Philip Whiteley's Blog

September 18, 2013

Ethical success

Filed under: Uncategorized — felipewh @ 2:29 pm

As part of its Management Futures series of blogs, the Chartered Management Institute picks up on the theme of ethical governance and management for its September feature. Like New Normal Radical Shift, it challenges the idea that ethical conduct and commercial success are natural opposites. The following is an excerpt:

For the past few decades, the matters of ethics and social responsibility in business have been put firmly in their place: a short section near the end of the annual report; a few minutes before the close of the Board meeting. Social responsibility has meant some charitable donations and volunteer days, perhaps creating useful photo opportunities for the PR department. It has been – and often still is – seen as very much junior to the big beasts of finance, strategy and marketing. This is changing, however. In the past few years, some highly unethical practices, often enthusiastically pursued as part of the quest for high returns, have destroyed much shareholder value.

Click here for the full article.

Click here to buy New Normal Radical Shift

(This blog was published simultaneously on the Radical Shift site http://radical-shift.net/.)

August 5, 2013

Why does the Left promote poverty pay?

Filed under: Uncategorized — felipewh @ 11:56 am

With the rise of zero-hours contracts, and campaigns for a living wage, it is distressing that so many wages are low, but heartening that living standards are at least becoming a political issue.

Some of the most vociferous campaigners, however, are unwittingly undermining their own case, by exaggerating the business benefits of low wages. The Guardian-Observer, for example, the leading centre-left news journal in the UK, gave the issue considerable coverage on 28th July, with news coverage and letter-writers angrily denouncing the ‘scandal’ of low pay. Some of the contributors, however, repeated the common error of assuming that wage costs = employment costs, and that it’s in the interests of the business to keep wages at a minimum.

I duly submitted a letter for publication pointing out this error, which unsurprisingly went unpublished. A full text is below. If you care at all about low wages – and about the cause of low wages – please publicise this.

Low pay is a perfectly avoidable scandal

I do despair when I come across Observer readers and trade unionists who enthusiastically promote low wages in the private sector. Many of your correspondents (Low pay is not only a scandal it disenfranchises the young, 28 July 2013), repeat the common assumption that low pay maximises profits. SJ Closs, for example, argues that the ‘only way’ a private company can reduce its costs is to reduce wage and benefit levels.

It turns out, however, that this is not true. The direct cost of employing people is only a part of total employment costs, and is often dwarfed by factors such as poor skills, weak leadership and low engagement.

After 15 years of writing and researching on the subject, I have come to the conclusion that the cultural belief in low wages as a commercial priority has three main culprits:

  1. Domination of accountancy. This leads to the false equation that wage costs = employment costs.
  2. Right-wing economic theory. Milton Friedman urged a ‘costs-based’ approach to management, neglecting matters such as employee engagement and skills.
  3. Left-wing economic theory. Karl Marx’s surplus value is the same zero-sum calculation as Friedman’s. It finds its contemporary shape in trade unions’ ‘social dumping’ argument, which also actively promotes low wages in the profit-making sector.

Neither Marx nor Friedman based their ideas on what actually happens in organizations, where some of the most ethical employers (WL Gore, John Lewis Partnership etc) are also some of the most successful.

Low pay is not just a scandal, but a perfectly avoidable one, created by centuries of bean-counting, Marxism and neo-liberalism. It has all been a terrible mistake.

Sincerely

Philip Whiteley

  • Our case study in New Normal Radical Shift, on how a living wage helped productivity and service standards for Marks & Spencer suppliers in Bangladesh, can be found on this link.

August 1, 2013

Readings and songs from Meet the New Boss: 7th September

Filed under: Uncategorized — felipewh @ 1:47 pm

Special Announcement from Ampthill Writers 

An evening of readings and acoustic songs …. In preparation for the inaugural Ampthill Literary Festival, 2014

Have you ever wondered why work gets a bad press? Or why songs about hard toil and the nine-to-five make such a great soundtrack? Ampthill author Philip Whiteley presents readings, observations and a selection of songs on the theme of work, based on his award-winning publication Meet the New Boss. He will be joined by Peter Webster and Ross Fergusson, plus special guests, to play some classic songs, including: Between the Wars, Nine-to-Five, We Gotta Get out of This Place, and more.

