Monday, February 26, 2018

Business Is Not a War, a Jungle, a Machine, or a Game: Rejecting Narratives that are Unhealthy for Work and Workers

Earlier this month, an Australian colleague (Rae Cooper) tweeted that Tony Dundon’s AIRAANZ keynote presentation made the point that the “war for talent” narrative is macho and narcissistic, and undermines collaborative employment strategies. I agree. In fact, there are many war metaphors used in business: in addition to the “war for talent,” we can see references to competitors as the enemy, strategies as plans of attack, cash as a war chest, competition as a battle (“capture market share”), sometimes even employees as troops (“rally the troops”). All of these portray business as focused on beating the competition rather than producing an excellent product or service and make it legitimate to do this by any means necessary. War metaphors make it seem necessary for business to adopt hierarchical, authoritarian, military-like chains of command. All of these should be rejected. Business should be viewed as focused on  excellent products and services, not winning. Business requires cooperation, shared interests, and agreed-upon rules of conduct, not war.

But it’s not just war metaphors that are problematic. Here are some other popular metaphors used in business, all of which should be rejected and discarded:
  • “It’s a Jungle Out There”: Business is viewed as uncivilized, lacking rules, and dominated by a killer instinct. This survival of the fittest mentality justifies and even promotes selfish behavior. But to the contrary, and as noted requires cooperation, shared interests, and agreed-upon rules of conduct. Inside and outside of organizations, humans need to be members of communities, not atomistic, isolated individuals.
  • Machine Metaphors: Employees as cogs, corporations as machines, knowledge as input, rest periods as downtime. These narratives reduce workers to impersonal machines without needs, rights, and knowledge. These narratives also emphasize static efficiency rather than dynamic effectiveness. But to the contrary...organizations are human communities. Workers deserve more than being reduced to a machine, and effective management requires more than technical optimization and a soulless deployment of labor (oops, back to war metaphors). 
  • Game Metaphors: playing fields, players, coaches, and scorecards. This creates a focus on keeping score (money) and winning. This gives legitimacy to seeking thrills and challenges without regard for the public who are reduced to spectators. But to the is an integral part of society, not a sideshow for entertainment. Corporate “playing fields” are not isolated from society and business is not just about winning through profits.

Employment relations scholarship and practice has long sought to embrace a broader conception of business than simply making profits. Many of the major theories in business ethics similarly reveal and advocate for this broader conception. These theories also discount the popular emphasis on competition over cooperation as the driving force in business. Rather, it is emphasized that business is “a fully human activity” that requires a sense of community, extensive cooperation, and a deeper purpose than simply making money (as just one example, see Robert C. Solomon, Ethics and Excellence: Cooperation and Integrity in Business (Oxford University Press), which is also a good reference for the negatives of business metaphors). 

But note that the common metaphors described above (and by Solomon) capture very narrow views of business. The rhetorical power of these metaphors is illustrated by the negative practices that these metaphors support. In studying and practicing employment relations and human resources (and anything thing else related to business, including policy making), it’s important to break through these narrow metaphors. 

Friday, January 5, 2018

Uncovering the Financialization Roots of Contingent Work

A Politico story by Danny Vinik was published this week with the headline “The Real Future of Work” and a provocative subtitle: “Forget automation. The workplace is already cracking up in profound ways, and Washington is sorely behind on dealing with it.” This is an important story that deserves to be read widely. Automation has the potential to shake-up the labor market, but as this story carefully documents, there is a more immediate trend that is already here and needs to be reckoned with. Yet, to mix my metaphors, I would add to this that there are still more layers to peel back to find underlying root causes.

But let’s back up. How is the workplace “already cracking up in profound ways”? This quote from the article summarizes it nicely:

Over the past two decades, the U.S. labor market has undergone a quiet transformation, as companies increasingly forgo full-time employees and fill positions with independent contractors, on-call workers or temps—what economists have called “alternative work arrangements” or the “contingent workforce.” Most Americans still work in traditional jobs, but these new arrangements are growing—and the pace appears to be picking up.

Indeed, the data suggest that between 2005 and 2015, “all net job growth in the American economy has been in contingent jobs.” The article also does a nice job of convincingly showing that this is a much bigger issue than the gig economy, which might only account for 10 percent of the growth in contingent work. My friend David Weil has also captured the breadth of the “fissured workplace” in his book, and as recounted in this article, did a heroic effort at the Department of Labor during the Obama Administration trying to combat worker misclassification in which firms classify workers as contractors to avoid labor standards that apply to regular employees.

