Monday, October 13, 2014

Another Empowering Story from the UK Miners Strike on its 30th Anniversary

This year marks the 30th anniversary of the UK miners strike. The singular watershed event in U.S. labor relations in last the 50 years is arguably the illegal Professional Air Traffic Controllers Organization (PATCO) strike in 1981. President Ronald Reagan’s firing of the 11,000 striking air traffic controllers is often cited as the event that made it acceptable for private sector companies to aggressively fight unions in organizing drives, at the bargaining table, and by using replacement workers for strikers. In Great Britain, the analogous watershed event is the National Union of Mineworkers (NUM) 12-month strike against the government-run National Coal Board (NCB) in 1984-85, often now referred to simply as the Great Strike.

The strike was extremely divisive. Hard line bargaining stances spilled over into numerous violent clashes between miners and police, with an estimated 10,000 arrests, 1,700 injuries, and a couple of deaths. Politically, the strike highlighted north (poor) – south (rich) divisions within Britain, created fissures within the labor movement and the Labour party, and questioned the fabric of British society. Prime Minister Margaret Thatcher’s opposition was so intense that she labeled the miners “the enemy within.” It was later revealed that MI5, Britain’s domestic CIA, led a widespread surveillance effort which included infiltration of NUM, bugging restaurants frequented by NUM leaders, and tapping the phone of every NUM branch. [For a collection of powerful images, see this Daily Mail retrospective]

Any yet, empowering stories emerge (and not just fictional ones, as in the movie-now-musical Billy Elliot). In stories that parallel the women’s brigade in the General Motors sit-down strike in 1935-36, women became actively involved in the NUM strike in running soup kitchens, speaking to groups around Great Britain to develop support for the strike, and picketing. A daughter, mother, and ex-wife of South Yorkshire miners captured this significant change in a later interview:

The NUM, as far as I can see, put all its eggs in the picketing basket, as they traditionally have, and made no particular provision for dealing with destitution amongst the families. So the women began to see that as well as campaigning there was a need to support the families. That meant going far beyond the traditional housewife role of the mining women. There has been large-scale catering, feeding five and six hundred people in a day; having to raise the money for that, learning to argue for it, to earn it in all sorts of ways, by speaking at meetings and rallies, by collecting on the streets. What they did was to set up an alternative welfare system, and an effective one at that. And these women who had never done anything outside the home before, learning to speak on public platforms to enormous audiences. The change in those women is tremendous. [Source: Vicky Seddon (ed.), The Cutting Edge: Women and the Pit Strike (London: Lawrence and Wishart, 1986), p. 229.]

And now there is a movie, Pride, based on another empowering true story from this strike. A group of gay and lesbian activists in London from a group “Lesbians and Gays Support the Miners” (LGSM) to raise money to support the strikers. One can easily imagine the culture clashes that result when LGSM members travel to a tiny Welsh village (Onllwyn) to personally hand over the donated money, as well as during subsequent reciprocal visits, such as for the “Pits and Perverts” benefit at a London rock club.

I highly recommend this movie to anyone who has the chance to see it. It is a very powerful and uplifting story. Individual struggles among activists and miners as well as the evolution of various relationships are captured with a deft blend of realism and humor. Within the domain of work, the film is a visual reminder that the labor movement can be a champion of social change, but it can be difficult to overcome traditional attitudes. Human resources professionals should also see this movie as a reminder that “diversity” should be very powerfully about human dignity, not superficially about broadening employee demographics to better serve a diverse customer base or enhancing creativity through a mixing of diverse perspectives. But you don't just have to be professionally interested in the domain of work to find this a very good movie. It has it all: human rights and dignity, identity, labor, caring, stunning Welsh scenery, an entertaining soundtrack, and many laughs.

To get you in the mood (or recall it, if you've seen the movie), here is the closing song: Billy Bragg, There is Power in a Union. Which reminds me of Jimmy Barnes, Working Class Man. Though one is British and the other Australian. But I digress. Just go see Pride.

Monday, September 22, 2014

Regulating Work: The Importance of the Geography of the Value Chain

Last week I was lucky to spend two days in beautiful Tuscany at an excellent ESRC-sponsored seminar on employment regulation hosted by faculty from Newcastle (England), Strathclyde (Scotland), and Monash (Australia) universities. As the stimulating presentations unfolded, a pattern emerged: in cases where the geography of employment regulation matched the geography of the value chain, regulation was effective; otherwise it was not.

As Nigel Haworth described, in the New Zealand fishing industry, the state is a robust actor in regulating working conditions on fishing vessels because particularly valuable species of fish are only found in New Zealand waters. So demand for those fish can only be filled by work that takes place there. In contrast, New Zealand recently weakened labor laws for workers in the movie industry because Warner Bros could have filmed “The Hobbit” somewhere else. Regional approaches to governing Italian workplaces match the vibrant pockets of Italian industrial districts (Luigi Burroni), whereas unions in Sierra Leone struggle to represent the large numbers of informal sector workers (John Stirling). And local and national attempts to create safer garment workplaces in Bangladesh and elsewhere have failed because of the ease of shifting production to new locations. So in this case, international standards are needed (Janice Bellace). 
 
Of course I’m not the first to think of these linkages.  In 1909, John R. Commons, the father of American industrial relations, published a once-famous article, “American Shoemakers, 1648-1895: A Sketch of Industrial Evolution.” Commons illustrated how workers’ efforts to improve their working conditions matched the evolution of the shoemaking production process and the nature of the “competitive menace.” When shoemakers were skilled craftsmen largely working as individuals, they formed guilds to prevent unskilled, substandard shoemakers from undermining their standards. When shoemaking became more of a job, workers formed unions, first on a local basis. And as the competitive menace expanded with the extension of the production and distributions systems, local unions joined to become national in scope, and they lobbied for protections in international markets.

