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Latest News & Blog | Business Ethics | GMJ Associates

Here’s a taste of some of the latest news and developments that caught our attention.

17 May

By

Radio Interview about Corporate Social Responsibility (CSR)

17th May 2017 | By |

 

 

Grainne and Ellen

Grainne Madden and Ellen Gunning at Dublin City FM studios

 

Listen back to my discussion about CSR with Ellen Gunning on her Mediascope show, Dublin City FM.  We talk about how to define CSR, strategically aligned social benefit projects, whether consumers really care, ESG investing, non-financial reporting, supply chain checks and diversity quotas.

 

04 May

By

Radio Interview about Whistleblowing

4th May 2017 | By |

Grainne and Ellen

Grainne Madden and Ellen Gunning at Dublin City FM studios

Click on this link to hear an interview with Ellen Gunning on her Mediascope show in which I discuss Whistleblowing, the Irish Protected Disclosure Act and its implications for Irish organisations.

 

 

 

10 Apr

By

Are we walking blindfold into artificial intelligence?

10th April 2017 | By |

Inevitable or impossible? Terrific or terrible? Rate these automated futures....Invitation to vote on Artificial Intelligence scenarios

Humans need not apply voting

The Impact of Artificial Intelligence and the Results of Visitor Voting

I visited the Humans Need Not Apply exhibition at the Science Gallery in Trinity College Dublin recently. The exhibition explores the possible impact of Artificial Intelligence (AI) on human lifestyles and the nature of work.  As part of the exhibition the gallery has asked visitors to vote on the likelihood and desirability of AI being utilized in three different scenarios.

Shows the voting from the Science Gallery exhibition on the likelihood and desirability of visa applications being processed by Artificial Intelligence

Visa application processing vote

Votes were cast by visitors placing a blue sticker on a four quadrant scatter graph.  The N/S axis is Very Desirable/Very Undesirable and the W/E axis is Very Unlikely/Very Likely. The one pictured above gave me pause for thought.  As  you can see the votes cluster strongly around very desirable and very likely to happen for use of AI in Visa Applications.

Is this an Issue?

So why did this bother me?  My first response was that the processing of visa applications is too ‘human’ in context to be delivered by machine. How is the individual’s human story to be condensed into mere rules to be processed by machine?  Instinctively it felt wrong. Why do lots of people think this a good idea? Well it’s possible that people see it as a convenient and efficient way of processing applications and getting rid of backlogs.  It’s worth noting that I visited about six weeks after Trump’s initial travel ban and it was still very much in the news.  The exhibition had been open five weeks so the travel ban and related discussions around movement of people had been current for all the time that people could have voted.

I discussed the issue with a small group mainly made up of fairly recent Trinity MBA graduates. Their view (and most of them would have had to get visas to travel to Ireland to study so they are the voice of experience) was that all visa applications are decided based on a set of rules regardless of who (or what) is making the decision. Even refugees will have their refugee status attached to visa applications so the human story has been dealt with earlier in the process.  A CSR specialist of my acquaintance reacted as I had when I showed her the graphs.

Shows the voting from the Science Gallery exhibition on the likelihood and desirability of Artificial Intelligence negotiators leading peace talks in conflict zones

AI negotiators leading peace talks vote

The graph asking about AI negotiators leading peace talks in conflict zones was more widely scattered but surely this is a truly human and emotional activity in which there are few rules so it worried me that there was not a more definite leaning towards the Undesirable and Unlikely quadrant.

Why is this Important?

Why is this important?  Well, many academics and researchers in the area of innovation and technology ethics (Groves et al 2011, Mali 2009, Sutcliffe 2011, UNESCO 2006) have highlighted the need for citizen involvement and stakeholder consultation during the development of new technology. Scientists are seen as overly focused on what the technology can do and in stretching it to the limits rather than as safe hands to consider the societal consequences of what they are inventing.

So we need scientists and the organisations that are developing this technology to engage with a broader range of thought to consider possible consequences and implications, to make decisions about the kind of society we want and how technology should be employed.  This implies we also need to educate citizens in ethical reasoning and analytical thinking. We should remember that those who voted in the Science Gallery were presumably those engaged enough to have visited an exhibition on Artificial Intelligence in the first place so in that sense they have self-selected as having an interest in the topic. A broader based sample of the population would likely be less well informed. So where do we find the civil society representatives to make these far reaching recommendations?