Free excerpts from Meet the New Boss: http://www.whiteleywords.com/Phil/books/new_boss_extract.html

Buy the book here: http://tinyurl.com/okfvkjn

Ampthill authors – Screenplay writer Simon Michael and best-selling thriller writer Adam Croft now confirmed

Date: Saturday 7th September 2013. 08.00pm-10.00pm

Venue: Postern Piece Farm, Bedford Road, Ampthill MK45 2EX

Special note: The readings will be by professional authors. The music will be by professional musicians and singers. For the most part.

Admission free: but RSVP, as places are limited, to:

phil@whiteleywords.com or max@haymax.biz

June 4, 2013

My talk to Human Potential Accounting

Filed under: Uncategorized — felipewh @ 10:55 am

On 23rd May, I gave a talk to a London meeting convened by Human Potential Accounting, to mark the lanuch of the Human Capital Handbook. One quote: “When both left and right argue that low pay maximizes margins, it’s hardly surprising that there’s a lot of low pay – something that, I would argue, benefits no one.”

May 30, 2013

Food banks, Big Data and a refusal to learn

Filed under: Uncategorized — felipewh @ 9:25 am

Three articles this week, mostly depressing but with a glimmer of hope in one, offer a vivid portrayal of our technologically rich, economically unequal, debt-ridden, politically anachronistic and remarkably conservative and incurious society.

In The Independent, a report that use of food banks in the UK has shot up. The usual suspects are highlighted: delays in benefit system; curbs to benefit increases, pay freezes. Not mentioned in the report, for political reasons as the title is anti-Coalition, is the high level of personal debt in the UK, which soared under the last Labour government – and under the Conservative government before it – as a 2010 Bank of England Working Paper notes: up by more than 50% between 1987 and 2006.

Inventor Jaron Lanier, in a report that led to a lively discussion on the Radical Shift Linked-in group, noted how social media and other consumer firms are using Big Data to manipulate consumers. Simon Caulkin, spot on as usual, relates how corporations have been captured by the neo-liberal cult of only caring about shareholders, focusing on the short-term, and enriching a few.

There is one matter on which the neo-liberal zealots and The Independent agree: that extreme inequality helps the corporations. Over the longer term, especially, this is not consistently true. As discussed repeatedly on this blog and on Radical Shift, low pay does not maximize profits – this is a cynical myth supported by right-wing and left-wing economics. We have known since at least the 1930s and the Hawthorne experiments, that the way in which you treat workers is the single most important element in enhancing performance and the customer experience. The more ethical employers are also some of the most successful.

What is depressing this week is the extent to which there seems to be a refusal to learn: an insistence that low pay is inevitable or helps economic efficiency; that corporations cannot have a soul or a conscience; that only the state – itself massively indebted in each of the major economies – can help those on low incomes.

We have highly advanced electronic communications yet continue to neglect human communication. We think data is the hard stuff and relationships are the soft stuff. Corporations, keen to apply 21st Century Big Data, have yet to apply management research from the early 20th Century. Some progress. Half a century ago Martin Luther King complained that we had guided missiles but unguided people; we made progress in technology, but not in governance and leadership. Still the case.

I hate to be pessimistic, so now to the glimmer of hope. In Simon Caulkin’s piece, there was a report of a radically different vision of capitalism, one in which all of society stands to benefit. The head of McKinsey, no less, Dominic Barton said that capitalism had 10-30 years to reform itself. The business schools must follow suit. It’s challenging but not impossible. There are highly enlightened practices emerging from many supermarkets and consumer multinationals, especially on sustainability. You can read some examples in New Normal Radical Shift.

May 3, 2013

Left-right politics keeps wages down

Filed under: Uncategorized — felipewh @ 9:37 am

One of the biggest misconceptions in management and politics is the idea that careers, good earnings and self-esteem only matter to high-flying graduates and the ambitious upper-middle class. One of the most heartening lessons I’ve learned in recent years has been the example of enlightened employers bringing better wages and careers prospects to people such as cleaners, security guards, gardeners and workers in clothing factories.

