Wells Fargo farrago

The unfolding scandal at US bank Wells Fargo, one of the most historic organizations in the USA, is an interesting illustration of the perils of managerial target-setting (see p. 30 of book). What seems to have happened is that sales staff were under such pressure to meet sales targets that they simply invented new bank and credit card accounts – and not just here and there: as many as two million bogus accounts were created.

But this story is also interesting in showing that such perverse incentives are not just an arcane matter of organizational theory. The scandal led to the company having to pay out on a $185 million lawsuit, and the resignation this week of its Chairman and CEO, John Stumpf. And it shows the weakness of corporate whistle blower legislation.

Target setting lies at the heart of many organizational failures and scandals in recent years, whether that be the British NHS or mortgage lenders’ payment protection policies. There is little sign that the lessons of these have been learned. A huge scandal in waiting is the UK deregulation of pensions, which allows people to draw down and spend or invest their pension pot on the advice of salespeople working, of course, to sales targets. Watch this space for what will undoubtedly result in the coming years: pensioners in poverty because they have blown their savings under the paradoxical dogma of 'choice'.

Targets encapsulate the core issue of formal and substantive rationality in organizations (pp. 21-25) because they prioritise the former over the latter. Formal rationality valorises target setting as a means of control; substantive rationality valorises ethical conduct. The irony is that the former is seen as hard-headed business logic whilst the latter is seen as fluffy ethical stuff but, as Wells Fargo shows, that is a false logic. Had Wells Fargo been more substantively rational, it would not face its current problems.

Unsurprisingly shocking

I have not posted for a few weeks now, partly because I took some holiday at the beginning of April, partly because of pressure of work, and partly because I have been writing several blog posts for various sites working with the EU Remain campaign. The most recent of these can be found here for anyone interested and there are several more in the pipeline. And in the even more unlikely event of anyone being interested in my holiday, my new profile picture shows me emerging from a Norfolk pub (quite sober, I should say) whilst I was away.

So there’s plenty I could write about but I’ll focus on the news this week that the retailer British Home Stores (BHS) has gone into administration, with debts of over £1.3Bn and a pension deficit of £571M, leaving the 11,000 employees across its 164 UK stores in limbo, and creating much insecurity for former employees with deferred pension rights. Like all statistics, this depersonalises the reality but I visited my mother this week and, by coincidence, her care assistant used to work for BHS and told me how worried she was about her deferred pension. I tried to reassure her that the Pension Protection Scheme meant that 90% of her rights were assured, but for someone on (I guess) the minimum wage and with limited pension expectations that 10% matters, even if she trusts that the 90% will be forthcoming.

BHS is one of those high street stalwarts that seems to have been there forever – I can remember one of my sisters having a Saturday job there in the 1960s. In fact it goes back to 1928 and joins the long list of British companies, some of which I mention in my book (pp. 105-106), that have fallen by the wayside. There are all sorts of reasons for that, of course, from the rise of the internet to the growth of Pound shops. I actually go to BHS quite regularly to – look away now, kids – buy cigarettes and that branch, at least, seems faded, dilapidated and dated, and the staff demoralised.

That is because underneath the general trends in retailing there is another story to be told about BHS. Bought by the fabulously wealthy tycoon Sir Philip Green for £200M in 2000 he sold it for just £1 in 2015. In the interim, rather than investing in modernising the business it had been used as an enormous cash cow and systematically pillaged for massive dividend payments. Far from ‘adding value’ in the manner self-righteously claimed as the hallmark of dynamic entrepreneurship, value was ripped out of BHS and pocketed. There are now calls for a public inquiry into what happened but, whatever the details specific to BHS, it is just another case of the consequence of rapacious financial engineering of the new capitalism (discussed in chapter 5 of my book). Hardly less noteworthy is that its post-2015 owner was a company run by a twice bankrupt former racing driver with no retailing experience, and the demise of BHS comes as no surprise. Interweaved into this sorry saga are the usual array of offshore tax avoidance schemes and global investment bank advice.