The exhibition continues until 14th May 2017 and is well worth visiting.  Permission to use the images given by the Science Gallery

References

Groves, C., Frater, L., Lee, R. & Stokes, E. 2011 Is There Room at the Bottom for CSR? Corporate Social Responsibility and Nanotechnology in the UK Journal of Business Ethics  Vol 101 Issue 4

Mali, F. 2009. Bringing converging technologies closer to civil society: the role of the precautionary principle Innovation – The European Journal of Social Science Research Vol.22, No 1

Sutcliffe, Hilary 2011 A Report on Responsible Research & Innovation. http://ec.europa.eu/research/science-society/document_library/pdf_06/rri-report-hilary-sutcliffe_en.pdf [accessed 7th April 2017]

UNESCO 2006 The Ethics and Politics of Nanotechnology

P.S. Sports fans will be relieved to see that it was considered far less likely and less desirable that soccer bots will play in the World Cup.

Shows the voting from the Science Gallery exhibition on the likelihood and desirability of soccer bots playing in the World Cup

Soccer Bots vote

17 Nov

By

The Changing Nature of Work: Ethical Dilemmas for Business Leaders

17th November 2016 | By |

Person at workWe previously looked at some of the ethical dilemmas that technology is bringing down the line for business leaders. In this post I want to focus on some of the ethical dilemmas business leaders face due to the changing nature of work.

 

Artificial Intelligence Replacing Workers

One of the major issues we looked at with technology is the rise of artificial intelligence and the impact this is going to have on jobs, especially middle-grade jobs. Some researchers have predicted that 47% of US jobs are at high risk of automation over the next 20 years. Middle-grade work will be valuable enough to be worth replacing with robots leading to a potential polarisation of jobs. The people left working will be doing either very menial and badly paid work (so not worth replacing with a robot) or incredibly high-level work (too complicated and expensive to replace with a robot).   The message to the young is clear – get educated to as high a level as you can and never stop learning!

With middle-grade jobs taken over by robots we have the potential for a generation left behind and unable to provide for themselves leading to massively increased inequality in society. For example supermarket or manufacturing plants could choose to automate and while this could help cut costs, offer better returns to shareholders and better prices to consumers, can the firm maintain its social licence to operate in communities devastated by unemployment?   It’s easy to talk of re-skilling but much harder to do effectively. I argue that we have still not cracked it in terms of providing our children with an education that will make them adaptable and able to pivot in their careers as they will undoubtedly be required to do. We certainly haven’t worked out how to retrain adults working in jobs that will inevitably be automated and enable them to participate in the new economy.

 

The Changing Nature of the Work Contract and Increased Freelancing

The nature of the work contract is also changing dramatically. The days of staying with one company for a long time are gone. Movement of employees brings headaches for business leaders who are trying to ensure business continuity and protect intellectual property. But as well as this, increasing numbers of workers are freelancers with so-called portfolio careers. In fact the Dean of the Trinity Business School, Professor Andrew Burke who has done a great deal of research in this area, says freelancers are the fastest growing segment of the workforce over the past 15 years. As his research has shown, freelancers can bring great benefits to businesses, can allow them bring new business ideas to market efficiently, can allow business trial new streams and bring in valuable short-term expertise. It can also benefit the freelancer, allowing them to get involved in projects that interest them and build depth of skill and knowledge. But use of freelancers also brings major challenges for business leaders who want to create a strong ethical culture. How do you maintain your history and tradition without continuity among your employees? How do you get someone on a short-term contract to buy into your business’s values? And indeed how do you ensure that the work they do and the decisions they are entrusted with are responsible and ethically sound?

What duty is there for leaders of firms that utilise freelancers and contractors to ensure that these people are reasonably protected from risk? Defined benefit pensions are a thing of the past for most employees but there are still pension plans and some kind of fall back in the case of serious illness. Not for the freelancer. And yes I’d agree that is a responsibility borne by the freelancer. An utterly unscientific survey of some people I know doing freelance work has left me shocked at the lack of good pension provision and lack of serious illness cover. If the proportion of freelancers continues to grow, we face the possibility of a generation without the means of supporting themselves in old age. The social disruption of this could be enormous. Older consumers without money to spend are not good for business. Neither are middle years consumers who lack disposable income due to the strain of financially supporting their parents. So although it may not be our responsibility to care about provision for these freelance workers, (don’t we pay them a premium to place the responsibility on them?) maybe we need to find a way to make it happen. Is there a case for developing contracts with freelancers and contracting firms that clarify the percentage of the freelancer fee that is intended to be for future pension provision and risk mitigation? It would also be a way of focusing minds on what is a truly appropriate fee for freelance work.

