work summer by christhebarker

Work. Because business is about people

A scepticâ&#x20AC;&#x2122;s guide to employee engagement Peter Drucker, meerkat mobs and frog eaters: the decline of the management thinker How Google became the bigotâ&#x20AC;&#x2122;s best friend Sir Ian Cheshire on the end of the hero CEO

Summer 2017

Work.

Because business is about people

When British scientist Tim Berners-Lee invented the worldwide web in 1989 he envisaged a platform that would allow everyone, everywhere to share information and collaborate across cultures. That vision has, for the most part, come true but so have a lot of unforeseen consequences that we are only just waking up to. Fake news permeates the web and can be manipulated by those who want to game the system, and we’ve lost control of our personal data – how many online T&Cs have you blindly agreed to in exchange for free content? These are complex issues, with repercussions for both business and society, as our feature on page 14 outlines. But one thing is clear: it’s too late to put the genie back in the bottle. As usual, please do send your feedback to claire.warren@haymarket.com. Claire Warren, editor

Features in detail p4 Perspectives: distilled management thinking p6 15 minutes with… Will Butler-Adams p12 The rise of big tech p14 Q&A: Sir Ian Cheshire p22 The colours of business p26 In the spotlight: employee engagement p28 Will there ever be another Peter Drucker? p38 What we can learn from companies that last p44 Interview: NSPCC CEO Peter Wanless p56 Debrief: business research, reports and insight p62 Further reading p72 The off-piste guide to anthropology p74

The power of big tech

Q&A: Sir Ian Cheshire

A brief history Employee of hues engagement

p14

p22

p26

p28

Search engines and social media shape the world in ways that would have been unimaginable when they were ﬁrst conceived – and, as became obvious during the US presidential election, they can be easily manipulated. In just two months, a fake news story that claimed Barack Obama had banned reciting the Pledge of Allegiance in schools while he was president generated more than 2.1 million engagements. It’s one of the biggest pitfalls of the online world. As Tim Berners-Lee, inventor of the worldwide web, says: “Using data science and armies of bots, those with bad intentions can game the system to spread misinformation for ﬁnancial or political gain.” But, asks Jeremy Hazlehurst, what can we do to combat it?

He might have left a busy role as chief executive of B&Q owner Kingfisher, but Sir Ian Cheshire certainly isn’t putting his feet up. Since leaving the retailer in 2015, Cheshire has taken on the chairmanship of high street department store Debenhams, as well as the lead non-executive role for the UK government. But if that wasn’t enough, he’s been confirmed as chairman of Barclays UK, the retail arm of the bank, which is being separated from the riskier investment division to meet new regulations. The news came as a surprise to some, given Cheshire previously worked with Bradford & Bingley, one of the casualties of the financial crisis. But, he tells Tim Smedley, that experience helped him develop a “better sense of what is mission-critical for an organisation”.

“Colour is the mother tongue of the unconscious,” according to Carl Jung. The psychiatrist has a point, but this is one mother tongue in which we are not as ﬂuent as we like to believe. The process by which colours acquire social meaning is mysterious, varied and complex – how can blue be simultaneously associated with nobility (blue blood), persistent melancholy (the blues) and dirty jokes (blue humour)? In this feature, Paul Simpson traces the development of a spectrum of meaningful shades – from Apple’s gleaming white to Ukraine’s Orange Revolution – and discovers why red is the colour of passion, socialism and bankers’ law suits.

Amazon founder Jeff Bezos, wrote author Brad Stone, “treats workers as expendable resources”, coldly allocating capital and manpower. Yet, despite reportedly failing to provide the enriching work environment that has been recommended in HR literature for decades, the company is hugely successful. So does that mean our notions of employee engagement are outdated? The CIPD’s Laura Harrison admits that we have to be realistic about the different business models that exist, but says businesses have a duty to ensure employees’ experiences at work are positive and meaningful. Part of the problem, she tells Claire Warren, is that we’ve turned engagement into a business transaction.

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

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

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

Tim Smedley is a freelance journalist, who has written for the Guardian

Richard Cannon; Niels Aage Skovbo; Getty Images; Internet Archive Book Images

FEATURES IN DETAIL

Drucker’s lasting legacy

Companies that last

p38

p44

Peter Drucker was the management guru other management gurus revered. Thinker, writer, contrarian, novelist and prophet Drucker recognised that management was a discipline in its own right. His theories – especially his focus on management by objectives – were immensely inﬂuential and he was ahead of his time in predicting the collapse of communism, the disappearance of blue-collar jobs and the importance of corporate responsibility. But how relevant are his ideas today? Is The Essential Drucker really an essential read for managers? And does the fact that no one has quite ﬁlled the void he left say more about the state of management theory than the quality of his ideas? Paul Simpson explores Drucker’s legacy in the 21st century.

Changing consumer habits and geopolitical shifts are combining to reduce organisational life spans. Today, the average company lasts around 20 years on the S&P 500 Index, and there is no longer any guarantee of a successful corporate life. “I believe in competition,” says Scott Anthony, managing partner of Innosight. “But when we celebrate ‘creative destruction’ and the rise of the new, we forget the damage destruction creates.” A number of organisations have bucked the trend, however, including toy-maker Lego, worker co-operative Mondragon Corporation, family business Bettys & Taylors, Japan’s Kao Corporation and US multinational 3M. And, as Jane Simms discovers, despite being very different businesses, they have a lot in common. Jane Simms is a freelance management journalist and was previously editor of Financial Director

Interview: Debrief p62-71 lives Peter Wanless Working Do the beneﬁts of working in p56

the gig economy outweigh the lack of job security?

It’s a credit to Peter Wanless, CEO of the NSPCC, that, despite the stream of child abuse revelations over recent years, he manages to maintain an upbeat outlook. “We’re about hope,” he tells Robert Langkjær-Bain. “There’s a really strong sense of positive change, so to some extent that does counterbalance the darkness.” Over the years, the charity has built a reputation for its expertise that gives it access to number 10. But with that comes a responsibility to ‘speak truth to power’ and a public proﬁle others might shy away from. Wanless is happy to accept both if it helps the NSPCC to continue punching above its weight. While people may think of it as big, he says, it’s tiny in comparison to the problem it’s seeking to solve.

Leadership

Chief executives need to be wary of those who ﬂatter them: ingratiating managers are more likely to be insincere.

Corporate reporting

Companies use obfuscation strategies in reports to make up for poor ﬁnancial performance.

Wellbeing

Research identiﬁes failure to unwind as a possible risk factor for cardiovascular disease.

Business travel

While some business travellers embrace frequent ﬂying, others see it as a source of stress.

HR profession

The HR function needs to evolve or transform to stay relevant in the face of momentous changes in the nature of work.

Work-life balance

Maintaining an active sex life can help improve work performance, because of the mood-enhancing effects of brain chemicals.

Bullying

Conventional advice is rarely sufficient to stop bullying, especially if it fails to recognise the strong emotions involved.

Skills development

Investment in lifelong learning is one of six recommendations for addressing serious weaknesses in the UK’s skills base.

Neuroscience

The love entrepreneurs have for their companies is similar to that felt by parents for their children.

Robert Langkjær-Bain is a freelance writer and editor specialising in business, marketing and technology

Millennials

Straight-talking is appreciated by millennials, but leaders who are divisive lack support.

Diversity

The gender of a hiring manager inﬂuences how gay applicants are perceived.

Creativity

Structuring knowledge can destroy creativity rather than enhance efficiency,

PERSPECTIVES MANAGEMENT THINKING DISTILLED

Q&A JULIAN BIRKINSHAW

Good leaders act on emotional conviction

IN RAPIDLY CHANGING TIMES, the winners will be those that move forward faster than others, says Julian Birkinshaw, professor of strategy and entrepreneurship at London Business School. His latest book, Fast/Forward, co-written with Jonas Ridderstråle, contends that the most successful businesses act decisively and intuitively – without being distracted by endless analysis. What sets fast/forward companies apart from their rivals? They take decisive action, are open to trying new ideas and are tolerant of well-intentioned failure. They are prepared to act on what we call ‘emotional conviction’ – valuing the intuitive, experience-based knowledge in the company, even if it cannot be quantiﬁed. Fast/forward ﬁrms don’t get it right every time – they make mistakes and try again. Can established organisations develop these characteristics? Of course, but they need to do it within their own context, and 06

How does a fast/forward approach relate to organisational structures? I make a distinction between ‘bureaucracy’ built on formal procedures and hierarchical control, ‘meritocracy’ where knowledge and expertise are dominant, and ‘adhocracy’ where action and experimentation are more important. Most large companies are bureaucracies or meritocracies, but we need more adhocracies to cope with the rate of change in the external environment. Many organisations are experimenting with agile teams, project-based structures and other versions of adhocracy. What leadership style does this approach require? You need initiative-takers, but the leadership style needed to manage them is about setting direction, providing a ‘safe’ environment to experiment and bringing the necessary resources to bear. You also need to create urgency – to motivate people to get things done – and, when the way forward is too ambiguous for lengthy discussions, you have to be more directive. Leaders have to be ambidextrous: good at empowering others, but prepared to step up and be decisive.

Unethical amnesia in repeat offenders PEOPLE OFTEN FEEL GUILT or remorse after behaving dishonestly, whether it’s ethical misconduct in business or smaller-scale misdeeds such as stealing from the workplace, so you’d expect them to stop acting in ways that trigger such negative emotions. Why then, do we see some individuals behaving unethically again and again? One explanation proposed by Maryam Kouchaki is that memories of wrongdoing fade over time – a condition she and Francesca Gino of Harvard Business School call ‘unethical amnesia’. A series of nine studies carried out by the pair found that people who view themselves as essentially good often act badly when given the opportunity. But to maintain a positive self-image, they are then motivated to forget the details of their unethical actions. Discussing their ﬁndings in the Proceedings of the National Academy of Sciences of the United States of America, Kouchaki and Gino say: “Because of unethical amnesia, people are more likely to act dishonestly repeatedly.” Strategies people use to distance themselves from their own wrongdoing include justiﬁcations for their behaviour or viewing it as morally permissible; for example, by dehumanising their victims. They may also judge the misconduct of others more harshly than their own. Kouchaki is an associate professor at Kellogg School of Management

Words: Anat Arkin

build this mentality into the organisation where it has the best chance of success – in business development, sales or R&D.

Bloomsbury; David M Benett/Getty Images

Utopian fantasies could come true FROM ENDING SLAVERY to giving votes to women, every great milestone of human history was considered a utopian fantasy – until it became a reality. The same, Rutger Bregman argues, could happen to visions that are currently widely dismissed as unachievable, including a 15-hour working week, a universal basic income and open borders. Bregman sees these revolutionary steps as the only way to tackle the challenges facing a world in which, he says, robots are taking over more jobs and inequality is steadily increasing. “If current trends hold, there is really just one alternative: structural unemployment and growing inequality,” he warns in Utopia for Realists. The book describes experiments showing how, instead of promoting idleness, guaranteeing people an income encourages those previously caught in the welfare trap to seek paid work. Bregman also makes the case that shorter working hours would give more people a chance to do meaningful work. Sounding even more far-fetched in today’s political climate is the idea of dismantling borders to reduce inequalities between rich and poor societies. But, as Bregman says: “Perhaps in a century or so we’ll look back on these boundaries the way we look back on slavery and apartheid today.” Bregman is a historian and author

I N G P OI

N T

PERSPECTIVES

Does an industrial strategy raise productivity? Industrial policy is back in fashion. Before the election, UK businesses called on all political parties to commit to an effective industrial strategy, while the Conservative government’s recent green paper proposed ‘deals’ to help companies address sector-speciﬁc challenges, more investment in science and R&D, and a new system of technical education. But how successful are such interventions likely to be?

EXPERTS’ VIEW VICKY PRYCE

SAM BOWMAN

Board member, Centre for Economics and Business Research; former government adviser

Executive director, Adam Smith Institute

We need to create conditions that encourage productivity to grow. Before the election, the Conservative government had done a bit, but money needs to be put into education and the government needs to be more involved in R&D, while encouraging private sector investment.

Industrial policy is a bad idea if it means favouring particular industries. Private investors and companies aren’t very good at predicting the future, which is why most new businesses fail. So why should the government be any better at picking winners? To the extent an industrial strategy refers to something broader, such as deregulation, it could be a good thing. We could, for example, change regulations covering land use to make it easier to build factories.

Growth, productivity and investment in R&D are spread unevenly across the country. Dismantling the regional development agencies that played a big part in regenerating Merseyside and other areas hasn’t helped. Sectoral support is not the right way to go. What tends to happen is certain sectors successfully lobby for support, and we end up throwing money at those that could do the job themselves without any help from the state. It’s harder to quarrel with what the green paper said about developing skills for a modern economy and beneﬁting the 50 per cent who don’t go to university. The trouble comes when money is put into a new, untested system of technical education, when signiﬁcant funding cuts have been made in further education. We need better coordination across government. An industrial strategy separate from the government’s overall approach to the economy doesn’t make sense – it has to be an integral part of the package.

Some of the proposals in the Conservative government’s green paper were reasonable. It’s right to try and move away from a model where you either go to university or are deemed a failure. But if we are looking for quick results, efforts to promote technical education will probably fail. To succeed they need cross-party support over the long term. Upgrading infrastructure is also a good idea. The problem is that funding decisions are made centrally, so money goes into projects like HS2, instead of those with much greater beneﬁt-to-cost ratios, such as links between northern cities. An effective industrial strategy would devolve some of the big spending decisions to the regions. That would deliver more even growth across the UK and help stem the brain drain from the rest of the country to London. It might even raise productivity.

PERSPECTIVES

OM I N

The end of R&D

How big a trend is this? The fear of interest rate hikes made Q3 and Q4 2016 record quarters for M&A. But volumes only tell part of the story. Big pharma is the largest sector for R&D spend by far, yet Deloitte says the amount of internal innovation in the industry is dropping dramatically while M&A is expected to increase, a trend that is replicated in other sectors. So much growth is located outside core business models – often driven by start-ups – that it’s costly and culturally difficult to drive it from the core. British American Tobacco bought US rival Reynolds primarily to get its hands on North America’s biggest vaping brand, and Unilever paid $1bn for subscription razor brand Dollar Shave Club to tap into its direct customer relationships. And the biggest driver of the M&A uptick? Talent. Google has more than 200 founders of start-ups among its ranks having bought out their businesses. The bottom line R&D won’t disappear, but you could argue that the breakthrough innovations are so prohibitively expensive that the risk of gambling on them sits more comfortably with investors in start-ups than the shareholders of multinationals. After all, who’d be Steve Ballmer? The Microsoft CEO religiously spent 15 per cent of sales on R&D, but was axed in part for failing to come up with the sort of major innovation that would excite the technorati. But if M&A isn’t right for you, there are still options: incremental innovation is arguably as important as eureka moments, and many R&D departments are being replaced not by big-ticket purchases but by crowdsourcing or strategic partnerships.

Why we need more purposeful leaders A more diverse definition of talent COMPANIES THAT employ people with autism and other neurological-based conditions are reaping benefits, including higher productivity and innovation. Other businesses hoping to achieve these benefits need to adjust their recruitment and career development processes to reflect a broader definition of talent, say Robert Austin and Gary Pisano. In a recent Harvard Business Review article, ‘Neurodiversity as a Competitive Advantage’, they observe that many firms use the same hiring practices with all candidates. As a result, they do not tap into the talents of ‘neurodiverse’ people as they often don’t interview well. Longer, less formal assessment processes give neurodiverse applicants a better chance to demonstrate their strengths. Austin and Pisano maintain such recruitment programmes encourage leaders to treat all employees as unique assets. “The work for managers will be harder,” they say. “But the payoff for companies will be considerable: access to more of their employees’ talents along with diverse perspectives that may help them compete more effectively.”

EMPLOYEES LED by purposeful leaders generally find their work meaningful, are satisfied with their job and committed to their company, and are less likely to leave their place of work. That’s one of the key messages from new CIPD research, which also found that just 21 per cent of UK managers rate themselves highly as purposeful leaders. “Purposeful leadership comprises three components: a vision for the team, a commitment to serving the needs of a range of stakeholders and a strong personal moral compass,” says lead researcher Katie Bailey. “Given the current business climate, the added stress of Brexit and the pressures on organisations to lead with moral conviction, it is concerning that so few managers feel they measure up against these ideals. There is clearly a significant gap between the skills and capabilities currently held by managers and where we need to be.” The research concludes that clear policies, role modelling from senior leaders, training and an open organisational culture can help to nurture purposeful leaders. On the other hand, resource pressures, unrealistic targets and cultural factors are among the constraints that may sabotage efforts to develop purposeful leadership.

Austin is a professor at Ivey Business School. Pisano is at Harvard Business School

Bailey is a professor of management at the University of Sussex

Pew Literary

What is it? Investment in R&D has long been a yardstick of innovation. But the ROI of R&D is sketchy at best: while big spenders on research are more proﬁtable, there’s no evidence of causation. Global R&D spend in 2017 is forecast by the Industrial Research Institute to rise by around 3 per cent, but the rate of growth is slowing and only China and India are increasing R&D investment (from an extremely low base). Instead, multinationals are on an acquisition spree, and it’s not hard to see why. M&A is more palatable for shareholders than a big R&D bet that might not pay off, while companies’ burgeoning cash piles can be spent more quickly and effectively on a purchase or merger than the drip-feed of research investment.

PERSPECTIVES

Matthew Abourezk/www.talkingbox.tv

Cultural conflict in business practices BUSINESSES OFTEN adopt new management practices when the old ways of doing things no longer work, or as part of wider change. But many initiatives fail to live up to expectations, according to Markus Spiegel. A key reason for this high failure rate is many organisations wrongly regard management practices as culturally neutral. In a recent MIT Sloan Management Review article, ‘What Makes Change Harder – or Easier’, Spiegel and co-authors Theresa Schmiedel and Jan vom Brocke of the University of Liechtenstein point out that, if the values and culture embedded in new practices are in conflict with a company’s existing culture, the business needs to encourage behaviours that support its new objectives. “This cannot be done by printing shiny posters and flyers that list ‘new values’ that are introduced to employees by managers reading from scripts. To truly unlearn existing behavioural patterns, there must be both a demand for new behaviour that builds on the desired values and an opportunity to reward it,” write the authors. Thinking through how new management practices will – or will not – fit with the existing organisational culture, they add, is an important first step towards bringing about real change. Spiegel is a partner at Schaffer Consulting

DR TOMAS CHAMORRO-PREMUZIC HR PRACTITIONERS SHOULDN'T RELY ON INTUITION WHEN IT COMES TO HARNESSING HUMAN CAPABILITIES

THROUGHOUT ITS 100-year intelligence and personality tests, history there have been three major and work simulations. concerns at the centre of HR. The Speculations about the future are first, influenced by Frederick theoretically interesting, but they Winslow Taylor’s 1911 book The imply present challenges have been Principles of Scientific Management, effectively addressed. HR must was performance, or how to turn learn to walk before it can run. people into productivity machines. Technology could help it go faster, The second – kick-started in the but in the wrong direction. If 1950s – was process, or how to decades of science have failed to manage the tactical aspects of make HR data-driven, it is highly employee relations. The third, unlikely things will change now. evident for the past two decades, is Talent management is full of potential. It pertains to the strategic shiny new objects. Buzzwords elements of talent emerge on a regular management, “Technology could basis and are often particularly how to help HR to go received with identify and harness faster, but in the enthusiasm. The big human capabilities, and wrong direction” leap in HR would be has been turbocharged if practitioners could by the digital revolution. implement the key scientific It is naïve, however, to expect recommendations from the past five new technologies to solve talent decades: profile a role, profile the identification problems. Emerging candidate and objectively evaluate assessment methods, such as data the degree of fit between the two. scraping, digital interviews and There is no shortage of tools to help gamification, promise to offer achieve this, but most decisionquicker, simpler and cheaper makers trust their intuition instead. solutions. But when it comes to The disproportionate reliance on accuracy and explanatory power, intuition is not just an HR issue. we are still waiting for scientific But the temptation to trust one’s evidence to justify the hype. In instincts is always stronger when contrast, organisational psychology our judgements concern people. provides decades of systematic This is the main problem with research on the validity of talent identification: most people established talent identification are interested in it, largely because tools, such as structured interviews, they believe they are good at it. Chamorro-Premuzic is author of The Talent Delusion, CEO of Hogan Assessments and a professor of business psychology at UCL and Columbia University

PERSPECTIVES

BEST OF Fresh thinking from the worldfamous incubator of ideas

LAURA VANDERKAM Author and time management expert Finding time How do we ﬁnd time for the things that matter? Not by saving bits of time here and there. Vanderkam believes a better way is to work out our career and personal priorities and set time aside for those each week. There are 168 hours in a week so, even if you are working 60 hours, it leaves plenty of time for other things. “And when we focus on what matters,” Vanderkam says, “we can build the lives we want in the time we’ve got.” ADAM GRANT Professor of psychology, Wharton School of Business Great thinkers fail again and again Creative people who not only come up with new ideas, but take action to champion them, have some surprising habits. These “originals”, as Grant calls them, often procrastinate over a range of ideas. They also have doubts, which motivates them to test those ideas. And, like the rest of us, they are afraid of failing. What sets them apart is they are even more frightened of failing to try. “The greatest originals are the ones who fail the most, because they try the most,” says Grant. “You need a lot of bad ideas in order to get a few good ones.”