Such stories have become so commonplace that they lose the power to shock. Even so, there is still a jolt of surprise in recollecting that as recently as 2010 Green was commissioned by the British government to make recommendations on improving its efficiency. Reading his report today, my immediate reaction was to think how thin it seemed – I have seen undergraduate student workplace projects with more depth. My second reaction was to recall how similar it was to the 2004 review of public sector efficiency by Sir Peter Gershon. In fact, on government procurement especially, the Gershon recommendations were nearly identical. It makes you wonder what the point is of these endless reviews – perhaps they have the same ritualism as public inquiries, about which I have written before.

Anyway, Green’s review concluded – surprise, surprise – that the way forward was for government to adopt the methods of the private sector, apparently unaware that this has been exactly the approach since the early 1980s, so what he was observing was the consequence of precisely the course of action he was advocating. And his headline finding was that the government was “failing to leverage both its credit rating and its scale”. In other words, the government should get on the wagon of the same financial engineering techniques that he was at the time so assiduously applying to bring BHS to disaster.

With the controversy now surrounding him, it’s unlikely that Green will in the future be asked to give advice on how the government should organize itself. But there will always be someone else – whether a faceless but fresh faced MBA from a big league consultancy, or whoever the currently lauded tycoon may be – to apply the same failed logic. Because however often it fails it is never discredited; worse, each failure provides the impetus for its re-application. That, too, has lost the power to shock.

Fat cats?

The British government have today announced plans to further restrict redundancy pay-offs made to public sector employees. Proposing an £80,000 cap, this will only affect senior staff, and it is in part a response to a populist media campaign, enraged about public sector ‘fat cats’ not just because of redundancy pay-offs but, more generally, high salaries and ‘gold-plated’ pensions.

Fair enough, perhaps – although where is the comparable outrage about private sector rewards? – but it is worth considering how it has come about that public sector managers enjoy the high rewards that they do. For it was not always so. Traditionally, senior managers (then more often called administrators or officials) had substantially lower salaries than in the private sector, and were expected to be motivated primarily by their commitment to public service.

That all changed from the 1980s, when under the general ideology of the market and the particular influence of the ‘New Public Management’ that derived from it, it was argued that the public sector was inefficient because it did not have the dynamic management of the private sector and that, therefore, it had to offer rewards commensurate with those in the private sector so as to attract that talent. This new breed of managers could hardly be expected to work for so fluffy an ideal as public service – no, in line with the motivational theories of what was then called the New Right, they had to be paid top dollar. And they were – bringing with them many of the reforms that have laid waste to the public sector. But that is another story, about which I have written elsewhere in the blog.

One way of understanding this story is to see it as one of a huge number of examples where the consequences of decisions by now long-retired or dead politicians who were in power in the 1980s neo-liberal heyday have now come to fruition. Examples range from the decision to relax planning regulations on flood plain building because the market should decide where to build, leading to the floods of recent years, through to the deregulation that led to the global financial crisis.

It’s the same with the 1980s approach to those parts of the public sector that were not privatised (those that were, by the way, have mostly now died). Wind forward 30 years and we see that the very same ideologues who blasted the public sector for not paying the going rate for top managers now blast the public sector for … paying the going rate for top managers. It is a hypocrisy unleavened by any acknowledgement that the going rate for top managers is ludicrously high. Because of course their quarrel is not with top management pay rates at all, but with the very existence of the public sector.

Indeed, the attack on public sector fatcat pay is really only a way of finding a soft point to attack public sector pay in general. It is part and parcel of two claims. One is that public sector workers are paid more than private sector workers. The other is that public sector workers get 'gold-plated pensions’. Often, the two claims are linked together.

The problem with the first claim is that – again because of the impact of market ideology and neo-liberal reforms – the lowest skilled (and therefore lowest paid) jobs in the public sector have been outsourced to private sector contractors. Thus, of course, average public sector pay is higher. As regards pensions, in 2012 (the latest year for which I have been able to find comparative figures) the median-average public sector pension was £5,600 pa (mean-average £7,800 pa) and the median-average private sector pension was £5,860 pa (mean-average £7,467). It’s true that most final salary pension schemes in the private sector have closed; it’s also true that those in the public sector are closing (one reason being the pressure put on them by high paid managers).