 

The Gig Economy

The use of technology platforms to broker business relationships has led to increased opportunities for people to generate new income streams (Airbnb and Uber are well known examples) by participating is the so called ‘gig economy’. This new form of working is for many people a lifeline, allowing them to generate income from existing assets or choose when it suits them to give up their time for income. But where to draw the line in terms of responsibility has become increasingly blurred. A recent Sunday Times article highlighted that many Uber drivers had to work very long hours to make a reasonable income (or even an unreasonable one) leading to concerns about tiredness and safety. Is monitoring the hours worked the responsibility of the individual driver or the company? Morally, it’s both. But is it reasonable to expect the individual driver who is struggling to earn enough to pay his bills to pack up and go home after a set number of hours. Regulation and the law will take some time to catch up with developments. But a savvy and responsible business leader should be considering these issues in a context that is much wider than mere cost minimisation and profit maximisation. The UK government’s recent decision that Deliveroo must treat delivery workers as employees and pay them minimum wage is an indicator of the efforts to impose regulation and find a path through this new way of doing business .

 

Reduced CEO Career Lifespans and Increased Average Wage Gaps

The expectations have also changed for the CEO role. With CEO average tenures reduced to only about 5- 8 years in the USA, there’s a lot of pressure for quick results over responsible nurturing of the company. The shortened lifespan of a CEO has led to inflated salaries and bonuses to compensate and a growing concern about the increasing pay gap between the top of the tree and the average worker. In the USA we are seeing a shrinking middle class and increases in income inequality. Large numbers of low-income citizens are not good for business long-term. The concept of fairness is deeply ingrained in human beings. We tend to react to perceived unfairness so greater disparity will lead to social unrest and a backlash against industries or companies seen as particularly guilty of promoting such division.

 

How Should Business Leaders Approach These Issues?

Every business is facing their own unique set of circumstances but there are some basic questions about the changing nature of work that every business leader should consider:

  • Is what we are doing fair?
  • Are our employment practices reducing or increasing risk and what is their effect on the long-term sustainability of the business?
  • What impact will our employment practices have on society?

04 Oct

By

The Value of Protected Disclosure Training

4th October 2016 | By |

Client Requirements

Some time ago the CEO of a Dublin based charity contacted me. The charity had put a Protected Disclosure / Whistleblowing policy in place and appointed two members of their board as ‘Protected Disclosure Managers’, in other words, the people named in the policy as those to whom internal protected disclosures could be made. These two board members had very sensibly insisted that they needed training in this area to ensure understanding of the Protected Disclosure Act and to enable them to carry out their duties effectively should anyone contact them to make a disclosure. At a time when the spotlight has been on scandals to do with charities and ineffective boards it is easy to forget that there are many people selflessly giving of their time and skills and acting in a highly responsible manner to ensure good governance of not-for-profit organisations.

Our initial proposal of a full day’s training to include understanding of the Act, best practice in dealing with disclosures and role play of scenarios was cut back to a half day due to limitations on time availability of those who wished to attend. So I prepared a four-hour session looking at understanding the Act and best practice in dealing with disclosures with some test scenarios tucked in my back pocket should we have any time left over. I also reviewed the organisation’s Disclosure / Whistleblowing policy and I was able to offer some suggestions as to how the first iteration of the policy might be improved.

 

Training Delivery

The board members nominated as Protected Disclosure Managers attended the session along with the CEO of the charity and CEOs of some other local not-for-profit organisations. The CEOs recognised their need to understand what was involved in the Protected Disclosure Act, that they might also be the recipients of disclosures and that they had a responsibility to understand their obligations towards protecting people in their organisations from reprisal due to a disclosure. Whilst I initially suggested sharing the session with another organisation as a way of spreading the cost of training it had a more valuable outcome, which was the sharing of knowledge, ideas, incidents and questions by people with varied experience and deep knowledge of their respective sectors.

I facilitated the session as a round table discussion guided by the key points in a tailored workbook that I had prepared for participants. The discussion forum was useful as people could look for clarification on issues or questions as they arose. There were lots of ‘What ifs?’ which we were able to pick apart in light of the Protected Disclosure Act and discuss how to be in line with best practice. Unsurprisingly with such active participation and involvement we never did get to those role-play scenarios in the four hours.

GMJAll participants fed back that they had gained a lot from the session with the only potential improvement being some scenario role-play as suggested in our initial proposal. A plan is in train to deliver this in another half-day session at a later date. It’s a privilege to spend some time with such a dedicated group of people and to feel that you are helping them a little in the difference they are making to a lot of lives.

