If We Don’t Create More Jobs, When Will the Culling Start?

It is estimated that the worlds population reached one billion for the first time in 1804. It would be another 123 years before it reached two billion in 1927, but it took only 33 years to rise by another billion people, reaching three billion in 1960. Thereafter, the global population reached four billion in 1974, five billion in 1987, six billion in 1999 and, according to the United States Census Bureau, seven billion in March 2012, (though the United Nations, estimated that the world population reached seven billion in October 2011).

Now, due to poor global governance, the majority of countries around the world have been dealing with an extremely harsh recession that has seen severe job losses across most sectors, leading to the inevitable increase in unemployment. Worse still countries like the UK have just gone back into recession, creating further uncertainty as the unexpected downturn puts pressure on their government to react (just after announcing their budget for the year ahead).

At the same time, we have known for decades that jobs in industries like manufacturing would reduce as technological advancements replaced human skills with technologically driven ones. Then we have the Internet revolution, both from a B2B and B2C perspective that is also having an impact on retail job numbers on the average high-street.

You don’t have to be a Professor or rocket scientist to see the signals from the impact that the lack of jobs are having on communities and the world’s youth in general. So where are the decision makers in government and business who are developing ‘real’ strategies to create employment opportunities for their citizens?

Just look around the world, as the US seeks to recover after Obama’s stimulus package, including tax cuts and the surprisingly successful bailout of the car industry, Europe as a whole may in fact drag the world, especially the US back into another recession. At least the US economy has seen modest but sustained growth and a very gradual decline in unemployment (as well as a surge in debt again – which some may warn is not such a good sign as others suggest).

Whereas in Europe we have France seemingly ready to elect a new president who promises to impose a marginal tax rate of 75%, which most observers agree would reduce prospects for a quick recovery. The German economy, once the growth engine that could pull the Eurozone out of recession is slowing and German chancellor Angela Merkel faces threats from three areas (1) her voters won’t tolerate sending more of their hard earned wealth to support other European failures; (2) her support from other countries is dropping and (3) the potential new French president plans to withdraw France from the Franco-German partnership. Then we have the Dutch faltering and the Fitch ratings agency considering lowering the Netherlands triple-A-rating. Then, if this wasn’t enough, you have far right pro-Nazi parties in Greece gaining votes and worse still gaining seats in Government, as the Greek citizens lose faith in mainstream parties to solve their country’s problems . And then in Spain, where 24% of the potential workforce are unemployed (more than 50% in the case of young people), the difficulties are looking as insurmountable as those in Greece.

On top of the above we also know from the World Food Programme that, “there’s a 1 in 7 chance that a child will be born hungry, as nearly 1 billion people in the world go to bed hungry each night.”

History has taught us what happens when the ‘masses’ find themselves unemployed and worse still starving; so why don’t we recognise the signals and learn from our past? Surely our global leaders aren’t that arrogant to think ‘luck’ is going to solve the problem or that they can have their four or five years of limelight, write their auto-biography and go on the speaker circuit, passing the problem on to someone else – who they can then heckle from the cheap seats.

So what’s the answer – we can wait for the ‘revolution’ that must surely come from our citizens, who ‘their leaders’ have simply abandoned and where their bad luck will be blamed on ‘unavoidable, outside influences’ by the politicians of the time. Be in no doubt, these won’t be the peasants of past historic uprisings, these will include highly qualified people, up to their necks in debt, for an education that only helped them understand how messed up our global economy really is.

We must accept that certain industries are now so technologically advanced that the human element is a small proportion of its overall business operation, and this isn’t going to change in the medium or long-term. So what we need to urgently find are industries that are ‘human driven’ and look for ways to encourage real sustainable growth so that we can create real employment opportunities. Otherwise as history has taught us, the only industry left for these individuals will be crime, then revolution – until, of course, some backroom boy in some obscure government department comes up with the bright idea of culling the population to solve the worlds employment issues.

References

Smith, D. (2012). Hold on tight the double dip begins. The Sunday Times, 29-04-12, p.15.

Stelzer, I (2012). Buck up, Europe, you’re holding back America. The Sunday Times, 29-04-12; Business, p.4.

Sullivan, A. (2012). The dire state of Britain’s economy could sway the US election. The Sunday Times, 29-04-12; News Review, p.4.

www.wfp.org [accessed 29-04-12]

Are Today’s Global Political Structures Optimising Business Growth?