So let’s by all means challenge the high pay and pensions of senior managers in the public sector. But doing so only makes sense if we do so across the board, perhaps by considering a maximum wage. In 1998 FTSE-100 CEOs were paid a huge 47 times the pay of their average employee. Shocked? Well, by 2014 they were paid 130 times as much as their average employee. We might think about Fred Goodwin, who brought down Royal Bank of Scotland and cost the taxpayer billions of pounds, scraping by on a reported pension of £342,500 pa, poor fellow. We might think about Paul Dacre, Editor-in-Chief of the Daily Mail which has so vociferously campaigned against public sector largesse. In 2014 his pay and bonus package was £2.4M. The average UK pay in 2014 was £26,500 or 1.1% of what anti-elitist Dacre earned that year. The highest paid public official, and this by a long chalk, in 2015 was the Attorney-General at £205,000 or 8.5% of what public sector scourge Dacre earned the previous year. We might think about Jonathan Isaby, the Chief Executive of the Taxpayers’ Alliance that campaigns against public sector pay in the interests of transparency – but, alas, so profound is his commitment to transparency that his pay isn’t on the public record, nor are the identities of the donors that fund the Taxpayers’ Alliance. Strange, perhaps, to learn that the Taxpayers’ Alliance are enthusiastic advocates of freedom of information, but we surely can’t doubt that everyone associated with them is an assiduous taxpayer, can we?

So let’s think about all that, let’s understand the hypocrisy of those who decry the consequences of what they advocate, and the underlying agenda they champion, and the kind of world they really want to see.

Stuck with choice

I had a plan for today’s post, which was to go back through this blog to find where I had used various news stories to make a point and to revisit those stories asking: what happened next? As I began to do so, I found that it was a completely overwhelming task. Over the last three years I have written about under-employment, corporate tax avoidance, outsourcing, immigration and refugees, global supply chains, public sector reform, economic insecurity, pensions, corporate takeovers, air crashes, the NHS, the Greek crisis, the British establishment, the war in Ukraine, the Chinese economy and many, many other things.

So I have given up on that idea (for now) and instead will return to just a couple of things I’ve written about which are in the news again. In my post More on Power (November 2013) I wrote about the ludicrousness of consumer choice in the electricity ‘market’. Wind forward to today, and the price comparison sites that would supposedly enable such a choice are mired in scandal. In my post Pensions (March 2014) I wrote about the deregulation of personal pensions, a reform supposedly freeing up pensioners to make choices about their pension pots. Wind forward and we find that already scandals are emerging as pensioners are ripped-off or conned into making dangerous investments.

The fallacy that links both these cases (and another current story, that of the need to shop around for the best bank account) is that consumer choice is both efficient and morally impregnable. It is a logic in which corporations and consumer rights associations are complicit (see also my post on The Benefits of Work in July 2015). Choice isn’t an unqualified good.

Of course the neo-liberals are right when they point to the absence of choice as being one of the failings of State Communism. But that Cold War rhetoric doesn’t take us very far because the issue isn’t ‘no choice’ versus ‘unlimited choice’: there are degrees in between. Moreover, as these various examples show, choice in many markets is fairly meaningless. I sometimes think that market ideologues genuinely believe that ‘the market’ always and everywhere has the same form as wandering around fruit and veg stalls, looking at the quality and price of produce before buying. If so, it’s wholly unrealistic.

The reality across huge swathes of products – not just energy, pensions or bank accounts but also mobile phones, insurance or university courses – is nothing like the Economics 101 textbooks. It’s all but impossible to compare products and prices, and even if you did so once then within a few days or even minutes things would change again. Choice in these circumstances is meaningless, and the constant invocation of choice as a cardinal value is in fact an attempt to make as central the idea that we are all ‘choosers’. And the significance of that is not that it is a good thing to be a chooser, but that if choosers make the wrong choice – as some or many will - then they have only themselves to blame.

Writ large, this means that whatever happens to anyone, good or bad, is to their own credit or reflects their own fault. And so any social situation, no matter how unfair or wrong it may be, is not just unavoidable but, actually, right. This grotesque moral spoonerism is the ultimate consequence of the benign or even positive spin put upon choice.