There are, however, two major obstacles to spreading this amazing and enlightening example. One is right-wing politics. The other is left-wing politics.

The misanthropic nonsense that has emerged from neo-liberals in the past half a century is a major contributory factor, with their absurd notions of people as ‘human resources’, or ‘cost units’. Outsourcing decisions have been based on the notion that it’s rational to transfer a service across the world to where the wage rates are x per cent lower. This is simplistic and risky from a pure business point of view, never mind the ethics.

But it’s also worth exploring the contribution of liberals in the arts, in maintaining the idea that an unfashionable job in a factory or shop or office is type of prison from which one ought to escape. I explore these ideas in Meet the New Boss.

Worse still, left-wing politicians, instead of challenging the exploitative neo-liberal business model, lend ideological backing. The recent fire in a clothing factory in Bangladesh was proof, left-wing bloggers thundered, that ‘capitalism’ puts profits ahead of welfare and safety. The fact that you can make more profits by treating workers well is something that the reactionary forces of the left and the right want to keep hidden from us.

As we describe in New Normal, Radical Shift, Marks & Spencer actually improved their margins when they moved to a living wage policy in Bangladesh.

Ed Miliband, UK Labour leader, has recently spoken in favour of a living wage policy, which is a mighty step forward. Unfortunately, he does not consistently believe in the business case. Just a few months ago, he predicted that people would be fired all over the place ‘if their employer didn’t like them’, should labour regulations be lessened even slightly; and he seems to think that businesses have to be bribed with tax cuts in order to implement the living wage.

A truly progressive policy would make living wages and enlightened leadership in the public and private sector the centrepiece of economic and business policy, as well as social policy. There is no benefit to low wages and miserable working conditions. NONE AT ALL. It has all been a terrible mistake, sustained by right-wing and left-wing political beliefs.

Excerpt from New Normal, Radical Shift:

Centuries of Marxists and neo-liberals claiming that exploitation is the way to boost margins, encourages the worst types of managerial style to be deployed. Employee relations can descend into a self-fulfilling, vicious cycle of mutual fear and threat, with management and unions seeing themselves as being on opposite sides of a conflict, each keen to get their retaliation in first. This unhealthy dynamic was the principal cause of the collapse of entire industries in some western countries in the 1970s and 1980s, and was largely self-fulfilling, based on inaccurate and cynical political philosophies.

April 30, 2013

Radical Shift: Leadership book challenges economic and political beliefs

Filed under: Uncategorized — felipewh @ 9:31 am

Following the banking crisis and amid increasing environmental pressures, it is clear that the dominant business model in the west is unfit for purpose, and that the dash for short-term growth at any cost has led to economic ruptures and, in some cases, ruin.

There are many books that demonstrate the benefits of enlightened leadership, engaged employees and environmental protection. New Normal, Radical Shift – now available for sale – is different. As well as charting the evidence that demonstrates the effectiveness of strong leadership, it questions the habits that undermine good practice. The authors, Neela Bettridge and Philip Whiteley, have used their experience as, respectively, executive coach and journalist, to explore the beliefs that have encouraged many to believe the opposite: that exploiting the workers and the environment maximizes corporate profits. They chronicle the damage that such cynical beliefs have brought, and discuss their origins in political theories, forming the momentous conclusion that the ‘left-right’ way of viewing economics and society is profoundly flawed.

New Normal, Radical Shift calls for a fundamental renewal of the business model, and a much higher priority for governance and sustainability, including environmental sustainability, in political circles.

The authors report how the organizations that have hit crisis – many western banks, and those firms brought down by accountancy scandals or reckless merger activity – followed the cynical fads that had their roots in political ideology. By contrast, many principled organizations that refused the dash for short-term or speculative profits have proved to be more profitable as well as more ethical and sustainable. The book sets out an alternative business model that is at once more practical and more positive. It features case studies with leading employers that have delivered for all their stakeholders. These include: Westpac, ISS, the Prospect trade union, and Marks & Spencer.