Time to appease the neglected classes EMPLOYERS HAVE helped fuel the rage of white working-class people who, after decades of seeing their jobs disappear and their interests ignored, are taking their revenge at the ballot box. And that, Joan C Williams suggests, is true of employers in both the UK and US. Williams, a law professor described by The New York Times as having “something approaching rock star status”, argues that, unlike their German counterparts, British and American employers have failed to provide the middle-skill jobs that support a modest but decent standard of living. She blames this partly on a failure of ‘social imagination’ and partly on education systems that do little to equip non-graduates with the high-tech skills needed in a modern economy. While employers are part of the problem, they can also be part of the solution, according to Williams, whose book, White Working Class, rounds on those who dismiss or deride working-class whites. Urging employers to invent new types of jobs, she explains that these won’t be the old blue-collar jobs, but will combine technology in various ways with either

manufacturing or service delivery, “giving them a higher value add factor, which is the only way they are going to lead to a stable, middle-class existence”. Another way for employers to allay the anger of white workingclass men in particular, is to recognise that most corporate diversity strategies currently focus, almost exclusively, on gender and race. With white men holding the vast majority of top management jobs, Williams stresses that gender and race are issues that need addressing. “That said,” she told Work., “the standard diversity talk sends the message that all white men are privileged – and that is not true.” Many of the methods used to level the ﬁeld for women and minority groups, she continues, will also help “class migrants” with non-privileged backgrounds. “Treating them as if they are privileged is infuriating. Not only does it undercut diversity efforts, it poisons national politics.” Williams is founding director of the Center for WorkLife Law at the University of California’s Hastings College of the Law

TED

TIM LEBERECHT Author Building human companies in the age of smart machines As machines take over our jobs, the only work left for humans will be the kind that must be done beautifully, rather than efficiently. So to remain human, organisations must become beautiful. That means rising above what is merely necessary, creating intimacy among co-workers, speaking the ugly truth and remaining incomplete by valuing questions above answers. Calling for a radical new humanism that embraces these principles and designs for them, Lebrecht warns: “If we don’t, we might end up feeling like aliens in organisations and societies that are full of smart machines that have no appreciation whatsoever for the unnecessary, the intimate, the incomplete and deﬁnitely not for the ugly.”

PERSPECTIVES

PHILIP ALDRICK

IN THE AGE OF THE ‘SUPERSTAR FIRM’, POLITICIANS’ FOCUS ON BOLSTERING THE RIGHTS OF WORKERS COULD PROVE MORE VALUABLE THAN A PAY RISE THE IMMEDIATE FUTURE is not a pretty sight for Britain’s workforce. People may feel secure about their jobs but, with inﬂation rocketing past wage growth, their wallets are about to get a little lighter. As the Bank of England governor has said, 2017 is going to be tough as the squeeze on household ﬁnances tightens once again. The solution to weak pay, as we know, is higher productivity. Productivity is an elusive friend, though; everyone wants it but no one knows quite how to get it. Yet, in terms of social pressure and the risk of political backlash, low pay is as redolent as high tax. Westminster can’t turn a blind eye, so something must be done. That something, it seems, is workers’ rights. A surprising development in the election was the common ground that Labour and the Tories found on employee rights. For a socialist like Jeremy Corbyn, it’s bread and butter. Theresa May, on the other hand, redrew the line for the Conservatives with her scorn for the cult of individualism and scepticism about big business. The upshot has been an unlikely consensus that employees need better protection. Both parties promised higher minimum and living wages. Both demanded employee representation in the boardroom. Both called for more entitlements for the

self-employed. Both promised to gold-plate EU standards. On one level, the economics makes sense. The more proﬁts that are diverted from dividends to a newly empowered staff with sharp elbows at the boardroom table, the more money will be spent in the UK and the better it will be for growth, in theory at least. There’s just one thing. On that issue, British workers are already doing pretty well. According to the OECD, the share of GDP taken by ‘labour “The internet is hastening the winner-takes-all trend, with large companies such as Google shifting more income into capital” compensation’ has been rising in the UK since 1995. Wages have grown faster than productivity as companies have more than shared the spoils. The problem on pay in the UK has been the paucity of productivity growth. OECD analysis shows that real wages in the UK fell on average by 1 per cent a year between 2009 and 2015. Only Greece and Portugal fared worse. If Britain is to remain a bulwark against the tide of an ebbing ‘labour share’, the present focus on workers’ rights could prove invaluable. At some point, productivity will pick up and, if

the UK follows where others lead, the labour share will fall. According to work by celebrated economists David Autor and David Dorn, dwindling labour share is a secular trend. The world is increasingly being dominated by big companies that hoover up profits, and big companies, they found, share proportionately less with both their employees and suppliers, who may not have the muscle to push back. The internet is hastening the winner-takes-all trend, with ‘superstar firms’ such as Google shifting more income into capital – be that the technology or automation that will one day replace much work, or company stock. The result, the professors believe, will be greater inequality because households don’t tend to own capital. If that’s the direction of travel, workers will need a louder voice. Staff at superstar firms could demand extra stock awards to participate in the capital growth and offset their shrinking labour share. Employee board representatives at suppliers to superstar firms could ensure the company does not pitch so low for contracts that workers feel the squeeze – hopeful that rivals will also need to reflect staff demands. Offering workers’ rights in place of better pay may seem like a cheap trade-off today, but it could prove more precious than we think.

Aldrick is economics editor at The Times

minutes with...

Will Butler-Adams The CEO of Brompton on openness, proﬁt-sharing and keeping things fresh

On being fair but ‘brutal’ It’s not easy being the boss. There’s a lot more to lose now. While I’d be happy living out of a rucksack, I’ve got more than 100 employees to think about, and there have been some hairy years that we’re only just starting to recover from. But if it’s taught me one thing, it’s to always be fair and honest with staff. This means explaining that while I take most of the big decisions, responsibility lies with them too. This is where I can be quite brutal. If staff don’t want to help, they can sod off! In return for their help though, I’m open about everything. They know what I earn and how much money is in 12

the bank, and this breeds respect. The more staff know, the more they can contribute. On needing disorder When I first arrived, I got everyone to tidy up the place. In a production line, you need order. Now though I encourage ‘disorder’ – but of another type: ideas. If you allow too much routine, it doesn’t generate innovation, it just creates stagnation. I see it as my job to lob grenades in and see how people respond. We need this even more as the company grows bigger. I need to break systems to keep things fresh. On being in it together I’ve said I’m brutal, but that’s really because we’re all involved in this together. We have a strong staff ownership model – through an EMI (enterprise management incentives) plan, where shares have an option after five years. About 15 per cent of the firm is owned by employees now, excluding management. The simple fact is Brompton can’t exist without its people – and it’s patronising to assume you’re cleverer than them, or that they can’t contribute. Because staff are stakeholders, we share the good and the bad times. Everyone here gets a 4 per cent profit share. Two years ago, when profits were £3.4m, everyone was happy, but

last year they were £700,000 and everyone felt it. But I say ‘good; it’s good you give a shit’, because now everyone wants to do better. On taking risks A lot of the things CEOs get in a ﬂap about are Champagne problems, and I feel I need to carry on taking risks if there’s an opportunity to grab. We’ve recently invested £2m in developing electric bikes, using KERS (kinetic energy recovery system) technology from the world of F1. We’re also putting effort into getting more outlets in China – historically where we’ve suffered from cheap copies being produced. The thing with risk though is that you have to accept knock-backs too. We’ve tried for years to get bike borrowing – supplying Bromptons to London train stations – up and running. Intellectually it’s a cool idea, but it just hasn’t taken off yet. On Brexit I worry that business leaders are talking themselves into paralysis when they don’t need to. If I can get all the things right that I’m planning to do, I can grow the business – full stop. I already pay a 10 per cent tariff trying to grow in the US, so who cares what’s negotiated? Brexit is completely over-egged. It costs to trade, that’s what happens in business. We all need to get over it.

Interview: Peter Crush. Portrait: Richard Cannon

On serendipity Having tried and failed to do a management buy-out of a DuPont chemical factory I was running in Middlesbrough, I decided to do an MBA. It was while travelling on the bus to Henley that I got chatting to a man who told me he was the chairman of a ﬁrm called Brompton Bicycle. I had no idea what a Brompton was, but he said he was looking for someone to help run the business, and would I be interested. I took one look at the factory and saw it was a total mess, but I also saw the product. I thought: ‘OK, I don’t love it, but it’s worth a shout.’ It was 2002, I was 28, had no kids, and decided I had nothing to lose.

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TRUMP CANâ&#x20AC;&#x2122;T READ 14

â&#x20AC;Ś at least thatâ&#x20AC;&#x2122;s what Google says. But what does that reveal about the power search engines and social media have over what we think and do? Jeremy Hazlehurst reports

ven before hackers published a large appeal to our biases, can spread like wildfire. And using quantity of documents stolen from the data science and armies of bots, those with bad intentions office of Emmanuel Macron, the new can game the system to spread misinformation for French president, people had been financial or political gain.” toiling away to destabilise him. But how do we combat it? It seems that such problems Shortly before the second round of are baked into the most successful internet companies. voting in the French presidential Evgeny Morozov, a well-known technology thinker election, a story was published on the 4Chan message whose book, The Net Delusion, criticised ‘cyber utopians’ board falsely claiming that Macron, a former banker, who believe the internet is inherently a force for good, has a fortune squirreled away in a tax haven. American wrote: “The problem is not fake news but the speed and alt-right types who supported nationalist candidate ease of its dissemination, and it exists primarily because Marine Le Pen soon started republishing the story and today’s digital capitalism makes it extremely profitable even denials that contained the words ‘Macron’ and – look at Google and Facebook – to produce and circulate ‘tax haven’, in an attempt to game Google by associating false but click-worthy narratives.” Social media is the words so strongly that the search engine’s designed and constructed to make stories go viral. That autocomplete would, when you typed in one term, is how these tech giants make money and they are so big suggest the other. Two days before the vote, hackers and profitable because they are extremely good at it. It is dumped stolen documents online, inspiring a concerted not hard to spread propaganda very far, very quickly. effort on Twitter to get the story trending by retweeting Can’t Facebook invent an algorithm to sift out fake stories using #MacronGate. The tweeting patterns news? “A fix to the fake news problem cannot be purely showed that bots – automated accounts – were technical,” says Sam Woolley, director of research in responsible for much of the traffic; one user reportedly the Computational Propaganda Project at Oxford Unitweeted 1,668 times in 24 hours, a rate of more than one versity’s Oxford Internet Institute. “Software tools per minute with no sleep. that help us to detect bot nets, This ability to disseminate unverified news sources or a misinformation so efficiently lack of proper citation can help “Today’s digital capitalism legitimises propaganda. During us to determine whether an artithe televised presidential debate makes it extremely profitable to cle is sufficiently vetted. This Le Pen said: “I hope that we will technology must, however, be produce and circulate false but not find out that you have an offcombined with education click-worthy narratives” shore account in the Bahamas.” focused on building media literShe later admitted that she had acy and critical thinking skills. no proof that he did, and Macron In other words, only a combinathreatened to sue. But it also matters because search tion of technological and social engines and social media shape our world in a way their solutions can help society founders could never have imagined – and are easily combat fake news.” It might be COULD WE SEE THE END manipulated. During the American presidential elec- possible to teach a computer to OF NET NEUTRALITY? tions in 2016, Facebook came under fire for its role in recognise egregiously false stoSince the birth of the internet, spreading ‘fake news’, which usually favoured Donald ries, but programming it to the idea that its resources should Trump (unlike a more recent conspiracy theory doing differentiate an outrageous opin- be available to everyone equally the rounds on social media that suggests he struggles to ion from propaganda is a tricky has been sacrosanct. It is closely read). Research by BuzzFeed found that a false story task, not to mention teaching it linked to ‘net neutrality’, the idea that governments and internet claiming that then-president Obama had banned recit- to recognise satire. service providers (ISPs) should The other tech giant, Google, treat all content the same. Net ing the Pledge of Allegiance in schools, published on a site resembling that of ABC News, generated more than might at first glance seem more neutrality was enshrined in the 2.1 million engagements in two months. Then there was benign, as all it does is search US by the 2015 Open Internet the bizarre Pizzagate story, a lurid tale alleging that information and present it to you. Order, but Ajit Pai, the new chairman of the Federal Hillary Clinton was involved in a paedophile ring that But don’t underestimate its power Communications Commission, used the basement of a pizza restaurant. Even after the to influence how we see the says that, although he supports story was thoroughly debunked, research by The Econo- world. Google currently com- the open internet, current mistt and YouGov found that only 29 per cent of people pletes about 40,000 searches a government oversight is too thought it was “definitely not true”. About half of Trump second and there is some draconian. Critics fear that if net neutrality is dismantled, ISPs controversy over how its algo- could change the access speeds voters believed “parts” of the story were true. Such activity is, according to Tim Berners-Lee, the rithms order information. For of sites, or block content as they godfather of the internet, one of the biggest scourges of example, is it politically biased? wish, to maximise their profits. the online world. He said recently: “Misinformation, or One study in 2016 suggested that Large news corporations could pay for their sites to be more fake news, which is surprising, shocking or designed to Google’s autocomplete gave easily accessible than the 16

smaller, less well-ﬁnanced sites.

big tech

The Washington Post/Getty Images

biased suggestions. If you typed in ‘Labour are’ Google suggested ‘… finished’, while ‘Conservatives are’ offered no search suggestions at all. Conspiracy theorists claimed that negative suggestions had been removed because of a tax deal between the Conservative government and Google, a rumour both denied. Yet during the US election, another study found that Google results were liberal-leaning. Typing in phrases like ‘gun control’ and ‘financial regulation’ tended to bring up liberal suggestions. For 16 per cent of the searches, there were no right-leaning results at all on the first page. Most people click on one of the first five results. Google says its algorithms are value-free because they are purely data-driven, but is that true? And isn’t relying on an algorithm without human interference a kind of value in itself? There is also a question of whether we trust the likes of Facebook to mediate our news. As its business model is based on promoting the sharing of stories, click-bait content is more likely to generate revenue than worthy investigative journalism. “There are several other challenges with editing news to remove propaganda or allowing platforms to curate news, and most of these have to do with issues of free speech. Allowing platforms to edit the news people see, with little or no oversight, could endanger the open sharing of information and ideas,” says Woolley. That said, most people recognise that the internet enables a greater diversity of views to

be heard than in the days when a few state broadcasters or newspapers had the monopoly on news. The problems surrounding fake news are inextricably tied to the collection of data. By collecting information about you, these firms can understand what you want to read – or, more accurately, what you are likely to click on, thus making money for their advertisers. As Berners-Lee puts it: “The current business model for many websites offers free content in exchange for personal data. Many of us agree to this – albeit often by accepting long and confusing terms and conditions documents – but fundamentally we do not mind some information being collected in exchange for free services.” However, he says that we are “missing a trick”, as we “lose out on the benefits we could realise if we had direct control over this data and chose when and with whom to share it”. The terms and conditions we routinely sign with barely a glance do not allow us to decide what data we do and don’t want to share, and especially what we want firms to pass on to (unnamed) third parties. This may change with new laws that come into force in 2018, as we will see later. The digital giants that mediate our view of the world and constantly bombard us with adverts are not exactly Big Brother, but there is a sinister edge to their activities. By stealth, they are gathering information about us. Half-knowingly, deliberately not thinking too hard about it because we are seduced by their products, we are colluding. At this point, it seems legitimate to

The now debunked Pizzagate story prompted protesters to gather outside the White House

Worked on local and national newspapers, including the Metro and the Independent

Career |

Editor of Work., the CIPD’s strategic quarterly journal. Previously deputy editor at People Management

Won a number of journalistic awards

How we did it | Claire has an extensive LinkedIn profile, detailing her career and education. We estimated her age based on the start date for her first job, assuming that she began work immediately after graduation. Work-related images of Claire are available on her LinkedIn page and Twitter feed. Limited social images are available on her Facebook profile.

Education | Attended Twickenham Girls School (a comprehensive). Graduated in 1987 with a BSc in psychology from Reading University

Age | 50 Appearance |

Blonde, diminutive

192.com

Related to Jackie Epstein, former racing driver and manager of Brands Hatch. Jackie is the son of Jacob Epstein (a renowned sculptor, who was famous for Oscar Wilde’s tombstone) and Isabel Nichols, Jacob’s muse

How much can you really ﬁnd out about someone through a few basic internet searches? We armed freelance journalist Alison Ratcliffe with just a name and a job title to see what could be surmised online about Work. editor Claire Warren. What would a similar exercise uncover about you? And what could someone do with the information?

Twitter

Address | Rotherhithe or Surrey Quays in south east London. Has mostly lived in south London for the past 15 years. Previously lived in Ware, Hertfordshire

Facebook Hester is PA to the CHRO at InterContinental Hotels Group. Isabel is a hospitality co-ordinator at KPMG, and formerly worked at Brands Hatch

How we did it | A few photos and posts are publicly available on Claire’s Facebook page. Her friends list is private, but comments and likes under some posts provide a partial view of her Facebook friends. Hester Swanson-Warren features in photographs. Given the similarity in age evident from images, Hester could be a sister. A post confirms that Isabel Epstein is Claire’s mum. We found their vocations on LinkedIn. Among Claire’s likes is a community page called ‘The Epstein family’. This links to a profile of Jackie Epstein, which mentions his father Jacob. There are profiles of Jackie and Jacob online.

