The Human Asset Manifesto

Is Work As We Know It Compatible With Liberal Democracy?

The idea that people must go to work to give up their freedoms and their ability to be creative, and accept a subordinate role to those who have invested money, is completely contrary to our social evolution and the very nature of humanity. The Human Asset Manifesto, Jonathan Ledwidge

Wal-Mart is one of the most successful and profitable organisations of its kind in the history of modern business. As such, stories in the media about the less than favourable experiences of Wal-Mart’s current and former employees do deserve our attention.

We talk of liberal democracy in terms of elections, a free media and an independent judiciary – and these are very important. However, the policies and actions of Wal-Mart and others like it challenge the very notion of liberal democracy and the social equality it supposedly engenders.

Yet, Wal-Mart is not the only guilty party. Day after day millions of workers trudge to work to engage in activities which for all intents and purposes require that they leave their brains at home. As it so happens, their rewards are more often than not commensurate with the lack of inspiration and creativity that their job demands.

If one is cynical, then one might be of the opinion that this equation is in perfect balance – an unfair day’s work for an unfair day’s pay. However, one might also want to consider that this also quite adequately illustrates why employee surveys routinely show that people are very rarely engaged or motivated by their work – which of course is a hindrance to innovation and productivity.

The long term consequences of the kinds of actions that produce such outcomes can be decidedly unpleasant. Wal-Mart is only now beginning to recognize this as a result of the class action lawsuit being filed against it by some 1.5 million current and former female employees.

In the book Maslow on Management, the author describes the term Enlightened Economics as; “the assumption that everyone prefers to be a prime mover rather than a passive helper, a tool, a cork tossed about on the waves”. Thus, an Enlightened Organization encapsulates the very essence of liberal democracy, by providing an environment where employees are willing to participate and enjoy the freedom to do so.

This ideal is emphatically supported by none other than Ben Bernanke, Chairman of the US Federal Reserve. In a statement to the Greater Omaha Chamber of Commerce on Tuesday, Bernanke noted; “Equality of economic opportunity appeals to our sense of fairness, certainly, but it also strengthens our economy. If each person is free to develop and apply his or her talents to the greatest extent possible, then both the individual and the economy benefit.”

This brings us back to the Wal-Marts of this world, low paid minimum wage jobs, the working poor, and growing social inequality. Indeed, Bernanke further stated; “We also believe that no one should be allowed to slip too far down the economic ladder, especially for reasons beyond his or her control.”

This is as good a pretext as any for organizations to examine their role and impact on the social fabric of society, why leading social change is wholly compatible with success and ultimately even the preservation of liberal democracy.

History shows that the disadvantaged will not tolerate their condition indefinitely.

I came across a very fine example of an organization focusing on people and leading social change while reading about Rosenbluth Travel, a firm whose motto is; “put your employees first and watch them kick butt”.

Against what many would have deemed to be their better judgment, Rosenbluth opened a new office in a depressed area of rural America. The community was extremely grateful for the investment and the opportunity for regeneration – and Rosenbluth’s new employees did not hesitate to show their appreciation. That office quickly became one of the most efficient in the entire Rosenbluth network.

From a philosophical perspective, divorcing the world of work from the idea of people, people development, sustainable living, and our notion of liberal democracy, is a fool’s errand. In the long term, organizations can only hope to optimize people potential and investment returns by adopting a human and social model of their business and leading social change – meaning they will have to move beyond their nice CSR programs.

Excessive Executive Pay Can Increase Corporate Social Dysfunctionality

You cannot divorce organisations from the societies within which they exist because it is those societies that supply the employees, the customers, and the social infrastructure necessary for their success.

Consequently, where it becomes apparent that an organisation is is run for the primary purpose of enriching the chief executive and a few others, it risks a severe disruption in the social harmony that is a prerequisite for success. That is especially true when polls indicate that more than 80 percent of Americans think corporate executives are overpaid.

In a recent editorial, The Financial Times cautioned that the excesses and conspicuous consumption brought about by current executive pay levels were placing the very balance of society at risk. In one extract, the editorial noted:

Plutocrats can spend all their money on mansions, yachts and servants, but if they do so, then pressure for higher taxes and collective labour bargaining will return and grow. Great wealth is often the result of great talent. But it is also a privilege granted by the rest of society and, if it is abused, society will not hesitate to take it away.

The Financial Times is not the only publication that has expressed concern over the possible negative impact of executive pay.

