affected by these systems, be it while at school, looking larger jaws and smaller foreheads compared to straight for a job, reading news online or interacting with the women – to predict a person’s sexuality. The technology courts,” she says. For example, she points to a team of raises obvious questions about the ethics of facialtechnologists at website ProPublica, which recently detection technology, and the potential for this kind of demonstrated how an algorithm used by courts and law software to be abused for anti-LGBT purposes. enforcement to predict recidivism in criminal defendants Equality legislation may exist to prevent sexuality was measurably biased against African Americans. In a discrimination in the workplace, but without clearly different setting, a study at the University of Pittsburgh defined regulation it is feasible that this kind of Medical Center observed that an AI system used to technology could be incorporated into recruitment triage pneumonia patients was missing a major risk software while providing companies with a degree of factor for severe complications. There are, Crawford plausible deniability. claims, many other high-stakes domains where these Critics, meanwhile, argued that the study was too systems are currently being used, without being tested narrow because it only used photos that people chose to and assessed for bias and inaccuracy. put on dating profiles and failed to test a diverse pool.

The historical lack of workplace diversity at many Ashland Johnson, director of public education and of the companies and institutions that create the AI research for the Human Rights Campaign, said the and algorithms that could steer the future of the work- research was flawed, and urged Stanford to “distance place may perpetuate and amplify biases in future. itself from such junk science”. Other experts, however, 36

artificial intelligence

AFP/Getty Images

The face of the future: Sophia, an artificially intelligent human-like robot, developed by Hong-Kong based Hanson Robotics, attended the AI for Good Global Summit in Geneva this year

back up the study’s claims. “AI can tell you anything about anyone with enough data,” Brian Brackeen, CEO of Kairos, a face recognition company, told the Guardian.

“The question is, as a society, do we want to know?”

Michal Kosinski, co-author of the study and an assistant professor at Stanford, has defended his work vehemently, arguing that a driving force behind the study was to expose potentially dangerous applications of AI – the problem here is not that AI can identify sexuality, but what we choose to do with that information – and to push for privacy safeguards and regulations.

Indeed, the idea that an AI’s creator could foresee every situation in which it may be used or abused in the future is fatuous. We may teach our children to stop, look and listen before crossing the road, but we cannot offer an instruction that allows an AI to deal with every situation that it will encounter. Instead, we instil in it models of behaviour and try to impart guiding principles.

Is this all futuristic scaremongering? The field of strong AI is still nascent. Our streets are not filled with self-reasoning cyborgs and they may never be. But the principles that the scenario raises are keenly relevant today, when robots increasingly fight our wars, evaluate our insurance claims, roam our roads and assist with our

hiring. Early-stage artificial intelligence systems are already changing the nature of employment in multiple sectors. And work must be done with social scientists, economists, labour organisers and others to better understand AI’s implications for work, and ask who benefits and who bears the cost of the rapid changes.

Even if algorithms somehow inexplicably fall away, and no longer have an influence on our world – they have already brought humanity value in causing us to reflect on our own values and biases.

“These kind of questions have come to the fore in recent months because robots seem more detached than humans, and so there’s a sense of urgency that we need to put measures in place or risk the technology overtaking us,” says Cheese. “But the truth is that we as an industry have not been confronting the ethical choices that we have been making as humans anyway. AI is increasingly highlighting, particularly in HR, things we should have been considering more deeply in the first place. It’s forcing us to think more carefully about the biases we already have, as they will be strengthened by the tools we create if they are not properly interrogated.”

For further reading, see page 72 37

PIONEERS OF THE GIG ECONOMY Like many of today’s freelancers, these notable figures valued their independence CAPABILITY BROWN

MARY KINGSLEY

JEROME H LEMELSON

(1716-83)

(1862-1900)

(1923-97)

(1904-86)

If Brown had his way, one contemporary architect complained, “we would not retain three trees in a straight line between Land’s End and Berwick-uponTweed”. No designer has remodelled the English landscape as extensively and expensively as Brown, who struck out on his own as an ‘improver’ in his twenties.

Every estate, he said, had “great capabilities” for improvement. He perfected a brand – the English landscape garden – and earned staggering sums creating gardens that were effectively a paradise for snobs. A chambermaid’s son, Brown became master gardener to George III. He was supremely efficient (he only needed a day to assess an estate and sketch his ideas), charming and, from the 1760s onwards, very fashionable. His best gardens – such as Blenheim – are artistic creations, but they can feel as if untidy nature has been airbrushed out of the view.

Liberated by her parents’ death, a £500 a year legacy and a book contract from Macmillan, Kingsley devoted the last eight years of her life to Africa. She explored uncharted territory in Cameroon, wrote a bestseller, Travels in West Africa (1897), that challenged the gender inequality in British society and, as a lecturer, criticised “stay-at-home statesmen who think the Africans are awful savages”. Her secret meetings with colonial secretary Joseph Chamberlain helped alter the course of Britain’s imperial policies.

Was Lemelson the 20th century’s greatest inventor – or its greatest fraudster? The jury is still out on a career that would make a fascinating Hollywood biopic. His 605 patents included industrial robots, the Sony Walkman’s audio cassette drive and, er, talking thermometers.

Lemelson championed independent inventors by example (he never worked for research institutes or corporations) and as a US government adviser.

Financed by his wife Dolly, an interior decorator, he sold his first licence when he was 41. Embittered by decades of rejection, Lemelson became convinced that corporations were stealing his ideas and sued for patent infringements on an industrial scale, earning $1.5bn in licensing fees from 979 companies. Ironically, Lemelson might have been happier, if significantly poorer, beavering away in a 3M R&D lab than emulating his idol Thomas Edison.

“Everyone wants to be Cary Grant, even I do.” The actor formerly known as Archibald Leach admitted that he had crafted his image in Gatsby-esque fashion, fusing elements of men he admired – Noel Coward, Rex Harrison and Scottish entertainer Jack Buchanan – into his distinctive movie persona. In 1937, at the age of 33, he spurned a new contract with Paramount, insisting on selecting his own roles.

Bucking the Hollywood studio system looked like professional suicide. But Grant chose well – starring in Bringing Up Baby, His Girl Friday and Notorious in his first decade of independence. He was also one of the first actors to launch a production company. His enduring popularity – he retired in 1966, dignity largely intact – is testament to the dexterity with which he managed his career.

38

CARY GRANT

Alamy Stock Photo; PA Images; Getty Images; SuperStock; York Museums Trust; Russische Tanzerin, 1928, Hannah Hoch-Herzog Anton Ulrich-Museum Braunschweig © DACS 2017; BBC Photos

WORKING STYLE

UNA MARSON

WILLIAM SHAKESPEARE

ANDY WARHOL

(1889-1978)

(1905-65)

(1564-1616)

(1928-87)

Trained in applied arts and the author of a manifesto on modern embroidery, artist Höch broke the Dada mould.

She flourished as an outsider, pioneering photomontage, lampooning misogyny and giving Dadaism some of its best lines, such as the title of her 1919 work, Cut with the Kitchen Knife Dada Through the Last Weimar Beer-Belly Cultural Epoch in Germany.

The Nazis banned her ‘degenerate art’ but she refused to be silenced.

She later created such masterpieces as the collage Industrial Landscape (1967), transforming photos of a crowded swimming pool and Swiss resort Lugano to resemble factories and smokestacks.

Poet, playwright, editor, publisher, broadcaster and activist, Marson had a portfolio career before the term existed. She launched Jamaica’s first women’s magazine, co-founded the country’s Save The Children Fund and led – alongside such luminaries as future Kenya president Jomo Kenyatta – the League of Coloured Peoples in London.

In 1941, she became the BBC’s first black female broadcaster, and helped create groundbreaking radio series Caribbean Voices. The brutal racism she faced in 1930s London influenced her poetry and she struggled with depression. But by daring to experiment with form and verse, chronicling the pain of exile and movies that “saw no beauty in black faces”, Marson helped liberate Jamaican literature.

One of the first things Shakespeare did in London was evade taxes. A lodger in Bishopsgate, he was listed as a defaulter in 1597. He was not poor – he acquired New Place, a massive property in Stratford-upon-Avon – and was already successful enough to be mocked by poet Robert Greene as an ‘upstart crow’ (Shakespeare, who had not gone to university, was seen as a parvenu). Aristocratic patrons smoothed his ascent, but he stayed at the top partly through astonishing productivity: between 1590 and his death in 1616, the Bard wrote at least 37 plays, two book-length poems and 154 sonnets. He also acted, directed, invested in two theatres (the Globe and Blackfriars) and shared in the profits and losses of a company of actors with exclusive rights to stage his works.

Henry Chesbrough wrote the book on open innovation, but Warhol lived it. In the 1960s, The Factory, his New York studio, was an open space where people could mingle and produce all kinds of experimental art. Regular visitors included rock band The Velvet Underground and cult writer William S Burroughs. Warhol didn’t just create art out of brands – most famously Campbell’s Soup – he anticipated the gig economy by making himself a brand. Painting, sculpting, making shocking movies that foresaw the manufacture of stars on reality TV shows, launching Interview magazine and staging multi-media events, Warhol ensured his brand would last longer than 15 minutes. In 2014, it was estimated that his works accounted for one-sixth of the contemporary art market.

Words: Paul Simpson

HANNAH HÖCH

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FRIENDS

COSMOPOLITAN WITH A TWIST Mistrust in authority is rising and that, says management thinker Gianpiero Petriglieri, means leaders need to give work value and meaning Interview Portraits

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Georgi Gyton Simon Fernandez

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A SELF-CONFESSED ‘cosmopolitan’, Gianpiero Petriglieri is the epitome of an educated and welltravelled individual (albeit one who believes his command of English is down to the lyrics of Bruce Springsteen). That he is is thanks to his parents, whose childhood experiences in southern Italy during the Second World War gave them first-hand knowledge of the devastation of nationalism. Neither spoke a foreign language and both spent their entire adult lives in the same place, but they had different plans for their son.

“To them there were two things that mattered: one was to get an education and the other to travel and learn another language,” he says. “The idea was that if people from different countries worked together and learnt about each other, they were less likely to bomb each other.”

That nationalism – fuelled by discontent with globalisation and resentment of immigrants and intellectuals – has resurged in Europe and the US is a major disappointment, but neither does Petriglieri recognise today’s cosmopolitanism and the “tainted luxury good” it has become. “People now talk about cosmopolitanism in such a different way to how I understand it. To me it was never about globalisation. It was never to abandon any sense of roots and belonging,” he says. “It has transformed from an attitude of being curious about others and compassionate towards them, into an exclusive identity.”

Currently associate professor of organisational behaviour at Insead, Petriglieri directs the business school’s flagship executive education programme for emerging leaders. He is also a conference speaker and, for the first time, this year joined the ranks of Thinkers50’s most influential management thinkers (at number 47).

His award-winning research and teaching focuses on what it means and takes to be a leader. While this may be relatively simple to explain, it is much more difficult to practise day in and day out, he says – “what makes it hard is that it requires sacrifice”.

Take some of the leaders we most admire, like Nelson Mandela or Steve Jobs. They were people who were not just passionate, but devoted to the point of obsession to one single story – one that people felt was a story of possibility, says Petriglieri. “In many ways they made the ultimate sacrifice. They sacrificed themselves; that’s what made them authentic.”

Here he talks to Work. about how we can enable leaders to be better teachers, what the trend for nomadic professionalism implies about wider society and why there are so many bad leaders.