How we did it | Googling Claire Warren returns a number of profiles on 192.com, which derives information from the electoral roll. It provides a patchy residential history and also lists other residents at the same address. We were able to select the correct Claire Warren profile because Claire at one stage lived with her mum, Isabel Epstein. The 192.com listing reveals that Claire lived with a man at more than one address – he could be a flatmate but it suggests they are a couple. Their different surnames could mean they aren’t married.

Headshots include four of the real Claire Warren and three of Joan Allen, who played Claire Warren in TV show The Family

Family | Sister to Hester. Daughter of Isabel Epstein

“ENJOYS A DRINK, ESPECIALLY RUM”

Relationship | In a relationship since 2002 with a personal trainer and nutritional adviser. Unmarried, but cohabiting

big tech

Interests | Passionate about motor-racing and motorbikes in particular

Enjoys international travel

Interested in science and technology

Likes to stay ﬁt

Has an interest in supporting people with disabilities

Enjoys a drink, especially rum

SuperStock, Zuma Press/PA Images; ABC/Getty Images; dpa picture alliance/Alamy Stock Photo

Music | Home Free and David Bowie How we did it | An early Facebook cover photo hints at Claire’s interest in motorbikes. This is backed up by likes for a motorcycle magazine and a racing driver’s page, as well as the family ties. Claire’s current Facebook cover photo shows her participating in a mud-run obstacle race. She also follows athletics/ﬁtness magazine Spikes on Twitter. Photos of an American road trip and an encounter with an elephant (apparently in Asia) suggest a love of international travel. Facebook likes and a volunteering stint (detailed on LinkedIn) demonstrate Claire’s interest in supporting people with disabilities. Claire follows a handful of Twitter feeds related to science and technology. Facebook comments by Hester hint that Claire may be a rum drinker. Facebook posts reveal that she recently attended a Home Free concert, and that she probably likes David Bowie.

Politics | Left-leaning

How we did it | Claire’s political leanings can be inferred through a combination of Facebook and Twitter: on Facebook she shared a link to the Patrick Stewart sketch parodying those who would like Britain to withdraw from the European Convention on Human Rights. Claire’s Twitter feed includes links to progressive articles on gender, race and refugees. Aside from various Financial Times journalists, the only newspaper Claire follows is the Guardian. She also follows a Twitter feed highlighting the ‘bizarre and terrifying comments’ found in the Daily Mail comment section.

ask: isn’t this is all a bit WILL COMPUTERS READ MINDS? alarmist? Okay, you might The next frontier for technology? say, fake news is bad, but Mind-reading. Elon Musk, the man behind how many people get all space rocket firm SpaceX and electric car their news from their business Tesla, recently declared his Facebook feed? And it interest in computers that understand our thoughts: “Some high bandwidth interface might be a bit distasteful to the brain will be something that helps that these firms harvest achieve a symbiosis between human and so much information machine intelligence.” Musk said his about me, but does it company Neuralink might develop a ‘neural lace’ that could implant electrodes into the really matter? brain. This could treat such neurological And, to be fair to Face- conditions as dementia and Alzheimer’s. book, it is addressing the If it works, he has suggested that we could problem. At first it was transmit thoughts to other people in a defensive, insisting that it process he calls “consensual telepathy”. Facebook founder Mark Zuckerberg has was a “platform” not a reportedly hired 60 scientists to develop “publisher” and certainly technology that would let your thoughts not, in the words of Sheryl appear on screen without you having to Sandberg, its chief operat- type. Is it possible to translate thoughts to electrical impulses, and then back into ing officer, “an arbiter of thoughts? No one knows, but we are about truth”. But in the run-up to find out. to the UK general election, Facebook deleted thousands of profiles it believed were created to disseminate propaganda. It now employs fact-checkers who label stories as ‘disputed’ if they are deemed false. It also published a checklist to help users sift the true from the fake, such as ‘be sceptical of headlines’ and ‘look closely at the URL’. This doesn’t solve a wider problem, however – that Google is now effectively the principal archive of human knowledge, an online library that has been polluted by fake news and, for that matter, fake facts. The concerns about our relationship with these tech giants run deeper than fake news or knowledge. At the most basic level, signing up to online services can endanger us. “We are slaves to this technology, and do not question it when an app tells us to reset a password, or upload this and that,” says David Claydon, operations director at Rose Partners, a security consultancy that works with firms and individuals. “Nobody questions why we do it, but the risks are real. Very simply, your phone contains your key locations. If anyone stole it, they would know where you live and work.” Hacking into apps that have access to your contacts, photos and browser history could expose your innermost secrets. Yet for many people, opting out is not an option. “The world is getting smaller and you have instant access to everything; you could turn the apps off and not use anything, but it depends what you want out of life,” says Claydon. Javier Ruiz Diaz, policy director at the Open Rights Group, which campaigns to protect digital rights, says that when we frame the issue as “giving away our data” it is tempting to view this as an economic transaction, and the question as: should I be paid fairly for my data? In truth, your individual data is worth very little on its own; it is only when it is combined with a lot of other 19

people’s that advertisers or algorithms can target you. in? Or, indeed, that you are an active trade unionist? “I Instead, we ought to consider the question of data as a tell people they should Google themselves regularly so question about power. “If I know everything about they know what information is out there about them,” your life, what is the price of that?” asks Ruiz Diaz. says Cheese. So far, most people are not hugely concerned about Then imagine you are an anti-government blogger in data harvesting, but “there is a growing, diffuse Saudi Arabia (or Tibet) and ask the question again. The harvesting of data is particularly troubling concern about it”, says Ruiz Diaz. “People are worried in the workplace. “You hear stories about firms giving about it, but in a vague way.” Yet Cheese is convinced their employees Fitbits, and that is all very well as we are approaching an “inflection point” where people long as the information they collect is anonymous, who had trusted Google and Facebook implicitly are having doubts. “The more invasive they are, and they are not going to hold it against you the more people will step back and say, hang if your BMI goes up GOOGLE WHO? on, is this what I signed up to? If you look at a little,” says Peter When we searched for these WHAT DO YOUR BROWSING Cheese, chief execu- famous people, here’s what Edelman’s Trust Barometer you see there is a tive of the CIPD. “I Google’s autocomplete said: growing distrust of the establishment, both HABITS REVEAL? government and big business. If you have read a story not long Just how far data analytics – and governments being secretive, for example, ago about a Swedish deep data harvesting – can go was about the way they are surveilling people, but company that was highlighted in a recent Observer the public realising that their information putting chips into article in which a former employee of an analytics firm alleged that a is available to the government in the interests employees’ arms, so UK company had been hired by of national security, how does that engender that they didn’t have Trinidad’s security council to trust? People are starting to ask: who has to remember passharvest the browsing history and got information on me, and how are they words. There is a Emmanuel Macron is phone calls of citizens to develop a … gay going to use it? big question around national police database to predict … hot how likely an individual was to “Small app developers deliberately collect what information … Jewish commit a crime. “The plan put to as much data as possible, because it makes businesses hold the minister was Minority Report. them more attractive to the bigger companies about their employIt was pre-crime,” said the source. they hope will buy them. One of the first quesees, and whether This might sound far-fetched but Elizabeth Denham, the UK tions they are asked is: how much data do you they are being truly information commissioner, has have about your clients?” transparent about it, announced an investigation into At the moment, the downside to the and protecting their whether political parties are using collection of digital data, apart from obvious interests.” people’s browsing history to target cases such as identity theft, doesn’t seem that Harvesting perthem on Facebook. Justin Trudeau is serious. But there might be cases where a sonal data can have a … awesome … son of Fidel Castro health insurer refuses to give someone a cancer real influence on recruitment. “I was recently … married drug because an algorithm says they are in front of a parliamentary select committee unlikely to recover. Take this a few steps and I was asked about the construction indusfurther, and such knowledge could have wider try blacklisting of union activists that consequences. “Take insurance,” says Ruiz happened a few years ago,” says Cheese. “And Diaz. “If you know everything about everyone, I was asked whether people were still doing you cannot pool risks. On an individual level, it this today. I told them that you don’t need a is fair – why should you pay for someone who is secret database – you can find if someone is a more likely to commit a crime or default on a union activist in two or three clicks.” Emma Watson is mortgage? – but you might be the one who Even more potentially disturbing, depend… French needs help tomorrow. If you were able to ing on your point of view, is the launch of … married completely predict it, there would be no riskGoogle Hire, the search giant’s new recruit… beautiful pooling or solidarity; it would be a case of ment tool. Details about it are thin on the ground, but reports have theorised that it might use everyone for themselves. And there are many social data Google has about your searches and YouTube structures that rely on risk-pooling, which are based on history to suggest jobs to you. That could be benign. the idea that you can’t know who will need help.” If enough data is fed into algorithms they might be For example, if you are a web designer who likes to read music reviews, it could recommend you for a job able to predict who will commit a crime, yet do nothing to designing a record store’s website. But how much infor- solve the root cause. “Data prediction can generate a logic mation will Google hand on to recruiters? Will it warn that creates a very narrow view of social problems. If you them that, although you are perfectly qualified for the look at what the algorithms are telling you, you are only job, your searches turn up some socially unacceptable solving the top layers of the problem,” says Ruiz Diaz. It is likings? Or which political parties you are interested often suggested that crunching the data in medical 20

big tech

SIPA USA,The Canadian Press/PA Images; AFP/Getty Images

A Swedish company is offering its employees the chance to have a radio-frequency identiﬁcation microchip implanted to enable them to access buildings and equipment

records would help us save lives. This already happens in the UK with cancer patients, and in 2016 the NHS gave the anonymised records of an estimated 1.6 million people to the Google-owned DeepMind big data company (without even bothering to ask them). But do the benefits outweigh the risks of information about people’s health leaking to, for instance, employers or insurers? Is worrying about this an outdated fear, a type of Luddism? Is the very idea of privacy outmoded? Are we – especially young people – living in a post-privacy world? Claydon says: “Nine out of 10 people aged 15 or younger have no privacy whatsoever. They live their lives in the public domain, on their phones; you can find them online and, if you can’t, you find them through their friends.” That might be overstating the problem: Ruiz Diaz says young people are good at ‘curating’ their online persona. Teenage girls, for example, know that they are more likely than boys to attract social stigma if pictures of them drunk appear online. Yet all this digital surveillance could have psychological effects. If you feel that you are constantly watched, it can have a profound effect on behaviour. “People have different personas or identities, and they go through stages in their lives,” says Ruiz Diaz. “If people feel that they are constantly watched that could inhibit their ability to change. You could become fixed by your Facebook profile, and become your digital self, forever. You are forced to become the person you are online.” Can the law protect us against rapacious tech companies? Up to a point. The EU’s General Data Protection Regulation, which will be implemented in early 2018 and will therefore apply to the UK, will give

individuals much stronger protections over their own data than previously, and will clearly define the rights and responsibilities of individuals and corporations that hold data about them. (The one-tick terms and conditions box, for example, will no longer be viable.) While this is important, it will not resolve the ethical issues. At the societal level, there are questions about risk-pooling and solidarity. At the personal level, we will have to work out when is it morally acceptable to tag someone in a photo. Even without your personal data, it is easy to learn a lot about you by knowing where you live, or other people who fit your profile. The tech giants, driven by profit, what is possible and an evangelical faith in the power of technology to change the world, will keep taking our data and selling us products. Propagandists will keep gaming the system. The law will keep evolving. What about the rest of us? We are not passive subjects under the control of Big Brother. As customers, we can choose to use these companies – or not. Big Brother Inc might be watching us – and scrutinising us in granular detail – but it needs us. We have to ask ourselves what kind of ethics and conventions we want to govern this new digital world. At the moment, infatuated with the joys of banter on Snapchat, posting pictures of our pets on Facebook and entering into faux communities on Twitter, this is a question few of us seem inclined to answer. But if we don’t focus, Big Brother Inc will answer it for us – by which time it will be too late. For further reading, see page 72 21

corporate governance

HOT ON THE HIGH STREET He might be Britain’s last great retail titan but, as Sir Ian Cheshire tells Tim Smedley, hero CEOs are overrated anyway Portrait

SIR IAN CHESHIRE enjoys an enviable position as one of Britain’s most powerful non-executive directors. Since stepping down as chief executive of Kingfisher, the Anglo-French owner of B&Q, in 2015, he has taken on the chairmanship of Debenhams and the lead nonexecutive role for the UK government, working with the prime minister and the head of the civil service. Earlier this year, he was also confirmed as chairman of Barclays UK, the soon to be ring-fenced retail bank that is being separated from the investment banking division to meet new regulations. It’s an appointment that came as a surprise to some, given Cheshire’s previous role as a non-executive director at Bradford & Bingley, one of the high-profile casualties of the global financial crisis. Effectively nationalised, the former building society’s mortgage book was transferred to government control, while Spanish bank Santander bought its network of branches. It was a bruising experience but, says Cheshire, it has helped him develop a “better sense of what is mission-critical for an organisation”. When Work. met Cheshire, Debenhams’ new chief executive, Sergio Bucher, had just announced the closure of several back-office operations and up to 10 of its 176 UK stores, as part of a plan to become “a destination for social shopping”. The move came on the back of lacklustre financial results: pre-tax profit for the six months to 4 March fell 6.4 per cent year-on-year to £87.8m. Clearly he’s going to be in for a busy few months, but that won’t stop Cheshire from focusing on one of his

Richard Cannon

ongoing passions: sustainability. While at Kingfisher, which he led for seven years and was at for 17, he was awarded the 2012 Guardian Sustainable Business Leader of the Year and instilled an ambition to have a ‘net positive’ impact on communities and the environment. There was, then, an awful lot to discuss. With so many roles, how do you split your time? It is about trying to organise your life into flexible chunks, as opposed to the chief executive experience, which is a full-on 24/7 job. It’s a very different working pattern. Once you get used to it, it’s really interesting, but it is a bit disorientating to start with. One thing I have found is that it’s easier if you’re the chair as you don’t have to be on the end of other people’s diaries. The times when it goes wrong as a non-exec are when you suddenly find you’re supposed to be in three places at once. My current division is a balance between commercial, government and charity. Debenhams is one day a week. Barclays UK, which comes into existence next year, is two days a week. That leaves me with two spare days, into which I am currently cramming a couple of smaller chairmanships – of French retailer Maisons du Monde, and a green investment trust run by Ben Goldsmith called Menhaden. I am also senior lead non-exec for the government, co-ordinating the network of non-exec directors across Whitehall. And, slightly to my 23

surprise, I am chairing the Heads Together charity, the Duke and Duchess of Cambridge and Prince Harry’s campaign on mental health.

In an era where other UK high street giants such as BHS have failed, what is the secret to Debenhams’ staying power? Debenhams has a broad business model. People think of it as a clothing retailer, when the business now is mostly non-clothing – the beauty market has been growing, whereas clothing has been tougher. It also has a very well-established store network across the UK, typically in the destinations that customers are still going to. Although we’ve seen a big switch to online, and we’ve done pretty well in riding that, the store base provides a stable source. It is clear that customers are saying there is a role for a 21st century department store, but it needs to be more experience-based, much more beauty and food rather than just clothing. The ability to ﬂex and change is the key, as opposed to becoming stuck in a spot like BHS where you are no longer relevant. People are increasingly carrying the store in their pockets – and in essence what we’re trying to do is build the whole store around the mobile phone.

What prompted you to take on the role at Barclays UK? Will your experience at Bradford & Bingley help? Retail financial services is an area I have some scar tissue from and, to some extent, I wanted to use that experience positively. But I have been doing other work in financial services for a long time and creating a new ring-fenced bank was an area I felt was genuinely fascinating. There are two really simple lessons [from Bradford & Bingley]. One is understand your business model clearly. The problem wasn’t capital, it wasn’t mortgages going bust – it was that it was funded by the wholesale markets and the fact you could sell your mortgages on as securities. While the markets were open, that was a profitable and sensible business and, in fact, most of the City told us to do more of it. But if you don’t have your deposits and funding in the banking system, you are vulnerable. It was a great example of how a set of assumptions can blow up under extreme stress. The second lesson is that as non-execs we ask a lot of “The problem wasn’t capital, questions – we asked all the questions you would expect it wasn’t mortgages going bust – – but I now know better when it was that it was funded by to insist on something.

At B&Q your vision of customers renting power drills – which are used on average for just six minutes a year – didn’t catch on. Why? It was a broader idea than just the wholesale markets” rental, but that’s the one that got the headlines – particularly What does your government because of that stat. We were non-exec role entail? trying to put in place a circular economy view of the I am an unpaid headhunter for the government. world. Sharing and renting would be part of it, but I help departments recruit their boards; we have we also needed to redesign the product so that it about 80 non-execs across government and the lead could be end-of-life reassembled. The mechanics of non-exec of each department has to go through renting are not clear-cut; people still want to own Number 10 and myself. their six-minute tools. We did trials that worked well It began, really, after the formation of the coalition with community tool chests and things like that, but government, and more specifically with [former the rate of change was quite small. minister for the Cabinet Office] Francis Maude. However, it did force an innovation cycle. Historically, politicians didn’t get that involved with We saw packaging redesigns, product categories the running of departments. Francis felt we should change – lighting went from incandescent bulbs have a triangular relationship instead: the board with to LED at an extraordinary rate. Those individual the minister chairing it, the permanent secretary and stories were probably more significant than the independent non-execs [from business]. Speaking headline of the shared power tools. But I’m sure truth unto power, which civil servants have been that will come eventually. charged with doing, can be a little career-limiting. Having someone who is not trying to get elected or Do you have any similar circular economy promoted, and is genuinely objectively interested in aspirations for Debenhams? ‘will this work better’, has a positive impact. We are allowing Sergio to settle in and define the It is a fantastically privileged position, because purpose, and then, absolutely, the next phase of this you get to be at the side of government without will be what we can do in terms of sustainability. I having to be in it the whole time. Most politicians am interested in what a department store can do. won’t have run anything before [they become Sourcing is incredibly important, particularly in a ministers], so planning, performance management world where we have a Modern Slavery Act. There’s and capability are the three areas we focus on. 24

corporate governance

Now converted to ﬂats, the former Barclays Bank on London’s Lewisham Way is an imposing sign of the times. Visits to bank branches are down as customers increasingly turn to internet banking

Stefano Ravera/Alamy Stock Photo

a clear imperative for ethical standards, but can we go beyond that and start thinking about a circular economy in clothing? And in beauty, there are some really interesting questions around ingredients and packaging. It’s about trying to give people choices so that they can buy things they know will make a difference to the net impact on the planet, and doing it in a way that is engaging rather than preaching at them. I am totally committed to the ‘net positive’ approach. Do you think Barclays and Debenhams as we know them today will be on the high street in 15-20 years? The reality is people are using banks less. With Barclays, retail customers logged into mobile and internet banking around 1.5 billion times last year, but they didn’t visit the branches that much. People are increasingly getting their banking delivered in a different way; however, when they want to see someone we have to provide that, although that might take the form of a Skype or Facetime conversation. With Debenhams, it’s likely that we’ll have a much bigger beauty hall with a lot more in the way of services. The fundamental question goes back to purpose: what is this organisation here to do for a customer? That will lead businesses into different areas. I think it will be more advice-based, with personal contact when you need it and virtually everything else being digital.