So there is really a twin phenomenon at work here: 1) the actual subcontracting of work and increased reliance on contingent workers, and 2) paperwork maneuvering to misclassify regular workers as contractors and temps. In both cases, the fissured workplace is a serious issue because “For many employees, their new status as “independent contractor” gives them no guarantee of earning the minimum wage or health insurance,” and the negative effects of insecurity are far-ranging. It’s hard to imagine a robust, democratic society with healthy families and communities when so many workers are stuck in insecure, contingent work arrangements. Anyone still doubting the pervasiveness of the trend toward contingent work arrangements needs to read Danny Vinik’s article. And remember that what happens at work, often doesn’t stay at work so the importance of bad work is magnified in our communities.

But what’s behind this powerful shift? The article doesn’t say. My own answer: in a (long) word, financialization. Financialization represents a multidimensional shift away from industrial capitalism in which corporations focused on making a profit by producing valuable goods and services, to financialized capitalism in which financial markets, motives, results, and institutions become dominant. An important part of financialization has been the rise of the ethos of shareholder value maximization.

In response to Japanese production methods, U.S. industry rationalized its operations in the 1980s; with the rise of digital technology, employment has been increasingly marketetized; and in response to globalization, employment has been globalized.  Each of these trends were initially driven by corporate strategies to restore competitiveness by restructuring the productive capacity of their workforce in the face of changing technology and competition. But under the pressure of maximizing shareholder value, these efforts turn into cost-cutting exercises for the sake of increasing short-term profitability and driving up stock prices. Workers face wage and benefit concessions, jobs are subcontracted and made contingent, the workplace fissures, and workers are intentionally misclassified—even when companies are profitable.

This is because under the banner of maximizing shareholder value, investors are insatiable in their demands for perpetually higher financial returns. I submit that this represents a fundamental shift in values. We can also see the importance of values in the private equity dimension of financialization in which the shareholder value ethos is pushed to the extreme by seeing companies solely as assets to be traded for maximum profit. All of this is important because values are hard to legislate. If I’m correct, then this means that while efforts to address worker misclassification and other abuses, to make benefits more portable, and other initiatives are important, they do not get at the heart of the problem (or at the lack of a heart).

With that said, this shift in values has been accompanied by institutional practices, specifically deregulated financial institutions, shareholder-friendly laws, corporate governance structures with outside directors, activist shareholders, and massive stock incentives for corporate executives. Consider this last element: these incentives can lead to stock repurchases, which have grown tremendously in recent years. Rather than retaining and reinvesting cost savings and earnings back into the business as was the norm before the shareholder-value movement, cost savings and earnings are increasingly being used to repurchase shares of the company’s stock. This “downsize and distribute” strategy drives up the stock price which not only benefits investors, but also top executives because of their sizable stock options.

To really confront the key trends undermining stable and rewarding work that supports healthy families and communities, we need to dig into the roots of these trends. Financialization is likely a key root, if not the taproot. The better we can do identify causes, the better will be the discussions over what can be done. If financialization is important, then combating contingent work requires a combination of normative shifts (that are hard to legislate) and public policy changes (that are hard to implement). So where to start? Recognizing the harm of shutting workers out of corporate governance and of massive stock options are just two possibilities. Work is too important to be left to Wall Street.

Saturday, December 16, 2017

Employment with a Human Face: Delivered on Christmas, Enduring as a Teenager

I just received news that my first book—Employment with a Human Face: Balancing Efficiency, Equity, and Voice—will be translated and published in Turkish. I have Dr. Fuat Man, a professor of HRM at Sakarya University to thank for this, and I’m particularly grateful and honored because he has already translated my The Thought of Work (Çalışma Düşüncesi). For personal reasons, I often think about Employment with a Human Face around the holidays (I’ll return to this below), and this news about a Turkish language edition has magnified these reflections.

I can’t believe that it’s been 14 years since Employment with a Human Face was published. It’s now a full-fledged teenager! How is it holding up? Here are the first two paragraphs of the book:

Employment is a critical feature of modern society. The nature of employment determines the quality of individuals’ lives, the operation of the economy, the viability of democracy, and the degree of respect for human dignity. It is therefore essential that modern society establish societal goals for employment. Economic prosperity demands that employment be productive, but should economic performance be the sole standard of the employment relationship? No. Work is not simply an economic transaction; respect for the importance of human life and dignity requires that the fair treatment of workers also be a fundamental standard of the employment relationship—as are the democratic ideals of freedom and equality. Furthermore, the importance of self-determination for both human dignity and democracy mandate employee input and participation in work-related decisions that affect workers’ lives. In short, the objectives of the employment relationship are efficiency, equity, and voice. This book is about these objectives, and the alternative ways in which they can be achieved.