We are in the so-called post-truth era. How does this play out inside organisations?

Mistrust is contagious. Even if you are the most well-meaning person, if you show up as the new manager in a team that has had a difficult experience previously, you often have to face mistrust that you have not caused. If you are not willing to accept that and work with it, then it’s going to be hard for you.

The worst thing you can do as a leader is resent people for scrutinising you.

In survey after survey, there are two things that we hear are lacking: one is trust in leadership and the other is a sense of meaning and engagement. For me these are two sides of the same coin. If leadership is not trustworthy, people may feel it is sensible not to engage too much in case they get hurt and, if they feel they might be betrayed at any moment, they will keep an eye out for other opportunities.

The primary outcome of lack of trust in leaders is the epidemic of meaninglessness. People need to feel they are being led and that they have got some kind of connection to a story about the future. I think we all look for the same thing – we all want to know that what we are doing is personally meaningful and that it creates value for others. Good leaders help us see that our work does both.

There is so much money invested in leadership development, so why are there so many bad leaders?

Before the US election, I wrote a piece about Donald Trump. In many ways he represents an extreme caricature of what we have called leadership all along: someone who succeeds, gets things done – no matter what it takes to do it – and stays in the public eye. Very often that’s what we teach prospective leaders to do, and we wonder why so many of them are narcissistic.

Leadership often goes wrong because it asks the question ‘what do I want from people?’ Rather than asking ‘what do people need from me?’ The majority of people do not work in the kind of organisations for which leadership development was designed. Most practices and theories were created at a time when businesses, like the army or large multinational corporations, were very stable and hierarchical, and there was work for life.

Leadership development was designed to make you stand out in an organisation that was homogenous and had a shared culture. Today, organisations are still vertical, but they are a lot more fragmented. If you just give people the skills to stand out, without the connections they need to be trusted, then it will not be effective.

Some companies are using DNA testing to ascertain the leadership potential of staff. Is it such a bad idea?

In history, every time we have gone down the route of looking at genetics to try and prove that some people deserve more status than others, I would argue it has usually not been the brightest of times. I think you have to be incredibly careful that you are not using science as a way to legitimise your stereotypes.

However, this kind of testing is really an extreme version of what all companies do with leadership 41

development. They create a set of competencies and then they say the leaders are the people that most clearly embody them. Suddenly you are not actually looking for leaders, you are looking for people who act as they are expected to by those who decide what leaders should look, talk and act like.

I don’t deny there are personality factors that can impact on whether you might be a good leader. There is an element of intellect, of courage and of skill, but there is also, inevitably, a fit with the situation. A leader can be brilliant in one organisation and then move somewhere else and fail to get the same success. Why? Well we know that DNA doesn’t change, so that is not a factor. And while this kind of testing might claim to know you better than you do, it can’t imagine you to be better than you are.

Much has been written about the need to humanise leadership. How does your thinking on it differ?

Humanising leadership has been talked about in the sense of knowing yourself as a complex being, and in finding your passion, purpose and values. But it is also about the connections you have with other people in a certain context. At the end of the day, who cares if you are self-aware if you lose that awareness once there is pressure or temptation?

The more pressure we are under, the more we rely on impulse, instinct and habit. And leadership is essentially a multiplier of pressure.

Psychologist Dan Gilbert says that we are perhaps the only primates to have the ability to imagine the future and can therefore forgo immediate reward for future benefit. That’s what consciousness does, but what makes us human is also that we have moved from being a biological being to a cultural being.

We have become members of a society.

One thing that leadership development needs to give you is the ability to use your consciousness when it would be much easier to rely on habit.

The other thing you should do is to sustain your connections even when you feel you could actually do the job on your own.

How can leaders better understand the power they wield and use it to greater effect?

One of the most universally acknowledged findings in the social sciences is, the more power you have, the harder it is to remain connected to common sense. Power tends to dehumanise – that we have

Over matter

“The workplace holds our body much longer in our lifetime than our mothers or our lovers ever will. The question is, what kind of hold is that: a choke, an embrace, a loose handshake or a distant wave?”

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always known. How to use power responsibly should be at the core of the good education of leaders.

In order for leaders to consider the broader context or consequence of using their power, we need to give them definitions, theories and role models, because ultimately we become leaders in the same way that we become citizens, lovers, parents or teachers – through role models.

If you look at the great religions from a social science perspective, they are extremely successful and enduring social movements. Their leaders have been able to convince millions of people that being kind to your fellow being is actually good for you and for everyone else.

The humanising of leadership can be done no matter what the size of the business. But it cannot only be done through personal relationships. You need to devise a culture and incentives in which decency, openness and kindness are the norm.

How has our relationship with work changed?

Today there are companies that are more powerful than nation states, and that actually determine the fate of those states. It could be said that this supports the argument that they are in a better position to address the needs of people than their democratically elected government.

There are a lot of people who feel that if they want to live a decent life economically, be a good citizen and a member of the community, and to feel that their life has a sense of meaning, then their best shot is to do it at work. In many ways, business occupies the place that the church or army used to. For thousands of years, people have relied upon religion for their spiritual needs, politics for their social needs and business for their economic aspirations.

Today we want work to provide us with our economic wellbeing, to allow us to be valuable contributors to society and to give us a sense that we are leaving something worthwhile behind. But part of the reason we are sometimes disappointed with work is that we expect so much from it, and it can’t always deliver.

What does the trend for nomadic professionalism tell us about how work is changing?

I use the term nomadic professionalism to describe what I think is a more common and widespread relationship with work, which is that

“The greatest red herring in leadership is style. People will forgive you murder. They will forgive any kind of style. What they will not forgive is inconsistency and lack of care for their concerns and aspirations.”

“We have always considered people who are nomadic as morally questionable. Today we say that unless you are willing to be mobile, you will never get to the top. That is completely new.”

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As employees find a connection to their work and become more mobile, they are less likely to want to be tied to organisations and workplaces, says Gianpiero Petriglieri

employees have a stronger and stronger connection to their work – it defines them and is a central part of who they are – and a looser and looser affiliation to their organisation. This relationship to work has always been the case for traditional professions, such as doctors, accountants and photographers, but for more of us work is becoming something that we take with us. We are psychologically relating to work more and more in the way that a painter or poet does. We use the term workplace, but we are moving towards the idea of workspace.

The organisation has a role in developing this mindset. We tell people that they need to find a sense of meaning and a connection to their work. The ideal of the nomadic professional is to have mobility and meaning. If I have those things, I am protected from the uncertainty in the current labour market because I can take my work with me wherever I go. But organisations are relatively conservative structures, and so the idea that you should organise for mobility is almost counter-intuitive.

“Performance has two meanings: achieving a stated goal and embodying shared values. The first is the way an engineer understands performance, the second the way an artist does. You need to ace both kinds or you are not a leader at all.”

How can we help leaders to be better teachers?

A question that often comes up in leadership development is ‘how can we be sure that people learn what we want them to?’ Many executives’ anxiety is that they want to empower, but at the same time control the learning. Learning is really like love – if you try to control it too much it dies. The issue is not getting control right, it’s getting freedom right.

Fifty per cent of learning is when you give something you have – skills – to other people. The other 50 per cent is giving people enough space to learn whatever it is that they need and want to.

We tend to be more preoccupied with the first half than the second. If your child came home from school and told you that they were never allowed to ask a question or develop their own thinking, you would be horrified. So why is it that when organisations design learning, all they think about is what knowledge they have and how it can be transmitted?

For further reading, see page 72

“Most people don’t like unpredictability and change.

Organisations where people feel a sense of opportunity in the face of uncertainty are giving people the most valuable asset that you can have in the contemporary economy.”

“There is a lot of research to suggest that it is actually good to lose a certain amount of talent, if people leave with the sense of having got something of value. I think it’s very hard for organisations to make that leap in thinking.”

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“ VLADIMIR PUTIN, THE MOST BORN KIND-HEARTED TO MAN RUNIN THE WORLD ” Ecerchici omnimai orepta niscipsum aut alit, ut hit faccuptio et unt imosam aut quam, ium, officiet enis ium late commolo rectet atur, seditem fugiae

Autocratic, democratic, kleptocratic – Russia is all of these and more. Paul Simpson tries to separate the fake news from the real issues

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‘The Most Kind-Hearted Man in the World’ was the title of an exhibition to celebrate Putin’s 60th birthday in 2012.

Protestors used Warhol’s Pop Art style to recast him as a ‘gay clown’

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remains available to those notables who can use it to prevent that kind of change from occurring.”

‘Notables’ is how Bullough, who spent a year in St Petersburg in 1999 and has returned to Russia many times since, describes the country’s ruling elite. In his eyes, the term covers “tens to hundreds of thousands of people” – from Putin himself to billionaire oligarchs, right down to the regional managers of Gazprom subsidiaries – in whose interests, for the most part, the country is run.

From the outside, this elite seems united in pursuit of a common purpose. In reality, different members have different interests and no one is entirely secure. Vladimir Gusinsky, Roman Abramovich, Boris Berezovsky and Mikhail Khodorkovsky, four of Russia’s richest oligarchs when Putin came to power in 1999, have left the country.

Berezovsky is dead, suspected to have committed suicide in 2013, after losing a ruinously expensive court case against Abramovich. Khodorkovsky now lives in Switzerland and, after spending 10 years in a Russian jail for tax ‘offences’ and having his business, Yukos, taken off him, is one of Putin’s fiercest opponents.

The less-publicised case of billionaire Vladimir Yevtushenkov is even more revealing. The owner of a small but prosperous oil company called Bashneft, he had worked within Putin’s guidelines, shunning politics – but that didn’t stop him from being placed under

In 2010, President Dmitry Medvedev drove California governor Arnold Schwarzenegger on a tour of Skolkovo, near Moscow, created as the Russian equivalent of Silicon Valley. The project has never been top of Putin’s agenda

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I

t looked like being one of the most embarrassing afternoons of Aleksey Veller’s life. Earlier this winter, the 51-year-old mayor of Murmansk, Russia’s most important Arctic port, was presiding over a civic ceremony to unearth a time capsule, buried to mark the 50th anniversary of the Russian Revolution in 1967.

The boulder that marked the spot was pulled away to reveal a concrete slab. Beneath it was another slab and beneath that, it turned out, was a square cavity filled in with cement. “The capsule is missing,” said one of the spectators. “Somebody must have got there first.”

Luckily, a soldier armed with a metal detector was able to confirm that there was something that looked like a metal cylinder buried at the bottom of the cavity.

But it took so long to chip away at the cement that, by the time the cylinder was finally unearthed, most of the spectators had gone home.

The suspicion that the capsule had been stolen was understandable. Vladimir Putin’s Russia is, many experts suggest, one of the world’s most effective kleptocracies.

As Oliver Bullough, author of The Last Man in Russia, says: “The figures show that 52 per cent of Russia’s household wealth is held offshore. That represents a lot of money that isn’t available to any government that comes after Putin and wants to create a more democratic, progressive Russia. At the same time, that money

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house arrest in September 2014 on charges of money if you were a young Russian, with the talent to make laundering. In his book All The Kremlin’s Men: Inside your name in Silicon Valley, you’d head to the real SiliThe Court Of Vladimir Putin, Mikhail Zygar says Yev- con Valley as soon as you could. Indeed, many already tushenkov’s ideas about floating his company on the have.” The most successful of these, Muscovite Sergey London Stock Exchange were perceived by Putin – or, Brin, who emigrated to the US with his family in 1979, more accurately, his de facto deputy Igor Sechin – as a co-founded Google. threat to Russia’s energy security.