Neela Bettridge says: ‘The most effective business leaders understand that the modern corporation has high levels of inter-dependence and requires correspondingly high levels of cooperation. This is an inescapable reality, not a “nice-to-have” extra. In my coaching work, I encourage individuals to become emotionally, spiritually and analytically intelligent. This book explains the context and the commercial relevance for such disciplines.’

Philip Whiteley says: ‘For decades, working as a business journalist, the priorities of management fads have struck me as illogical and damaging. In particular, the tendency to overlook the importance of employee relations, despite its fundamental importance to how the organization functions, is a major weakness. I’m delighted to partner with Neela to put together a comprehensive book that seeks to rectify this and other weaknesses.’

April 13, 2013

Japanese motorbikes, flying pickets and Margaret Thatcher

Filed under: Uncategorized — felipewh @ 9:28 am

It was a shiny new 750cc motorbike, and the brand on the petrol tank said ‘Yamaha’. I was surprised. My patriotic friend had for years been extolling the virtues of British motorbikes, riding a reconditioned Triumph, but by his 18th birthday had switched to the Japanese marque.

This was the late 1970s/early 1980s, a period of British history recently revived in the collective memory following media coverage of the death of Margaret Thatcher. Nothing more clearly symbolized the decline of manufacturing in the UK, and the superior industrial leadership, skills, teamwork and product quality of Japanese (and also German) companies at the time. Even the most fierce patriots had to succumb. British police rode BMWs.

Most of the recent coverage falls into a partisan pattern: the Iron Lady either rescued the country from union militancy and bankruptcy, or savaged it with class war and unemployment. There is an alternative perspective; that it wasn’t the unions or the Thatcher Government who destroyed large swathes of British industry, so much as the fight between them; an ugly left-right sectarianism that prioritized inflicting damage on the other constituency ahead of building businesses with good pay and prospects, strong teamwork and skills. This was a colossal and historic failure of leadership – both of industries and of unions.

It culminated in the restructuring of the coal industry being settled in quasi-Mediaeval battles between flying pickets and policemen, in the hideous – and largely gratuitous – year-long strike in 1984/5. This was no way to modernize an industry, and Thatcher’s description of miners as the ‘enemy within’ was shocking and undeserved for communities who had served their country with courage in peace-time and war. But the idea that the industry didn’t require modernization was unrealistic.

At least as much blame falls on the unions for the decline of industry. Much of the militancy was gratuitous, with political ambitions. In the 1980s I was talking with a Workers Revolutionary Party veteran who said that during the 1970s their members, fired up by the protests of 1968, were directed to go into unions in targeted industries: automotive, ship-building, etc, with a view to disrupting entire industries and preparing the way for revolution. They spent long days door-stepping the mining communities. It is possible to overstate this influence, but it was a shocking revelation that tales of revolutionary activism in left-wing unions was not, after all, dreamt up by the Daily Mail. It’s an aspect of the history of those times that you won’t find in The Guardian or the New Statesman. Manufacturing was destroyed by class-based, short-termist management and Marxist-influenced unions. Thatcher was merely the undertaker.

Another under-reported feature of the era concerns the fall in support for the parties of left and right. To hear them talk, then and now, you would think that they represented the whole of society between them. In fact, millions of voters deserted both. In the election of 1970, Conservatives and Labour had polled nearly 90 per cent of the votes between them. By the election of 1983 this had fallen to just 70 per cent: a 20 percentage-point fall during the years of militancy. Of the two, Labour lost much more.

While class warfare and employer-union militancy are thankfully now reduced – Triumph are even exporting motorbikes again! – the cynical theory that you can only win by exploiting the other side lingers on. My new book New Normal, Radical Shift, co-authored with Neela Bettridge, points to a future based on an understanding of inter-dependence; not in a romantic way, but as a pragmatic approach to building better organizations.

March 28, 2013

Expense is not cost; people are not resources

Filed under: Uncategorized — felipewh @ 11:24 am

One of the many baleful examples of an accountancy-dominated business model is the pretence that the numbers tell the whole story. Commonly heard in management circles is the mantra: if you can’t measure it, you can’t manage it. This is nonsense. At the very least, 50 per cent of management is un-measurable, because you cannot measure the impact of a course of action you decided not to take. Every time a manager takes a decision, there is an unquantifiable opportunity/risk that is passed over. Real management involves forming a judgement on hypothetical matters; it also means being comfortable with paradox. If you only manage what you can measure, you cannot manage at all, you can only add up.