Does that mean that, in retail, customer-facing roles will become increasingly important? The key issue is skill levels. We have many people who are very busy on-task – flowing stock, keeping the place organised – but who don’t serve customers. If you can take some of that out through better technology, you’ve then got to retrain people to a service standard. The trick is how fast you can hire and invest in those people, and in which areas. Getting lower-value tasks out of the system has already begun. We are developing a service model, but it is probably a three-year journey. We are looking at whether we can recruit people who are already blogging etc, to help us with the digital shift. And finally, what do you think is the secret to effective leadership? The media focuses on key individuals, but actually decent leaders build great teams. That’s not an advert for incredibly boring or unpleasant CEOs, but you don’t achieve anything through the ‘hero CEO’. Every effective organisation I’ve seen has had leadership through teams and self-aware leaders, who can work out what they have and what they need to find in other people. That means you can’t sit in your office and come down the mountain with your ‘tablets of stone’. For further reading, see page 72 25

COLOUR AT WORK

G MA

IVE

HMV

•

Barbie

•

Yahoo

BBC

•

Cadbury

BI T

IOU

Colour has a surprising power to change the way your workforce feels. Paul Simpson offers a brief history of hues

SET THE RIGHT TONE

C R E AT

Zoopla

•

ROYA L

Victoria’s Secret

PURPLE

•

NHS

•

CE SI N

Blue has been the world’s favourite colour for centuries, but few people have felt as passionately about it as artist Yves Klein. Keen to create a blue as pure as the French Riviera’s skies, Klein bound the ultramarine pigment in a synthetic resin, inventing International Klein Blue (IKB). The shade has resonated in mysterious ways. In an episode of the animated TV series Mike Tyson Mysteries, the boxer wants his summer tracksuit to feature IKB.

CA LM

BLUE

Samsung

•

Oral-B

• IBM

•

Dell

Ford

Pampers

•

Listerine

•

B DA

The Co-op

•

Android

Starbucks WhatsApp

•

The Body Shop

•

SA F

Soothing, neutral blue has become the default setting for Silicon Valley giants such as Facebook and Twitter. Facebook CEO Mark Zuckerberg, who suffers from red-green colour blindness, once said: “Blue is the richest colour for me – I can see all of blue.”

• • HTC

•

TR U

Alamy Stock Photo; Getty Images

•

Skype

Twitter

•

Despite EL James’s erotic bestseller, grey still conjures up boredom. Politicians deemed to lack charisma – notably John Major – are damned as grey. It is the colour that former citizens of the German Democratic Republic use to characterise that failed state. James’s novel has slightly enhanced the colour’s image: some designers call it ‘the new magnolia’, which is apparently a good thing.

In the US, some learner drivers make sure they don’t have lessons in an ‘unlucky’ green car. The superstition dates back to 1911 when a green racing car ploughed into a crowd in Syracuse, killing 11 spectators. Nine years later, at the Indy 500 race, two drivers died in an accident involving a green car. In 1965, Jim Clark became the ﬁrst and only to driver to win the Indy 500 in a green car – a Lotus. He died in a crash three years later.

Facebook

OR T

GREY

GREEN

•

Oxfam

G R OW T H

Tyrian purple is one of the most expensive colours in history. Two kinds of Mediterranean snail, Thais haemastoma and Murex brandaris, had to be caught by hand to produce the dye and, as each creature produced only a single drop, it could take 250,000 of them to make 1oz of dye. In Roman times, purple became synonymous with the emperors. Nero decreed that it could only be worn by the royal family. One visiting prince’s son, who had the temerity to dress in purple, was arrested and executed.

PA S S IO N A

TE EN

•

T IC

Santander

•

Nintendo

•

Coca-Cola

FLAG IT UP

Red is the colour of blood, socialism and international banking disputes. Germany’s highest appeals court ruled last year that Sparkasse bank could keep its trademarked scarlett shade, known as Red HKS 13, rejecting efforts by Santander, which uses a similar red, to get the trademark cancelled.

The red flag was flown in 1791 by the Jacobins to symbolise the blood shed by the French Revolution’s martyrs. The association with blood had been established long ago: ‘red’, ‘rouge’, ‘rot’ and ‘rosso’ all derive from the Sanskrit word rudhira, meaning ‘blood’. Six years later, the red flag was hoisted by mutinous British sailors at the Nore naval base, near the Thames Estuary. The association between red and left-wing politics was cemented in 1870 when it flew over the Paris Commune. This inspired the Bolsheviks who seized power in Russia in 1917 under a red flag with golden lettering.

U PL

IF TI

Firefox

•

• Fanta

•

Nickelodeon

Timberland

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Sainsbury’s

UPS

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FR IEN

D LY P O SI T I V

•

McDonald’s

•

Morrisons

OP T

•

Lidl

•

PINK YELLOW In 1963, after much corporate restructuring, managers at the US’s State Mutual Life Assurance Company were so worried about staff morale that they commissioned artist and ad man Harvey Ross Ball to create a graphic that would cheer staff up. It took him just 10 minutes to design the smiley yellow face. Versions of the design were popularised in the US (with the words ‘Have a happy day’ added) and nowadays it is most commonly used as an emoji.

The sickly hue known as BakerMiller Pink is said to control violent behaviour, particularly in men. Initial experiments suggested 15 minutes’ exposure to P618 reduced stress levels and athletic performance (which prompted some US football teams to paint the away team’s locker room pink). Other studies have challenged this. In 1979, prisoners who were exposed to it for hours tried to scratch the paint off the walls.

Snapchat Amnesty International

•

IST

•

Ikea

James I may have influenced more flags than any other monarch. His reign as king of Scotland and England paved the way for the creation of the Union Jack. When Britain’s colony, America, achieved its independence it redeployed the red, white and blue on its Stars and Stripes. This inspired the French revolutionary tricolour, which, although the Dutch were the first to use the treble, created a template adopted by Italy, Mexico and Ireland. Dominica’s standard with seven colours and a parrot is in a class of its own.

RED

ORANGE IN T EL

LE CT U

•

Asda

•

• Spotify

Budgens

•

Waitrose

Harold Wilson may have talked of transforming Britain through the “white heat of technology”, but Apple changed the world with its gleaming white tech. The company was multicoloured but Sir Jonathan Ive convinced Steve Jobs that white’s “shocking neutrality” suited the iPod.

BLACK When Coco Chanel showed a little black dress (LBD) in Vogue in 1926, French couturier Paul Poiret asked her what she was in mourning for. “For you,” she replied. Vogue liked the LBD, calling it “Chanel’s Ford”. (Henry Ford liked black – feeling that it was morally superior to bright shades, he made Model T Fords in the colour.) Chanel had put black at the heart of the fashion spectrum where it has inspired hundreds of “… is the new black” clichés.

Why was Ukraine’s revolution orange? The answer may lie in a 15-metre long orange scarf knitted by Polish campaigner ‘Major’ Waldemar Fydrych and given to the protestors in Kiev. In the 1980s, as graffiti supporting Solidarity spread across Poland, the authorities covered them with whitewash. Fydrych then painted orange dwarves in these spaces. Adopting the slogan ‘Without dwarves there is no freedom’, he launched a movement called the Orange Alternative with the aim, he said, “of bringing some colour to grey everyday reality”.

H HE

TH AL

Y PE AC E

FUL

EVERY MAN FOR HIMSELF

Everett Collection Inc/Alamy Stock Photo

Being all in it together is intrinsic to employee engagement. But in an age of individualism, should we measure workplace satisfaction differently? Claire Warren reports

a result, he treats workers as expendable resources without taking into account their contributions. That in turn allows him to coldly allocate capital and manpower and make hyper-rational business decisions.” Bezos himself has admitted that it is not easy to be an employee there. “You can work long, hard or smart, but at Amazon.com you can’t choose two out of three,” he wrote in a 1997 letter to shareholders. Yet Amazon, like its tech peers, is a hugely successful company. Its ﬁrst quarter revenues for 2017 rose by 23 per cent yearon-year to $35.7bn, it is ranked number two on Fortune’s list of most admired companies (after Apple) and just last month it was listed as number two on LinkedIn’s US Top Companies list. What explains this disconnect between niceness and ﬁnancial performance? Stanford professor Jeffrey Pfeffer argues that, while economic necessity and lucrative stock options play a part in Amazon’s success in attracting and retaining people, “important psychological principles” are also at play. “Not everyone is chosen to work at Amazon and not everyone can tolerate the environment,” he wrote in an article for Fortune in 2015. “Therefore, if someone survives or even thrives, that individual must be ‘special’. Survival at Amazon validates those who believe they are part of an elite workforce. That enhancement of the self provides incentives to join and remain, regardless of other aspects of the work environment.”

Apple’s Steve Jobs and Intel’s Andy Grove had a ruthless management style in common. The former was known for his volatility, while the latter was unrelenting in his expectations

Denise Amantea

hen it comes to employee engagement, Silicon Valley has – as in so many other areas – taken things to another level. In the world’s technological playground, staff exude corporate cheeriness and feast on takeaways at their desks as they bed down for another all-night sprint. Being a Googler or a Tweep is an idea that subsumes individual identity and promotes discretionary effort and corporate loyalty to a degree the industrial titans of the past could only ever have dreamed of. But if the programmers and coders of California are engaged, they are considerably less loyal than any other group of employees (Google’s median tenure has been put at around 12 months). And they are working for people for whom benevolence appears to be a foreign word. Apple’s Steve Jobs reportedly ﬁred employees while riding with them in the elevator, according to biographer Brad Stone. Microsoft’s Bill Gates used to throw epic tantrums. And former Intel CEO Andy Grove “was so harsh and intimidating that a subordinate once fainted during a performance review”. In The Everything Store, Stone also painted an unﬂattering picture of the management style of Amazon founder Jeff Bezos. “Some Amazon employees advance the theory that Bezos, like Jobs, Gates and Oracle co-founder Larry Ellison, lacks empathy,” he wrote. “As

engagement

Bezos, in short, has succeeded not by creating a seriously, such as the UK, also have the most stubborn supportive and mutually enriching environment full of issues with productivity (it lags the rest of the G7 by development opportunities – as HR literature has 16 per cent). The problem, says Harrison, is that recommended for decades – but by focusing relentlessly we’ve turned engagement into a transaction when on individual achievement. really it should be an intention. Businesses want Does that mean our notion of what a great place to more engaged workforces because they believe it work looks like is outdated, or even that the idea of generates returns for shareholders – effectively being ‘engaged’ is unrelated to true value creation? creating a win for themselves at the expense of Laura Harrison, director of strategy and transforma- somebody else. “Engagement is sold as a means to tion at the CIPD, admits that we have to be realistic performance and productivity – it’s not sold as a moral about the different business models that exist, but she’s imperative or a means by which you create value for clear that organisations have a responsibility to the your workforce,” she says. “It is only a reasonable people who work for them – to ensure their experience expectation on behalf of business leaders that your at work is positive and meaningful. “If you’re not pre- workforce will be engaged with your vision and your pared to take that moral responsibility then shame on strategy if you have been inclusive in how you developed you. Where is your licence or your legitithat vision and strategy.” macy as a business to operate in society?” According to Gallup’s 142-country asks Harrison. study, State of the Global Workplace, only Engagement, she adds, can’t be used 13 per cent of employees worldwide are as a blunt instrument or standard measengaged at work – with the highest levels ENGAGEMENT ure across all industries and all sectors. of engagement in the US and Canada. BY GEOGRAPHY It’s essential in very human capital and Research by Jacob Morgan, author of knowledge-intensive businesses, but The Employee Experience Advantage, US & Canada 29% those that are more tech-focused or rely suggests that this could be because most on a very small managerial elite for employee engagement initiatives amount Australia & New Zealand 24% short-term gains and innovation may to little more than “an adrenaline shot”. Latin America 21% be more about ‘machinations on the A perk is introduced – often on the back Commonwealth of balance sheet’. of an employee engagement survey – but Independent States 18% But these questions do give us cause over time the effect wears off, scores go Western Europe 14% to look again at whether employee down and another perk is introduced. engagement is the right idea for the It’s a cycle that employees soon become Southeast Asia 12% modern era. As a concept, it has been wise to. Central and around for decades – ever since academic “When organisations make real Eastern Europe 11% William Kahn defined it in 1990 as “the gains, it’s because they’re thinking Middle East & harnessing of organisation members’ longer-term,” Morgan wrote in an artiNorth Africa 10% selves to their work roles”. At the time, it cle for the Harvard Business Review. South Asia 10% failed to gain much traction but aca“They’re going beyond what engagedemic and consultant interest grew, and ment scores are telling them to do in the Sub-Saharan Africa 10% in 2002 Gallup launched its engagement moment and redesigning employee East Asia 6% survey, the Gallup Q12. experience, creating a place where It was given a further boost in people want, not just need, to work each Source: Gallup, 2013 2009 with the publication of the UK day.” And that, he said, pays off finangovernment-commissioned Engaging for cially: “Compared with other companies, Success report, authored by David MacLeod and Nita the experiential organisations had more than four Clarke. The MacLeod report, as it was widely known, times the average profit and more than two times the cited “convincing” evidence of a positive correlation average revenue.” between an engaged workforce and improved perforHowever, Rob Briner, professor of organisational mance, and concluded that four common factors psychology at Queen Mary University of London and a underpinned effective employee engagement: strategic prominent critic of prevailing HR practice, says the narrative (provided by a visible, empowering leader- statistical link between employee engagement and ship), engaging managers, employee voice and performance is far from strong. “There are lots of organisational integrity. counter examples where people hate their jobs and Ubiquity soon followed. Today, according to perform well, or people love their jobs and are super research by Bersin & Associates, organisations engaged but don’t do very much,” he says. US research invest around $720m annually with the specific firm Leadership IQ, for instance, found that in 42 per intention of improving engagement. Yet many of the cent of organisations, low performers were more • countries that have taken the problem the most engaged than high and middle performers. 31

AFP/Getty Images

Despite the tough nature of the job, the military routinely scores highly for its employee engagement

Ben Roberts

Amazonâ&#x20AC;&#x2122;s working culture has been widely criticised, but it ranked number two on Fortuneâ&#x20AC;&#x2122;s list of most admired companies

“I’m not saying there is no evidence that engagement works but it depends what you mean by engagement. The Gallup Q12, for instance, correlates [by a factor of] .9 with a bog-standard, free-to-use measure of job satisfaction that has been around since the 1950s,” says Briner. “A lot of the debates about engagement are the same as the ones for job satisfaction. There’s a ton of evidence about job satisfaction and what it tends to show is not that there’s no link [to performance] but that it’s small.” Part of the problem, he says, is a plethora of deﬁnitions, many of them contradictory. He has a point. The MacLeod report came across more than 50 ways of deﬁning engagement but concluded it was most helpful to “see employee engagement as a workplace approach designed to ensure that employees are committed to their organisation’s goals and values, are motivated to contribute to organisational success, and are able at the same time to enhance their own sense of wellbeing”. By its nature, such a statement is hard to quantify. “Engagement allows a group of people to talk about engagement and feel as if they talking about the same

thing,” says Briner. “How can you talk seriously about trying to improve something when you cannot agree on what it means?” Worse still, he says, focusing on employee engagement and surveys in particular is a huge distraction for businesses – it makes them feel like they are doing something positive when in reality they might be failing to address the problems that create performance issues. “Simply measuring engagement and trying to increase it will not fix those problems because you don’t know what they are. Unless you have understood that first, there is zero point in looking at engagement,” he says. “For many performance issues, it’s not the attitude of workers that you would want to intervene in, it’s things like goal-setting, job design, technology, training and staff selection.” GlennTunstall,aformerpolicechiefsuperintendent, agrees that before you can create an engagement strategy it’s essential to find out what’s wrong. But he is clear that specifically addressing employee engagement is the key to improving performance – in a little over

When Glenn Tunstall arrived

A few months later, a new aerial

local police service in the

urging her to stop “blanking us”,

at Kingston Police in 2013, it

was up. Concerned that the

country), getting managers on

went viral. She was spotted by a

was a “pretty sad place to be”,

existing performance culture

board, ensuring organisational

follower, who called the police,

he says, with poor sickness

meant little to officers,

integrity (“one of the

and was later jailed.

levels and low morale. And

Tunstall also gave responsibility

agreements we made with our

before he could even think

for performance back to

staff was that whenever we

mid-2016, Kingston doubled

about engagement, he had to

individuals and took down the

made a decision we would

the number of crimes solved

gain the trust of the workforce.

performance graphs that lined

always explain the ‘why’ behind

and reduced complaints from

the walls, replacing them with a

the decision”) and giving staff a

the community by 59 per cent.

‘You said, we did’ board.

voice, including enlisting their

In terms of staff engagement,

help in creating plans to tackle

the borough now outperforms

“The police have a very difficult culture. There are some amazing people who do

“I think a lot of people make

Between mid-2013 and

amazing things day in, day out,

the mistake of trying to run into

speciﬁc crime problems, as well

the Met, with a score of 59 per

but the culture is ‘it is trendy to

an engagement programme

as bigger issues such as the

cent, compared to 42 per cent

be negative’. The challenge for

before you have got that

borough budget.

for the organisation as a whole.

me was how to build credibility

credibility and trust,” he says.

and trust.”