In political philosophy, the most sophisticated expression of this valorization of choice as central is to be found in Robert Nozick’s book Anarchy, State and Utopia (1974). It is a beautifully written and intellectually elegant book that I would recommend to anyone. At its heart (as regards choice) is the ‘Wilt Chamberlain example’ (Chamberlain being a famous basketball player). Nozick argues that if before Chamberlain plays a game everyone agrees that the distribution of income in society is fair (even, say, if it is equal); and if, then, everyone who pays to watch Chamberlain play does so as a free choice; and if, then, as a result Chamberlain has more money than everyone else; then that new unequal distribution of income must also be fair, as everyone has chosen it.

There are two flaws in this argument. One is that it is only Chamberlain and those who paid to see him who have consented to the new income distribution. What about everyone else? If consent is the key principle for fairness then how can it be fair when they haven't consented? The other is that if Chamberlain and everyone who paid to see him had known that his extra income was to be taxed at 100% and redistributed, and he had still chosen to play and they had still chosen to pay, then the resultant equal income distribution would also be fair, on the logic of choice.

So choice doesn’t work, even at the most sophisticated theoretical level, as a guarantor of fairness, and it doesn’t work at the demonstrable empirical level of how choice actually works in markets. Which doesn’t mean that it is of no importance if people don’t have choices. On the contrary, choice is vital for both economic and political well-being. It’s just that it is not the only thing that matters, or the thing that matters above all else. It's not a kind of trump card that beats every other aspect of human existence.

Uberfication: an idea from the past

I learned a new and rather ugly word this week: uberfication. It came up in a discussion of new patterns of work and employment and checking on the internet I find that it is a term which has been in use for a year or so now. It derives from the taxi firm Uber which has developed a model for taxi hire in which customers use a mobile phone app to match their journey requirements to the availability of an Uber driver. This has caused protests from taxi drivers all over the world, most recently in Rio de Janeiro just yesterday, because Uber drivers are exempt from the licensing and many of the regulations of established taxi firms and drivers who are thus having their livelihoods threatened.

Uberfication refers to the application of the same, or similar, business model to a range of businesses and activities with many websites referring to the uberfication of everything, examples ranging from dog walking to doctors. Other terms for the same phenomenon are the ‘gig economy’, the ‘on-demand economy’ or the ‘platform economy’ (the point being that a platform such as Uber does not provide services but connects customer demand to a supplier, who provides a service as if engaged to play a gig) or the more cosy-sounding ‘micro-entrepreneurship’.

This business model has three defining features. The most obvious is a technological one, the mobile phone app that enables the connection between demand and supply to be made, including differential pricing according to levels of demand and supply at the moment that the transaction is agreed. The second is that it enables the avoidance of most or all of the regulations that apply to conventional providers of the service. The third is that those providing the service are not employees of any company but are independent contractors or self-employed agents (or, if you prefer, ‘micro-entrepreneurs’).

Although the word is a new to me, the underlying idea is one discussed at several places in my book and on this blog. The ‘flexibilization’ of work has been underway for some time now, leading increasingly to a ‘precariat’ (p.117 of book) whose work is insecure, often characterized by zero-hours contracts and without much or anything in the way of fringe benefits such as pensions, sick pay or maternity/paternity pay. Uberfication is an intensified form of this, since the independent contractors have no employment rights at all: they are not employed, so such rights are irrelevant.

Unsurprisingly uberfication is beginning to find its way onto the political agenda, at least in the United States. For the free market right it is a splendid development, bypassing state regulation and ‘vested interests’ and promoting an Ayn Rand type vision of autonomous self-determining individuals, freely contracting with each other in a pure(ish) market (only pure-ish because there is some evidence that prices are manipulated by controlling supply at times of peak demand). For the left, the concern is that employment rights are eroded, insecurity increased and, for that matter, buying power diminished (in other words, this isn’t an anti-capitalist point, it’s a Keynesian point: if workers don’t have strong and secure earnings then where does demand come from?).