Putting all of this together, we can think of the geography of the value chain as ranging from atomistic to global:


And then we must note that effective regulation typically occurs when the geography of the value chain is in the middle range (local and national systems)--this is the “sweet spot” of effective regulation and governance. For value chains that are more atomistic or more global, it is often difficult to establish and enforce labor standards and to give workers effective voice. 

If this analysis is right, it should be particularly alarming because trends in work point toward both ends of the geography of the value chain as increasingly important, not the middle. The effects of globalization on manufacturing over the past few decades is a well-known story, but services, too, are increasingly becoming globalizedfor example, through outsourcing to lower cost areas, such as has happened with legal research and Catholic prayer fulfillment. At the opposite end of the spectrum, in addition to the millions in developing countries who work in informal sectors, there are many atomistic areas on the rise in developed countries, such as the self-employed, independent contractors, and household-based workers such as home health aides.

These are not new issues (see Commons), and they are not easy issues. But they are issues of critical importance. The geography of the value chain is dynamic in today’s organizations and economies. The regulation of work cannot continue to only hit the sweet spot of subnational and national value chains. We need to continue to figure out how to design strategies for governing work—whether privately crafted through unions and other institutions, or publicly crafted through government regulation—that match the dynamism of the geography of the value chain across its full spectrum. Only then will work really work for all. 

Saturday, August 30, 2014

Real Leaders Shouldn't Need $63 Million in Tax Help From Their Company

One of the hottest topics in business schools and in business is leadership. Business schools are expected to provide a range of leadership development opportunities, and their graduates—after interviews that  invariably emphasize leadership potential or accomplishments—then enter corporate leadership development programs. Companies spend large sums on leadership training, and numerous consultants and organizations provide services for furthering developing corporate leaders.

It’s probably safe to say that these efforts are not aimed at creating command-and-control,  transactional leaders. Rather, something deeper is being sought, such as the widely-popular concept of transformational leadership that occurs when “one or more persons engage with each other in such a way that leaders and followers raise one another to higher levels of motivation and morality” (James MacGregor Burns, Leadership, Harper & Row, 1978). Or consider this description of purposeful leadership:

It is about having clear values and demonstrating a commitment to living those values. It is about modeling positive attitudes and behaviors that others wish to emulate. It is about building a sense of community where people feel that their work is important, that they are important, and, as a result, they are inspired to perform at the highest levels. (Training Magazine, October 16, 2013)

Medtronic, a leading medical devices company, says of its executives and leaders:

We are proud of our reputation for attracting and developing some of the brightest leaders in the medical technology industry. Strong leadership is vital to achieving our goals and fulfilling our Mission to alleviate pain, restore health, and extend life.

Our executive leadership team members serve as role models. Not only do they provide strategic oversight and motivation, they also contribute to the collective good of the company and the industry – by serving on Inclusion Councils, leading volunteer efforts in our communities, and collaborating with industry peers to improve healthcare policies.

Medtronic further describes its mission as follows:

Written in 1960, our mission dictates that our first and foremost priority is to contribute to human welfare. Over a half-century later, the Mission continues to serve as an ethical framework and an inspirational goal for our employees around the world. It guides our day-to-day work and reminds us that our efforts are transforming the lives of millions of people each year.

Sounds great. But actions speak louder than words. Medtronic has found itself in hot water over its recent decision to move its corporate headquarters from Minneapolis to Ireland to avoid billions in taxes on money it holds overseas. This move has upset long-term shareholders who will now have to pay immediate capital gains taxes. And then this week, Medtronic disclosed that  it will pay its top executives (pronounced “leaders”) $63 million to compensate them for special excise taxes they face.

A Medtronic spokesperson told the StarTribune, “The company believes these individuals should not be discouraged from taking action that they believe is in the best interest of Medtronic and its shareholders.” By making these payments, Medtronic’s top leaders will be able to “focus on what is in the best interests of the company, and not on their personal finances.”

But wait a minute. Read that again while thinking of the corporate emphasis on leadership (sometimes even ethical leadership). This hardly paints a picture of transformational, purposeful, role-model leaders, and even less so of ethical leaders. Worried about their personal finances? The CEO made over $8 million last year. Are these “brightest leaders” so easily led astray by their own paydays? Shouldn't transformational leaders be able to rise above their narrow self-interest? With or without an ethical duty to do so?

Or has the culture of executive pay become so obscene that it fuels its own fire? Indeed, research in behavioral economics has shown that financial incentives can crowd out intrinsic motivators. So maybe it’s true that personal finances trump deeper leadership qualities when executive pay is so high. But adding more fuel to the fire doesn’t seem like the answer. If companies truly believe their own rhetoric about leadership, it’s time to reign in executive compensation, open up corporate governance, share the wealth more fairly, and demand that corporate executives truly be leaders.

Happy Labor Day.

UPDATE
A column appeared in yesterday's StarTribune with the headline "Medtronic had no choice but to cover the excise tax." I disagree. If someone wants to argue that the payments are justfied because they serve some purpose, then that's fine. But Medtronic certainly has a choice. Now why does the column think that these payments are a good choice? An alternative way to avoid this extra tax is to allow the executives to exercise their options early. But according to Medtronic, this would “undercut Medtronic’s compensation philosophy of ensuring that executive officers hold long-term, performance based compensation." And the columnist then writes, "the next problem would have come the morning after closing, when the CEO and nine other executives came to work without any stock options." This brings me right back to the point of my initial post: Should we call someone a leader if they require millions in stock incentives to look beyond their own self-interest? Shouldn't a true leader be able to lead even in the absence of such strong (some might say, obscene) incentives? And what kind of culture have we created such that these incentives are not only acceptable, but are seen as essential?