 

Need for Protected Disclosure Policies and Training

Experience has shown us that wrongdoing uncovered by people brave enough to speak up helps us all. It’s needed in all sectors of society and I look forward to helping other organisations, both not-for-profits and businesses, prepare their people properly for the responsibilities imposed by the Protected Disclosures Act 2014.

Contact us to discuss how we can help your organisation with policy development and/or training about the Protected Disclosure Act 2014

03 Jun

By

Technology and the future; ethical dilemmas for business leaders

3rd June 2016 | By |

The following is the text of a short address given at the Trinity Global Business Forum on the 26th May 2016.  The panel was asked to focus on ethical dilemmas for business leaders.  I presented some thoughts on the dilemmas of the future brought about by technology, but many of these things are probably not that far into the future.  I will follow this up with some thoughts on the ethical dilemmas that the changing nature of work and climate change will bring.

The sheer pace of change, advances in technology development and political, social and environmental disruption will create major ethical challenges that many don’t even foresee. We’re getting into Donald Rumsfeld territory here with known unknowns and unknown unknowns but we need business leaders who actively embrace thinking about the unknowns. I want to touch on just some of the challenges that technology is going to bring. The value that technology adds to our lives is accompanied by downsides which I think most of us recognise (always on and connected to the office for instance) and future technology has future downsides we may not have anticipated.

 

The Sharing Economy

For example the enablement of the sharing economy through technology has allowed many people to generate new income streams. Think of the likes of Uber or Airbnb. We see the most popular enablers growing in power to the degree that they pretty much own that space without huge investment in staff or capital assets. Airbnb is probably the largest hotelier in the world but doesn’t own any bedrooms or employ any staff to clean those bedrooms. These businesses often find themselves in an unknown regulatory space as legal systems lag innovation. And maybe suffer a backlash from a society concerned about disruption to established business models.

 

Use of Personal Data

There is hardly a day goes by without some kind of news report revolving around concerns about the data held by companies and data breaches. Most businesses now hold a rake of personal data. Some businesses are built on the use of personal data. The opportunity to have medical therapy personalised and targeted to my genetic make-up to offer the best potential outcome is amazing. The use of that genetic information by a bank deciding whether they will give me a mortgage – not so good perhaps. Are we prepared to sacrifice the genetically less fortunate to benefit the greater wellbeing and affordability of insurance, health care and property for others?

 

Lack of Common Standards

To get the best out of technological advances we need common standards and a shared viewpoint on the best way to proceed, to be globally on the same page so to speak. The difficulty is that we are not. Utterly different approaches to issues of privacy and risk on just either side of the Atlantic make decisions for business more difficult. This is illustrated by the current difficulties over the negotiation of Privacy Shield (or Privacy figleaf as it was referred to by Karlin Lillington of the Irish Times). Really thinking through privacy issues and how they might affect or be affected by our businesses is crucial. It’s not just about what is legal. It also should be about what is right and what fits with the values of our organisation.

 

What is Acceptable Risk?

How do we decide what is safe and what constitutes acceptable risk? Again we find differing attitudes make a global agreement on the correct course of action impossible. The precautionary principle relied upon in European law – if there is a potential for risk to people or the environment we should avoid it, guilty until proven innocent as it has sometimes been described – is at odds with the innocent until proven guilty focus in the US. There it is prove to us that something is harmful before we ban it. To most of us the precautionary principle may seem very sensible but we also need to consider that an over reliance on the precautionary principle may hold us back from the advances that we most need to solve big global problems.

 

Artificial Intelligence and Effect on Society

The rise of Artificial intelligence, an era of robots who work and think for us sounds like science fiction but is already happening. One of the obvious consequences is the elimination of jobs currently done by humans. Earlier this year academics predicted at a meeting of the American Association for the Advancement of Science that advances in automation were likely to result in mass unemployment across many industries. For example they predict that driving will be fully autonomous within 25 years. That means many transport workers will become surplus to requirements. Self-drive vehicles also affect many other industries such as insurance, crash repairs, signage manufacturers and bring new challenges in determining liability for accidents and injury. This is just one small example with some obvious knock on impacts. Business leaders will be required to dig deep on the issues they create and the issues created for them by new technology.

A polarisation of jobs is predicted: some high-skilled workers being very much in demand because it is still too difficult for robots to do their work and some people left in very low skill jobs because it’s simply too expensive to replace them with robots leaving a redundant middle. We have the potential for a chunk of middle grade workers left behind and unable to provide for themselves and massive inequality in society. So businesses could choose to automate and while this could help cut costs, offer better returns to shareholders and better prices to consumers, can the firm maintain its social licence to operate in communities devastated by unemployment?  It’s easy to talk of re-skilling but much harder to do effectively to enable these abandoned workers participate in the new economy.