One way of looking at this in organization theory terms is a shift from ‘hierarchy’ to ‘market’. In brief, the idea here (associated with the economist Oliver Williamson but also, in a different way, the business historian Alfred Chandler) is that there are different ways of co-ordinating human activity, which come into play according to specific cost conditions, allied to particular technological conditions. One way is via a market of individual contractors (the invisible hand, as Adam Smith called it), the other is through internal hierarchies within firms (the visible hand, as Chandler dubbed it in his book of that name). Following that account, uberfication substitutes market for hierarchy. However, it should not be forgotten that the way that co-ordination occurs does not just arise ‘naturally’ from cost and technology but depends on the political decisions we make and the legal systems through which we enact those decisions (hence the many legal challenges to Uber, most recently in Canada).

We can see this as a new technologically-mediated moment in the long-term hollowing-out of the social contract that sustained at least Western economies and societies in the post-1945 era which, along with erosions of the welfare state, makes for an increasingly insecure existence as I have written about several times on this blog. But although the technology may be new, the idea, and its consequences, are not: in very many ways it is reminiscent of the ‘putting-out system’ of the early industrial period (and still to be found in many parts of the world today). In this system subcontracting to individuals and families working within their homes was a way of bypassing the restrictions of the medieval guild system.

Of course the idealised image of uberfication is one in which people have complete flexibility of work and complete control of their destinies with no manager telling them what to do. And that may fine for some people, especially when they are young and healthy. But as a general model of employment it means low wages, no security and no protections. Stripped of its technological glitz it means a life rather like that depicted in the long poem written by Thomas Hood in 1843, The Song of the Shirt, which is about the putting-out system in the garment trade. The link to the full text is here, but just to quote the closing stanza:

Stitch! stitch! stitch!
In poverty, hunger, and dirt,
And still with a voice of dolorous pitch,--
Would that its tone could reach the Rich!--
She sang this "Song of the Shirt!

I began my last post with a reference to the saying that history always repeats itself but never in the same way. Here, I will finish with another aphorism, usually attributed (in a number of variants) to the Spanish-American philosopher George Santayana: those who don’t learn from history are doomed to repeat it.

The benefits of work

The way that work is rewarded is central to organizations, and pay is only one part of it. Associated benefits such as pensions, maternity and paternity pay, and sick pay are also highly important. Sick pay in particular makes a huge difference to security and quality of life. I know this very well from personal experience. When I was a child in the 1960s and 1970s my father was self-employed. He had no savings, six children, and a wife whose work – looking after these children – was not paid. If he was ill, as he sometimes was, or if for some other reason there was no work for him, as was often the case, we felt the consequences within a day or two: there was no food to eat.

So I was struck today by a news story that the British government are considering the idea that workers should fund their own sick pay by paying into an individual savings account. There are no details yet – it isn’t a policy announcement – but seems to be based on similar systems in the United States and in Singapore. It has also been explained in a paper by – predictably – the free market think tank, the Adam Smith Institute (ASI). The idea seems to be not so much a savings account per se, but a combination of savings and private insurance policies.

The logic, if one can call it that, seems to be the same as that in the debate about NHS funding, which I discussed in a recent post. It is that state welfare is unaffordable and so must be replaced by private provision. That is nonsense because it still has to be paid for: if I can’t afford to pay the tax or national insurance to fund sick pay, how can I magically afford to pay an insurance premium to a private provider? Actually, as with health, the situation is worse than this. State-run insurance systems pool risk across the entire population, making them cheaper. Private insurance systems don’t just pool risk across a smaller population (the customers of the company) but are also inherently prone to sub-divide those populations. Thus, as we see most obviously with car insurance, companies segment their customers into risk groups and charge differentially accordingly – hence the very high premiums charged to young and old drivers. The commercial logic is obvious: those most likely to claim have to pay a higher premium. Translated to sick pay the logic is equally obvious: those most likely to need it have to pay more to insure against it. And, pretty quickly, they become uninsureable.

Perhaps the logic is that private providers will do the job better than a state system. This standard neo-liberal claim for private provision is, predictably, made in the ASI paper (as an aside, if the ASI ideologues read the writings of Adam Smith they might be less naïve). It founders on the now massive evidence of how in the personal finance sector in particular inefficiencies and rip-offs abound. Consider the massive mis-selling of private pensions, endowment mortgages and personal protection insurance (PPI), which have given rise to billions of pounds of compensation claims and huge heartache along the way, since compensation never really compensates and, often, arrives too late to do so at all as in the case of the Equitable Life pension scandal. Most of this arose from precisely the deregulation of financial services and of state provision of welfare. It doesn’t take a genius to work out that if sick pay goes the same way there will be massive scandals a couple of decades down the track. And, if so, then as with PPI a second wave of scandals around scam sales of compensation services will emerge.