“Until you’ve got that, it’s

promoted in the press and one

hardest thing I’ve done in

just meaningless.”

officer was tasked with looking

30 years of policing,” says

He needed a big win, which came when an officer

Success stories were also

“It was hard work – the

After attending a talk by

after social media – dramatically

Tunstall. “In the last 10 years

complained about poor radio

David MacLeod, he built a plan

increasing engagement with the

especially, I had to make life

reception affecting safety in a

around the four enablers of

borough’s Facebook page. One

and death decisions. That was

particular area – an issue the

employee engagement, creating

inventive post, an open letter to

easier than delivering an

team felt had been ignored.

a strategic vision (to be the best

suspected burglar Tracey Dyke

engaged workforce.”

engagement

three years, he and the rest of the team at better responses on the surveys, and second to be Kingston Police in south west London succeeded in associated with higher wellbeing,” says Guest. turning round an underperforming and crime-ridden “Most research hasn’t looked explicitly at productivity borough by building trust and focusing on MacLeod’s but on balance I think you will get enhanced four enablers of engagement (see panel opposite). “I’ll productivity, because with enhanced wellbeing you have a fight round the bike sheds with anyone who says will have lower absence, fewer quits and generally engagement doesn’t work,” says Tunstall, now a more positive employees.” consultant for Merida Consulting. “There’s nothing The question for employers is how far they are else we did in that borough. They didn’t get more pay, prepared to go to generate engagement at the workplace they didn’t get any more time off, they got a really level, given the trust required, not to mention counter rubbish shift pattern and the working conditions set by trends such as the increasingly contingent workforce the organisation (pay and pensions) were getting and the tendency to centralise control, which reduces worse. The only thing that was different was we were rather than increases autonomy. “[Work engagement] engaging with them and they were getting lots of has the potential but it is a potential that is not being reward and recognition.” realised,” says Guest. “The puzzle for me is why, given Others, however, would argue that what Kingston the evidence, people in HR and elsewhere aren’t paying Police and many others, such as those on the ‘best a huge amount of attention to work engagement and companies to work for’ lists, have achieved, while highly giving up on organisational engagement.” commendable, isn’t actually employee engagement – at Briner, who doesn’t hold much truck with any least not in the way we tend to define it. kind of engagement, says that in his experience the David Guest, professor of organisational psychology overall tone of much discussion in this area is and human resource management at King’s College uncritical. “For some reason, people are just a bit overLondon, points out that while research on award- positive,” he says. “Just imagine another profession winning workplaces shows some getting behind this panacea-like evidence that they are better in cure for all its ills. People will terms of performance, effectively say there are some problems “I’ll have a fight round the what they’ve done is created a [with engagement] but that climate that supports good we shouldn’t throw the baby bike sheds with anyone human resource practice. “They out with the bathwater. I’m not who says engagement call it engagement at the so sure.” doesn’t work” moment; they might call it In the end, however, does something else in a couple of it matter whether employee years, but it’s basically good engagement enhances performanagement – they have got a lot of competent people mance – or whether it actually is a concept in its own around so good things result.” right rather than a rebadging of existing ideas – if focusGuest makes the distinction between organisational ing on it encourages the right kind of business behaviour? engagement (what we traditionally mean by employee Guest is not arguing that engagement at the engagement) and work engagement. The former, he organisational level isn’t possible – just look at the says, is a “rehashing of two existing ideas, organisational British military, which routinely scores highly for its commitment and organisational citizenship behaviour” employee engagement – but that the productivity payand, despite the claims, there is little evidence to offs tend to be limited and that, on the whole, we are support its impact on business performance. “looking in the wrong place” to achieve it. “Most “A lot of the literature and consultancy on HR people are dedicated followers of fashion,” he says. organisational engagement of the Gallup-type “If it provokes the right kind of behaviour because it approach is very limited and hasn’t demonstrated that has become a fashion then it is no bad thing. The risk is it has any impact on anything very much,” he says. “In it then becomes faddish, and that is what’s tended addition, if you look at the literature on organisational to happen.” commitment that’s associated with lower intention to Organisations, Guest says, opt for, and then get quit, it tends to be associated with more citizenship- hooked on, the easiest option, which often means type behaviour, but it’s not clearly associated with bringing in the consultants to conduct a survey. His higher performance.” recommendation is to give up the multiple-choice It’s a different story for work engagement – give options and concentrate on good management and people more autonomy, responsibility and more good HR practice. That’s certainly not bad advice – challenge in their individual jobs and they tend to but, of course, some people would probably call it respond positively. “If you can use work design plus employee engagement. organisational support to generate engagement in the job or work that people do, that seems to first of all get For further reading, see page 72 37

IS THIS THE NEXT PETER DRUCKER? In an age of micro-attention spans, TED gurus and showbiz tycoons, Paul Simpson asks what happened to the management thinker

Graham Denholm/Getty Images

business gurus

IN 1968, THOMAS J PETERS, a junior lieutenant in the US Navy, was recalled from Vietnam, where he had been helping the Marine Corps build bridges, and reassigned to the Pentagon. As one of the youngest recruits in a forces management team, the 25-year-old officer feared he might be a little out of his depth so, as he recalled: “I read (devoured) Peter Drucker’s The Effective Executive, my first management text, and was profoundly influenced by it. I was hardly alone in that.” That junior lieutenant is best known today as the forthright author and co-author of such classic management tomes as In Search of Excellence, Thriving on Chaos and The Circle of Innovation. Although Drucker criticised him as a “populariser” – a charge also levelled at Peters by his former colleagues at McKinsey – the pupil’s admiration for the master remains undimmed. “Peter Drucker didn’t invent management. The Chinese probably did that thousands of years ago with, among other things, Sun Tzu’s roughly 2,500-year-old The Art of War. Then there was Machiavelli’s The Prince and Frederick Taylor’s century-old The Principles of Scientific Management,” wrote Peters. “But he did arguably 1) ‘invent’ modern management as we now think of it; 2) give the study and craft of management credibility and visibility even though schools like Harvard had been around for a long time; and 3) provide (the first?) comprehensive toolkit-framework for addressing and even mastering the problems of emergent complexity.”

And he did so in a way that was accessible and comprehensible to a 25-year-old naval lieutenant desperate to get up to speed with his new colleagues. That reaction to Drucker’s work is not unusual. For once, management thinker Charles Handy put it more pithily than Peters, saying: “Think of any management idea that is fashionable today and the chances are that Peter Drucker was writing about it before you were born.” If Drucker had felt uneasy about Peters’ brand of populism (which, at its nadir, had the latter dishing out soundbites – ‘We are all Michelangelos’ – as meaningless as any uttered by politicians), what would the most inﬂuential management thinker of the 20th century make of his trade today? Twelve years after his death, we now have what business thinker Rita McGrath aptly describes as a “guru-industrial complex”. The more respectable idea factories – Harvard, Wharton and INSEAD being merely the most obvious – compete for our attention with such masters of TED Talks as Simon Sinek (an expert on why great leaders inspire action), bestselling authors of varying credibility (including James Surowiecki and Malcolm Gladwell), showbiz tycoons (Donald Trump, Alan Sugar and, though she is yet to properly enter this arena, Oprah Winfrey), random sports stars (Alex Ferguson’s career in football management was dissected by Harvard Business 39

Review) ew) and novelty acts like Brian Tracy’s Eat That ew Frog! and Spencer Johnson’s Who Moved My Cheese? Johnson’s 100-page tome was, computer analysis suggests, written to be understood by a 10-year-old. It may frustrate even younger readers when they realise that the identity of the cheese mover is never revealed. In the clamour for our attention – and money – we have been promised the management secrets of Moses, meerkats and millionaires. If the contemporary equivalents of junior lieutenant Peters can’t ﬁnd the right insights from these sources, they can always pore over the biographies of such fashionable business leaders as Warren Buffett, Steve Jobs and Richard Branson. Drucker never tried to woo us with frogs, meerkats or Moses, and would probably have regarded these works as proof of his dictum that “incompetence is the only commodity that is never in short supply”. Yet, although he published his ﬁrst book, The End of Economic Man, in 1939, his views seem more pertinent today than Johnson’s or Gladwell’s. As Duncan Brown, head of HR consultancy at the Institute for Employment Studies (IES), says: “Timeless writing pares back life to its simplest essentials. Drucker did this for management – how you actually manage resources and people to best effect. Yet his journalistic roots made him very readable, without our contemporary management hype and jargon, and he had an uncanny knack of anticipating the future, for example, on the growth of knowledge workers, 40

outsourcing and the contingent workforce. And he actually wrote about what managers do and need to do, irrespective of sector and specialisation.” How did Drucker know what managers needed to do? Although he was a polymath, who may have preferred lecturing on Japanese art than modern management, he didn’t spend much time managing anyone. Born in Vienna on 19 November 1909, Drucker was educated, intellectually, at the soirées his parents held two or three times a week, frequented by guests of the calibre of economist Joseph Schumpeter, Czech leader Jan Masaryk and novelist Thomas Mann, at which he was encouraged to speak. He was utterly bored by his limited exposure to conventional office life – at a cotton exporter in Hamburg and a securities broker in London – recalling: “I neither functioned well nor felt happy as a cog in a bureaucratic machine.” He was far more effective and happier as a journalist (at the Frankfurter GeneralAnzeiger, Financial Times and Harper’s Magazine) ee) and a lecturer (he began teaching economics part time at the Sarah Lawrence College in New York in 1937). In the autumn of 1943, Drucker received the phone call that changed his life – and would transform the study of management. The End of Economic Man had been critically acclaimed but, to his dismay, he had no success in parlaying that into a chance to observe – and consult with – large American corporations. The boss of Westinghouse Electric had rejected him as a “subversive

Alan Levenson/The LIFE Images Collection; Bettmann Archive/Getty Images

Visual aid: in a 1965 presentation to 20 leaders from Polish government and business on a visit to New York, Drucker draws a diagram to convey the characteristics of American management

business gurus

THE WORLD ACCORDING TO DRUCKER Favourite phrase To be brutally honest… Favourite sound I know few more satisfying sounds than the sqoosh-sqoosh of a good puddle. Biggest influences Walther Rathenau, Max Weber, Joseph Schumpeter and my school teachers, the sisters Miss Elsa and Miss Sophy. Secret passion Collecting Japanese art, especially ink paintings from the Muromachi Period (1392-1573). Worst boss Henry Luce, owner of Time magazine. An impossible person to work for. He seldom interfered and never issued an order but he could always roil the waters and keep the infighting going. It explains why so many of his editors took to drink. Greatest career break That my paper, predicting the bull market would stay bullish, published a month before the Great Crash, was written in German – not English – so I could still get a job as a securities analyst in London. Worst job At a cotton-export company in Hamburg in 1928. We learned nothing, absolutely nothing. It was terribly boring. Strangest gig The University Club, Rochester, New York. Ten minutes before my lecture, I was told to split my talk in half – before the music and after. The music was two students from the Eastman Conservatory doing the death scene from Aida. And when the star-crossed lovers had died at my feet, the chairman turned to me and said: “Your last sentence before you stopped was…” Best book he never wrote Managing Ignorance. I’m very sorry I didn’t write that one. Best book ever written on leadership Kyropaidaia by Xenophon – himself no mean leader of men – is the first systematic book on leadership, and still the best on the subject. Despised piece of management jargon For aesthetic reasons, I am not overly fond of the expression ‘bottom-up management’. Thoughts on being called a guru People only call me a guru because charlatan is too long for headlines.

radical”. But the leadership of General Motors – particularly vice-chairman Donaldson Brown – were more impressed and Paul Garrett, the head of PR, invited him to spend two years taking a “fresh look” at policies and structures that had been established 25 years ago. The offer was all the more remarkable because, as Garrett told Drucker: “I realise that you know nothing about the automobile business and not too much about business altogether.” Drucker’s journey of discovery began before his first interview when he realised that GM’s PR department was ashamed to admit that CFO Albert Bradley had studied and taught at the University of Michigan. Tapping into the Horatio Alger rags-toriches narrative that remains popular even today in America, the automobile giant only gave a public profile to executives who had risen through the ranks. Promotion at the time was not always meritocratic. Brown had been doing well at DuPont when his boss told him that he would only run the company if he married one of 28 unmarried or widowed daughters, granddaughters or nieces in the DuPont family. When the DuPonts discovered that Brown had secretly married one of those on the list, Greta, they were so angry they exiled him to GM, which, in 1924, was nearly bankrupt. Immersing himself in the messy reality of corporate life, Drucker wrote Concept of the Corporation (published in 1946). His book was prescient – he warned that “GM is an organisation of managers and management – not an innovative company” and chastised executives for focusing on facts rather than trying to see facts as others saw them, but he later admitted that, in presenting to the company, he had through inexperience and caution softened his findings to suit the audience. The author of a surprise bestseller, Drucker was suddenly in demand. Over the next half a century, he would consult for organisations as diverse as GE (under Jack Welch), Procter & Gamble (when it was led by Alan Lafley), Intel, Coca-Cola, the Salvation Army, IBM and the Girl Scouts of the USA. He described the art of successful consultancy very succinctly, saying: “I listen to what’s not been said.” He would also write prolifically – apart from Concept of the Corporation, Peters recommends The Practice of Management (1954) and The Effective Executive (1967) as “tracts that define the practice of management today and for years to come” – and even found time to pen two novels, The Last of All Possible Worlds and The Temptation to Do Good (the latter prompted The New York Times reviewer to say: “One wishes Mr Drucker had resisted his own temptation”). The main point of his work, he wrote once, “is that the organisation is a human, social, indeed a moral phenomenon”. For him, being a manager was more about responsibility than power. His close study of the impact of “the three most charismatic leaders of all-time – Hitler, Stalin and Mao” had left him with a profound 41

distaste for the cult of leadership. In the 1980s, he to prioritise common goals – was corrupted into, as slammed the “cult of cruelty”, which made heroes of Handy noted, “management by targets and quotas, CEOs who made thousands of staff redundant. His with workers spending more time chasing numbers criticisms of soaring executive pay were also ignored, than doing the real work. Give policemen a target of making so many arrests a week and they prompting management thinker Rosabeth may spend more time on parking offences Moss Kanter to say: “Listening to Drucker than the real crimes.” might have headed off some of the excesses This was not what Drucker had in associated with Wall Street in general – mind. He wanted to create a workplace and AIG [the insurance group] in THE SMARTEST THINGS where, Handy says, “workers were trusted particular – in which bonuses were DRUCKER SAID to get on with the job without undue decried not only for their amounts but also supervision, where they knew what was because they were often uncorrelated “The word ‘report’ should be stricken from management expected of them and were clear about with company results.” vocabulary. Information is how it would be measured and how they It is hard to judge how influential replacing authority” would be rewarded.” The fact that such an Drucker is today because he was a generideal remains unrealised in so many alist who reserved the right to comment “Corporations built to last workplaces says more about our corporate on anything from employee share ownerlike pyramids are now more like tents” culture than any flaws in Drucker’s vision. ship and the need for systematic Was he too idealistic? Moss Kanter abandonment to why a good jazz group “One of the most identifies one blind spot in his thinking: offered a better management model than degenerative tendencies of “There is no power, no politics, no greed – the opera. James O’Toole, professor of the past 40 years is the belief that if you are no human frailty that interferes with the business ethics at Denver’s Daniel Colunderstandable, implementation of ideal practice.” His lege of Business, concluded his 2005 you are vulgar” laudable insistence that “people are a Drucker retrospective with: “His ideas resource, not a cost” is unlikely to sway were so persuasive that scholars espoused “Bulldozers move mountains. many bean-counting CFOs. – and managers practised – them without Good intentions don’t” It may be that Drucker is now more recognising their origin. Today, indeed, “Those who perform love cited than read. The heart of today’s global we are all Druckerians.” what they’re doing. I’m not guru-industrial complex is TED, where Japan is home to many Druckerians. saying they love everything audiences can draw on a wide range of His views resonated with Toyota and but pianists have a wonderful expression: ‘I practice until I wisdom – management thinkers, philosoinspired a novel with the rather clunky have my life in my fingers’” phers, artists, musicians and writers – in a title: What if the Female Manager of a more accessible form that suits our High-School Baseball Team Read Drucker’s “To build achieving attenuated attention spans. Management? The book, which resonated corporations, you must The other constraint on Drucker’s especially with Japanese businesswomen, replace power with responsibility” influence is that much of his best work sold a million copies and spawned its own focused on big American corporations, anime series – an accolade yet to be “It’s not given to mortals to most of which are now deeply unfashiongranted to Peters or Gladwell. see the future. All one can do able. If he had studied Apple, Google or Reflecting on his legacy, IES’s Brown is analyse the present, especially those parts that do Microsoft – all of which existed while he says: “He is not generally popular in HR not fit with what everyone was alive – he might have a greater share circles for his attack on bureaucratic knows and takes for granted” of the market. His writings are infused by personnel functions without point or optimism about our ability to run large purpose constantly chasing the latest fad, “One either meets or one companies rationally, morally and consida charge still uncomfortably close to home works. One cannot do both” erately. Yet that conviction, particularly in for too many faddish, reactive, market“Any organisation develops the light of the corporate failures that preobsessed and project-driven departments. people, it either forms them cipitated the global economic crisis in What HR most needs to take on board is or deforms them” 2008, is rarer than ever. Even people who his view that HR functions talk endlessly “Although I believe in the aren’t developing portfolio careers seem to about ‘the line’ but spend very little time free market, I have serious have given up hope of improving the comand resource in practice on them, a deficit reservations about pany and are more likely to turn to self-help that has become even more dangerous and capitalism” books, promising them that seven highly dysfunctional in our world of outsourced, effective habits can transform their delayered organisations and functions.” rr, compiled by Some of his theories have not aged well. This isn’t careers. (Ironically, The Daily Drucker, entirely his fault. Any good idea, executed by morons, Jim Collins, fulfils a similar need – though not quite as can look like a bad one. So his focus on management by succinctly and with a side helping of Danish philosopher objectives – in which managers and employees agreed Søren Kierkegaard.) 42

business gurus

Natsumi Iwasaki/Production I.G

Far-reaching inﬂuence: What if the Female Manager of a High-School Baseball Team Read Drucker’s Management by Natsumi Iwasaki, adapted into an anime TV series, sees Minami Kawashima run the team using Drucker’s traditional corporate advice

Management has also become a much more specialised field since Drucker’s heyday and the gap between research and practice, as Brown says, has grown wider than ever. But he argues that quality of thought and word can still cut through the clutter. “Drucker wasn’t the first great writer on management (Chester Barnard and Mary Parker Follett were earlier and probably better thinkers on the people agenda) and he borrowed ideas from possibly stronger thinkers like Elton Mayo. But he had that breadth of perspective to draw out common truths. And he could write. If people can do that, they can still have massive influence. Dave Ulrich’s work has led the reshaping of the majority of HR functions. Robert Goffee and Gareth Jones’ ‘Why Should Anyone Be Led by You?’ is one of the 10 bestselling Harvard Business Review articles of all time.” The proliferation of media makes it hard for any guru to have the share of voice that Drucker enjoyed in corporate America from the 1950s to the 1980s. Peters has proved one of the most enduring management thinkers, although In Search of Excellence remains his most influential book. Jim Collins has probably had more influence in boardrooms with his works Good To Great and Built To Last (even if some of his case studies have been challenged). The other difficulty, observed by Peters’ co-author, Bob Waterman, is that management fads come and go much faster than they used to.

