HR FEATURES
HR FEATURES
Shifting sands and changing tides What’s the corporate response? By Callistus Antony D’Angelus, HR professional (you might remember from one of our previous HR Conferences) currently based in San Francisco
It may seem from one set of lenses that the world is being gripped with mayhem. The political, economic and social evolution, or even revolution, has placed us at a time in history where the extent of change and tumult is causing distress, uncertainty and hardship to the various stakeholders of society—with some being impacted more than others. This period of volatility was preceded by an era of economic growth, described proudly by some renowned economists and regulators, including two former Chairmen of the Federal Reserve, Alan Greenspan and Ben Bernake, as a period of ‘Great Moderation’. It was opined very strongly, where any sort of dissent was often met with disdain and contempt, that the violent boom-and-bust cycles of the economy were over and that the economic growth experienced would continue—with any gyrations being minor. Such growth came on the back of the end of the Cold War, with the Reaganites and Thatcherites claiming that the progress was due to privatisation, reduced regulation, and the evisceration of workers’ rights. Immediate results, especially economically, may have supported such an argument. The Global Financial Crisis in 2008 and its aftermath, however, have established that the world order is broken and the current system—or lack of it—is not sustainable.
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Globalisation trade to the exclusion of all else The term globalisation is used to reflect a world where goods and services can be exchanged and moved around with little restraint, where the World Trade Organization had been established to see to this end. To an extent this has proven to be successful, and we live in a world where the barriers to international trade are being dismantled swiftly. The social dimension of globalisation has been ignored, and this has in turn caused social, economic, cultural and political issues. This is resulting in disenchantment and unrest that has manifested itself in various forms. Henry Kissinger in his World Order captured the dichotomy between the current state of interplay between politics and trade where he stated that, “The political and economic organisations of the world are at variance with each other. The international economic system has become global, while the political structure of the world has remained based on the nation-state. The global economic impetus is on removing obstacles to the flow of goods and capital. The international political system is still largely based on contrasting ideas of world order and the reconciliation of concepts of national interest. Economic globalisation, in its essence, ignores national frontiers.” The exclusion of the social aspects or human soul of how trade globalisation has taken root
in practice has caused a host of social issues. This would include a growing income and wealth divide, increasing relative poverty, crippling of dissent and the exclusion of large sections of society from the social, economic, political and cultural mainstream. The promise that globalisation is a tide which would lift all boats has in reality proven to be a myth. It has lifted some boats through a rising tide, with the backlash of that same tide having resulted in a tsunami which has hit those excluded. Pope Francis had succinctly captured this argument where he said, “Some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the socialised workings of the prevailing economic system. Meanwhile the excluded are still waiting.” As reported in the Financial Times, a recent International Labour Organization study revealed that since the 1980s, wages have been rising less quickly than productivity, which means that workers are receiving a shrinking share of economic growth. Backlash & effect on corporate world The recent political upheavals in Hong Kong through the pro-democracy protests, the Scottish independence referendum vote which could have resulted in the break-up of the United Kingdom, the annexation of Crimea by Russia, among so many others, have caused businesses around the world to reassess their risk profile due to the changing political dynamics. We cannot expect this to subside anytime soon. Businesses operating in environments experiencing uncertainty would usually make
contingency plans, and go to the extent of evaluating the continued viability of operations, investment plans, security of staff, etc. The corporate world has artfully held itself out to be independent of politics and social issues which could be deemed as being controversial. This would especially be in the case of international companies, who often support the ruling elite quietly behind the scenes while resisting any change to the prevailing status quo. From a purely short-term business standpoint, this may well be the clever play. In the longer-run though, this is impractical, unsustainable, and could be argued as being morally wrong as well. In South Africa, many foreign owned-businesses operated and even thrived during the apartheid regime. It was only when it was clear the way in which the cards were falling did businesses assume a different position. There have been some quarters that have wrongly accredited businesses for the success in dismantling the apartheid regime. It was the collective
will of the South African people which caused the fall of the brutal regime. Corporate response In these times, political considerations are a necessary facet of any business strategy, plan or calculation. What has become clear is that business would have to relate to their environments differently, with the relationships between international companies and the different environments even more complex. The new normal—an evolutionary process It is so very often that some new idea or position is described as ‘the new normal’. Reality though is that the new normal is an evolutionary process and is changing all of the time. The corporate world should embrace itself for this and—as difficult as it may be—institutionalise a system, culture and philosophy which will allow for a conflict of opinions to determine the new normal at any point in time. HR should be taking the lead in the process and working together with the Board to make it an ongoing reality.
While there are many different approaches in dealing with this change, D’Angelus highlights some key considerations that should be made by HR and the C-suite.
Key considerations for organisational models 1. Bold positions consistent with the values that are espoused by companies need to be taken, even where the shorter-term business interests suffer; 2. Corporate Responsibility is treated as an investment, cost, moral and social obligation; 3. Shareholder value takes a wider and more sustainable meaning, where it works and stands to benefit together with the value and interests of other stakeholders such as employees, general public, civil society institutions, etc.; 4. Local considerations and needs are considered in a de jure sense, and not just by using a de facto approach; 5. A deliberate effort is made, in particular by international companies, towards an inclusive approach. Biases in favor of the country where the head office is situated should be avoided and not allowed to become institutionalized, and 6. A certain form of balance should be found in terms of how things operate within any international company. The common gravitation towards adopting a Western operating and cultural model should not be the default position.
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