What is worrying is that the ‘financial data tells the whole story’ myth is creeping in to the personnel profession, as my new article in Personnel Today reports. Many employers are pretending that reducing the direct costs of hire always results in lower operating costs, neglecting matters such as morale, skills, communication and so on that have a direct bearing on efficiency and operating costs.

As economist Haig Nalbantian describes in this article, there is a difference between ‘expense’, the direct costs of hiring people; and ‘cost’, which is an economic construct that depends upon collective performance. The measures that he and his team have developed over the past 20 years are far more sophisticated and valuable to a management team, because they analyse the inter-relationships between deployment of people and types of reward and training, and the impact on the business.

Even here, though, a judgement has to be taken; Haig refers to ‘sleuthing’, because data, even sophisticated data, cannot tell the full story. I sometimes liken it to forensic science in a court case: necessary, but not sufficient. You also need to know about motive and relationships.

This is not an argument against measurement; it is an argument both for better measurement and for an understanding of its limits.

February 26, 2013

Do people actually want to cooperate with each other?

Filed under: Uncategorized — felipewh @ 9:35 am

A few years ago at a conference, I heard an entertaining account from a trade unionist who had become a proponent of partnership deals in the workplace – that is, where employee representatives seek to maximize their area of agreement with managers in order to promote better workplaces and opportunities. In doing so, he related how he was a convert. Back in the 1970s, he had been a militant: organizing industrial disputes, buzzing around the country in a van to mobilize the strikers. ‘Sometimes people ask me what it was like,’ he concluded. ‘And I reply: “I loved every minute of it.”’

For many people, conflict is exhilarating, harmony is dull. This includes employee relations, especially at a policy level.

You can divide the relevant issues broadly into two – the first being leadership and skills, and the second to do with legislation. In the former, the employer interest groups and the trade unions agree with one another.Taking the UK as an example, Frances O’Grady from the Trade Union Congress and Lord Heseltine of the Conservatives have begun collaborating on business development. All main political parties support the Engage for Success initiative. According to one estimate, increasing employee engagement would add over £25 billion to economic growth. If you are sceptical of this claim, look at the more detailed work by individuals such as Haig Nalbantian showing not only the gains of a more engaging workplace, but the costs of an exploitative one. Many ‘cost-saving’ initiatives where workers’ benefits are slashed don’t help the business, because employers haven’t factored in the huge costs of high staff turnover, weak skills, and so on.

Yet are these the issues that make the pulse race in the bi-partisan lobbying world? The second policy area, legislation, concerns ‘rights for workers’ if you support them, or ‘red tape’ if you don’t. This is what really excites activists on both sides. There is no clear evidence that a ‘flexible labour market’ automatically helps business development (the employers’ lobby case); but nor does it necessarily diminish job and career opportunities for workers (the trade union argument). It is extremely unlikely that legislative changes could have anything like the economic impact of better leadership and skills, but these are less appealing subjects because their discussion raises the risk of having to agree with the other side. It gets in the way of the Two Minutes’ Hate. Sometimes, when there is a bitter political conflict, it’s not the issue that motivates, but the fight.

Those of us who agree with the idea of Appreciative Inquiry – that people can learn to cooperate much more effectively if they take the trouble to understand one another – are in conflict with the world view that it’s always better to get your retaliation in first. The former is a rational, not a utopian case. For the trade unionist I quoted at the start of this article, switching from militancy to reasonable cooperation was a victory of head over heart. Normally, being ‘nice’ is portrayed as the opposite.

A relish for conflict is something we have to acknowledge and discuss: it’s not that folk cannot believe the evidence that cooperation can be mutually profitable, it’s that many don’t want to.

For more on sustainable leadership and cooperation, go to the Radical Shift blog here.

From 28 April, the New Normal, Radical Shift book will be on sale.

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