 

What Can Business Leaders Do?

Business leaders need to consider the fine line their businesses tread between developing useful new products and services and the potential for future harm. Bring the best science to the decisions made in the boardroom and ensure a broad range of views is considered. Be open to opposing views. Seek to hear the uncomfortable and the bad news. Listen to the dissenters within your organisation and those outside who criticise your organisation. They may be your greatest allies in helping you predict problems coming down the line. Weeding out bias when considering new business developments can be extraordinarily difficult so we rely on business leaders to ask the hard questions of a broad range of people.

06 Apr

By

Is the law requiring CSR spend in India working?

6th April 2016 | By |

Indian Flag

Image of Indian Flag

I’ve previously written about my interest in India’s CSR Companies Act requiring larger companies to donate 2% of pre tax profits to good causes. The law was passed in April 2014 and an article in yesterday’s Guardian reviews progress two years on.

Debate has long raged in the Corporate Social Responsibility (CSR) community about the desirability of making CSR compulsory or even whether it is possible to make such a concept compulsory. The Indian law covers only the philanthropic spend by a company rather than responsible behaviour by a company and for me that’s far too narrow a view of what CSR is. Having said that it must be recognised that India has major social problems which government alone is not able to solve. So any intervention that will help address social issues and improve quality of life for marginalised communities should be welcome.

From the early days of the discussion about the forced spend in India there were concerns that it would turn into a tick box exercise for companies, that it might actually exacerbate inequality due to firms located in wealthier areas being more likely to support local projects and that it would lead to corruption with layers of bureaucracy siphoning off commissions. Commentary last year focused on lack of compliance by companies and that penalties could be enforced only on companies who failed to report their spending, not on those who did not actually spend the compulsory 2%. So, have things improved since then?

According to the Guardian article spend on charitable work in the private sector has jumped hugely from an estimated 33.67bn rupees in 2013 to around 250bn rupees. So this is good news, right? Well maybe. But such a large increase in spending may well create capacity problems in the charity sector. A charity that is flooded with money can find it very difficult to spend that money effectively. What do most human beings do with an oversupply of money in their pockets? Spend it on daft stuff. It certainly removes the pressure to be discriminating in our choices. If you are running a charity, having your income triple or more in a relatively short period of time does not automatically mean that you can access the right resources to scale up accordingly.

In the rush to spend the required amount, companies are also probably favouring the larger established and better known charities while smaller organisations find it hard to get a look-in and may also find it more difficult to deal with the bureaucracy of the corporate world. The easy option of funding the big charities or the government-approved projects is not resulting in the kind of innovative solutions that India needs. The focus needs to be more on outcomes than on money spent in order to ensure donations are being utilised effectively. The bias towards wealthier areas also appears to be a reality which means that the areas most in need are not seeing an uplift in living standards. As I’ve previously suggested this is short-sighted of companies who will need to grow their customer base in the future. That increase in consumers will come about through giving those who lack opportunity access to education and improved infrastructure. Quite simply, having access to power and water means kids can go to school rather than do household chores and can study due to light sources being available. If they get an education they get a chance to improve their earning ability enabling them to have a better quality of life and more disposable income as adults.

Despite the large increase in overall donation levels it appears that many companies are still failing to comply with the law. Reports suggest that 52% of the top 100 have not made their 2% donation. And while many Indian corporations have a long history of philanthropic involvement there are concerns that it’s far more difficult for them to use this to stand out now. It’s become more about legal compliance and there are fears that some of these long-term donors may scale back their giving if it doesn’t have the same reputational impact.

Disconcertingly it seems that corruption is indeed an issue with reports that some donations are being made on the understanding that they will be returned minus a commission. This implicates the charities in fraud as well as the donors. It may mean that charity employees are deciding that the greater good is served by getting some money for their work rather than none but the effect is to undermine trust in the charity sector, which can only be damaging in the longer term. It also demonstrates that some businesses are still failing to review their day-to-day practices through a lens of responsibility to society as a whole. Spending on good works while making profit through poor behaviour leads to cynicism amongst stakeholders, especially employees who are likely to be most aware of the inconsistency.