In some situations, efficiency, equity, and voice are mutually reinforcing. A productive workforce provides the economic resources for equitable working conditions that include employee voice in decision making. And equitable treatment and employee participation can provide the avenues for reducing turnover, increasing employee commitment, and harnessing workers’ ideas for improving productivity and quality. But the more important question is: What should happen when efficiency, equity, and voice conflict with each other? This is the critical question that makes the analysis of the employment relationship a dynamic topic with diverse perspectives. Should efficiency—and the closely related property rights of employers—automatically trump equity and voice concerns? Or should the reverse be true—should equity and voice have priority over efficiency needs? Neither of these extreme options is preferable; rather, a democratic society should seek to balance efficiency, equity, and voice. The power of free economic markets to provide efficiency and economic prosperity is important and should be encouraged, but respect for human dignity and democratic ideals further require that the power of economic markets be harnessed to serve the quality of human life and provide broadly shared prosperity. As such, the imperative for the drivers of employment—individuals, markets, institutions, organizational strategies, and public policies—is to provide employment with a human face—which I define as a productive and efficient employment relationship that also fulfills the standards of human rights. The International Labour Organization (1999) calls this simply “decent work.”

Maybe I’m biased, but I think this is as true as ever. Indeed, in recent years there has been an increased recognition of the deep importance of work, which magnifies the need to think seriously about the goals of the employment relationship, imbalances in this relationship, and to reject pure commodification and efficiency approaches. And there remains a pressing need to strive for a better balance in the workplace and in our societies. In fact, I just received a press release from the World Inequality Lab that confirms the tremendous increase in inequality that has occurred over the last few decades around the world, and calls for “more ambitious policies to democratize access to education and well-paying jobs in rich and emerging countries alike.” In other words, we need to actively strive for a better balance between efficiency, equity, and voice in and out of the workplace, even though this can be difficult, it requires institutional innovation, and there are diverse perspectives on how to best achieve this.

Since the time I wrote Employment with a Human Face, there has been increased thinking around citizenship rights as an alternative to human rights. Although the differences can be subtle, citizenship rights stem from membership in a human community such as a nation, rather than from being part of overall humanity, and thereby more clearly place obligations on the nation to provide citizenship rights. Moreover, whereas human rights are seen as universal, citizens have obligations as well as rights; so characterizing workers’ rights as citizenship rights rather than human rights also makes it easier to allow for workers’ interests such as equity and voice to be balanced with other objectives such as efficiency. The teenage Employment with a Human Face could be slightly more nuanced that the original by connecting equity and voice to citizenship rights rather than focusing on a human rights narrative. 

But in either case, I think the imperative is clear. I started with the introduction, and I can close with the book’s concluding passage, to which the teenage Employment with a Human Face would also add pressures from financialization as further impetus for new thinking and new policies:

Public discourse that emphasizes competitive markets, efficiency, and marginal productivity justice; the frequent lack of appreciation for employee voice; the continued turbulence of the 21st century workplace; the focus of employment research on the operation of the existing processes (often solely with efficiency in mind); and the need for “explicitly recognizing the role of moral choices in the labor market” (Osterman et al., 2001, 12) all make it imperative to ground the study of employment in the objectives of the employment relationship—efficiency, equity, and voice. This grounding provides the basis for a fuller understanding of all aspects of the employment relationship, including the alternative behaviors, strategies, institutions, and public policies for balancing efficiency, equity, and voice. From such analyses can come workplace governance practices and systems that fulfill the economic and human needs of a democratic society and foster broadly shared prosperity.

And if you are curious about why I often think about Employment with a Human Face around the holidays, here is my story. The very first copy of the book (so the very first copy of any book I had written), was delivered to my home on Christmas Eve in 2003. But no one heard the delivery person. My wife and I were up late getting things ready for Christmas morning. At around 1 in the morning (so it actually is Christmas by this point) a light snow is falling and for some reason I opened our front door, and a package falls into our front entry. Completely unexpectedly it was the very first copy of Employment with a Human Face. I won’t go so far as to say that it was a Christmas miracle because that would cheapen the significance of the holiday season, but it was a touching moment, complete with a gentle snow on an otherwise still night, that I will always remember.

Happy Holidays, and may your 2018 be filled with efficiency, equity, and voice.