But suppose all that is too pessimistic, and a private market in sick pay insurance accounts did not fall prey to scandals and rip-offs. If so, then at best we would have yet another extension of the paradoxically controlling nature of choice, which I discuss in the book (p.75) drawing on the more extensive, and brilliant, discussion in Barry Schwartz’s (2004) book The Paradox of Choice. For, now, we will have to monitor, evaluate and switch between the providers of sick pay accounts alongside our same (unpaid) work choosing electricity, gas, water, phone, pension providers and so on. The extension of choice as an unquestioned good into every area of life re-constitutes us as perennial choosers. An image of, say, shopping around the market for the nicest or cheapest vegetables, becomes elevated to a cardinal and unique principle. Making the wrong choices means you only have yourself to blame, but the consequences will not just be a less than nice dinner; they will be destitution.

It is tempting to think that those advocating such measures are well-intentioned but naïve, over-attached to the theoretical nostrums of page one of the Economics 101 textbook. It is not so. They know exactly what they are about. As the ASI report that provides the intellectual ballast for this idea bleakly puts it:

“The new system must overturn any idea that society collectively is responsible for the future needs of its members; that future provision is for themselves to determine by their actions now.” (p.13)

Or, as Margaret Thatcher so chillingly put it as long ago as 1981: “Economics are the method: the object is to change the soul”.

 

Working assumptions

This post is inspired by Martin Vogel’s thought-provoking piece, on the excellent Vogel Wakefield counter-consultancy blog, where he discusses the politics of organization. In particular, he points out how little conversation there was during the British election of the changing nature of work, the social purposes of business and similar themes. With economic debate (and not just in Britain) dominated by the single theme of government fiscal deficit and cultural debate by that of immigration, work – so central to most people’s lives – barely got a look in.

True, there were some marginal references. Labour did seek to open up issues of lack of employment security, lack of quality jobs, and zero hours contracts. The Conservatives did talk at times about the number of jobs created in the British economy in recent years. Both parties talked occasionally about apprenticeships. But huge issues about under-employment, about the effect of technological change on white-collar employment, and about productivity (again, see Martin Vogel’s post for more on this) didn’t get mentioned at all. Moreover, nothing much was said on the many issues adjacent to or around work – for example the highly uncertain future of pensions and the exploding need to provide care for the elderly, much of which will be done as unpaid work, especially by women.

Perhaps it is the case that modern politics is incapable or unwilling to talk about such large and long-term issues. Indeed, it is not just in relation to work that big issues are neglected. In particular, no one in British politics seems willing to take a good look at Britain’s role in the world, something which has been ducked since, arguably, 1945. In fact, with the exception of the issue of EU membership, foreign policy of any sort did not figure in the election. And this is not just an issue for Britain. The mechanisms of international governance seem unable to gain any traction at all on a range of pressing problems from Ukraine, through to the dire and increasingly unstable situation right across the Middle East. The central structures of the UN, specifically the permanent membership of the Security Council, again reflect the world in 1945, not 2015.

One factor here – pertaining to work as much as to security – is the way that globalization, whilst largely created by the decisions of nation-states, has now undercut the purchase that nation-states have upon policy, leaving a political vacuum. From this viewpoint, what can national politicians say about, for example, job insecurity, pensions or de-skilling other than to see it in terms of the ineluctable effects of the global free market? The same could be said about things such as corporate tax avoidance which I posted about earlier this year. We just don’t have the political structures to deal with this situation, and very few people talking about how we might create them.

Yet there are some levers which national governments do have, especially around education and training, that might be pulled at least with respect to issues of employability and productivity. One reason why they do not get much discussed is, I suspect, the increasingly dysfunctional effects of media management. Political strategists seek simple, constantly repeated mantras to ‘frame the narrative’ – the fiscal deficit being the obvious example – which are by definition incapable of speaking of or to complex, inter-related problems. Add to this the almost inevitable short-termism of the electoral cycle and it is perhaps unsurprising that long-term problems get shelved for another day – witness the huge difficulties of developing a global approach to environmental sustainability.