So the analysis is looking a bit bleak at the moment. But it’s early days in a major new initiative and it would be unrealistic to expect spectacular results at this point. A big plus has to be that it starts the conversation and gets corporate India discussing the part it can play in making things better for everyone. It will take imagination and persistence on the part of business, the charity sector and government to ensure that resources are used for projects that make a real difference and that this goes well beyond a mere compliance exercise of meeting a 2% target spend.

 

 

09 Mar

By

Is it ethical to ambush customers with gambling opportunities?

9th March 2016 | By |

On a business trip recently I took the opportunity to stock up on some cosmetic items at the airport including of course a gift for my mum with Mother’s Day on the horizon. At the checkout I was surprised to be invited to purchase a ticket giving me entrance to a draw to win back the cost of my purchases. Maybe there were posters advertising the draw but I hadn’t spotted them?

I have mixed emotions about schemes that ensure a profit is made from offering prizes. I’m probably old fashioned but I remember the days when a brand or a business had to pay for the prizes they offered. Part of me admires the chutzpah in getting participants to fund the prize, as is the case here or with premium phone lines for example. Another, probably rather naive part, feels a prize that is offered as part of a marketing initiative should not come with an entrance fee.

But quite apart from this it’s a matter of context. If it’s an often-repeated phone-in competition that is offered by your favourite TV show or a competition emblazoned on a pack of detergent or a chocolate bar it’s clearly sign posted to you, the consumer.

This was different because it was asking me to participate in a gamble in a situation that was not obviously a gaming or betting situation. What if I had a gambling problem? What if I was trying to limit my exposure to such situations? This seemed a little like being offered a glass of wine in a sports shop, not something we’d expect to encounter and so not something a person with an alcohol issue would be braced to deal with. It’s inevitable that some of our customers will have addiction issues. We expect businesses such as betting shops to take steps to protect customers with addictions. Do all businesses have a similar duty of care?

When it’s out of context like this it feels like an ambush and it got me thinking about the ethics of such competitions. I’m interested in what you think. Was this a good marketing move? Is it ethical to surprise customers with an opportunity to gamble or participate in a lottery? Would it be different if the customer did not need to take action by buying a ticket?

By the way I declined the offer but it did make me wonder if it’s a sign that I’m spending too much on cosmetics!

11 Dec

By

Are tough targets the cause of unethical behaviour? VW?

11th December 2015 | By |

Setting business goals

Setting business goals

A report today on the Irish Times website about the VW emissions scandal finds the major catalyst which led to a ‘chain of mistakes’ was the introduction of tough emissions regulations in the USA. The company had introduced a big push on diesel sales with presumably some pretty tough sales targets. The Irish Times report tells us that “Engine developers could not find a way to meet permissible means to comply with tough US emissions regulations, at least in the timeframe and budgets available. That led to the installation of the cheat software that could determine whether a vehicle is on the road or a test bench.” VW’s Chairman is reported by the Guardian to have said that “engineers had installed defeat devices in diesel engines after realising they could not hit emissions targets by permissible means”.

We don’t have to look far to see examples of stretch targets being pinpointed as the cause of unethical behaviour. The sales person who brings forward an order to meet quarter-end figures, the lawyer who overstates hours spent on a client’s file to meet billing targets, the acceptance of risky mortgages to meet lending targets. In the auto industry two famous cases stand out. The fraudulent behaviour by Sears auto mechanics in doing un-needed work on customers’ cars in order to meet performance quotas is outlined by Lynne S. Paine in her seminal 1994 HBR article on organizational integrity. The famous case of the Ford Pinto, made to a strict price and weight target is often referenced in the business ethics literature. A saving of only a few dollars on the car’s fuel tank resulted in many deaths and horrendous injuries.

So tough targets appear to be potentially problematic. But I think we’d all agree that we need targets to push ourselves to achieve. Most of us know the great feeling of having managed to make a difficult target. It’s exciting, it gets the adrenalin going and it builds confidence in our own abilities, setting us on course to do even better. As managers we need to set targets to ensure the business achieves what is required. A world without targets would not get us where we need to go. Why else the time and effort being put into the COP 21 goals? So what dangers do we need to be aware of as managers when we are setting goals for our businesses?

Over emphasis on a specific goal – Targets are often set as a response to a particular business need such as meeting a deadline date or improving financial performance, maybe even with a view to saving the company which makes goal achievement even more urgent. The danger here is that we become over focused on a narrow target rather than considering the broader impact on the business. Ask yourself if you are over-simplifying the target without fully considering what you want to achieve e.g. increase sales of diesel models this year rather than maintaining brand reliability and trust which will in turn yield strong sales figures.