It’s not entirely clear whether or not Putin wants The real motivation for the arrest (and the state’s Russia to have its own Silicon Valley. Neither he nor any subsequent confiscation of Bashneft) Zygar suggests, previous leader (with the possible exception of Mikhail was that its profits saved the state-oil company, Ros- Gorbachev) have worried about encouraging the startneft, of which Sechin was – and still is – executive ups and SMEs that the west has long regarded as the chairman. Yevtushenkov’s arrest was a greater shock to motor of economic growth.

Russian business than the annexation of Crimea and It is possible that Russia suffers from its own version war in Ukraine. As one billionaire put it: “It’s far worse of a phenomenon The Economist calls the ‘oil curse’ – than sanctions. This means there are no rules any more the idea that easy access to oil wealth distorts a – anything goes.” It was proof, some tycoons feared, country’s economy and society. As Bullough says: “If that they didn’t own their assets, but were effectively you can make a fortune simply getting oil, gas, nickel managing them, until the state – or Putin – decided it and diamonds out of the ground, why would you waste was useful or convenient to claim them. your time doing something else?”

Such machinations are often misunderstood in the Sustainability is certainly not high on the governwest. Elisabeth Schimpfossl, author of Rich Russians: ment’s agenda. Asked recently about Moscow’s renewable From Oligarchs To Bourgeoisie (to be published by energy strategy, a senior official said frankly: “Interest in Oxford University Press next year), says: “The private renewables tends to be dictated by local energy prices. sector is absolutely liberalised.

Our energy is cheap, so it has not The rule of law is a different been a priority.” issue – but you could say the The regime has proved rea“What Putin has done same about China. If you take a sonably adept in manipulating long-term perspective, the pridigital technology for its own is shifted assets from vatisations in the 1990s were ends, yet Schimpfossl says one part of the elite extremely speedy and continued the western media’s image of to his closest allies” with even more force in the a super-efficient Smersh-style 2000s, especially in the energy organisation carrying out Putin’s sector. The west’s perception is every whim is “ridiculously exagskewed because of the Yukos affair, but that case was gerated”, suggesting that the conspiracy theories atypical. The idea that Putin has renationalised large swirling around Russia’s role in Donald Trump’s election sectors of Russian industry is misleading; what he has win and the Brexit referendum “massively misjudge and actually done is shifted assets from one part of the elite over-estimate their capabilities”. to his closest allies.”

She agrees that some of the stories have substance But she does concede that the drive to modernise but is disturbed by a mindset that blames everything on the economy that characterised Putin’s first term in Russian cyberwarriors. Last month, a Twitter user office, and that of Dmitry Medvedev, has abated. Med- with the name ‘Smoo’, ‘outed’ as a Russian troll, turned vedev’s economic regeneration plan – which included out to be a bored security guard in Glasgow, posting an audacious, expensive attempt to create a Russian under a childhood nickname.

Silicon Valley by launching a technological park at There are, as Bullough says, good reasons for thinkSkolkovo, near Moscow – looked unrealistic even before ing that Putin isn’t that interested in digital technology. the global recession of 2008 slashed the oil revenues “What he is really focused on is big infrastructure proneeded to finance such ventures. Lingering hopes of a jects – like the Sochi Winter Olympics – because that’s return to reform were dashed by Putin’s fear of ‘colour where the notables can make big profits.” The bill for revolutions’ – as the Kremlin described the unrest in the 2014 Games came to $51bn, $39bn over its initial Ukraine and Georgia – and the sanctions that followed budget and $7bn more than 2008 Beijing – hitherto the war in Ukraine. At the height of this official paranoia, most expensive spectacle in Olympic history. Was there anyone wearing an orange shirt (the colour of Ukraine’s corruption? Undoubtedly. Did the region – where Putin revolution) risked being attacked by Nashi, Russia’s has a large Italianate palace – have its infrastructure nationalist street gangs. transformed? Absolutely. Was it worthwhile? That The vision of a new high-tech Russia was always, depends on what you were trying to achieve.

Bullough says, going to be difficult to realise. “The What Putin wanted from Sochi – and is looking for country does have a strong technological tradition but from next summer’s World Cup – is an image of a 47

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powerful, globally respected, successful Russia he can Putin’s assertive foreign policy, an old-school socialist project, through the power of state-controlled televi- may find solace in one of his public rebukes to – and sion, to the people. In that respect, Sochi was, for the occasional disputes with – the oligarchs. government, worth every rouble.

The effect is all the more persuasive because inconWhen opposition politician Boris Nemtsov, who venient truths – such as the fact that his personal was murdered in Red Square in 2015, visited Putin’s wealth has been reliably estimated as around $200bn Kremlin office in 2000, soon after the presidential elec- – will seldom even make it on to TV. Broadcasters and tion, they watched the 3pm news together. Looking journalists have learned that occasionally failure to around the office, Nemtsov was curious to see what had censor themselves can end careers – and lives. changed since Boris Yeltsin’s presidency. He recalled Alexei Navalny, the last man in public who staunchly later: “Nothing seemed to have changed, apart from opposes Putin, turned to the internet to expose the one thing. The only object that had been on Yeltsin’s luxurious lifestyles of the country’s rich and infamous. otherwise empty desk was his pen – the pen he had His message has resonated across Russia partly given Putin when he had signed his own resignation. because, as Schimpfossl says, “he’s not a metropolitan Putin’s desk was also empty, but the pen was gone. liberal Muscovite; although he opposes Putin he does Instead, Putin has a TV remote control on his desk.” so as a Russian nationalist”.

At the end of every day, according to the Financial In a country where incomes fell by 10 per cent in 2016 Times’ former Moscow correspondent, Arkady Ostro- as oil prices plummeted, his drone footage of ministers’ vsky, Putin watched how every TV channel covered palatial residences, insistence that the wife of deputy him (Donald Trump is said to do the same). The only prime minister Igor Shuvalov was flying her corgis ism that Russia’s president can be definitively said to around Europe on a private jet, and a YouTube video believe in is Putinism. He has made use of various claiming that Medvedev controls an empire of residences, ideologies while in office – empowering gangs of white vineyards and yachts, have struck a chord. Indeed, their nationalists and flirting with popularity – his Medvedev video Eurasianism, a belief that Russia has attracted 20 million views – is destined to lead in Europe and may help account for the Russian “The ambiguity of Putin’s Asia in opposition to the ‘Atlanparliament’s draconian new laws ticist’ nations led by the US – but on internet privacy. remarks makes him a mirror the longer he stays in power, the The problem for Navalny is in which people see what more power seems to be an end that a conviction for embezzlethey want to see” in itself. And television has ment, which he says was become the most important politically motivated, prevents mechanism for maintaining that him from standing in the presipower. In 2014, for example, the Ukrainian conflict was dential election next spring. So far, it looks as if the only repackaged on prime-time Russian TV in a series of opponents to Putin will be those encouraged, openly or violent, suspenseful 60-minute news specials – many implicitly, to campaign by the regime purely to give the of which attracted more viewers than soap operas and election a veneer of respectability. drama series.

It’s a clichéd image but it may be helpful to think of The cumulative hallucinogenic power of such Putin as a series of Russian dolls. The biggest, the one control – a feature of the Soviet regime in its heyday – he presents to the west and to his own people, is that of may explain why, to mark the leader’s 60th birthday in Putin, the master strategist, a leader who is playing 2012, artist Alexei Sergiyenko staged an exhibition of chess while his rivals play draughts. Yet, as Bullough paintings in Moscow entitled ‘Vladimir Putin: The asks, how true is this perception?

Most Kind-Hearted Man in the World’. Although the “Putin is really a master of short-term tactical victitle provoked incredulous laughter in the west, tories that, in the long term, prove to be strategic paintings of Putin stroking a tiger cub or bottle-feeding defeats. Take Ukraine. He has annexed Crimea but a calf resembled the children’s picture books used to Russia already had the important bit – the naval port of promote the cult of Lenin in Soviet times.

Sevastopol. The rest of Crimea is full of pensioners and As a manager, Putin is more of a monitor who scans holidaymakers and has no geographical connection to the horizon for threats and issues than a micro-man- the rest of Russia. To achieve that goal, he has incurred ager. He does not, as Joseph Stalin liked to, waste his sanctions and alienated a country, Ukraine, which had time drafting memos about moving machinery from previously – even when it elected leaders who looked to one plant to another. But the one thing he does micro- the west – been very friendly towards Russia.” manage is his image. As Bullough says: “The way he Indeed, that hardline policy was, in part, a reaction presents himself, the ambiguity of his remarks, makes to the strategic failure of his attempts to partner with him a mirror in which people see what they want to the west – and the US in particular. Schimpfossl says: see.” So while a white nationalist can be cheered by “It’s easy to forget that, in 2005, Putin was talking ª 48

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The last man standing in opposition to Putin, Alexei Navalny, had a green alcohol solution thrown at him before a press conference this spring. His fearless exposure of the elite’s luxurious lifestyle has won public support

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Members of female punk band and protest group Pussy Riot: Nadezhda Tolokonnikova (left), Maria Alyokhina (centre) and Yekaterina Samutsevich (right) inside a glass cage during their trial for hooliganism

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As Russia’s economy shrank in 2016, the country’s metal sheds became centres of economic activity. In this garage cooperative near Moscow, locals change tyres, repair furniture and smoke fish to earn extra money

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Jonas Bendiksen/Magnum Photos

Vissarion – whose real name is Sergey Anatolyevitch Torop – believes he is the reincarnation of Jesus, Thousands of Russians belong to the 56-year-old mystic’s Church of the Last Testament

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about Russia joining NATO. He was also the first world standards. The country was given a course of shock leader to offer George W Bush aid after 9/11.” therapy in market economics but the policy-makers Such hopes were dashed by western leaders’ failure weren’t the ones getting the shock treatment. Ordinary to understand his intentions, and his failure to underRussians paid the price: in 1990, the UN estimated that stand their motivations. Finding indifference where he 100 million of them lived in poverty. It is also easy to sought respect, Putin changed tack and set Russia on a underestimate the appeal of stability in a ‘managed different course. democracy’, as some of Putin’s aides call it, after a cenBullough isn’t even convinced by the tury of revolution, terror and war. theory that annexing Crimea has buoyed Clichés about Russians’ innate Putin’s popularity. “To say that Putin authoritarianism are, Bullough says, has 85 per cent approval in the polls isn’t misguided. “It is easy for us in the west the same as saying Theresa May has 85 to forget how important institutions per cent approval.” The country’s oldest and ideas such as the rule of law are to WHO SAID IT? polling organisation, the Russian Public our democracy. We have had them for Was it Stalin, Putin or Trump?

Opinion Research Center, is owned by so long, we almost take them for 1. the government and reports to the Mingranted. That isn’t the case in Russia.

“F**k the Pope – how many istry of Labour and Social Affairs.

We also tend to underestimate the role divisions does he have?”

Whether Putin’s ratings are inflated or we have played in the way Russia has 2. not, they have to be taken, Bullough sugevolved. Much of the money – and we’re “When somebody challenges you, gests, in context: “The number of talking about billions of dollars – that fight back. Be brutal, be tough” Russians attending Navalny’s events has been stolen or laundered from 3. across the country suggests that there’s Russia has found its way here to “I am not a woman so something in the air.”

London, to Zurich and to New York.