Are Governments, and thus politicians, out of touch with what is required in today’s global society to enhance their own countries growth and business success? Are the very foundations, on which many government principles are based, simply out of date for our current time and thus in need of a ‘good’ overhaul?

The governance in the United States and in China, for example, is considered to have completely different structures and processes. On the one hand, the United States is a liberal democracy with an array of extremely complex institutional relationships, whose multiple veto points make decision making difficult but also provide a great deal of accountability. Further, the delegation of many functions to sub-national governments and to market-type mechanisms has increased this inherent complexity. On the other hand, China has very limited democratic institutions, but the dominant Communist Party might provide greater capacity for making decisions, and also greater policy integration and coherence across a large society, despite continuing change. (p. Zhao and Peters, 2009, S122).

Yongfei Zhao and Guy Peters, (2009) mention that “although these two regimes appear quite different, they share at least one major governance problem. In both cases, there is substantial separation between the policymaking and implementation systems. In the terms of the now familiar language of New Public Management, there is a separation between “steering” and “rowing.” Much of the New Public Management logic and other types of reforms separate these two functions, but in the process, coordination and control may be lost. In both societies, this separation can present significant accountability problems associated with poor performance and corruption. In the United States, these problems arise from delegation to both sub-national governments and non-state providers, while in China, these issues arise from the low capacity of local governments,” (p.S122).

It’s worth remembering, for example, that “the framers of the U.S. Constitution created, by design, a complex system of governance in which it would be much easier to prevent action than to pass laws or produce any other type of public action. At the federal level, the separation of powers among the three branches of government, as well as additional institutional divisions within the legislature, requires consensus among a large number of actors if anything is to happen. Although its political dynamics are different from the corporatist, coalition governments that served as the basis of the original analysis of consensual democracies, American government is clearly a consensual system. The result is often gridlock in the policy-making system, with several components of government unable to reach effective decisions,” (p.S122).

The styles and problems of governance and public administration in the United States and China are distinctly different, but the nature of the differences converge on one point—the accountability of government to other levels of government, to non-governmental actors, and to citizens. The historical, cultural, and social values, as well as the constant government reform efforts, only diversify the appearance of the accountability problem. Regardless of the fuzzy public and non-public boundaries or the ambiguous formal and informal political conflict, the heart of governance lies in the establishment of an accountable and capable government, (Zhao and Peters, 2009, p.S126).

This problem goes far beyond the borders of the US and China and could be said to exist in all countries that exist today, whether considered first world or not, democratic or not. In fact one reason that the ‘emerging economies’ are emerging is that their government infrastructure is more ‘flexible’ to making change. For example, South Africa introduced a credit act – which controls how money is leant by banks – long before the credit crisis (and not after like many ‘first world’ countries).

Yongfei Zhao and Guy Peters (2009), state that “the numerous divisions within American government, which were designed to enhance accountability through checks and balances, have become dysfunctional for that purpose. Political divisions, and the increased politicization of the system, now tend to make evasion of responsibility easier. That loss of control is evident not just in the devolved components of the system but also in numerous instances of ineffective oversight. Again, it was once thought that creating a more responsible party system was the answer to our political problems, but instead that change has only exacerbated the underlying problems of division,” (p.S127).

They also state that “the essence of governance in China, or the key to solving the local accountability problem, therefore, lies in structural change of Chinese guanxi networks. Accountability and responsibility for public officials are important not just for ethical reasons, but also for governance. Perhaps the most crucial element of popular control over policy is the ability to use the information from monitoring and evaluating programs to shape future policy. That capacity seems especially weak in China now, with the connection between local governments and the centre attenuated and few instruments existing for the enforcement of local accountability,” (p.S127).

Many political systems are being run on ‘very old’ foundations – where in the current democratic world it appears to be ‘wealth’ rather than ‘ideology’ that defines selection into the upper-echelons of power. Is it any wonder that many countries citizens feel that their governments are out of touch with what the people think and want – when these countries are being run by people, more often than not, who have never had to do a hard days work in their lives.

It will take a new breed of people coming into our political structures to make the changes that are necessary to improve political cohesiveness and optimise decision making. But what is clear is that economic growth will suffer until these changes take place and where politicians ‘fight’ for their countries (and hence business and employment), rather than just fighting for a ‘second term.’