Over emphasis on goal achievement without considering how – If the achievement of the goal becomes the main focus it’s easy to lose sight of how it’s being achieved. This leads to a ‘just do it’ mentality which can be very dangerous as people can feel they have been given permission to do whatever it takes even if they cross a line. The behaviours have to matter too and we need to focus on more than a very narrow behaviour set. Behaving unethically has to be clearly and emphatically understood as unacceptable. So as managers we need to make sure we have the how we want to achieve conversations as well as the what we want to achieve conversations about targets.

Making the non-achievement of goals too scary – If we make the non-achievement of goals so scary that people feel they have little choice but to bend the rules we probably shouldn’t be too surprised when they do. Sears mechanics were reportedly scared that they would lose their jobs if they did not meet the set targets. We need to remember that scary can be a perception as much as a reality. So if people feel they might lose their jobs for example, that’s enough to influence behaviour, even if there is no actual intention to let people go.

Understanding the potential for humans to self-rationalise bad behaviour – I don’t know how many times I’ve come across bosses shocked at discovering that the employee they perceived as ‘good’ had engaged in bad behaviour. In relation to setting targets we need to understand that people can self-rationalise their bad behaviour if it leads to the ‘good’ outcome of achieving the goal. There is also evidence to suggest that people close to the achievement of a stretch target are more likely to do this than those some way off the target. So maybe you need to be thinking about the high performers and how you might unwittingly be encouraging them to rationalise doing something wrong.

Many years ago I saw examples of bad and good goal setting in action that have stayed with me ever since. In one company there was an admin team whose primary job was to process documentation. Their secondary role was to take calls from other departments with customer queries. In a push to deal with a backlog of documentation a stretch goal was put in place to encourage staff to make additional effort. A bonus was to be paid to the person who processed the greatest number of documents with the lowest error rate. Unfortunately the secondary role of the department was forgotten about. The winner of the award made massive inroads in the backlog with a near zero error rate but the rest of the team felt aggrieved that she achieved this by ignoring incoming calls that had traditionally been informally shared out and answered by all.  The target had been set to deal with a very specific problem without fully considering the broader needs of the business and the behaviours that supported that broader need.

Elsewhere, a sales manager under enormous pressure to achieve his target thought about the behaviours he needed in his team to have any chance of success. The economic environment was tough, he had a mix of very experienced sales people who were close to achieving their individual targets and very new sales people who were nowhere close to theirs. He saw the danger that the experienced people could achieve their own target and then stop bothering and that the inexperienced ones would just give up altogether. So he put an extra team incentive in place – every team member would get an additional smallish bonus if the overall team target was achieved. The experienced people had a reason to overachieve and to help out their less proficient colleagues. The people who had no hope of getting their individual targets could still get some bonus by bringing in sales and of course the added advantage was that they built some pride and confidence in what had appeared to be a pretty hopeless situation. In the first situation the culture of the department was badly damaged, in the other a stretch target built and cemented a culture of team work and shared success in a department that was traditionally populated with people focused on individual success.  Oh, and they smashed their target contributing to the success of the business even under difficult trading conditions.

 

 

 

18 Nov

By

Addressing the Imbalance of Power in ‘Zero Hours’ or ‘Banded Hours’ Contracts

18th November 2015 | By |

Dunnes Stores Strike Poster

Dunnes Stores Strike Poster

The issue of so-called zero hours contracts has appeared frequently in the Irish and British media this year with the strike in Dunnes Stores strike in April, protests against Sports Direct in the UK, a recently published study by researchers from the University of Limerick on the prevalence of such contracts in Ireland and a sharp rise in their use reported in the UK

Zero hours contracts strictly mean that a worker has to be available to their employer but gets no guarantee of any work. More common in Ireland are banded hours contracts which guarantee a minimum number of hours per week but not necessarily when those hours will be rostered or how many hours will be assigned from week to week. The recently published report carried out by University of Limerick found that what they termed ‘if and when’ contracts were more prevalent in Ireland. The hours of work are not guaranteed but neither does the employee have to make themselves available.

These types of contracts tend to be more common in low paid jobs in the retail and service sectors. So what are the pros and cons of such contracts? Clearly, they offer businesses maximum flexibility to staff up or down depending on how busy they are. They are often touted as providing flexible work for those who don’t want full time jobs, such as carers, parents of young children (by which I suspect the proponents actually mean mothers) and students. While I appreciate that many people don’t want full time work, I suspect most people have some kind of life they need to fit around their work. I am frequently amazed by the implication contained in reporting on this subject that low hours flexible contracts are particularly useful for students. This is suggesting that it’s okay for students to drop their college work at a moment’s notice as though their classes have little value.