Music critic Lester Bangs once observed: “I promise you one thing: we shall never agree on anything as we agreed on Elvis.” The subsequent fragmentation of popular music into a range of quasi-independent genres has proved Bangs’ point. Management thinking seems to be fragmenting too into an array of specialist disciplines. Does this matter? Brown thinks it does, fearing that the process has led many companies to neglect the essential core skills of management: “In an era where reading a book seems to be regarded as an unacceptably old-fashioned form of development, many employers and HR functions are struggling increasingly with ‘the line’ problem of bad managers, maybe even more so than in the 1950s. One employer I know has resorted to mandatory training for managers on performance appraisal, just like they have to on health and safety. Making them read The Practice of Managementt would be an equally effective cure.” Whatever management theory you subscribe to – and, in practice, it’s probably true that many CEOs don’t believe in any of them – the questions Drucker raised are as pertinent today. Managers could do worse than kick off their day with the key questions he asked the CEOs he consulted for: what is your mission? Who are your customers? What do you know about them? And what will you do differently on Monday? For further reading, see page 72 43

Niels Aage Skovbo, Fokus Foto

Following a fire at his carpentry workshop in 1924, Lego founder Ole Kirk Kristiansen moved away from making wooden furniture. One of the company’s first plastic toys was a baby’s rattle shaped like a fish

companies that last

DON’T JUMP THE SHARK Every business reaches a point where it becomes irrelevant – except for a lucky few. Jane Simms on what we can learn from corporate longevity “GOOGLE IS NOT a conventional company,” pointed out Larry Page and Sergey Brin in the opening line of their 2004 IPO letter. The message was intended for potential shareholders, but maybe it should have been seen as a warning for the hordes of businesses that try to emulate it, forgetting one vital detail: Google is rich. In April this year, its parent company Alphabet’s market cap surpassed the $600bn mark for the first time. Clearly it can afford to lose money on risky ventures or empower its employees to be creative with innovations such as 20 per cent time. While Google’s profitability may, if it’s lucky, ensure its future, rapid technological advances, changing consumer habits and major geopolitical shifts are, on the whole, combining to reduce organisational life spans. Today, according to Scott Anthony, managing partner of innovation and growth consulting firm Innosight, the average company life span on the S&P 500 index of the US’s largest listed businesses is around 20 years, down from 35 in the 1960s. And over the last 50-odd years, the number of companies falling out of the index each year has increased from an average of 15 to 25. “Over the next decade we’re projecting 25 to 50 companies per year leaving the index. That’s a lot of change,” says Anthony. In short, there is no longer any guarantee of a successful corporate life – most of the businesses Tom Peters discussed in his 1982 bestseller, In Search of Excellence, have delivered far from

excellent performances, and many of those Jim Collins praised in Good to Greatt (2001) have also failed. Does that matter? Yes, maintains Anthony, who warns that this level of churn is dangerous: “I believe in competition and that good should win over bad, but when we celebrate ‘creative destruction’ and the rise of the new, we forget the damage destruction creates,” he says. Rochester in New York State, for instance, was devastated when Kodak went out of business in 2012. We need to “recognise the intrinsic value in companies that last a long time”, says Anthony. “Having a ‘legacy mindset’ means thinking about how you are set up for generations to come, as well as doing well today.” Because, of course, businesses don’t exist purely to make proﬁts. The notion that their primary purpose is to ‘maximise shareholder value’ is relatively new – it gained currency in the 1970s as a way of aligning the interests of executives and shareholders. Yet a legacy mindset won’t guarantee survival – witness the demise of Cadbury, which in 2010 capitulated to a takeover by Kraft – but there are a number of organisations that have bucked the trend for ever-decreasing company life spans, and they have little in common with Google and its Silicon Valley stablemates. Over the following few pages Work. takes a look at four of those companies, as well as a worker co-operative, and discovers that they have many common features. 45

MONDRAGON CORPORATION

“HUMAN VALUES PREVAIL OVER ECONOMIC ONES” IF WE NEEDED evidence to nail the lie that high pay correlates with high performance, Mondragon Corporation – the world’s largest worker co-operative – provides it in spades. Based in the town of Mondragón in Spain, it was founded in 1956 by a Catholic priest, José María Arizmendiarrieta, to create employment for local people in a climate of severe hardship following the Civil War. Today it is a constellation of worker-owned ventures, with production subsidiaries and corporate offices in 41 countries. The fourth largest employer in Spain, it has proved enviably recession-proof. Some 44 per cent of its workers are still based in the Basque region, which has the lowest unemployment in Spain and the most equal distribution of wealth. The average ratio between the salary of the highest and lowest-paid workers is 9:1, compared to an average ratio for FTSE 100 companies of 129:1. 261 Its slogan, ‘Humanity at Work’, has different been its lodestar since Father Arizcompanies and mendiarrieta (‘Arizmendi’) insisted subsidiaries that “human values must prevail over 74,335 purely economic and material ones”. workers Mondragon was founded when Arizmendi encouraged ﬁve young €11.37BN graduates to set up a co-operativeturnover in 2015 style enterprise making paraffin stoves named Talleres Ulgor (subsequently Fagor Electrodomésticos). Further co-operatives followed and, in 1959, recognising Mondragon needed a ﬁnancial institution to support its expansion, Arizmendi created Caja Laboral, which was structured as a credit union and is now one of Spain’s biggest banks. Over the decades, Mondragon became increasingly international, responding to competition from the developing world by setting up factories or buying companies in countries including Vietnam, Russia and China. It even set up its own university, in 1997, committed to social transformation. Today Mondragon is a series of diverse organisations, largely worker-led and owned – around 80 per cent of its employees are ‘members’ – but they are united by the common values of co-operation, participation, social responsibility and innovation 46

Fagor Electronica

The Basque region has the most equal distribution of wealth in Spain

companies that last

Mondragon began life when ﬁve graduates set up Talleres Ulgor, an acronym of their surnames: Usatorre, Larrañaga, Gorroñogoitia, Ormaechea and Ortubay. Further co-operatives followed, with expansion into manufacturing, retail, ﬁnance and knowledge

companies that last

established at the outset. The co-operatives work collaboratively (sometimes reallocating staff to cope with rising or falling demand), prioritise R&D, foster the exchange of knowledge and channel contributions to the wider community. Despite the inbuilt resilience of the model, however, it is not infallible. When Fagor Electrodomésticos went bust in 2013, with the loss of 2,000 jobs, it shook the organisation to its core. Even pay cuts of 20 per cent or more weren’t enough to stave off disaster after ﬁve years of falling sales and mounting debts, but most of the workers were redeployed. As one member puts it: “We are not some paradise, but rather a family of co-operative enterprises struggling to build a different kind of life around a different way of working.”

LEGO

“LEGO TURNED ITS BACK ON THE BRICK” Once on the brink of bankruptcy, Lego has found success in a simpler business model

All three generations of the Kristiansen family – Ole Kirk, son Godtfred and grandson Kjeld – have run the Lego company, but it took the ﬁrst non-family head, Jørgen Vig Knudstorp, to return the failing business to its roots

TODAY LEGO is the world’s most valuable toy company (in May 2016, Forbes estimated its worth at $7.1bn) and in March it posted record revenue of DKK 37.9bn (more than £4.1bn) for 2016. But it nearly didn’t make it. Over-diversification in the 1990s led to the first loss in its history, in 1998, and from 2003 to 2005 turnover fell by around 40 per cent, 915,103,765 bringing Lego to the brink of ways to combine bankruptcy. Attempts to stave off six eight-stud competition from electronic games Lego bricks and toy discounters were choking it 3,000 with complexity. visitors to the Master carpenter and joiner Ole opening day of Kirk Kristiansen first began making LEGOLAND® wooden toys in the small town of Billund Billund, Denmark in 1932, and in 1968 started manufacturing the plastic bricks we know today in 1958. For nearly five decades, Kristiansen, his son Godtfred and his grandson Kjeld pursued slow, steady growth. It could take years for a new product idea to get to market and demand was often so high they had to slow sales down. Careful attention was paid to every aspect of the business, and the precise specifications Godtfred laid down (the moulds used to produce Lego elements are accurate to 49

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companies that last

within 0.0004mm – less than the width of a single hair) meant that the bricks created 60 years ago are interchangeable with those made today. But the sudden rise in competition triggered incontinent brand extension into areas as disparate as theme parks and clothes – and, in doing so, Lego ‘turned its back on the brick’. The saviour was Jørgen Vig Knudstorp, the ﬁrst non-family member to head Lego, who was just 35 when he became CEO in 2004. He returned the company to its founding principles – the Lego name is based on the Danish words ‘leg’ and ‘godt’, meaning ‘play’ and ‘well’ – focusing on core products (it sold its theme parks in 2005 to Merlin Entertainments), reducing product complexity, managing cash carefully, reining in innovation and re-engaging with consumers. Still 75 per cent family-owned, with the remainder owned by the Lego Foundation, the business is now stable and poised to exploit the potential of its brand – but in a disciplined way. According to the 2017 Brand Finance Global 500 report, it has overtaken Disney as the world’s most powerful brand, helped by The Lego Batman Movie and digital innovations such as the Lego Life social network.

Bettys & Taylors of Harrogate Ltd

Family-run and still ingrained in its Yorkshire roots, Bettys & Taylors Group brands include Yorkshire Tea. Here the Marsden Silver Band, formed in 1889, dress up as the Yorkshire Tea Band for a TV advert

BETTYS & TAYLORS GROUP

“WE NEEDED A SHIFT IN CULTURE” The company embraced collaboration, with ﬁve executives now sharing the CEO role

BETTYS & TAYLORS has been a Yorkshire institution since it was founded nearly 100 years ago by a young Swiss immigrant, Fritz Bützer, who arrived in Yorkshire by accident after catching the wrong train (he’d intended to find work on the south coast). Undeterred, he changed his name to Frederick Belmont and opened his first European-inspired café in the conservative spa town of Harrogate in 1919. Today, the award-winning business remains familyowned and there are six tea rooms, all in Yorkshire, a craft bakery, a cookery school and an online shop, as well as the tea and coffee business Taylors of Harrogate (which originates from 1886), acquired in the 1960s. The company has been run on a stakeholder model since well before such terms became fashionable – a bonus scheme, which typically gives employees an additional five weeks’ pay a year, has been in place for 51

more than 30 years. The business also fosters long-term ethical relationships with its suppliers and has planted more than three million trees and protected an area of the Amazon rainforest larger than the Yorkshire Dales – a crusade it began in 1990 after former chief executive Jonathan Wild found his children in tears over a programme on deforestation. £163.4M Wild ran the company until 2011 turnover for the but, with the fourth generation of year to Oct 2015 the family not yet ready to join the firm, his retirement plunged Bettys Pre-tax profit fell to £9.6M into an existentialist crisis. Andrew (£10.8m in 2014) Baker, former CEO of Duchy Originals, joined as the first non- 1.3 MILLION people family CEO in May 2011, only to leave a year visit a Bettys tea room five months later because of a difference in approach over “the long-term ambitions and cultural direction for the group”. Chairman Lesley Wild admits she couldn’t see a way forward and almost left: “I knew we needed a fundamental shift in culture and approach,” she says. “We struggled in our business to deal with conflict and to be open and honest because we are terribly, terribly nice.” Bettys called in consultants who helped the management team to shift from its traditional paternalistic culture to one that embraces collaboration and “peerbased leadership”. The company now has not one chief executive, but ‘a Collaborative CEO’ – a group of five executives who share responsibility for organisational strategy and development, and the operations.

“HIRE GOOD PEOPLE AND LET THEM DO THE JOB” 3M’s principles of creativity and innovation extend to its management practices

ONE OF 3M’s best-known products, the Post-it®, might never have existed if it wasn’t for the frustration of church choir member Arthur Fry, who was forever losing the bookmark in his hymn book. A 3M employee, Fry realised a weak adhesive accidentally created by another staff member might be the answer. That serendipitous moment led to the creation of the Post-it, but 3M’s famously innovative and collaborative culture is based on an approach that was established when the Minnesota Mining and Manufacturing 52

Company was formed in 1902. The founders wanted to harvest a mineral called corundum and, when they failed, they turned to other materials and products instead, a move that ultimately led to a string of new ideas including such early breakthroughs as the world’s ﬁrst waterproof sandpaper and masking tape. The company’s commitment to innovation and collaboration extends to management and people practices, says UK HR director Stella Hegarty: “We are innovative through to our core. Many of our principles

companies that last

In 1948, 3M introduced its legendary ‘15 per cent’ programme, allowing employees to spend time developing their own ideas, followed by a technology forum in 1951 to facilitate the exchange of ideas across the globe. Today it still spends 6 per cent of sales on R&D, even when times are tough, and its matrix structure supports collaboration. “You need to create $30.1BN space where unexpected connections net sales, 2016 can be forged,” says Hegarty. While the McKnight Principles are 4,000 the business compass, they are Post-it matched by an ethical approach. Its products code of conduct is: ‘Be good. Be honest. $8.6BN Be fair and impartial. Be loyal. Be invested in accurate. Be respectful.’ In the 1970s, it R&D over the set up an anti-pollution programme last ﬁve years (saving an estimated 2.1 million tonnes of waste) and in 2016 the company launched a partnership with the Nobel organisation to help advance scientiﬁc research and education. “Someone asked our CEO what keeps him awake at night, and he said: ‘The fear someone, somewhere in the world, would do the wrong thing,’” concludes Hegarty.

KAO CORPORATION

“IT’S ABOUT BEING TRUE TO WHO WE ARE”

Nicholas Hunt/Getty Images

A friendly Post-it war began on New York’s Canal Street in 2016, with offices competing to produce window displays using only the sticky notes. Their efforts included Marge Simpson, Spider-Man and a homage to Prince

were established in 1948 by William McKnight [who joined in 1907 as an assistant bookkeeper and rose through the ranks to become chairman], and we still try to live by those today.” One of those principles was to hire good people and let them do the job. “It’s essential that we have people with initiative, if we are to continue to grow,” said McKnight, urging managers to “encourage experimental doodling” on the grounds that “if you put fences around people, you get sheep”.

The ‘Kao Way’ is to be as concerned about how you do business, as what you produce

KAO CORPORATION’S proﬁle – or lack of it – is reminiscent of western consumer goods giants 20 years ago, before people became interested in the companies behind the brands. But if you haven’t heard of it now, you soon will. The quiet presence behind toiletries brands such as Molton Brown, Bioré and John Frieda has committed itself to ‘fostering a distinctive corporate image’ to help it achieve its global ambitions. By 2030, it wants to be making ¥2.5trn in net sales, ¥1trn of them outside Japan. Founded in 1887 and named after its ﬁrst product, Kao Sekken (face soap), the corporation now comprises four main businesses: beauty care, human health care, fabric and home care, and chemicals. Much of its growth has come through acquisitions and Kao uses matrix management to drive synergies between the businesses and divisions. How it does 53

Organisational life spans may be on the wane but some businesses are bucking the trend

12%

40-50 YEARS

Percentage of the original 1955 Fortune 500 companies that were still on the list in 2014

Average life span of today’s multinational, Fortune 500-sized corporation

Source: Mark J Perry, American Enterprise Institute*

Source: Mark Goodburn, KPMG Intl, World Economic Forum

AVERAGE AGE OF FTSE 100 COMPANIES

99.1 yrs 98.4 yrs

1984: 2012:

55%

of new businesses don’t survive for more than ﬁve years

Source: ritamcgrath.com

The Kao Corporation was named after its ﬁrst product, Kao Sekken (face soap)

For further reading, see page 72 54

MADE IN JAPAN

Number of companies aged 200 or more, by country Source: Bank of Korea, 2008

Germany 837 Japan 3,146

Netherlands 222

France 196

Rest of the world 1,185

EIGHT COMPANIES THAT STOOD THE TEST OF TIME 705 NISHIYAMA ONSEN KEIUNKAN, JAPAN

This hot springs hotel is the oldest still operating in the world, run by 52 generations of the same family

803 STIFTSKELLER ST PETER, AUSTRIA Located inside St Peter’s Abbey, Europe’s oldest eatery has played host to kings, cardinals and Clint Eastwood

772

Charlemagne expands empire

900 SEAN’S BAR, IRELAND

Ireland’s oldest pub is in Althone, by a crossing point for an ancient ford. It’s now a popular destination for tourists

841

Dublin founded by Viking settlers

Source: Business Insider, 2014

business has always been as important as what it produces. Its corporate philosophy – ‘The Kao Way’ – is, according to president and CEO Michitaka Sawada, “like a compass we refer to if we are facing difficulties or if we are unsure what to do”. “The Kao Way is the path we walk along, as we go about our business. It really embraces and captures the culture and the history of Kao,” he says. “One of the core concepts is integrity. And that is not just about compliance, it’s also about being true to who we are.” The corporation hit a blip in 2013 when it had to recall whitening products after more 1934 than 2,000 consumers reported skin Housework blotches. At the time Bloomberg Science Laboratory reported that it would lose ¥6bn founded ($54m) of operating profit for that 185.6BN fiscal year, and Sawada admitted the operating income corporation’s “reputation was hurt”. 2016, up 10.9% The recall, however, did no real lasting damage to its reputation. This 33,195 year the Kao Corporation was employees included in the FTSE4Good Global Index for the 10th consecutive year and is the only Japanese firm to be named as one of the world’s most ethical companies for 11 years in a row by the Ethisphere Institute. It was also one of only a handful of companies lauded by think tank Global Canopy Programme for its work to reduce deforestation and, in a country that has a word for death from overwork – karoshi – it has been promoting work-life balance for the past 30 years.

Source: RSA

*Note: Fortune changed its methodology in 1995, adding service ﬁrms

GOING THE DISTANCE

companies that last 70

SURVIVAL TOOLS

AVERAGE COMPANY LIFE SPAN ON S&P 500 INDEX (YEARS)

Lessons learned from our case study organisations

GUIDING PRINCIPLES

Kao’s corporate philosophy, ‘The Kao Way’, acts as a guiding principle for all employees, while the McKnight Principles underpin 3M’s innovative culture nearly 70 years later

30 20 10

Projections based on 2011 data 1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

2020

STAKEHOLDER MODEL

2025

Mondragon is built on egalitarian principles, including worker-ownership. Bettys & Taylors rewards workers with generous bonuses and fosters long-term ethical relationships with suppliers

Courtesy Kao Corporation; Superstock; Getty Images; Alamy Stock Photo

Data: Innosight/Richard N Foster/Standard & Poor’s

Royal Dutch Shell British American Tobacco BP GlaxoSmithKline Reckitt Benckiser Group Unilever Lloyds Banking Group Prudential Rio Tinto Barclays Imperial Brands RBS Group Standard Chartered Associated British Foods Aviva BAE Systems RELX (Reed Elsevier) Legal & General Group Tesco Smith & Nephew Land Securities Group Whitbread Marks & Spencer Group RSA Insurance Group Barratt Developments J Sainsbury GKN Johnson Matthey Pearson Hammerson

1040 WEIHENSTEPHAN BREWERY, GERMANY

Despite tasting like bananas and bubblegum, the beer from the world’s oldest brewery is one of the best, with a 98% rating given by BeerAdvocate

1066

Battle of Hastings

£175bn £101.2bn £93.2bn £80.2bn £54.7bn £54.1bn £51.5bn £45bn £43.6bn £36.6bn £35.1bn £31.6bn £24bn £23.5bn £21.4bn £20.6bn £17.7bn £15bn £14.9bn £11.8bn £8.5bn £7.7bn £6.4bn £6.4bn £6.1bn £6bn £6bn £6bn £5.7bn £4.6bn

FOCUS ON R&D

FTSE 100 LONGEVITY

30 of the companies that were on the FTSE 100 when it started in 1984 are still on it. 19 (in orange, left) of those have been a constant constituent Source: London Stock Exchange Group, market capitalisations, May 2017

CO-OPERATION AND COLLABORATION

3M’s matrix culture supports the ‘unexpected connections’ essential to innovation. Mondragon encourages the exchange of knowledge across businesses

Described as “the epitome of excellence”, the cognacs produced at one of France’s oldest distilleries come from grapes grown on the same vineyard the family has used since it opened

1163

CUSTOMER FOCUS

Kao’s principle of ‘Genba-ism’ denotes working with customers on site to understand their needs. At Lego, reconnecting with its fan base helped it return to form after it over-diversiﬁed

1270 FRAPIN, FRANCE

Construction begins on Notre Dame

3M’s success is underpinned by a rule that 30 per cent of sales must come from products less than ﬁve years old, while more than 20 per cent of sales at Mondragon come from products and services less than ﬁve years old

1498 THE SHORE PORTERS SOCIETY, SCOTLAND

Aberdonians with anything to haul around the world have called on this removal company since the time of Columbus’ expeditions

1254

Marco Polo is born in Venice

1347

Start of the Black Death

1526 BERETTA, ITALY

Family-run for more than 400 years, Beretta has been manufacturing guns since the Arsenal of Venice needed 185 barrels for the arquebus (a form of long gun)

1440

Johannes Gutenberg invents printing press

1534 CAMBRIDGE UNIVERSITY PRESS, ENGLAND Henry VIII gave the world’s oldest publishing house permission to print “all manner of books”, including Milton’s Lycidas

1588

Spanish Armada defeated

“While the cause is dark, what we offer is pure sunshine” As head of the NSPCC, Peter Wanless has been thrust into the public eye. But, he tells Robert Langkjær-Bain, he’s happy to take the heat if it brings better outcomes for children Portrait