Coming back to work, and thinking just from the standpoint of organization studies, I think that one striking and problematic feature of the subject is just how little it actually has to say about work. This is partly to do with the demise of what used to be called industrial sociology and the concomitant rise of studies that are more concerned with consumption and identity than production and the workplace. It probably also reflects the way that organization studies takes place almost entirely inside management and business schools, with more emphasis on management than on work per se. It certainly reflects the growing ‘theoreticism’ of the academic literature, with a disdain for ‘merely’ reporting what is actually happening in the workplace and an insistence that each academic paper should make a suppose ‘theoretical contribution’, something I’ve discussed elsewhere on this blog. As Barley & Kunda argued in 2001, there is a need to “bring work back in” to the discipline, but it is an argument that more than decade later shows little sign of being heeded.

In 1974, in a book probably better known in the United States than elsewhere, the writer and oral historian Studs Terkel published Working. People Talk About What They Do All Day and How They Feel About What They Do, the title of which is self-explanatory. Its coverage ranged from farm workers to dentists, tennis players to nuns. It’s difficult to think of anything remotely like this book now, and certainly not anything by an organization studies academic. The neglect of work within political discourse may be an intractable problem but within the more limited terrain of organization studies may not be irredeemable. And who knows, perhaps the two might be linked. After all, an organization studies that educated students into the realities of contemporary working life might not only prepare them better for those realities but also encourage them to ask political questions about it.

 

References

Barley, S. and Kunda, G. 2001. ‘Bringing work back in’, Organization Science 12: 76-95.

Terkel, S. 1974. Working. People Talk About What They Do All Day and How They Feel About What They Do. New York: Pantheon/Random House.

Pensions

The subject of pensions does not excite great interest. It seems boring, technical and remote. But a pension is a key aspect of work, being a form of deferred wage. Of the many inequalities opening up between young and old, access to a reasonable pension is one of the most important. Public policy in this area is quite complicated, and very long-term: decisions made now have their impact decades into the future.

This week, the British Government have decided that those in money purchase schemes will in future be free to spend their pension pots as they like, rather than having to buy annuities. There is some sense in this. An annuity means that you pay a lump sum to an insurance company in return for a lifetime of payments (but you lose the lump sum). Returns are quite low, and the crucial issue is how long you live after retiring: if it is a long time, it is not a bad deal. In a sense it is a kind of insurance product, with pooled risk meaning that those who live a long time are balanced out by those who do not. But annuities are not great value in general because the companies providing them take so much of the investment.

So this reform is being greeted as giving greater choice because the pensioner may do as s/he wishes with the pension pot. S/he might blow it on luxuries or invest it soberly for old age. What is interesting about this is that these money purchase schemes developed when, in the 1980s, the State Earnings related Pensions Scheme (SERPS) was wound down in the name of – consumer choice. Both then and now ‘choice’ is seen as the value that trumps all others.

Yet at the same time, final salary schemes are depicted as an elite ‘gold plated’ advantage, available only to public sector workers and senior executives in the private sector. Why don’t ordinary workers in the private sector have them (as they used to)? Well, because those workers decided (or were seduced into deciding) that it was better to have individual choice rather than unionised negotiations of pension rights.

Choice has been valorised in neo-liberalism as the prime – maybe the only – thing that matters. But that is nonsense, and pension provision shows it to be nonsense. The best way of organizing pensions is via collectivization of risk (in this case, longevity risk). The consequence of not seeing this is the generational gap that has opened up between those who under the ‘old settlement’ have decent pensions and under the ‘new settlement’ do not.

The temptation is to see the old benefitting at the expense of the young. But this is nonsense. It is not that the old prosper at the expense of the young but that the collapse of collective provision in the last few decades has effected a massive transfer from ordinary people to the global elite. Of course that elite would love to pit grandparents and parents against children and grandchildren. But the reason why a 20 year old today has no prospect of a decent pension is not because Aunt Nellie has a few thousand a year from her pension scheme. It is because there has been a wholesale transfer of power and wealth – by virtue of the seductive rhetoric of individual choice.