Disadvantages for workers in this situation include the inability to plan social events or other appointments, difficulty in sorting out child or elder care, the extra costs associated with arranging such care at short notice and even commuting to a workplace that might then decide to send them home after a couple of hours if it isn’t busy. It’s not inconceivable that a worker would be left at a net minus if they organise childcare and pay a bus fare to work only to be sent home after a couple of hours. These workers are also prevented from accepting work from other employers since they don’t know when they’ll be available. Their uncertain hours mean uncertain pay and with that worries about their ability to meet bills, secure tenancies and little likelihood of qualifying for loans or mortgages.

Although these contracts are often presented as offering maximum flexibility to both employer and employee, this clearly ignores the imbalance of power that exists. These contracts are most prevalent in low paid work. The workers know that they are easily replaced and are therefore operating at a disadvantage meaning they are scared to protest against bad treatment and unwilling not to show up when asked. Saying that ‘if and when’ contracts address this ignores the reality that workers are afraid of being seen as uncooperative and disobliging if they refuse to come in. I’ve seen the panic in some of my students’ eyes when they get a text message from their employer ‘asking’ them to come in. Rostering tends to be done at business unit level by the local manager so the system of low hours or ‘if and when’ contracts facilitates a bullying or discriminatory individual abusing their power behind the shield of good budget management. I’ve seen examples of a store manager giving the prime shifts to the workers of their own nationality while the workers of another nationality always get the less desirable hours and/or fewer of those hours.

Low hours contracts are not just the preserve of minimum wage workers and are commonly used for part-time lecturers in third level educational institutions as well. I am one of those lecturers and while I have certainly seen the situation abused in some instances, lecturers tend to have choices denied to many low hours contract workers and have a much greater negotiating power to organise hours that suit them. The power balance is a great deal more even.

What does it mean for society? It’s often argued that the good value we get when shopping is linked to retailers’ ability to staff appropriately without any wastage. While there is a degree of truth in that, we also need to recognise that as a society we still pay for those workers, just not at the tills. Such working hours likely cost us eventually in stress related sickness, the need for additional social security benefits, housing supplements and various other costs related to the care of the families of such workers. The students that miss classes and need to repeat subjects are also subsidised by the taxpayer. It seems to me that we are permitting businesses to get away with poor planning and make additional profits through the use of such contracts at the expense of the taxpayer.

So what can be done? I’m not suggesting that we get rid of flexible working arrangements. I understand the pressure on margins and the desire to be responsive to customers (but if Primark can work without banded hours contracts I really don’t see why other businesses can’t manage it). I also understand that for some staff the flexibility of part-time work is wonderful. I’m not against part-time work at all but I am against flexibility being used as a reason to leave a lot of (low paid) workers in contracts that are unbalanced in their fairness with most of the power being in management hands. So we need to find a way to address the power imbalance.

A number of sensible proposals have been made by the University of Limerick researchers including:

  • Contracts should be issued to employees on their first day,
  • The minimum period an employee should be made to work should be three hours,
  • Employees should be given at least 72-hours notice before being called in – or otherwise be compensated by being paid time and a half,
  • Employees should be given 72-hours notice of cancellation of hours

I suggest that we could go further and should also distinguish between large businesses and smaller ones. One hopes that in smaller businesses there is greater communication between worker and manager leading to easier collaboration in the setting of shifts. Small businesses also lack other advantages enjoyed by bigger operations. Larger businesses have greater ability to re-allocate workers to other tasks if they are not busy. They may also have better ability to plan. For example a large-scale retailer has vast amounts of sales data at their disposal which if analysed enables them plan staffing requirements very effectively. For a larger business it should be possible to give staff their shifts a week in advance to enable workers plan more easily. It should also be possible for larger businesses to seek to accommodate workers preferences to some extent at least. If local managers are in charge of setting rosters there should be some kind of system for Head Office to check they are carrying out their duties appropriately and not using their power to bully or intimidate workers.

Maybe as shoppers we should start voting with our feet. Ask to speak with the manager of your local supermarket which is probably where you spend most money in a business which is likely to use these contracts. Tell the manager your concerns. Ask them what they are doing to ensure workers can plan more effectively. Ask them how they use their sales data to predict their staffing requirements. Ask them if head office conducts checks to help guard against abuse of workers by rostering managers. Ask them why they can’t follow the example of Primark (Penneys). If enough of us show we are concerned the message might start to filter through to the senior management.