I don’t have bad days” The Russian doll analogy is equally The western media might focus on that 4. revealing when applied to the country’s rather than yet another photograph of “Why can’t I use superpower image. Russia is the largest Putin bare-chested on horseback.” nuclear weapons?” country in the world, the second greatIn Russia’s House of Cards, Putin 5. est military power and, by reputation, seems to hold all the aces. Bullough can “Everybody has the right to be stupid – but some people the most sophisticated exponent of find few reasons to be optimistic about abuse the privilege” cyberwarfare. Behind this redoubtable the future of a country he loves. Yet 6. front is a country that ranks last in Schimpfossl says we should remember Europe in terms of productivity (its “It’s better to be hanged for loyalty, that the only predictable feature of than rewarded for betrayal” workers generate even fewer dollars Russian history is its unpredictability: per hour than their counterparts in “If the oil price doesn’t recover and the 1.Stalin, quoted in Hunter S Thompson’s crisis-stricken Greece) and first in economy goes further downhill, all The Great Shark Hunt. He is said to have been responding to French leader Pierre Europe when it comes to rates of drugkinds of things could happen. More Laval’s plea to placate Pope Pius XI. resistant tuberculosis. authoritarianism is probably the most 2. Trump, in a tweet posted on his Open up that doll and you find, as likely. Such a regime could be based on account on 8 April 2015, which garnered 39 likes and 52 retweets.

Schimpfossl says, a Russia where bilthe siloviki (politicians from the secu3. Putin said this in a filmed lions of roubles are being invested in rity services) and military elements interview with Oliver Stone. technology for schools, poverty rates among the current elite. Navalny-type 4. Trump asked a foreign policy expert this question three times during a that, although high by international populism might stand a chance – he briefing on the campaign trail, according standards, are at historic lows and an enjoys some proper support throughout to US radio host Joe Scarborough.

5. Stalin, recorded in The Quotable energy infrastructure that supplies Russia. A more liberal regime, domiA**hole by Eric Grzymkowski. Ironically, power to remote villages in Siberia, nated by reformers with Khodorkovsky the remark is also attributed to Leon Trotsky, who was assassinated on which, as recently as the 1990s, only as a major player, seems unlikely, even Stalin’s orders in 1940. had electricity for an hour a day. though liberal economic reformers 6. Putin said this in 1996, when he There are those who argue that have been quite strong in the governrefused a job with the new St Petersburg city council team after his boss Sobchak Russians, after four centuries of ment for a while now.” had failed to be re-elected as mayor.

Romanov tsars and nearly 75 years of As powerful as Putin might seem Soviet rule, are hard-wired to support authoritariannow, he represents, she says, a “compromise between ism. Schimpfossl says: “This isn’t only a view you hear members of the elite. Once that changes, the game is in the west, it’s said in Russia too, although, as an arguopen – and unlikely to be very pleasant.” As Russian hisment, it seems borderline racist and is disputed by torian Yegor Gaidar once wrote, “Big changes happen many historians.” It is hard for people in the west to later than we think but sooner than we expect.” understand how disastrously perestroika – and YeltFor further reading, see page 72 sin’s laissez-faire economic policy – affected living 55

HOW MANY CONSULTANTS DOES IT TAKE TO CHANGE A LIGHT BULB?

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IT DEPENDS...

HOW BIG IS YOUR BUDGET? Every big-name British business is almost certainly using them but, as Jeremy Hazlehurst reports, the jury is still out on the value of management consultants

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ames O McKinsey was something of a genius.

So which is it? Are management consultants savThe founder of the management consulting iours, devils or a bit of both? The answer probably firm that bears his name is said to have once depends on whether or not you’ve been on the receiving diagnosed the problem with a business just by end of consultant-led ‘downsizing’ or ‘restructuring’. looking at its letterhead. The client, a Chicago- But perhaps the more interesting question is why are based air-conditioning concern, boasted that it had they so ubiquitous? How come they have infiltrated operations “coast to coast, from Canada to Mexico”. every nook and cranny of business and government?

The trouble, suggested McKinsey, was that the company To understand its spread, you need to look at the was trying to cover too much ground, and its salesmen’s history of consultancy. The first consulting firms, as we travel expenses must be crippling it. It turned out he understand them, called themselves ‘management was right. engineers’, and combined Taylorite time management Apocryphal? Perhaps. But the legend plays into the with careful accounting. Arthur D Little (famous for idea that consultants are adepts of a sort of business literally making a silk purse from a sow’s ear by spinning voodoo. Likened to marines, doctors and even Jesuits, gelatine into artificial silk fibres) started in 1896. The to their fans consultants are hit-squads of brilliant firm that would become Booz Allen Hamilton dates young people who, with a whiteboard full of the latest back to 1914, while McKinsey has been around since the jargon and a few spreadsheets, can turbo-charge a mid-1920s. Their growth was catalysed by the so-called company. Since the birth of the industry in the early second industrial revolution in the early years of the 20th century, thousands of big businesses and dozens of 20th century. A US merger boom condensed 1,800 governments have paid handsomely for the management companies into just 157 sprawling, decentralised consultancy pixie-dust. They helped set up NASA, fine- conglomerates in which managers took control of tuned the way the British governed Hong Kong and products and regions. This new managerial class had to re-modelled countless corporate giants. be trained, and consultants were called in to do it.

They are more popular than During the depression, when ever. Research by IBISWorld cost-cutting and M&A were shows that four million people rampant, consultants flourished, are employed as consultants helped by the 1933 Glassworldwide, while global revenue Steagall Act, which compelled from consulting was $603bn in banks to seek outside valuations 2016 and grew 4.5 per cent a year before they advised on M&As or Marvin Bower (far left), pictured with McKinsey between 2012 and 2017. About loaned money. In 1930, there partners in 1944, believed in inspiring trust 80 per cent of that revenue total, were 100 consulting firms in the according to the Management US, and by 1940 the number had Consultancies Association (MCA), is earned by the Big reached 400, ballooning to 1,000 by 1950.

Three – McKinsey, Bain & Company and the Boston After the war, the consultants shipped their Consulting Group (BCG) – and the big four accounting American management techniques and organisational firms: PwC, Deloitte, KPMG and EY. structures to Europe. In 1957, Booz Allen Hamilton and The MCA, which represents the profession in the Arthur D Little opened Zurich offices, and McKinsey UK, says every household-name firm in the country is set up in London in 1959. Soon they were working with almost certainly using consultants right now. Clearly, the cream of British business, including Shell, ICI, Tate they are doing something right. But consultants have & Lyle and Dunlop. As early as 1962, The Sunday Times another, less-flattering image: as snake-oil-peddling jokingly coined the verb “to McKinsey: to shake up, shysters, con-men and money-hungry mercenaries. reorganise, declare redundant, abolish committee Hired hands whose only purpose is to justify firing rule”. Today, consultants are firmly ensconced in every people, and whose aim is to bamboozle managers with corner of the world. buzzwords and get paid millions for it. There’s a reason To understand the consulting ethos, you need look there are several unflattering jokes about them. no further than McKinsey. More than any other it Businesses such as AT&T, GM and Enron were defines the profession. It was in the 1930s, when its pole-axed by consultants. Jamie Dimon, CEO and founder was replaced by Marvin Bower, that McKinsey chairman of JPMorgan Chase, has called them “a started to become the quintessential consulting firm. disease for corporations”, and they’ve been parodied An instinctive cost-cutter, who it’s said refused to buy on our TV screens. In US show House of Lies, based on his children toys because they were “unnecessary”, the book How Management Consultants Steal Your James McKinsey was brilliant at making firms leaner Watch and Then Tell You the Time, by former McKinsey and more competitive. But for Bower, consultancy was man Martin Kihn, the cynical antihero points out that about inspiring trust. consulting is “like dissing a really pretty girl so that “The successful consultant has a personality that she’ll want you more”. causes most people to like him,” he wrote. He liked to 58

management consultants

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Thanks to the Boston Consulting Group’s revolutionary ‘experience curve’, Black & Decker sales skyrocketed 12-fold in the 1970s

hire tall, likeable, “clubbable” men, insisted on sober dress – dark suits and fedoras – and banned short socks so no “raw flesh” would be displayed. One partner described the McKinsey aesthetic as “well-to-do mortician”, and at one point employees published a spoof colouring book in which everything was to be black and grey. Superficial, perhaps, but it is also important. “If you have revolutionary ideas, they are much more likely to be listened to if you do not have revolutionary dress,” Bower explained.

It was Bower who also changed the description of what McKinsey does from ‘management engineering’ to the more mysterious ‘management consulting’. The whole ethos was that of “a secular priesthood”, wrote Duff McDonald in his book, The Firm: The Inside Story of McKinsey. He added that Bower’s vision, which still animates the firm today, was that “the consultant would comport himself as a lawyer, with discretion and integrity; he would bring scientific, fact-based rigour and precision to the task, like an engineer or accountant.

Like a doctor he would dispense advice to unhealthy companies on how to get better and to healthy companies on how to stay that way. And, like a priest, he would serve his clients.”

But why do firms hire these dourly dressed highpriests of capitalism? Isn’t hiring someone to tell you how to run your business an admission that you are not up to the job? Not necessarily. Bringing in the big guns, says Åsa Björnberg, who runs her own consultancy, Chiron, can actually be seen as a sign of strength – admitting your ignorance can show you are dealing with the fast-changing, volatile modern world. “I see a parallel with the coaching world. People used to think that if you got a coach it was a sign of weakness, but now people think it is a badge of honour. In some circles it is the same with consulting.”

Ostensibly, consultants are meant to solve problems, and they can be spectacularly good at that, not least because working for different companies gives them a degree of insider knowledge that’s hard to rival (one of the reasons that Apple and Google, which have a lot of intellectual property, tend to eschew them). When the BCG applied its new-fangled ‘experience curve’ to Black & Decker in the 1970s, sales increased 12-fold. While working for Heinz, McKinsey helped invent the modern barcode, and hugely improved the firm’s efficiency. And, calculates the MCA, management consultants on average £ make back seven times what they cost.