Richard Cannon

eter Wanless’s job is not for the fainthearted. As chief executive of the NSPCC, you could forgive him if his work left him downcast and dour. The stream of shocking revelations of child abuse that have come to light in recent years is bad enough, but even more frightening is what we don’t hear about: for every case of abuse that is uncovered, eight more children are being maltreated, the charity believes. So it’s credit to Wanless that he is upbeat in his outlook, and warm and open in his demeanour. He takes inspiration, he says, from Reverend Benjamin Waugh, who founded the NSPCC in 1884. By 1889, the first Children’s Act was on the statute books. “If the founders could achieve that in five years, the Reverend Benjamin might wonder why we’re still at it today,” says Wanless dryly. “But the issues and challenges facing children vary over time. Great progress has been made on some fronts, but new challenges emerge.” In his early career, Wanless spent a decade at the Treasury, where he enjoyed an insider’s view of the workings of government, rising to principal private secretary to several cabinet ministers including Michael Portillo. In 1998, he became a director at the Department for Education, a role that opened his eyes to the real-life impact of policy on the young – and when he became a father, his concern became more personal. After five years leading the Big Lottery Fund, he had the chance in

2013 to take the reins of the NSPCC, with a mission to “give every child the start in life they deserve”. Keeping the NSPCC up and running are 1,800 staff, including social workers, counsellors, researchers and fundraisers, and 12,000 volunteers (many of whom man the 24/7 Childline service) spread across 29 service centres and 12 Childline bases in the UK. Wanless does his best to keep in touch with them all: “I try to get out and about in the organisation to some of the less likely places, to demonstrate that all these voices are important. So if I pop up in Anglesey one day and Letchworth another day, it hopefully symbolises an interest.” The “NSPCC family”, as Wanless calls it, is clearly important to him. It explains why he hasn’t replaced the vintage NSPCC pin badge he wears on his lapel with one bearing the charity’s new logo – it was given to him by a volunteer, he says. What kind of person does the NSPCC look for? “I’m not sure there’s a type. What unites us all is a passion for the cause: an interest in young people, what they say and do, and how to keep them safe.” Resilience is a must, especially for those who work directly with vulnerable young people who have experienced terrible things. But so is the supervision and support the charity gives to staff and volunteers exposed to these situations. Surprisingly perhaps, the NSPCC is far from a grim place to work: “While the cause is dark, what we offer is

Pupils from schools in Hoxton, London joined protestors at Downing Street in 1971, requesting guards for their schools to protect them from sexual assault

interview

Daily Express; Hulton Archive/Getty Images

pure sunshine,” says Wanless. “We’re all about solutions. numbers of staff and volunteers who have different motiWe’re about hope. We’re about making things better. vations and patterns to their life, that plays itself out in There’s a really strong sense of positive change, so to all sorts of ways. One of my challenges is to channel that some extent that does counterbalance the darkness of in a healthy way.” He enjoys the job “hugely” and, in the moments when he’s not, it’s usually as a result of that the subject matter.” At the NSPCC’s offices, he says, there’s a liveliness frustration – “that impatience and passion that people and a sense of togetherness and purpose: “We have this have to do things faster and better”. Wanless says his time working in government taught extraordinarily important cause that a lot of people are passionate about. If you look at the engagement that him valuable lessons about persuasion, influencing and people have with us as an organisation, it’s really high.” building alliances for change. “There’s a reason that the A big part of Wanless’ role, as he sees it, is to build NSPCC has survived longer than some other charities,” bridges between the charity’s different constituencies: he says. “It has built an authority and a credibility and an children, staff, donors (who give the NSPCC more than expertise around abuse and neglect, which gives us the 90 per cent of its funds), volunteers and external influ- chance to walk through open doors, to Number 10. That encers. Then there are the trustees, who fall into three brings with it a responsibility to tell truth to power, but main groups: “the commercial, business, philanthropic at the same time to engage in an authoritative and types”, “the expert social work, public policy academic appropriate way that will influence change.” At the other end of the scale from this approach are types” and “the fundraisers and people in the branch and district network the length and breadth of the coun- organisations that style themselves as hero charities riding to the rescue of vulnerable try who care about children”. people. It would be an easy image The magic happens when all to adopt, but it’s not how Wanless these groups come together but, wants to run a charity. “You can inevitably, there are tensions. “There’s a really strong raise money on the back of that “There’s this really strong sense sense of purpose and mission, rather more easily than by of purpose and mission, but also but also a sort of impatience building a really strong sense of a sort of impatience and frustraand frustration” shared purpose and a coalition of tion,” says Wanless. “Particularly interest with government, with when you’re working with large

Princess Margaret, who was president of the NSPCC from 1953 until her death in 2002, pictured with Frank Sinatra before a fundraising concert in aid of the charity

Sarah’s Law, which allows for controlled access to the sex offender registry, came into force following outrage over the murder of eight-year-old Sarah Payne in 2000 by child sex offender Roy Whiting

citizens, with other charities, it’s seeking to solve. Each year with businesses,” he says. “But I the NSPCC raises around £125m, “Don’t assume we’re just know health visitors in very while children’s social services do-gooders and that, if we pressurised local authorities who spend about £5.5bn a year on the did it like you do it, children work their hearts out with really children known to the system – challenged children and families. and for every one of those, there would be magically better” If the NSPCC came along and are many more who are being said ‘you should be doing 100 mistreated. times better than you are at the “Everything we do needs to moment’, that wouldn’t energise them to do the best they be amplified beyond anything we can possibly do can.” Instead, he believes the charity should be “an ourselves,” he says. “I’m consciously trying to influence enabler, an orchestrator and an encourager”. way beyond the organisation, as opposed to just Indeed, Wanless’ role is sometimes highly public. In administering in-house. I must get myself and the charity July 2014, then home secretary Theresa May chose him out there and associated with the issue, wherever we can to lead an inquiry into an alleged cover-up of organised make a constructive conversation, because we need child abuse by figures linked to the British government keeping children safe to be everybody’s responsibility.” – prompted by the revelation that a dossier passed to A criticism that is often levelled at charities is that Leon Brittan when he was home secretary in 1984 was they need to be more like business – but when asked lost and never acted upon. (Wanless’s report found no what the NSPCC can learn from the private sector, evidence of wrongdoing, but said it was “not possible to Wanless has more to say about what the private sector say” if files had been removed or destroyed.) Google his can learn from them. name and the third result after his Wikipedia and “Business insight can sharpen our operating sysTwitter pages is a story from The Sun attacking his “sky tems, our KPIs and our management information, but high” salary, which, at £167,000, could be viewed as a don’t patronise us. Don’t assume we’re just do-gooders fraction of what he’d get in the private sector. and that, if we did it like you do it, children would be The publicity is a part of the job Wanless is happy magically better,” he says. “The trade-offs we have to to accept, given how essential it is for the charity to make between what we put into prevention for continue punching above its weight. While people may large numbers of children, versus what we put into think of it as big, it’s tiny in comparison to the problem potentially life-transforming services for a small num60

interview

Dan Chung/Reuters; Paul Ellis/AFP/Getty Images

Former footballer Andy Woodward, the ﬁrst of a number of players who have had the courage to talk openly about child abuse, helped launch The Offside Trust to safeguard children in sport

ber of extremely damaged children – there aren’t straightforward answers. Our insight and understanding of managing complexity can be underestimated, and it is something we could offer back to some businesses.” There are some signs that the culture surrounding the abuse and neglect of children is changing for the better. However tragic and distressing high-profile child abuse scandals like those involving Jimmy Savile are, it can only be good news that they have come to light. “The fascinating thing about the Savile and post-Savile situation was that people were coming forward not simply about abuse that happened in the past, but about abuse happening now,” says Wanless. In November last year, former Sheffield United footballer Andy Woodward became the first of more than 20 footballers to speak out about abuse by coaches when they were boys. Other players including Paul Stewart, David White and Steve Walters came forward, several of them naming convicted paedophile and ex-coach Barry Bennell. Their courage in speaking out was a sign of how much has changed in the culture of sport. Poisonous attitudes do persist. Former darts world champion Eric Bristow caused outrage when he publicly suggested that football abuse victims were not “proper men” because they didn’t “sort out” their abusers when they were older and fitter. Bristow – who holds an MBE – was expressing exactly the kind of view that stops people speaking up, and was duly sacked as a commentator by Sky Sports. But public attitudes are

changing, and the more people open up about abuse, the more they will continue to change. “It’s a great opportunity for us to capitalise on the greater recognition and understanding of the long-term consequences of child abuse and neglect, and the fact that it’s still going on today,” says Wanless. “There are many people who have been associated with the NSPCC for a long time, who have fought to convince people that child abuse and neglect are as prevalent as they are, and are as serious an issue as they are, and weren’t heard. Now the issue is up and out there.” Even so, he is still frustrated by the lack of followthrough by those in power to prevent abuse happening, or to provide support that prevents problems further down the line. Therapy, for instance, is not automatically available to abuse victims, and only kicks in if they become a danger to themselves or others. This approach amounts to “picking up the pieces afterwards”, he says, and he’s determined that it needs to change. But he remains full of hope. “I’m optimistic about the increasing conﬁdence and capability that people have to speak up and speak out and I’m optimistic about the good intentions many people in power and authority have to do something about these issues.” And with a smile, he repeats a line that he must have spoken a dozen times during our interview: “You’ve got to believe that things really don’t have to be like this.” For further reading, see page 72 61

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WORKING LIVES

To gig or not to gig, that is the question Does the freedom of piecemeal work outweigh the drawbacks?

Deliveroo recently changed the contract for its couriers following pressure from MPs

s the quality of work and where people work. The report, working lives in the so-called To gig or not to gig? Stories from the gig economy any different from the modern economy, authored by CIPD average experience of workers in head of public policy Ben Willmott, more traditional defines the gig “Just four in 10 gig employment? economy as “a way economy workers Recent CIPD of working based said they felt research has identified on people having like their own boss” some significant temporary jobs or trends that shed light doing separate pieces on a sector regarded by some as of work, each paid separately, rather insecure and exploitative, and than working for an employer”. by others as offering valuable Examples include Uber drivers flexibility over when, how and and Deliveroo couriers. 62

The findings were based on a survey of 400 gig economy workers who participate in work via online platforms and more than 2,000 other workers, as well as 15 in-depth interviews with individual gig economy workers. The proportion of UK working adults aged 18-70 taking part in the gig economy is just 4 per cent, or around 1.3 million people, but the report found that this number is set to grow. Of those working-age adults who had not participated in gig economy work in the last 12 months, 12 per cent said they were thinking about doing so over the coming year. When it comes to the quality of work and working lives, gig economy workers were significantly more likely than other workers to report that they felt positive emotions such as optimism, excitement and cheerfulness. A quarter of gig economy respondents said they felt optimistic most or all of the time as a result of their work, compared to 14 per cent of other workers. A fifth reported feeling excited by their work either most or all of the time, compared with just 7 per cent of other workers. In terms of overall job or work satisfaction, there was little difference between the two groups. But working in the gig economy is not without its drawbacks. Income from gig economy work is typically low, with a median average hourly rate of between £6 and £7.70, and 60 per cent of respondents said they didn’t get enough work on a regular basis. Some gig economy participants also raised concerns about the level of control exerted over them by the firms they worked for, even though they were classified as self-employed. Just four in 10 gig workers (38 per cent) said they felt like their own boss. Gig economy workers’ views on regulation were less clear-cut.

Words: Rima Evans

BUSINESS RESEARCH, REPORTS AND INSIGHT

Half agreed that people working in the gig economy made a decision to sacrifice job security and workers’ benefits in exchange for greater flexibility. Yet 63 per cent said there should be regulation to give all those working in the gig economy basic rights and benefits. This shows that finding the correct policy response to the challenge of providing both sufficient freedoms for gig economy businesses and protection for individuals is not straightforward, says the report. Responsible employers can lead the way, however, by becoming more transparent on the ‘deal’ they are offering giggers, providing opportunities to enhance their employability, and ensuring there are appropriate channels for these workers to raise concerns about their employment. bit.ly/Growing-Gig-Economy

LEADERSHIP

Daniel Leal-Olivas/AFP/Getty Images; Mary Evans Picture Library/Alamy Stock Photo

Flattery leads to resentment Ingratiating behaviour may result in more harm than good

hief executives need to be wary of those who constantly ﬂatter them. Ingratiating behaviour may leave top managers feeling resentful, and therefore prone to undermining their bosses or stabbing them in the back. The warning comes from a study by Gareth D Keeves and James D Westphal from the Stephen M Ross School of Business at the University of Michigan, and Michael L McDonald of the University of Texas at San Antonio College of Business. They argue that while CEOs subject to high levels of ﬂattery would probably suspect that not all of it was

sincere, they may not grasp just would make statements reflecting how deep the insincerity runs. negatively on the CEO when The research found that communicating with journalists. ingratiating managers are more This criticism could either be likely to make covert critical direct or take more subtle forms, comments about their CEOs to such as noting that the ‘board is journalists. Women CEOs or those picking up the slack’ or that the from racial minorities may be CEO ‘recognises their lack of particularly at risk of having their experience’. Analysis confirmed leadership reputation harmed in that each kind of negative this way. commentary was “Ingratiating managers associated with more The study are more likely to highlights how negative subsequent make covert critical ingratiating coverage of the CEO’s comments” behaviour, which leadership. It was involves deliberate also found that flattery or apparent conformity white, male managers seemed with the opinion of others, is a to particularly resent having to “fundamental means by which ingratiate themselves with a managers build and maintain female or a racial minority boss, their social capital”, since it elicits and were more prone to then a positive reaction from its target. criticise that CEO to a journalist. Yet flattering the boss can also feel This last finding reveals a demeaning for senior managers, “previously unrecognised and weakening their belief that they rather insidious form of social owe their own success to talent discrimination” the researchers and hard work. That, in turn, may conclude in their paper, Those trigger resentment and result in Closest Wield the Sharpest Knife: behaviour intended to damage How Ingratiation Leads to the CEO. Resentment and Social The research team collected Undermining of the CEO. bit.ly/IngratiatingBehaviour survey data for three years from CEOs and top managers at large and mid-sized US public companies. The surveys measured both the extent to which top managers ingratiated themselves with their CEO and their resentment of the CEO. Surveys of responding executives and journalists, with whom they had communicated during the previous year, then measured any negative commentary about the CEO’s leadership. The association between measures of negative commentary and subsequent press coverage of the CEO’s leadership was also examined. The data revealed that ingratiation increased the likelihood of managers feeling resentment towards their CEO, Mirror, mirror: it’s not always a good idea to hear what you want to hear as well as the likelihood that they 63

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spanning industries including oil and gas, utilities, financial and consumer goods, healthcare and technology were examined. The researchers looked at balance, conciseness and completeness, in addition to the quality of Companies found to use communication and the obfuscation strategies relationship between what was reported and performance. irms are ‘greenwashing’ They found that firms with lower company reports to make up financial performance adopted for poor performance, despite an ‘obfuscation strategies’, producing initiative introduced to improve reports that tended to be longer, the quality of reporting practices. less readable, less concise, more Researchers from Norwich optimistic – and therefore less Business School, Bocconi balanced. Companies with University and the Rotterdam relatively poor social performance School of Management at Erasmus provided reports that were University looked at early adopters ‘foggier’ and disclosed less of a framework for integrated information on environmental, reporting (IR), developed by the social and governance issues. As International Integrated Reporting Melloni observes: “Our evidence Council in 2013. This aimed implies that early adopters of IR to combine usually separate manipulate the financial and nonfinancial details “Evidence implies that content and tone of their reports of a company’s early adopters of as an impression performance to make integrated reporting reports more concise manipulate the content” management strategy. The lower and balanced, and so the performance, the poorer improve their quality and the disclosure.” usefulness to investors and analysts. Companies that want to be “An IR should communicate credible cannot only report the ‘concisely’ how a firm’s strategy, positives, she adds. “IR allows governance, performance and firms to talk about the future, prospects, in the context of its something traditional reports external environment, lead to don’t like. If they include less the creation of sustainable value,” positive details, but set out what explains the research paper, actions are going to be taken, Saying more with less? Disclosure shareholders will want to conciseness, completeness and know that.” balance in Integrated Reports. The study acknowledges that A report using the IR framework since IR is still in the early stages, also needs to include all relevant teething problems are expected. information – both positive and “While the results are not very negative. Yet an examination by encouraging, we are not suggesting Gaia Melloni, Ariela Caglio and that IR is wrong – it has very Paolo Perego of firms involved in strong potential,” says Melloni. a pilot IR programme found that, “However, companies need to despite the new reporting regime, plan and, if they want their report some companies are still not quality to be good, they need to reporting what they are doing. be concise and balanced.” Some 148 reports issued by 74 bit.ly/SayingMoreWithLess businesses during 2013 and 2014, CORPORATE REPORTING

WELLBEING

Blinding us to the truth

Taking work home could prove deadly

Research shows failing to down tools is bad for your health

oday’s ‘always on’ work culture can – literally – be deadly, with failure to unwind identified by a study as a possible risk factor in the development of cardiovascular disease (CVD). Researchers set out to examine the relationship between ‘workrelated rumination’ – the process of thinking about work outside of work – and the risk of disease. “Workers need to psychologically detach and unwind from the demands of work during their leisure time to replenish lost resources expended at work,” they note in The Association between Work-Related Rumination and Heart Rate Variability: A Field Study. Delaying that unwinding process through not being able to switch off has been associated with a range of health complaints, including increased risk of CVD. To prove that link, the team examined the neurophysiology of stress and rumination. The team of researchers from Lillehammer University College, the University of Surrey, Oslo University Hospital Rikshospitalet, the University of Pisa and the BioBeats Group carried out a study, in collaboration with AXA PPP, on 195 employees recruited from financial organisation BNP Paribas. With a final sample of 36, individuals were first assessed and categorised into two groups: 19 high ruminators (those who reported being troubled often or very often by work issues when not at work) and 17 low ruminators.

Bloomberg/Getty Images

United Airlines CEO Oscar Munoz chose to return to his stressful job after a heart transplant

Researchers monitored the employees’ heart rate variability (HRV), a non-invasive measure of stress response and marker for emotional regulation. Reduced HRV is also a known indicator of CVD risk. Individuals were fitted with a wrist sensor band, which sampled their HRV at home during three consecutive workday evenings. Participants were asked to behave as they normally would during their leisure time. The researchers found that the high ruminators had lower HRV compared to the low ruminators. Admitting that caution needs to be exercised in interpreting these findings since the study did not control for factors such as smoking, exercise or use of medication, and is based on a relatively small sample, the researchers say that, to their knowledge, “this is the first study to demonstrate an association between a trait marker of workrelated rumination and a shortterm HRV parameter”. As David Plans, CEO of BioBeats and co-author of the study, puts it, taking work home is “far worse than originally believed and the

results of our study indicate that, in fact, it is killing people”. The other researchers who took part in the study were Mark Cropley, Davide Morelli, Stefan Sütterlin, Ilke Inceoglu, Geoff Thomas and Chris Chu. bit.ly/Work-RelatedRumination

BUSINESS TRAVEL

The perils of frequent ﬂying Organisations need policies to protect staff who travel for work

requent business travellers fall into two groups: ‘flourishing hypermobiles’ and ‘floundering hypermobiles’, according to a study by the University of Surrey and Lund University. Their findings are based on analysis of public responses to media reports of an earlier research paper called A darker side of hypermobility, which presented a different perspective on the usually glamourised and soughtafter business ‘perk’ of travel.