The Washington Post editorialized December 22 in support of “Just Capitalism”, remarking, “Executive overpayment running into the billions sends a terrible signal about the justice of the capitalist system.” The newspaper warned that unless executive pay and the “industry of consultants [that] exists to legitimize super-sized executive pay” are reined in, “the growing material inequality in the nation will be compounded by the corrosive perception that the rules are unequal, too.”

Work Foundation, an independent think-tank notes that the “excessive” pay levels of Britain's top chief executives amount to a “perversion of market principles" because they bear little risk…Growing pay inequality, with top directors getting pay rises of 10 times the inflation rate, "corrodes the basic concept of fair reward that underpins a thriving society”.

Then of course, there is the widespread scandal surrounding the backdating of stock options, the full extent of which is only now becoming apparent.

Excessive executive pay rewards will only serve to increase corporate social dysfunctionality by fracturing the relationship between employees and managers and causing their objectives to diverge. This will negatively affect organisational creativity and productivity.

Further, such excesses will also affect an organisation’s relationships with its customers and the wider community, and in the longer term further impair its value.

Executives should view executive pay and rewards as an important aspect of their relationship with all their human asset stakeholders – employees, clients, suppliers, managers, and the wider community. Consequently the management and credibility of the process, as well as how and what it communicates should be considered essential aspects of stakeholder/human asset management as well as the organisation’s overall business strategy.

The Consumer Electronics Industry Is Waking Up To The Power Of Women

It would appear that at least one industry is both understanding and waking up to the challenges and opportunities of the purchasing power of women.

The consumer electronics market is estimated to be worth over $140 billion. A significant proportion of that market is for gadgets, games and other similar items, traditionally considered a male preserve. However, it now appears that women account for some $80 billion or approximately 57% of that market.

As such, manufacturers and retailers alike are now changing their approach to accommodate this phenomenon and are adopting a number of different strategies to take advantage of it:

More ads for electronic gadgets now feature women

There is greater styling and proliferation of colour to reflect women’s tastes

More products are being made to accommodate the specific demands of women

Smart retailers are providing more store assistants, reflecting the demand of women consumers for more attention

There are more women retail assistants

If we think of it in logical terms, it is almost incomprehensible that this change is a recent phenomenon. It is another example of what can be achieved when organisations focus on their human assets and the human and social aspects of business - moving beyond stereotypes and narrow-minded approaches.

However, some sectors of the market do still have some way to go.

For a long time the computer games industry dedicated itself almost exclusively to men. Then one day it realised that women played games too, but their products were simply not catering to their needs. Part of the reasons for that was that the industry had not recruited many women so it could not properly understand or reflect those needs.

They industry is now trying to redress that balance. Many others are yet to wake up.

A Sterling Example Of Why Organisations Should Lead Social Change – New York’s Ban On Trans Fats In Restaurants

The action of the New York City authorities has clearly demonstrated what this blog has been espousing all along; organisations should either lead social change, making human and social issues the centrepiece of their strategy, or suffer adverse consequences and loss in competitiveness. 

Yesterday, December 5, the city placed a ban on the use of artificial trans fats in foods in all its restaurants. The basis of their ruling is that trans fats are responsible for the clogging of the arteries, which can lead to severe heart conditions.

The ban is effective in three months and many of the cities restaurateurs are not prepared for it. They will be scrambling to get their business in order by the due date.

Some of the major chains such as Wendy’s and McDonald’s have been making steps to reduce the level of trans fats in their foods by making “voluntary reductions” in the amounts used. They too will be scrambling to meet the deadlines – their partial solution to the problem has effectively been deemed unacceptable.

This further strengthens the arguments made by this blog and the book The Human Asset Manifesto; for organisations to have a business that is both sustainable and competitive, they must lead social change, rather than being dragged kicking and screaming into it. You would think that made absolute sense.

Unbelievably, the National Restaurant Association is fighting the ban – somehow the initials NRA  seem most appropriate to its stance. The association is more worried about the ban spreading to other parts of the nation, than for the health of the consuming public.

Such thinking is both futtile and backward. Soon, all consumers will be demanding food sans trans fats – be it in New York or wherever in this world the consuming public expresses more than a passing concern for the vitality of its heartbeat. In other words, everywhere.

Those establishments that take the lead by recognising the full human and social implications of their current business model, and resolve to take all necessary action, will emerge as the champions of the future.