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But they have other, less savoury, uses too, notably recruit Baker Scholars, who make up the top 5 per cent cost-cutting. Faced with an expected £900m NHS of each MBA cohort. In 1950, just 20 per cent of deficit, 44 NHS trusts spent more than £17m on McKinsey graduates had MBAs, a figure that had consultants to create “sustainability and transformation increased to 80 per cent by 1959. By the mid-60s, 40 per plans”. In south-west London alone, a 2017 freedom of cent were Harvard alumni. information request by the Press Association revealed, In fact, the road from Harvard to McKinsey is so consultants were paid £4m, including almost half a well-trodden that some talk of ‘McHarvard’ and, with million to PwC for “specialist commissioning work”. around a quarter of top business school MBAs going And, in an irony-defying move, the health service in into consulting, a job in the industry so logically follows north-central London paid Deloitte a cool £267,000 for the MBA that it is often called the MBB (the name colhelp with financial planning. It is easy to laugh. Or to loquially given to the ‘Big Three’ consulting firms). get angry – a Unite union representative responded to These days, however, engineers and, increasingly, comthe report by saying that “what the public wants is puter scientists from the top universities are also more doctors, nurses and paramedics, not management hoovered up by consultancies. “Appreciation of techwhizz-kids brandishing flip-charts and PowerPoint nology, big data, analytics and even robotics is becoming presentations” – but the spend was only a drop in the vital for consultants,” says Tim Payne, head of the ocean compared to overall UK government spending on People & Change Practice at KPMG’s consulting arm. consultancy. Public sector work was worth £1.3bn to the They might be clever, but can these freshly minted consultancy market in 2016, according to a report from MBAs actually run a business? The question has Source Global Research. haunted consultancy since the beginning. James One reason consultants are so in-demand is that McKinsey himself left the firm he founded in 1935 after they are great at doing your dirty work. “Even the most a client, department store chain Marshall Field & prestigious, supposedly respected consulting firms can Company, hired him as chief executive. He was forced work as fantastic axe-men,” says to implement his own Professor Laura Empson, an recommendations, firing 1,200 academic at City, University of people in what became known London and former consultant as the ‘McKinsey purge’, whose recent book, Leading prompting him to say: “Never in Professionals, looked at the my whole life before did I know consulting world. “As a senior how much more difficult it is to McKinsey was instrumental in the creation of the manager, you can keep your make business decisions myself, now ubiquitous universal product code hands clean. When you have a than merely advising others very difficult decision to make, what to do.” and you don’t want to be too closely associated with it, Ron Ashkenas, a Partner Emeritus of Schaffer Conyou can hide behind the skirts of the consulting firm.” sulting and a consultant for 35 years, has some doubts: Björnberg believes one of the functions of “These young MBAs know nothing about business, the consultants, albeit an unconscious one, is to outsource culture of a business, what it means to lead people or anxiety. “You see how these people want to relate to how to make things happen.” While they can be useful their consultants, and ideally they want to have when paired with older, experienced partners, he says, somebody sit with them and be there for them. It’s on their own the whizz-kids “continue what they were lonely out there in the business world, especially for doing at business school: they gather data, analyze it senior leaders.” Empson agrees that consultants can be and write papers”. That has value, he adds, “but to “a comfort blanket” for a CEO. “If you are a CEO trying charge that amount of money for people who were in to push through change against strong opposition, that business school a few weeks ago is morally bankrupt”. is a useful service,” she says. “In business in general, If they really knew how to run a business, wouldn’t there is this myth of the heroic leader who will fix consultants be doing it? Well, as soon as they can, they everything and make it all right, but if you are that often do. The average age of a McKinsey employee is so-called heroic leader and you know your feet are just over 30, and few stay more than five years. It can be made of clay, it is very tempting to hire a heroic an effective finishing school for young businesspeople consulting firm that can fix everything.” who want to learn how real businesses work – ironically, Consultants themselves are more likely to say they just as a consultant learns how to do the job you pay can help businesses because they are clever. It was way them to do, they move on. back in the 1950s that McKinsey realised that The consultancy business model itself is troubling intellectual fire-power was marketable. Who wouldn’t to some. Repeat work is the holy grail and accounts for want a bunch of A-grade brain-boxes coming in and around 85 per cent of income at the big firms. “The conanalysing their business? McKinsey forged a close sultant’s dream is to turn a three-month project into a relationship with Harvard Business School, aiming to two-year one,” says Empson. A cynic might suggest that 60

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CONSULTING CONTROVERSIES

Bain & Company was responsible for the turnaround of Guinness in the 1980s; however, the Irish company fraudulently bought its own shares to help it take over Scottish firm Distillers. Several Guinness executives went to prison, partly because a Bain consultant, who had been seconded to the board of Guinness, implicated CEO Ernest Saunders. Saunders called Bain’s behaviour “ruthless”, but the consultancy was cleared of any wrongdoing.

In 2011, Raj Rajaratnam, CEO of hedge fund Galleon Group, was sentenced to 11 years in jail for insider trading. The source of the tip-off? Anil Kumar, founder of McKinsey’s Silicon Valley practice. He provided Rajaratnam with information about tech firms, which allowed him to make profitable trades. Kumar cooperated with the prosecutor and avoided jail, although his colleague, ex-McKinsey managing director Rajat Gupta, served two years behind bars.

Alamy Stock Photo; PA Images; Getty Images

In 2013, stories about Prism, the US government’s digital surveillance programme, began to leak to the media, showing that the NSA could access citizens’ confidential data. The source was Edward Snowden, who accessed the information via his work as a contractor for Booz Allen Hamilton. The firm was quick to distance itself (“he was not a Booz Allen person and did not share our values”) and was exonerated, but the idea that it was working on Prism raised eyebrows.

When McKinsey consultant Jeff Skilling worked at Enron, he impressed CEO Kenneth Lay so much that the firm hired him. He transformed Enron into an energy-trading hub but, despite claiming vast profits, Enron was losing billions. It was also paying millions to McKinsey, which somehow missed what was going on. McKinsey escaped unscathed, but professional services company Arthur Anderson was convicted of fraud after shredding documents.

Enron and Arthur Anderson both collapsed.

there is an incentive to create problems rather than solve them, and to increase anxiety rather than assuage it. The McKinseys and BCGs of this world are fantastic at high-level strategic thought, says Ashkenas, but “often it is in their interests to say ‘we want to help you with the implementation’, and they sort of become in-house staff ”.

Someone who can tell you whether it is a good idea to move into a new market might not be the right person to install a new computer system. But when they tell you they can do it all, the stage may effectively be set for disappointment. Bills balloon and firms come to rely on consultants to provide services, rather than training their own staff. “They have follow-up work not just because they are good at what they do, but because they are trained to manage these kinds of client relationships. They understand that the core reality is the relationship and the conversation, and that any particular engagement is merely epiphenomenal,” Alan Kantrow, ex-editor of McKinsey Quarterly, has said.

All of this suggests one big question. Are consultants worth the money? Not accidentally, that is a very hard question to answer. The whole consulting schtick is that they sell a product whose value is ‘intangible’, or otherwise defies usual valuations. McKinsey’s official position, wrote McDonald, is that measuring its value is difficult, evoking a kind of “Heisenbergian notion that the intervention of consultants themselves destroys any basis for such a calculation”.

But wondering if consultancy is a con may miss the point. At its best it has a deeper role to play in managerial capitalism, spreading new management ideas and providing business leaders with the knowledge and support that only an outsider can. As McDonald pointed out in an interview with Time, if there were no value to what they did they’d have disappeared long ago: “Western capitalism is a merciless thing,” he says.

“There’s no way that McKinsey would still be around after nearly a century without providing something that some of the country’s smartest people consider to be of great value.”

And, as their alumni prove, consultancies can be a fertile breeding ground for future talent. Former McKinsey employees, for instance, include Tidjane Thiam, CEO of Credit Suisse, Jørgen Vig Knudstorp, Lego Group’s executive chairman, Sheryl Sandberg, COO of Facebook, and Sundar Pichai, Google’s CEO, while Tom Peters’ seminal book, In Search of Excellence, grew out of his work for McKinsey, and Clayton Christensen, who popularised the concept ‘disruption’, worked for the BCG. Some people call consultants parasites, but they are not a bug in the system of capitalism – they are an ineradicable feature.

For all the scepticism about them, they might even be a force for good.

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HUMAN CAPITAL

Nations are failing to advance their talent More must be done to develop people’s knowledge and skills

Sub-Saharan Africa is not making the most of its talent compared to other regions

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he world is squandering around 38 per cent of its talent.

That is one of the key findings of the Global Human Capital Index 2017, which ranked 130 countries on how well they are developing their people’s knowledge and skills, which are needed to create value for the global economy.

The rankings show that, on average, the world has developed only 62 per cent of its human capital, with just 25 nations tapping 70 per cent or more of their human capital.

At regional level, the gap in human capital development is largest in sub-Saharan Africa (47 per cent) and smallest in North America (26 per cent). Western Europe is failing to leverage only 29 per cent of its human capital, which makes it a strong regional 62

performer, second only to North America. However, The Global Human Capital Report 2017: Preparing people for the future of work stresses that all countries can do more to nurture and fully develop their human capital.

The World Economic Forum compiled the index by scoring countries against four criteria: capacity (level of formal education as a result of past investment); development (formal education of the next generation workforce and continued skills development of the current workforce); deployment (application and accumulation of skills through work); and knowhow (breadth and depth of specialised skills-use at work). Countries’ performance was also measured across five distinct age groups: 0-14 years, 15-24 years,

25-54 years, 55-64 years, and 65 years and over.

The report argues that optimising long-term human capital potential is about “building up deep, diverse and resilient talent pools and skills ecosystems in economies that allow for inclusive participation in good-quality skilled jobs by the largest number of people”. It also highlights the divide between formal education and labour market needs. This needs to be overcome so that “learning, R&D, knowledge sharing, retraining and innovation take place simultaneously throughout the work lifecycle”.

The top 10 countries in the Global Human Capital Index are: 1 Norway (77.12 per cent) 2 Finland (77.07 per cent) 3 Switzerland (76.48 per cent) 4 US (74.84 per cent) 5 Denmark (74.40 per cent) 6 Germany (74.30 per cent) 7 New Zealand (74.14 per cent) 8 Sweden (73.95 per cent) 9 Slovenia (73.33 per cent) 10 Austria (73.29 per cent) The UK ranked 23rd, having developed 71.31 per cent of its human capital. bit.ly/GlobalHumanCapital

PEOPLE DATA

Investors look at quality of management HR can offer analysts useful insights on workforce issues

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he quality of an organisation’s management is a factor used by analysts when making investment decisions, a CIPD research report reveals.

Words: Rima Evans

BUSINESS RESEARCH, REPORTS AND INSIGHT

Alamy Stock Photo, Getty Images

The CIPD, Warwick University Business School and the University of Kansas School of Business carried out a literature review, The intangible workforce: do investors see the potential of people data?, to gauge whether human capitalrelated information is of any real interest to investors. Most of the research reviewed focused on securities analysts and the information they process.

Overall, the study found that human capital data is far from As the Joker in The Dark Knight proves, a being used consistently. smile isn’t always a good thing While management quality is on data, or it could be a result of analysts’ radars – and seems to be the mainly finance-orientated the one area of people-related education that analysts and fund data they view as an important managers receive in their training. indicator of an organisation’s value Whatever the reason, it means – exactly how they evaluate this that senior human resources “remains an open question”, says professionals now the report.

“Overall, have a golden Other people-related human capital opportunity to data used relatively data is far from being engage with frequently by analysts used consistently” investors by includes information offering quality on employee numbers, insight on workforce issues. labour-management relations, training and HR-related risks, such This can be achieved by: as long-term financial obligations • building high-quality measurement related to human capital. Forwardand reporting systems that are looking information (a new training transparent, accessible and relevant and development programme or to investors; approach to work organisation, for • framing HR strategy and human example) is also of interest. capital investment in terms of The characteristics of the long-term business strategy; analysts themselves may also • disclosing material risk and have a bearing on whether they opportunities in both narrative use people data in their evaluation and numerical format; and methods. For example, one study • reporting standardised and found that human capital is more consistent human resources likely to be taken into account measures to boards and senior by experienced analysts, leadership so that they can better “potentially because of better articulate the value and quality access to information”. of human capital to their Nevertheless, “presently analysts external stakeholders. don’t appear to pay attention to human capital information to the Ed Houghton, co-author of same extent as information the report and senior research describing other types of adviser for human capital and intangible resources”, says the governance at the CIPD, says it is report. This may be because they also important to understand the lean towards more easily accessible

type of people data that is most useful to investors.

The report’s other authors are Louisa Baczor of the CIPD, Dr Achim Krausert from Warwick University Business School and Professor Clint Chadwick of the University of Kansas School of Business. bit.ly/ValueOfPeopleData

ONLINE ETIQUETTE

Why a smiley won’t impress The use of a smiling emoticon in a work context is best avoided

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hen is a smile not a smile?