References

Zhao, Y. and Peters, B.G. (2009). The State of the State: Comparing Governance in China and the United States. Public Administration Review; Supplement 1, Vol. 69, p.S122-S128.

Downsizing and Ethics: Do They Go Together?

Once upon a time, a loyal and faithful employee might have expected both a career and a gold watch from an employer in whose service they toiled, good years and bad, for 40 years or more. No more. Over the last 20 years, corporate downsizing, in the form of massive layoffs of employees, has become a business-as-usual response as well as a socially legitimate activity for western organisations.

Carl Rhodes, Alison Pullen and Stewart Clegg (2010) mention that “in an era of ‘new capitalism’ characterized by ‘stiff international competition, state deregulation of industry, institutional ownership of firms and rapid technological change’, organizations have used downsizing in a bid to achieve structural simplicity and flexibility as well as to respond to heightened financial demands,” (p.535).

Rhodes et al, state that “given that those who exercise power frequently claim ethical justification for their actions in terms of authoritative rhetoric through narratives, not least in the everyday unfolding of organizational action (and organizational change and downsizing), ethics can be regarded as the domain through which power asserts legitimacy,” (p.536). This is such a strong statement and one that leaders need to reflect upon.

As an example, in the dot.com era of the late 1990s, V-Tech (not their real name) had experienced unprecedented success as a financially prosperous industry leader envied by its competitors. The end of the dot.com boom and associated economic and technological changes, however, did not favour this company. Faced with a declining market and rapidly changing technology, V-Tech failed to maintain its market position. The organisation was changing in ways that no one could have envisaged in the heady boom time. The reversal in V-Tech’s fortunes was catastrophic. In the mid-1990s, the organisation had been riding on a wave of financial success and was generally regarded as the most innovative firm in its market. As the 1990s came to a close, however, the computer industry was changing. With developments in personal computing, the types of products and services that could once only be delivered by specialist companies with expensive technical infrastructure were becoming increasingly cheap and available. V-Tech did try to invest in different technologies to mitigate the erosion of their core markets, but these decisions proved unsuccessful and, in some cases, disastrous. The financial implications of this were significant: the company’s market capitalisation in the mid-2000s being less than 2% of what it was in the 1990s. The passage between these two points was one of continual unprofitability and a spiralling program of cost cutting and downsizing. By 2005, the staff base had been decimated and in 2006, V-Tech had been de-listed from the stock exchange and had filed for bankruptcy – only to emerge soon after bolstered by a new swag of capital investment in 2007, (Rhodes, Pullen and Clegg, 2010, p.536; 540).

Like many organisations that have suffered from the recent global financial crisis, V-Tech’s past, characterised by informality, was directly linked to its financial performance. Executives talked of a carefree organisation whose pursuit of ‘customer intimacy and technical differentiation’ meant that the focus was less on operational efficiency and financial prudence and more on excessiveness. This should resonate with many who have read the stories of other organisations, especially in the western world, consumed by their own success, and living the excessive ‘life-style’ – supposedly telling the world; “hey, look at us.”

Rhodes, Pullen and Clegg highlight how “the presence of strong collective narratives in organizations can limit the scope of ethical deliberation and action, organizations seeking to engage in organizational change ethically should encourage debate, critique and contestation over the meaning of those events. In order to do so, they would engage in an ‘ethical vitality’ whereby the presence of multiple and competing interpretations of organizational change would highlight the need for individuals to take a more active role in both making sense of their organizations and taking action within them. Practically, this would suggest that dominant narratives, such as those in V-Tech, needs to be actively contested and disrupted to create an organizational environment conducive to active ethical deliberation,” (p.547).

In a brilliant summary, Rhodes, Pullen and Clegg state that, “we can surmise the relationship between storytelling, change, power and ethics in organizations – when narratives of organizational change become dominated by an organizationally legitimated plot, the narrative serves to close down the openness required by ethics,” (p.546).

So maybe it’s time to relook at the rhetoric and re-establish transparent channels of communication within our organisations, so that we can encourage open and ethical dialogue, in the best interests of the organisation as a whole, which includes the employees.

References

Rhodes, C., Pullen, A. and Clegg, S. (2010). ‘If I Should Fall From Grace...’: Stories of Change and Organizational Ethics. Journal of Business Ethics, Vol. 91 Issue 4, p.535-551.