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May


Corporate killing fields

Mon, 28th May 2018

Layoffs are in the news. BT is axing 13,000 middle managers and back-office staff. Marks & Spencer is closing 100 of its High-Street shops, mainly big ones, with as yet unquantified job losses. In the US Tesla followed up a spate of executive departures with the announcement of a broad reorganisation in an attempt to bring down record losses at the company as it ramps up production of its Tesla 3 saloon.
There is a glaring omission in the reporting of these events. Although they merit plenty of coverage, it all centres on the future of the company, the future of the CEO and even the future of middle management. But completely absent from media or public concern in such episodes, points out Jeff Pfeffer in his urgent and angry new book, Dying for a Paycheck, are those most directly affected by the decision – people losing their jobs.
As anyone who has suffered it will testify, being sacked is one of life’s more bruising experiences, up there with divorce and loss of a family member, and its personal sequels – anxiety and depression, substance abuse, family breakdown – are often similar.
Yet as Pfeffer, one of the most respected US academic researchers, shows, this is far from the full price exacted. Those who keep their jobs pay heavily for the redundancies too. Because it is easy and there is no disincentive – companies do not pay the knock-on costs of redundancy; society does – firms invariably take out more people than they do work. The result is added pressures on the survivors, and in some cases dysfunction for the company as it transpires later that the amputated middle managers were an essential repository of corporate memory and order. What’s more, if the company’s underlying problem is lack of orders rather than excess costs – as at M&S – it’s not obvious that getting rid of people is a useful or relevant response. A smaller company is just smaller, not necessarily better. The damage layoffs do often far outweighs the ‘benefits’.
As Pfeffer demonstrates, the toxic effects of layoffs are replicated in other common workplace arrangements such as shiftwork, long hours, jobs with low control, little social contact and poor employment security. All of which are on the increase as work becomes more contingent and fragmented. To put it bluntly, the human consequences of modern performance management in the form of overwork, stress, lack of work autonomy, low pay, inequality and precarity, mean that for many just going to work is as dangerous to health as breathing second-hand smoke.
The costs are mind-bending. Pfeffer and his co-researchers estimate that toxic workplaces are responsible for 120,000 excess deaths a year in the US, making employment the country’s fifth largest killer, at an additional $2bn cost (at least) to the health system. Let that sink in. Most absurd and tragic, these effects are not only preventable, but preventing them would benefit employers too. Writes Pfeffer: ‘Unhealthy workplaces diminish employee engagement, increase turnover and reduce job performance, even as they drive up health insurance and health-care costs. All too many workplaces have management practices that serve neither the interests of employees nor their employers, truly a lose-lose situation’.
Europe is not as bad as the US, where employees largely depend on employers for healthcare coverage, but the UK with its proud emphasis on ‘flexibility’ (aka ‘insecurity’ for employees) is not far behind. So how on earth have we come to this pass? After all, we’ve abolished child labour. Physical accidents at work have been steadily reduced by health and safety regulation: workplace fatalities have fallen by two-thirds in the US since the 1970s. No one argues that health and safety, food and drug quality, or environmental pollution should be left to CEO discretion. So how come they can slave-drive their employees at work without anyone even noticing?
‘What kind of a company keeps you away from your family for that amount of time?’ asked a senior executive bitterly of a travelling routine that had him travelling 200,000 miles a year and on the road for three weeks at a time (GE, since you ask). Or pressures an executive on maternity leave to return to work two weeks after giving birth to make a keynote presentation at a corporate event (Salesforce)? Or apparently without irony recommends taking ‘a call from a client while having sex’ (freelance site Fiverr)?
Pfeffer caustically details the care lavished on tree-planting in the grounds of his university, Stanford, at a time when hundreds of people were being made redundant in the financial crisis. He comments: ‘At Stanford, you were better off being a tree than an employee. At too many workplaces, trees...fare better than people.’ Why? Why is there no business school research or teaching on this stuff? Why is it apparently of no interest to HR departments, whether in public or private sector?
The obvious answer is that this stunning erasure of humanity is the delayed cost of the still unfolding catastrophe that was triggered by the hijacking of the corporate form by the shareholder interest in the 1970s.
The doyen of management gurus, Peter Drucker, warned that the corporation was too important for society as a whole for its control to be monopolised by any one constituency. He was right. When the sole end of corporate activity is to maximise shareholder value, everything else becomes a means. In company accounts, humans are a cost, not an asset – just another resource to be exploited and disposed of, with the wider costs relentlessly exported to society as a whole.
In such a context, technology will intensify and speed the process. In the longer perspective, the gig economy is nothing new – just the logical end point of the unpicking of companies as human communities and their reconstitution, as Pfeffer notes, as the affectless, loyalty-less nexus of labour market contracts that the shareholder-primacy theory proposed – a remarkable if depressing piece of self-fulfilling prophecy.
One of the more poignant ironies – which Pfeffer himself has pointed out in another context – of this narrative is that according to repeated Gallup polls, more than anything else, most people in the world today desire a job and a paycheck. Perhaps that’s why we’re willing to put up with such shit – not to mention bullshit – when we get one. Pfeffer ends his important, indignant book as he begins it. If there is something special and sacrosanct about human life, he argues, then we should accept that it is indefensible morally to trade it for organisational considerations of cost and efficiency. The fact that cost and efficiency are also served by treating people properly – so that, to spell it out, the latter comes at no extra cost – is important but subsidiary. Most people have come to accept that environmental sustainability is essential for planetary survival. What about human sustainability?

 


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User comments

Henning Sieverts :: 29th May 18
An excellent analysis, powerfully stated. Thank you. A subsidiary point you make is often under-recognised: that "middle management" in a well-run company is absolutely vital, particularly in the positions that require professional and practical knowledge.
John Carlisle :: 29th May 18
OK, BUT shareholder value has no place in, e.g. the NHS, or government schools, or the police. So, I think while our Companies Act has much to answer for, it is only a small part of the neo-liberal mystery of why the executives of big companies are like the worst, most inhuman, incompetent,generals of World War 1, the end of which we are now commemorating. Where did this utter lack of moral responsibility come from? I think we now have a new class system based on hierarchy, money and technocracy. They have no idea and no interest in their employees or anyone else outside their lofty towers. Monsters! Now when this malevolent culture is entrenched then the ersatz leaders like Hunt, Grayling and JDS emerge from the political undergrowth to ruin the NHS, Home Office and Transport. No wonder we have Brexit. This disenfranchised nation had no other recourse than use this Cameron ploy to kick them in the goolies. What have the English done to deserve this ship of fools?
Andy Lippok :: 30th May 18
Excellent article and comments. Whilst not suggesting Scotland is immune to all this dreadful stuff, I do believe however that under the current Scottish Government are trying to be different within the confines of a hostile context and environment. The problem is that unless Scotland becomes an independent country and able to run things somewhat differently and progressively, then we're sunk along with rUK. I do believe that the folks at Business for Scotland are promoting a different model of economics. I remain hopeful for an independent Scotland otherwise I will become increasingly depressed and disenfranchised - my despair is for my children and grandchildren!
Paul Reading :: 30th May 18
I'd suggestive CEOs of public sector organisations do believe they are increasing shareholder value because they long to belong to that gilded elite too. They therefore follow private sector management fads convinced that they benefit the taxpayers (shareholders) even whilst bemoaning that those beneficiaries are ignorant of the rare and valuable skills deployed in their interest! The conviction of their own exceptional talent is extraordinary, hence their belief they remain still underpaid.
Paul Reading :: 30th May 18
"suggestive" was Android believing it better understood my meaning than me, sorry.
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