When it’s a smiley emoticon used in a formal work context.

While an actual smile can help to make a good first impression, research shows that using the emoticon version in a work-related email may have the opposite effect.

Even worse, these representations of mood or facial expression can lower perceptions of the writer’s competence, and undermine information sharing.

“Our findings suggest that smileys are perceived differently than actual smiles, at least on first impressions in work settings, contradicting the theoretical suggestion that a smiley functions similarly to a smile,” say researchers Ella Glikson, from Israel’s Ben-Gurion University of the Negev, Arik Cheshin of the University of Haifa, also in Israel, and Gerben A van Kleef of the University of Amsterdam.

Smileys do not increase perceptions of warmth and actually decrease perceptions of competence, they add.

Their paper, The Dark Side of a Smiley: Effects of Smiling 63

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Emoticons on Virtual First EXECUTIVE EDUCATION Impressions, highlights the prevalence of smiley usage in work settings, with around 18 per cent of work-related emails including at least one emoticon.

To explore the possible consequences of this, the But most senior professionals team conducted a series believe L&D benefits business of experiments with 549 participants from 29 countries. eadership development and One experiment asked executive education are valued participants to read an email by senior professionals but not from an imaginary team mate and seen as priorities, according to evaluate both the competence and the Corporate Learning Pulse warmth of that person. There were 2017 global survey for the Financial four types of email: those with a Times IE Business School photographed neutral face, those Corporate Learning Alliance. with a photographed smiling face, Only 24 per cent of nearly 1,000 those with a greeting text without senior professionals surveyed in smileys, and those with a greeting western Europe, the Middle East, text and smileys. While a smiling Japan and China cited learning and photo significantly increased development among their top three perceptions of both warmth and priorities for 2017. Market growth, competence compared to a neutral strategy development face, smileys had no “The negative effects and execution, impact on perceived of smiley use cybersecurity and warmth, and were limited financial management significantly to formal settings” all took precedence. reduced perceived Despite this, the competence, majority of respondents felt that compared to a text-only message. corporate learning had a positive In another similar experiment, impact on their business, delivering participants were asked to reply both tangible and intangible value. to the email. This time, the More than half (58 per cent) said researchers found that information executive education and leadership sharing was significantly lower development were vital to retaining when smileys were used. their best employees, while 53 per In a final experiment, the cent agreed that investing in “negative effects of smiley use employees via learning were limited to formal settings programmes drove change and where smileys were perceived as innovation in their organisation. inappropriate”. So in work emails “These perceptions highlight the about a social event, smileys had correlation between focusing on positive effects on perceptions of employee development, and how warmth and no effect on perceived that focus, if done well, can help competence. organisations meet their business The study concludes that, priorities for the year: namely in terms of first impression growth, strategy and sound management, “the use of smileys financial management,” says in formal contexts should be the report. avoided” by everyone, regardless When respondents were asked to of age or gender. bit.ly/VirtualFirstImpressions pinpoint how education/leadership

Learning is not a top priority among execs

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development had benefited their organisations, 84 per cent said it had improved their business knowledge, competencies and confidence, and 83 per cent felt it was important for achieving business goals. In addition, 81 per cent acknowledged that it had enhanced their ability to do their job more effectively.

On a less positive note, the report identifies a disconnect between senior leadership (C-suite, presidents and MDs) and other senior professionals when it comes to perceptions of the effectiveness of learning and leadership development. Those in the C-suite (60 per cent) and presidents/MDs (75 per cent) are the most satisfied with current investments in corporate learning. By contrast, senior managers, who are often the ones taking part in programmes, are the least satisfied (39 per cent).

The absence of reliable approaches to measuring the success of programmes is posing a problem. According to the report: “Organisations are still finding their way when it comes to effectively selecting, implementing and then evaluating their corporate learning and leadership development programmes.”

The report also reveals that despite all the change the world has experienced over the past 12 months, the top learning needs for senior professionals, including strategy and planning, successful innovation and customer engagement, have remained consistent since the last Pulse survey was conducted in 2016.

What is the picture in the countries surveyed?

• Satisfaction with current programmes is strongest in China, Spain and Germany, respectively.

• Senior professionals from China (69 per cent), Spain (60 per cent) and Germany (60 per cent) are the

returns and accomplishing this in a socially responsible manner. However, where a company’s financial performance is poor, investment in CSR becomes an additional negative.

“We suggest that it will lead the board to believe that the CEO has invested too much of the firm’s resources on the secondary objective of CSR, rather than on the company’s primary mission – generating economic returns for shareholders,” the study observes.

Researchers Timothy D Hubbard of the University Unilever’s CEO, Paul Polman, has been praised widely for creating the company’s Sustainable Living Plan, but he could face criticism if he doesn’t continue to drive profits and the firm’s share price of Notre Dame, Dane M Christensen from the most confident that past leaders, it provides “additional University of Oregon and Scott D investments have added context” on a firm’s financial Graffin of the University of Georgia value to the organisation. performance, which is in turn a investigated 98 CEO dismissals • Respondents in Germany primary driver of CEO dismissal. occurring at 90 Fortune 500 and Gulf Cooperation Council “Broadly, our findings suggest companies between 2003 and countries ranked corporate that prior investments in CSR 2008. They measured CSR learning as one of the top amplify the relationship between using rankings of five dimensions business priorities for 2017. firm financial performance and from the MSCI KLD social bit.ly/CorporateLearningPulse CEO dismissal,” the researchers index, including employees, explain. They attribute this effect community, diversity, environment to CSR’s unique characteristics, and product.

CORPORATE SOCIAL RESPONSIBILITY including its high visibility, with The findings suggest that CEOs investment attracting a lot of running companies with high scrutiny and attention from levels of CSR investment are stakeholders. It can also be 84 per cent more likely to be contentious, as research still dismissed when financial hasn’t reached consensus on performance is poor, compared to Bosses who invest in initiatives whether there is a link between their counterparts at firms with also need to increase profits CSR and improved financial lower levels of CSR, says Hubbard. performance.

“However, research also company’s investment in All these factors play a part in indicates that prior CSR corporate social responsibility how a CEO is assessed. So where investments reduce a CEO’s (CSR) initiatives may boost the an organisation enjoys good likelihood of dismissal by 53 per CEO’s career – or end it, suggests a financial performance and cent when profits are higher.” It new study, Higher Highs and Lower there have been high levels of is important for us to understand Lows: The Role of Corporate Social investment in CSR programmes, the personal consequences Responsibility in CEO Dismissal. the CEO is viewed more positively CEOs face when investing in While CSR doesn’t have a direct by stakeholders and the company CSR, he adds. bit.ly/CSRandCEOdismissal

effect on career outcomes for board for generating economic

CSR can make or break a CEO

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ARTIFICIAL INTELLIGENCE

Firms fail to act on AI Despite being keen, companies are not ready for the robot revolution

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anagers have high hopes for artificial intelligence (AI) and the advantages it can bring their organisations. Yet these remain aspirations, since most companies have not incorporated AI at all into their business. Many do not even have an AI strategy in place, reveals a report by the MIT Sloan Management Review and the Boston Consulting Group.

Will AI-enabled toys in the home mean even dogs’ days are numbered as our four-legged friends?

The report, Reshaping Business With Artificial Intelligence: Closing for example, is using it to minimise There are key challenges the Gap Between Ambition and disruptions on the factory floor around introducing AI into Action, is based on a global survey and speed up production of the organisations. These include: of more than 3,000 executives, A350 aircraft. AI’s ability to • ensuring executives and other managers and analysts, as well identify patterns in production managers have at least a basic as interviews with 30 technology problems and match disruptions understanding of AI. This might experts and executives. with solutions has shortened the involve using online courses or A total of 63 per cent of time it takes to deal with problems tools to find out how programs respondents said they expected by more than a third. learn from data; AI to have a large effect on their “AI capabilities are leading • deepening executives’ perspectives organisation’s offerings within five directly to new, better processes on how to organise their business years, while 14 per cent felt it was and results at other pioneering around AI; and already having such organisations,” the • developing a more expansive “Just about any an effect. In addition, report says. “Other view of the competitive landscape. company today more than 80 per cent large companies, More than 60 per cent of needs a plan with of organisations such as BP, Infosys, respondents said a strategy respect to AI” thought AI was a Wells Fargo and Ping for AI was urgent for their strategic opportunity, An Insurance, are organisations, but only half of with 84 per cent saying it would already solving important business those said their organisations allow their organisation to obtain problems with AI. Many others, had a strategy in place. or sustain a competitive advantage. however, have yet to get started.”

However, the report highlights a While organisations anticipate “Just about any company today disparity between expectation and that AI will deliver major benefits, needs a plan with respect to AI,” action. Only about one in four they are also mindful of the the report’s authors, Sam executives has incorporated AI strategic risks it brings.

Ransbotham, David Kiron, Philip into some of their business Respondents are all-too aware that Gerbert and Martin Reeves, offerings or processes, and just one AI can give their competitors the conclude. “Most do not have one, in 20 has deployed AI extensively. same potential boost that they and those that have been slower to The majority of organisations – 54 themselves expect, for example. move have some catching up to do. per cent – have not adopted AI at Seventy-five per cent predicted that Those that continue to fall behind all to date. new organisations using AI would may find the playing field tilted Among the companies cited in enter their market, and 69 per cent ever-more steeply against them.” the report as exploiting AI, Airbus, felt competitors would use AI. bit.ly/ReshapingBusinessWithAI 66

WORK-LIFE BALANCE

Show you care when hiring Work-life balance benefits in job adverts attract applicants

Everett Collection Inc / Alamy Stock Photo

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ncluding even brief details about an organisation’s commitment to work-life balance in recruitment adverts can boost its appeal as a prospective employer.

A study has found that, when it comes to recruitment, employers offering standard pay and work-life benefits (WLBs) such as flexi-time, job-sharing and child or elder carerelated perks may have an advantage over those that offer standard pay with healthcare benefits or standard pay alone.

This is because jobseekers perceive greater compatibility, in terms of values, between themselves and employers that offer WLBs, and are more likely to apply for roles in those organisations, says the study, The Lure Of Work-Life Benefits: Perceived Person-Organization Fit As A Mechanism Explaining Job Seeker Attraction To Organizations.

To examine the role of benefits provision in predicting candidates’ perceptions of compatibility, (referred to as ‘personorganisation (P-O) fit’ in the study), researchers Shainaz Firfiray of Warwick Business School and Margarita Mayo from IE Business School, Madrid, conducted an experimental study on 189 MBA students belonging to two generational groups – millennials and gen X. Participants were asked to read a job ad that included information about the employment benefits on offer, and then complete a survey measuring their attitudes towards the company as a possible future employer. Three versions of the ad

were used: one offering standard pay, another healthcare benefits and the third work-life benefits, such as flexible hours and extended parental leave.

The results show that firms supplementing their standard pay with WLBs are able to enhance P-O fit perceptions more than those that do not take this approach. When companies emphasise the availability of WLBs, they also signal to jobseekers that they are responding to important social issues.

Another key finding was that although both generational groups value work-life balance, millennials are more likely to be attracted to or apply to organisations on the basis of P-O fit than gen X. The research concludes: “HR departments should be attentive to the inclusion of employment inducements such as WLBs in their recruitment materials as they can positively influence applicant perceptions of recruiting organisations.

“Even a small amount of information about an organisation’s commitment to work-life balance can substantially influence perceptions of value fit among jobseekers.”