Published in 2015, that study uncovered a range of negative consequences for the health and wellbeing of individuals in jobs with regular travel – in particular, flying. These included feelings of isolation, increased stress, fatigue from jet lag and hectic schedules, the risk of deep vein thrombosis and radiation exposure during flights, and poor diet. The study attracted considerable media coverage across 17 countries and online comments that researchers were keen to investigate. After analysing 433 online media comments, they identified a split in ‘subject positions’. There were those who embraced frequent business travel and saw it as part of their happiness and identity, and so denied its health and wellbeing implications or simply developed strategies to overcome these – the so-called flourishing hypermobile. Then, there were floundering hypermobiles – those who understood travel to be a source of “physiological and psycho-social stress” and wanted to reduce the frequency of their travel, but felt disempowered to do so. This latest report, The dark side of business travel: A media comments analysis, concludes that it is up to organisations and HR departments to develop policies to protect their employees from the ‘darker sides’ of business travel. Measures that could be adopted include making greater use of technology for face-to-face communication; ensuring trips to locations that are close to each other are scheduled under one visit; setting a minimum rest period in between longdistance trips; using transport other than flying; and booking direct flights where possible. The researchers were Scott A Cohen, Paul Hanna and Stefan Gössling. bit.ly/DarkSideOfTravel

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the future needs and context of • A trend towards more flexible, business, and sees HR exploiting project-based teams, in contrast the full potential of its strategic to a traditional steady-state contribution by defining and business-as-usual operation. delivering differentiating strategic Organisations that help team capabilities, and creating new members maximise their entities to meet that need. happiness and enthusiasm will The authors of the study are benefit from significant increases Senior leaders doubt profession’s William Scott-Jackson and in individual resilience and ability to deliver strategic value Andrew Mayo, with additional flexibility, with significant research by Nick Holley, Chris effects on business results. omentous changes in the Brewster, Dr Liz Houldsworth, • Increasing use of artificial nature of work mean the Mark Swain, Don Barratt, Dr intelligence (AI) and the potential HR function must either evolve or Najat Benchiba-Savenius and near-term displacement of human transform if it is to stay relevant. In Nick Kemsley. capital with AI capital. With bit.ly/HRWithPurpose its current state, it will not deliver differentiating strategic value for businesses as they capabilities no longer deriving grapple with major challenges mainly from human capabilities, WORK-LIFE BALANCE around the future of work, talent organisations will need to balance and technology, says a report by and manage increasingly Henley Business interchangeable “Changes in the nature technological and School and Oxford of work mean the HR Strategic Consulting, human capabilities. function must evolve HR with Purpose: Exploits in the bedroom link to or transform” Future Models of HR. Today’s HR your performance at work Based on interviews function is not in a with senior practitioners and position to address the challenges eople looking to climb the academics, and a review of existing thrown up by these changes, the career ladder may find an studies, the report proposes that report says: “Senior leaders, while active sex life contributes to the purpose of the HR function is consistently acknowledging that their success. to “deliver the capabilities needed people and their capabilities are to achieve outstanding strategic their most important success”. These capabilities strategic asset, also encompass not just those that believe the ability of “confer advantage”, such as good the HR function to IT or finance, but differentiating deliver people’s strategic capabilities that are a potential is extremely source of sustainable competitive low.” HR is also seen advantage to the organisation as having little because they are rare, valuable strategic value. and hard to copy. The study sets out two models for This purpose is set against a change: evolve and background of three key trends transform. The identified by the report: first continues the • A rapid and continuing shift from general evolution a permanent full-time workforce of HR, reskilling to a combination of full-time practitioners to and part-time, permanent and provide better temporary, employed and selftactical value though employed, staff. Key people will be people processes and far less tied to one organisation, so expert advice on their enthusiasm and motivation people issues. The Happiness chemicals have never been in short supply for Bond will need to be earned daily. second responds to HR PROFESSION

Why HR must change to stay relevant

Sex and the modern office

Everett Collection Inc/Alamy Stock Photo; Amy Vinchattle/Iowa State University News Service

A study has shown that sex has a positive influence on work the next day, while also boosting job satisfaction and engagement levels. This is a result of the moodenhancing effects of sex (caused by the release of the happiness brain chemicals, oxytocin and dopamine) that spill over to the next day. Researchers Keith Leavitt of Oregon State University, Christopher M Barnes and Trevor Watkins from the University of Washington and David T Wagner of the University of Oregon carried out a diary study of 159 married employees (married couples have more sex than single people, according to the study). Over the course of two weeks, participants were asked to complete three surveys each day to capture data on their sex lives, how positive they felt at the start of the work day, daily job satisfaction levels, engagement levels and daily levels of work-related stress that encroach upon home life – so-called strainbased work-family conflict. The results show that sexual intercourse on a given night tends to have a beneficial effect the next day, increasing daily job satisfaction and job engagement. In the study, the effect was equally strong for men and women, and was present even after researchers took into account marital satisfaction. They also found that strain-based work-family conflict “undermines sexual behaviour the following workday”. The researchers point out the findings of their study, From the Bedroom to the Office: Workplace Spillover Effects of Sexual Activity at Home, have practical implications for organisations, which may need to consider work-life balance practices such as limiting urgent emails in the evening “when employees may be engaging in physical intimacy”. For employees, particularly those seeking promotion, the study

Researcher Stacy Tye-Williams of Iowa State University found the victims of bullying gave the same advice to other targets of abuse, even when they believed it wasn’t helpful

suggests they be “mindful of tending to their sex lives”. “Making a more intentional effort to maintain a healthy sex life should be considered an issue of human sustainability and, as a result, a potential career advantage,” says Leavitt. bit.ly/BedroomToOffice

BULLYING

Emotions need to be validated Conventional advice is rarely enough to stop workplace bullying

orkplace bullying persists in many organisations, but can the advice of victims be useful in dealing with the problem? The results of a study reveal a paradox. Individuals who suffered bullying at work gave other targets the same advice they had received, despite believing it wasn’t helpful or could exacerbate the problem. A total of 48 workers from various occupations including

nursing, banking, sales and the armed forces, who had experienced workplace bullying, were interviewed to see if the process of offering advice to others had the potential to open up new strategies for addressing “difficult work experiences”. Researchers Stacy Tye-Williams of Iowa State University and Kathleen J Krone from the University of Nebraska-Lincoln asked what advice these workers had been given, whether they had followed it and how helpful it had been. They also asked participants about their reasons for using or not using the advice. Next, they were asked to consider the usefulness of common pieces of advice, including being more assertive, ﬁling formal complaints and/or keeping written records to use when approaching organisational authorities. Finally, participants were asked to share the advice they would give to others experiencing bullying. The advice targets received personally, as well as from experts, included resigning from the job, standing up to the bully, ignoring the bullying, reporting it, staying 67

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helping the workforce adapt to calm, avoiding the bully and changes such as automation, says toughening up. Yet, the targets a CIPD report. of bullying typically did not use Encouraging individuals either the expert or personal and employers to invest in advice available and, when they lifelong learning is one of six did, they felt it often made matters recommendations the CIPD has worse or made no difference, put forward to help address serious according to the study, Identifying weaknesses in the UK’s skills base. and re-imagining the paradox The report, From ‘inadequate’ to of workplace bullying advice. ‘outstanding’: making the UK’s skills The participants were either system world class, outlines how reluctant to offer advice to others two decades of underinvestment or simply repeated the advice they and failed had received. government skills The researchers “The findings policies have taken discovered that what highlight the complex was problematic for nature of anti-bullying their toll, leaving the country with many was the advice” a low-skills economy downplaying of the just as it prepares to leave the EU. “significance of their emotional Internationally, the UK compares experience” in the advice offered. well on the provision of higher-level The findings highlight the qualifications, but its performance complex nature of anti-bullying on most other indicators of advice, with conventional advice qualifications or skills is either poor “rarely sufficient to stop the or mediocre. For example, England behaviour”, especially as it fails and Northern Ireland came third to recognise the emotional nature and the need for a collective, rather from the bottom in literacy skills in 16 to 24-year-olds in an than individual, response. Organisation for Economic The researchers conclude: Co-operation and Development “Validating the strong emotions survey, and fourth from the bottom associated with being bullied can in numeracy skills in that age create alternative spaces where group. It also did badly in terms of targets, and their allies, can young people’s computer problembegin to imagine more potent solving skills. options for disrupting cycles of At the same time, UK employers workplace abuse.” spend less on training than any bit.ly/ParadoxOfBullying other major EU economy. In 2010, the cost per employee was just €266 in the UK, compared with €511 SKILLS DEVELOPMENT across the EU, says the report, by CIPD skills adviser Elizabeth Crowley and acting chief economist Ian Brinkley: “Participation in job-related adult learning has fallen significantly in recent years, leaving Underinvestment and failed us languishing close to the bottom policies have taken their toll of the league table.” strong culture of lifelong The report concludes that a more learning with ample strategic view of skills and the development opportunities mechanisms through which they provided by employers will bring can be developed and sustained economic benefits, while also

UK skills base remains weak

is required. To achieve this, the CIPD recommends: • Bringing strength and stability to the system. The government should consider establishing a new national and independent strategic body to set direction and deliver on the post-16 education and skills agenda. • Improving basic/core skills. This should be part of a broader strategy to raise the demand for skills among employers and to incentivise lifelong learning. • Increasing the quality of vocational pathways. Apprenticeship standards should be reviewed to ensure quality not quantity, and there should be greater involvement by social partners and professional bodies, as is the case in most other developed nations. • Building capacity at local and workplace level. Low or no-cost HR support could be given to SMEs to improve people management competencies, especially around the effective use and development of skills. • Promoting learning across the life course. To overcome barriers to engaging in learning, such as lack of time and money, the government should look at creating personal learning accounts based on co-investment by employees and employers, and linked to quality careers advice. • Strengthening access to quality information, advice and guidance. This can shape learner demand and career choices, better aligning them with the current and future requirements of the labour market. Crowley says evidence shows that a co-investment model to promote lifelong learning results in much closer matching between the skills employers are looking for and the training undertaken by individuals. bit.ly/UKSkillsSystem

NEUROSCIENCE

Entrepreneurs really do love their ﬁrms Researchers ﬁnd feelings are similar to those felt by parents

Tristar Media/Getty Images

he love that entrepreneurs feel for their venture is similar to the love parents have for their children, with the emotion being a major motivator for both groups. That is the conclusion of a study that used functional MRI (fMRI) to compare the neural basis of entrepreneurial attachment with the Elon Musk’s emotional attachment to SpaceX is evident in his body language neural basis of parental attachment. “Love can be conceptualised as a ‘peak experience’ that is an a familiar firm, and of 21 fathers intense, beyond ordinary emotion,” viewing pictures of their own and say Marja-Liisa Halko from the a familiar child. Participants then University of Helsinki, Tom Lahti filled out questionnaires to measure of the Hanken School of Economics, the strength of their emotional Kaisa Hytönen from the Laurea reactions, optimism, confidence University of Applied Sciences and sense of closeness between and Iiro P Jääskeläinen of each father and child and between Aalto University in their paper, each entrepreneur and his venture. Entrepreneurial and parental love – They were also required to rate are they the same? how strongly three components As “peak experiences thought to make up love – are particularly intimacy, passion “Love is a ‘peak experienced with and commitment experience’ that is an high-growth – characterised the intense, beyond ventures”, relationship with ordinary emotion” entrepreneurs who their venture or expected the annual child. Finally, growth of their firm to exceed subjects evaluated the chances of 20 per cent in the three years success of their company or child, following the experiment were compared to other companies in targeted for the research. Only the same industry, or children of male entrepreneurs and fathers the same age. took part in the study, mainly Looking at images of one’s own because of the difficulties in child, in particular, deactivates finding female entrepreneurs those parts of the brain that are who would meet the study’s responsible for the theory of mind selection criteria. and social understanding. Similar Using fMRI, the researchers deactivations were observed among measured the brain activity of 21 entrepreneurs who self-rated as entrepreneurs as they viewed being very closely attached to their pictures of both their own and company. “The strong attachment

entrepreneurs can have to their venture is reflected in the same brain areas as the attachment between a parent and child,” the study concludes. The results also indicate that less confident fathers and male entrepreneurs may be more sensitive to the dangers and risks of parenting and entrepreneurship, says Halko. On the other hand, overconfidence and the repression of negative emotions may lead to overestimating the probability of success for both a child and a company. bit.ly/EntrepreneurialAttachment

MILLENNIALS

Straight talk gets thumbs up But leaders who take divisive positions lack support

illennials are reluctant to support leaders who aim for “radical transformation” or take divisive positions, favouring instead business and political leaders who seek to appeal to those who feel marginalised or isolated. These are among the findings of the 2017 Deloitte Millennial Survey – Apprehensive millennials: seeking stability and opportunities in an uncertain world, which surveyed almost 8,000 college or universityeducated millennials (those born after 1982) from across 30 countries, working full time in large private sector organisations. This year’s findings reflect turbulent events in the wider world, particularly the outcome of the US presidential election and the Brexit vote in the UK. Many believe a new kind of political and leadership style is emerging, “one that rejects the globalisation agenda, promotes 69

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local self-interests and offers radical solutions in place of gradual change”, says the report. However, this is an agenda most millennials are reluctant to embrace. When asked to evaluate both business leaders and politicians, 66 per cent expressed approval of business leaders who used plain, straight-talking language. The figure was 67 per cent for politicians. They also looked for passion from leaders offering an opinion, a trait that 58 per cent looked for in business leaders, and 55 per cent in politicians. By contrast, only 36 per cent approved of business leaders taking controversial or divisive positions, even if it’s what they truly believed. The findings echo those of a 2016 Deloitte survey, which suggested that “organisations taking an inclusive approach, rather than an authoritarian/ rules-based approach, are less likely to lose people”. In this year’s survey 62 per cent of millennials also considered business leaders to be committed to helping improve society – up from 57 per cent last year. However, this was lower in mature markets (51 per cent) than in emerging markets (73 per cent). Other findings in the Deloitte survey include: • Millennials see business as a broadly positive force that behaves in an increasingly responsible way. However, multinationals are falling short of their potential to make a positive impact. While 74 per cent believed they had the potential to contribute to economic and social progress, and alleviate challenges such as inequality, conflict and corruption, only 59 per cent felt they had delivered on that. • Millennials are showing signs of greater loyalty to their employers. Thirty-eight per cent said they 70

However, for male recruiters the would leave within two years, opposite is true: they consider compared to 44 per cent in 2016. heterosexual applicants more The group expressing a desire to hireable than gay and lesbian stay beyond five years has jumped candidates with similar from 27 per cent in 2016 to 31 per qualifications, recent research cent this year. “While these results has revealed. signal better news for employers, The research paper, Can Being the 38 per cent of millennials Gay Provide a Boost in the Hiring globally who would leave their Process? Maybe if the Boss is Female, jobs within two years, if given says that although recent work has the choice, is still high,” the shown that women are adopting report notes. more positive attitudes toward gay • The majority of millennials men and lesbians recognise the overall, these results potential benefits of “Women perceive are the first to show automation in terms gay men and that women give of productivity and lesbians to be more economic growth. competent and warm” gay and lesbian applicants a boost However, they also in the hiring process. see major downsides. Forty per Benjamin A Everly from the cent felt automation posed a threat University of Sussex School of to their jobs; 44 per cent believed Business, Management and there would be less demand for Economics, and Miguel M Unzueta their skills; and 53 per cent thought and Margaret J Shih, both of the the workplace would become more Anderson School of Management impersonal and less human. The at the University of California, ‘super connected’ millennials – conducted experiments on two those who currently make the groups, one with experience of greatest use of social media – have evaluating CVs and one without. the most positive outlook in respect Just over 350 people took part in of automation. Only 15 per cent felt the study, during which they were it would reduce the number of jobs randomly shown one of four CVs: available to people like them, while that of a lesbian, a gay male, a 64 per cent thought there would straight female or a straight male. actually be more jobs available. The fictional candidates’ CVs were bit.ly/DeloitteMillennialSurvey identical in terms of professional experience. However, to indicate gender they were given different DIVERSITY names and to indicate sexual orientation they were listed as belonging either to the Los Angeles Gay Business Professionals organisation or to the Los Angeles Business Gender plays an important role in Professionals organisation. the perceptions of gay applicants Participants were asked to identify the candidates’ sexual eing gay can be an advantage orientation, before evaluating during the job hiring process their hireability using a seven-point – but only if the boss is a woman. scale. Female recruiters scored gay Female recruiting managers candidates an average of 5.21 and perceive gay and lesbian applicants straight candidates 4.8, whereas as more hireable than equally men scored gay applicants 4.6 qualified straight candidates.

Bias in hiring processes

Ken McKay/ITV/Rex/Shutterstock

and straight applicants 4.93. The bias was even stronger among those who had signiﬁcant experience of evaluating CVs. The study also found that the female recruiters perceived gay men and lesbians to be more competent and warm, and that these factors inﬂuenced their hiring decisions. The male recruiters, however, viewed heterosexual candidates as more competent, which affected their hiring decisions, but saw no difference in perceived warmth between the different applicants. As the paper says, these results indicate that “sexual orientation biases are more nuanced than what previous literature has found”. Having a better understanding of these biases should help organisations make their selection processes more objective. In addition, placing more women in selection roles or having mixed gender selection panels could temper the negative bias men show against gay and lesbian applicants, and lead to less biased decisions, the researchers suggest.

CREATIVITY

Ideas and the power of chaos Structure can curb creativity and cognitive ﬂexibility

tructuring knowledge can destroy creativity, according to the research paper Ideas rise from chaos: Information structure and creativity. It suggests that far from enhancing efficiency and reducing complexity, as previously identified, structuring knowledge can in fact be a double-edged sword. The research team distinguishes between an information structure that is hierarchical, and one that is flat. In the first, information is organised by categories, and in the second there is no categorisation. A flat information structure leads to higher levels of creativity than a hierarchical one because it increases ‘cognitive flexibility’ – the ability to easily switch focus between different categories or bit.ly/BiasInHiring perspectives, explain researchers Yeun Joon Kim and Chen-Bo Zhong from the University of Toronto’s Rotman School of Management. The absence of categorised information “allows individuals to discover alternative interpretations of the information and increases cognitive flexibility”. The pair ran three experiments, two of which consisted of sentence construction tasks, with the third involving Lego. A total of 277 students It’s 20 years since Ellen DeGeneres came out as gay, but she could still face negative bias from male recruiters today participated in the

first two studies and were randomly assigned to either the hierarchical or flat information structure, before being asked to generate as many sentences as possible from a list of nouns, either organised by categories or without any categorisation. In the final study, 182 participants were asked to make an ‘alien’ either out of a box of bricks organised by colour and shape, or out of a box of unorganised bricks. They were instructed not to pour the bricks out and could only take pieces from the boxes when they needed them. The researchers found that the participants displayed less creativity and cognitive flexibility when asked to complete tasks using categorised sets of information than those asked to work with items that were not ordered in any way. For example, in the Lego experiment participants working within the flat information structure made more creative alien figures than those in the hierarchical structure. In addition, those in the organised information groups spent less time on their tasks. This suggests reduced persistence, a key ingredient of creativity. These findings may have implications for the way multidisciplinary teams are managed, say the authors. Such teams are inconsistent in their contribution to innovation because a hierarchical information structure is often created when information is organised around job functions. To fully reap the benefit of crossfunctional teams, managers need to create a flat information structure by putting random ideas forward before trying to think about their connections. It is our tendency to categorise information that those working in creative industries need to guard against most, the researchers say. bit.ly/IdeasFromChaos