17th November 2016 | By Grainne |
We 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?