COMMUNICATION

Even bad news is good news Staff are motivated by total transparency in organisations

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he saying ‘no news is good news’ may not hold true when it comes to the workplace. A study has found that bad news coming from bosses can be more motivational for staff than no news at all.

A lack of transparency about workplace issues has been thought to have detrimental consequences for organisations, creating uncertainty for employees and reducing their commitment and productivity.

Research carried out by Leif Brandes of Warwick Business School and Donja Darai from the University of Zurich now supports this view, but also shows that disclosure of both good and bad information improves performance.

In other words, transparency benefits organisations, whereas managers who choose to keep staff in the dark have a more detrimental effect on their effort bit.ly/WorkLifeBalanceBenefits and motivation than previously assumed, says Brandes.

The two researchers designed a new version of the ‘dictator’ game, in which one player is given money and must offer some to the other player, even if it is zero.

The aim was for participant B to motivate Transparency is beneficial, which might be news to feared spin doctor participant A to Malcolm Tucker (Peter Capaldi) in TV political satire The Thick of It 67

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transfer as much money as possible. A was paid either £5 or £10, but didn’t know which, and then had to decide whether to transfer some money or not. B, who knew how much A had been given, could spend £1 to send a message to A as to whether they had £5 or £10. Effectively, they could spend £1 to give their partner the bad news that they had received £5.

Participants played the same game up to 10 times, each time with a new partner.

Across 10 rounds of play, the researchers found that when A didn’t know if they had £5 or £10, the amount they transferred was 48 per cent lower than when they had been told that they had been given £5, and not £10.

So how could the sharing of bad news increase motivation to transfer more money? “We think that information sharing helps participant B to shape A’s perspective of their relationship: after all, a person who is willing to spend money on information sharing is likely to be a nicer person than someone who does not spend the money,” says Brandes.

“And ample research in economics and psychology shows that people are willing to share more with those who they perceive to be nice.”

In a different version of the game, A knew if they had £5 or £10, irrespective of B sending a message. Here, transferred amounts were still 40 per cent lower when B had not sent a personal message stating how much money A had received – even though A already knew.

The research paper, The value and motivating mechanism of transparency in organizations, highlights the motivational value of transparency. Even if news has already spread around a company, employees would still be 68

motivated by being told about innovation is required – one that it personally. puts job quality at its heart, and “These results should be human resource management a concern for decisionpractices in the middle “Sometimes makers in real-world as the vital link bad news is organisations,” says between them, say better than no the study. “It is not Professor Chris news at all” uncommon for Warhurst and Sally uninformed employees Wright from the to eventually even leave the firm.”

University of Warwick’s Institute Brandes adds: “Sometimes bad for Employment Research, and news is better than no news at all.”

Christopher Mathieu of Sweden’s bit.ly/ValueOfTransparency Lund University.

Their paper, Job Quality as a Lever for Organizational Innovation INNOVATION and the Role of Human Resource Management, notes that “innovation has become seen as a, if not the, key route to economic competitiveness”, regarded by the EU as an overarching driver of economic recovery and growth.

But little progress has been The right working practices can made in boosting innovation enhance employees’ creativity in either the UK or the EU as a whole, partly because of e all know that diversity in misguided current thinking about business cannot be achieved how it can be achieved. This is by following a crude recipe of ‘add based on a top-down, sciencewomen and ethnic minorities and centric approach focused on stir’. Equally, innovation cannot be having highly qualified workers facilitated by a simple recipe of and boosting R&D spend to create ‘add PhD and stir’, an academic more patents and products. And paper argues. A new approach to it’s not enough. What is missing is having the right working, management and organisational structures and practices in place to lever and enable workers’ ideas and efforts, contend the researchers.

In the absence of these structures and practices, organisations are treating innovation as a crude supply issue (the supply of suitable workers and finance), rather than addressing the role of firm-level practices, in particular HRM practices, in the innovative process.

The paper cites the example of Denmark, which can claim to be in the top-ranked group of countries classified as innovation leaders Danish innovation: furniture designer Arne Jacobsen’s famous Egg Chair because it successfully encourages

Job quality is key to boosting innovation

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a bottom-up, “more inclusive and encompassing participatory approach to innovation”.

Where does job quality come in?

According to the paper, it is tied into the innovation process, since its ingredients are often the enablers of good innovative performance and shift the focus to processes within the workplace itself. These ingredients include characteristics such as complexity of tasks; task rotation; autonomous and non-autonomous teamwork; learning dynamics in work; ways of quality controlling; learning dynamics in work; and more.

This overlap is key since it gives HRM a potential role in “championing, architecting and orchestrating this synergy at organisational level”.

With HR having unique expertise in areas such as recruitment, talent and competence development, task and job design, team-building, communication, voice and participation, and motivation and incentives, the profession now has a tremendous opportunity to contribute to innovation performance, says the paper.

The main way HR can make a difference is in pushing for higher levels of job quality, since “good job quality tends to align with higher innovative performance”.

The paper concludes that “need and opportunity exist for boosting innovative performance, and human resource practitioners can, and should, take the lead”.

This paper (currently only published in Portuguese) was produced as part of the QuInnE interdisciplinary project that investigates how job quality and innovation support each other at organisation level. It brings together a team of experts from nine partner institutions across seven European countries. bit.ly/QuInnEProject

Charlize Theron has said her good looks often count against her when being chosen for roles DISCRIMINATION

It’s a hard life for beautiful people Attractive individuals may be ruled out for less desirable jobs

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eing physically attractive may not always be the asset it’s perceived to be in the workplace.

Good-looking people are discriminated against in hiring processes for less desirable jobs, such as those with low pay or uninteresting work, according to the authors of Perceived Entitlement Causes Discrimination Against Attractive Job Candidates in the Domain of Relatively Less Desirable Jobs.

“Our studies… stand in contrast to a large body of research that concluded that attractiveness, by and large, helps candidates in the selection process,” they say.

The researchers suggest this discrimination takes place because of a belief that attractive individuals have a greater sense

of entitlement than those who are less attractive. This leads hiring managers to assume attractive candidates would be less satisfied in jobs that are relatively less desirable.

This is no trivial issue, the paper notes, since relatively less desirable jobs may “in reality constitute the majority of all jobs”, which means that discrimination in this area may have the most harmful social consequences.

Four experiments were conducted involving 755 participants, including students and HR managers. In the first study, participants were given photographs of two workers, one attractive and one unattractive, and asked to rate “their sense of entitlement to good outcomes”.

They were also asked to indicate which of the two candidates expressed dissatisfaction working in a relatively less desirable job and which expressed dissatisfaction working in a more desirable job.

This first study supports the theory that the perceived higher sense of entitlement of the attractive worker would lead people to predict that this individual would 69

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be more dissatisfied with the less desirable job.

The subsequent three experiments focused on hiring decisions. The participants were given job profiles and photographs of two candidates (attractive and unattractive) and asked which they would hire for a job such as a warehouse worker or housekeeper (rated as less desirable work), or project director and manager (rated as more desirable work).

The participants were significantly less likely to hire the attractive candidate for the less desirable job and more likely to hire the attractive candidate for the more desirable job. The paper concludes that these results “contribute to research on selection decisions by revealing that decisionmakers are considering more than a candidate’s ability to perform well”.

The researchers were Margaret Lee and Madan M Pillutla, both of London Business School, Marko Pitesa from Singapore Management University and Stefan Thau of Insead. bit.ly/AttractiveCandidatesDiscriminated

CEO PAY

Terrorism hikes salaries CEOs demand higher pay in areas that are under threat

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EOs are using terrorist attacks to boost their pay levels by negotiating ‘terrorist compensation premiums’.

Leaders of firms in areas of the US that have experienced attacks are receiving an average additional 8.8 per cent in pay, compared to those employed by companies in safer areas, says the report An Ill Wind? Terrorist Attacks and CEO Compensation. This terrorist 70

The study reveals that the 8.8 per cent premium holds “after controlling for other factors that might affect the results, including the cost of living, tax, urban agglomeration and the general living environment for the state where the company is based”.

Ben Cohen and Jerry Greenfield were friends before they founded Rau adds: their phenomenally successful ice cream brand Ben & Jerry’s “Powerful CEOs compensation premium is larger appear to be better able to use for more powerful CEOs (leaders terrorist attacks to negotiate with a long tenure or with very pay increases for themselves.” bit.ly/CEOPayAndTerrorism high pay). For less powerful leaders, CEO power increases following terrorist attacks.

TEAM-BUILDING “Faced with increased psychological stress, CEOs may demand larger compensation packages to compensate them for the loss of wellbeing,” say the study’s researchers, Yunhao Dai of the Huazhong University of Science and Technology in Working with mates boosts China, Raghavendra Rau of group performance Cambridge Judge Business School, and Aris Stouraitis and Weiqiang s working with friends a huge Tan, both from the Hong Kong distraction or can it improve Baptist University. work performance? Surprisingly, The study was based on a sample research shows that it’s the latter: of 2,754 publicly listed US firms teams composed of friends, rather between 1992 and 2013. Terrorist than mere acquaintances or attacks were identified using the strangers, may produce better Global Terrorism Index compiled results on certain tasks. by the Institute for Economics Seunghoo Chung and Robert B and Peace, while executive Lount Jr, both from The Ohio State compensation data was taken University, Hee Man Park of the from the ExecuComp database.

Pennsylvania State University and Some 569 terrorist attacks were Ernest S Park of the Grand Valley tracked, with companies identified State University conducted a as being potentially affected if literature review of empirical their headquarters were within studies that examined the effects of 50 miles of the attacks. The results friends, rather than acquaintances, point to a causal effect between on group performance. terrorist attacks and increases in Data from 1,016 groups was pay levels (cash compensation, not obtained from 26 studies, and the equity-based compensation).

With a little help from your friends

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results support the suggestion that the overall effect of friendship on group performance is positive – whether the tasks involved are physical or cognitive and whether the groups are children or adults.

The results also show that teams including friends are particularly effective when the groups are larger and when their focus is on maximising output, as opposed to finding an optimal solution.

The benefits of friendship groups may stem from their ability to better coordinate resources and actions through shared knowledge and effective communication, and as a result of higher levels of motivation, says the study. The findings are consistent with the “notion that friendships allow members to bring to the table many of the group dynamics and processes that underlie productivity and effective performance”.

The researchers explain that, when groups are larger, motivation and coordination are usually harder to sustain. Friendship between group members appears to mitigate those threats. However, working with strangers may be of greater benefit when it comes to tasks that require an answer to a problem, says Lount. This is because people who are not friends may be more likely to discuss the pros and cons of a proposed solution, rather than just go along with the crowd.

Friends With Performance Benefits: A Meta-Analysis on the Relationship Between Friendship and Group Performance says managers should encourage the development of friendships among employees during team-building or training. It also acknowledges that further research is required to establish what proportion of the group needs to be friends with one another for any benefit to occur. bit.ly/BenefitsOfFriendship

INCENTIVES

Playing for status piles on the pressure Non-monetary incentives can prove to be counterproductive

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study goes against the grain in suggesting that competition for non-monetary awards such as status, social esteem and respect can have a negative effect on performance, causing employees to ‘choke’ under pressure.

The burden of glory: Competing for nonmonetary incentives in rank-order tournaments explored the impact of high-stakes, nonmonetary incentives since they became widely used in the business world. But the researchers turned to a rather different setting to investigate their impact – US professional golf.

The study used data from the PGA Tour on the performance of US players competing to qualify for the Ryder Cup, a highly prestigious competition between the US and Europe for which there is no

Jim Furyk managed to qualify for nine Ryder Cups and is US captain for 2018

monetary award. Participation and “being part of an elite group of golfers who have the privilege of representing their countries” is considered reward enough.

The Ryder Cup qualifying system allocates points to each PGA Tour tournament. During the qualifying period, which is typically two years, two editions of the same PGA Tour have a different value in terms of Ryder Cup points. One year there are few points, and the next year there are many, while all other aspects of the tournament are the same. The study compared the performance of players across the same tournament in two subsequent years. By focusing on blocks of the PGA Tour tournament with similar economic incentives (prize money) but different ‘glory’ incentives (Ryder Cup points), the researchers could measure the effect of the latter.

The results show that, the higher the number of Ryder Cup points at stake, the worse the players’ performance. The desire to attain glory – status, social esteem and respect – is a burden on players that affects their performance. And underperformance intensifies as pressure increases.

“Choking under pressure, rather than risk-taking or intimidation by superstars, seems to be the reason behind underperformance, especially when the competitive pressure intensifies,” co-author Raja Kali of the University of Arkansas says. “In terms of broader impact or relevance to the way firms do business, these findings are important, because managers and firms in general probably do not realise that some non-monetary efforts to build morale or boost performance may not be helping. In fact, they may be counterproductive.”

The other researchers were David Pastoriza and Jean-François Plante, both of HEC Montréal. bit.ly/NonMonetaryIncentives

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STYLE Further Reading

Voice p14

Waheed Alli p24

Gig economy p38

Can Your Employees Really Speak Freely?

Harvard Business Review, 2016 bit.ly/EmployeesSpeakFreely

Key dates for lesbian, gay, bi and trans equality Stonewall bit.ly/LGBTEqualityDates

Capability Brown And His Landscape Gardens by Sarah Rutherford National Trust Books, 2016

Why Employees Are Afraid to Speak Harvard Business Review, 2007 bit.ly/EmployeesAfraidToSpeak

Lunch with the FT: Waheed Alli Financial Times, 2011 bit.ly/WaheedAlli

The Power of Talk: Who Gets Heard and Why Harvard Business Review, 1995 bit.ly/WhoGetsHeard

Lord Alli: ‘I was called sinful and dirty.

And that was in a Lords debate’ Independent, 2013 bit.ly/NameCallingAtLords

The power of being heard Science Daily, 2012 bit.ly/PowerOfBeingHeard Friends to count on The Guardian, 2011 bit.ly/FriendsToCountOn Rethinking employee voice: Employee voice survey bit.ly/RethinkingEmployeeVoice Have your say: alternative forms of workplace voice CIPD, 2017 bit.ly/WorkplaceVoice Industrial Relations to Human Resources and Beyond by Bruce E Kaufman Shubhi Publications, 2004 The Ludlow Massacre Still Matters The New Yorker, 2014 bit.ly/LudlowMassacreMatters Freedom to speak up bit.ly/Freedom2SpeakUp Something weird happens to companies when they hit 150 people Quartz, 2016 bit.ly/StartupsBeWarned

Travels in West Africa by Mary H Kingsley CreateSpace Independent Publishing Platform, 2013 Who Was Jerome Lemelson?

Lemelson Center for the Study of Invention and Innovation bit.ly/JeromeLemelson

AI and Ethics p30

Land of Wizards Popular Mechanics, 1986 bit.ly/LandOfWizards

Moral Machines: Teaching Robots Right from Wrong by Wendell Wallach Oxford University Press USA, 2010

Becoming Cary Grant documentary directed by Mark Kidel Yuzu Productions, 2017

How to Hold Algorithms Accountable MIT Technology Review, 2016 bit.ly/AlgorithmsAccountable

Cary Grant: A Class Apart

by Graham McCann Fourth Estate, 1997

New AI can guess whether you're gay or straight from a photograph The Guardian, 2017 bit.ly/NewAI-GayOrStraight

Hannah Höch: Life Portrait

by Hannah Höch The Green Box, 2016

Learning to Trust a Self-Driving Car The New Yorker, 2016 bit.ly/TrustingSelfDrivingCars

Hannah Höch: The woman that art history forgot The Daily Telegraph, 2014 bit.ly/HannahHochForgotten

Teaching robots right from wrong The Economist, 2017 bit.ly/RobotsRightFromWrong

The life of Una Marson: 1905-65 by Delia Jarrett-Macauley Manchester University Press, 2010

Controversial Brain Imaging Uses AI to Take Aim at Suicide Prevention Wired, 2017 bit.ly/AIAndSuicidePrevention

The Lodger: Shakespeare on Silver Street by Charles Nicholl Penguin, 2008

Moral Machine MIT Media Lab bit.ly/MoralMachineMIT

Why Shakespeare was also a savvy property investor and developer Financial Times, 2014 bit.ly/ShakespeareTheDeveloper Shakespeare: The World as a Stage

by Bill Bryson William Collins, 2016

Free speech at work People Management, 2017 bit.ly/FreeSpeechAtWork Social Identity Theory Simple Psychology, 2008 bit.ly/SimplyPsychology

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Work.

WORLD'S BEST BOSS

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

Russia p44

Consultants p56

Alexi Navalny's Very Strange Sort of Freedom The New Yorker, 2016 bit.ly/AlexNavalnyStrangeFreedom

The Firm by Duff McDonald Oneworld Publications, 2014

Black Wind, White Snow: The Rise of Russia's New Nationalism

by Charles Clover Yale University Press, 2016 Brains, not oil, should fuel Russia's economy Financial Times, 2017 bit.ly/BrainsNotOil Cluster bomb: How Russia is ruled The Economist, 2016 bit.ly/ClusterBombRussiaToday The Commissar Vanishes: The Falsification of Photographs and Art by David King Tate Publishing, 2014 In the First Circle by Aleksandr Solzhenitsyn Harper Perennial, 2009 Imperium by Ryszard Kapuscinski Granta Books, 2007

House of Lies by Martin Kihn Business Plus; reissue edition, 2012 From Higher Aims to Hired Hands

by Rakesh Khurana Princeton University Press, 2016 Leading Professionals by Laura Empson OUP Oxford, 2017 To the brainy, the spoils The Economist, 2013 bit.ly/SpoilsToTheBrainy AI May Soon Replace Even the Most Elite Consultants Harvard Business Review, 2017 bit.ly/AIReplacements Should business schools fear McKinsey’s leadership factory?

Financial Times, 2016 bit.ly/FearOfMcKinseysFactory Mass Layoffs? Overpaid CEOs? Blame McKinsey!

Time, 2013 bit.ly/BlameMcKinsey

The Invention of Russia: The Journey from Gorbachev's Freedom to Putin's War

by Arkady Ostrovsky Atlantic Books, 2016

Q&A: leadership p40

It Was A Long Time Ago, and It Never Happened Anyway by David Satter Yale University Press, 2013

In Defense of Cosmopolitanism Harvard Business Review, 2016 bit.ly/DefenseOfCosmopolitanism

Manuscripts Don't Burn: Mikhail Bulgakov: a Life in Letters and Diaries

by J A E Curtis Bloomsbury, 2012

New study examines the possibility of a leadership gene The Washington Post, 2015 bit.ly/LeadershipGene

Natasha's Dance by Orlando Figes Penguin, 2003

Scientists Find DNA Sequence Associated With Leadership Qualities Huffington Post, 2013 bit.ly/DNASequenceForLeadership

The New Tsar: The Rise and Reign of Vladimir Putin by Steven Lee Myers Simon & Schuster UK, 2016 Nothing is True and Everything is Possible

by Peter Pomerantsev Faber & Faber, 2015

Hillary Clinton, Donald Trump, and the Danger of Comparing Leadership Styles Harvard Business Review, 2016 bit.ly/DangerOfComparingLeadership

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RISK MANAGEMENT Rymer Rigby on the advantages of being dull sometimes Sounds sexy, right? A little edgy? But good risk management isn’t like that. It’s boring; it’s what happens when boards do their jobs properly, know their businesses inside out and push the right values and systems. But you’re not here for that. You’re here for bad risk management, which destroys companies and careers and makes for headlines dripping with schadenfreude.

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Another great way not to manage risk is to jump in without thinking. The classic example here is New Coke. It never occurred to Coke’s top brass that millions of loyal customers might hate having their favourite soft drink changed. And there are dozens of similar examples, from Compaq’s foray into software and services, to Microsoft’s Zune (a good product in theory… that flopped).

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There’s always M&A too. Why did AOL and Time Warner merge? Or Daimler Benz and Chrysler? Why did Murdoch buy MySpace? We can all be wise after the event, but in all three cases there were plenty of people who were wise before it. It’s just they weren’t listened to. Not listening is very important, if you want to take bad risks.

Sometimes it’s about your company culture. You could be toxic through and through like Enron. Or just bad in parts and happy to let it fester – like VW with its emissions scandal, or BP and Deepwater Horizon. Bad risk management is often just companies allowing human nature to operate unchecked – and forgetting that human nature actually evolved to hunt game in small groups, not run multinationals.

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Want to ignore potential danger until it’s too late? Bring in systems that incentivise people not to rock the boat by pointing out problems. Risks multiply and before you know it you’ve trashed the Gulf of Mexico. Boards push bad mergers and product launches because of short-term financial incentives and the desire to look like they’re doing something exciting.

So what should you do? The slightly dull truth is, you can’t avoid risks but you can learn from past mistakes. You can build an open, transparent culture. You can do your homework. You can talk to experts – and, crucially, listen when they tell you what you don’t want to hear. And, perhaps most importantly, you can build robust systems that are stronger than individuals.

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OK, cynics corner. Perhaps somewhere in your risk management, way down in the black ops portfolio, you should be looking at what you can get away with. At the time, a lot of people said the emissions scandal was curtains for VW’s reputation. It wasn’t.

Similarly, BP is still around and its former CEO, Tony Hayward, has a pretty sweet job at Glencore Xstrata. The thing is, VW had a good enough reputation that it could survive a scandal. As for BP, people hate oil companies anyway, so now they just hate BP a bit more. Sometimes the lesson is, there is no lesson.

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Wassily Kandinsky, Colour study - Squares with concentric circles, 1813; Photo AKG-Images

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One great way not to manage risks is to ignore the iceberg everyone else can see. Borders was a bookshop group that managed to pull off a very difficult trick: it was a large chain that people loved. Then the internet came along.

We can only presume that Borders’ senior managers somehow didn’t see online retail as an existential risk, because they ignored it for years.

Which is why Borders was a bookshop group.

I’m Dead – David Shrigley Glasgow-based David Shrigley’s darkly distinctive work gives a voice to the common artist.

Overlooked for serious acclaim in the art world before a Turner prize nomination in 2013, Shrigley had wrongly been seen as “just funny and therefore marginal”, said Penelope Curtis, the chair of the judges. He has described his work, including I’m Dead and Really Good, the bronze sculpture of a thumbs-up on Trafalgar Square’s Fourth Plinth, as serving a cathartic purpose: “It’s somehow a healthy thing for me to say what I say.”

Recently confirmed as guest director for the 2018 Brighton Festival, Shrigley is not alone in needing a voice. In the workplace, being heard helps staff to feel like legitimate stakeholders in their organisation. In turn, they will share their knowledge and ideas. And, as the popularity of sites such as Glassdoor proves, when people aren’t given a voice they will ultimately find a different way to articulate themselves. brightonfestival.org