Category: Governance/CSR

A foolish race to the bottom

October 7, 2008 2:05 am by Stefan Stern

“Mabel sweats when she is making jam.” This terse and disapproving diary entry, describing the work being done by a domestic servant, was made by the English writer Virginia Woolf. It feels dated for several reasons. Nobody gets called Mabel anymore, hardly anyone makes their own jam, and it will simply no longer do to express such snobbish views about the staff.

In her new book Mrs Woolf and the servants: the hidden heart of domestic service, Alison Light, a senior lecturer at the University of Newcastle, reveals some of the prosaic realities that lay behind the Bloomsbury myth.

Virginia Woolf displayed the classic hypocrisy that bourgeois intellectuals are often seen as specialising in. She had Fine Feelings and a Tortured Soul – a history of mental illness, in fact – but was beastly to the domestics. Ms Light catalogues her many insults and put-downs: the stupid, ignorant cook and the ugly, gormless charwoman. In anticipation of a war-time air-raid, Mrs Woolf wrote: “What an irony if they should escape and we be killed.”

Continue reading “A foolish race to the bottom“.

Posted in Governance/CSR, Managing others | Permalink

Male chauvinists relieved that glass ceiling still sound

October 6, 2008 9:20 am by Adam Jones

Male chauvinists have breathed a sigh of relief after a structural survey of the glass ceiling in leading British boardrooms revealed that it was still in good condition in spite of recent worries about localised cracking.

Anxieties about the physical state of the ceiling had been aroused by anecdotal evidence that more women had been appointed to prominent directorships.

However, an annual structural survey undertaken by the Cranfield School of Management showed that women still held only 12 per cent of board seats at FTSE 100 companies and that the glass ceiling would continue to hold back women from obtaining equal representation for another four decades or so if the recent pace of deterioration didn’t change.

One male director said it was a relief that the glass ceiling was in no danger of imminent collapse.

“Business loves certainty and it is great news that corporate Britain might not be forced into fully engaging with vital issues such as equal pay and macho HR practices until the middle of this century, when the effects of global warming will probably give us plenty of new excuses to avoid taking action.”

Posted in Governance/CSR, Managing others | Permalink

Pick of the week

October 3, 2008 9:53 am by Adam Jones

When he taught his macroeconomics students about the Great Depression, Insead’s Ilian Mihov used to declare that it would never happen again. Now he is not so sure.

Elsewhere:

CEOs can demand, US presidents must persuade – really?
How to be an outstanding chairman;
Motivational speaking is about story-telling;
The psychology behind non-executive directors’ silence;

Posted in B-schools, Career/skills, Governance/CSR, Hard times, Leadership | Permalink

Are the curbs on pay in US bail-out bill workable?

September 29, 2008 2:19 pm by Adam Jones

The draft of the US financial bail-out bill – or troubled asset relief programme (Tarp) – has supposedly been designed in such a way that failed executives will not be able to “dump their bad assets on the government, and then walk away with millions of dollars in bonuses”.

But will these curbs on executive pay work in practice? And could they/should they be deployed elsewhere?

To summarise as best as I can – this is dry, specialised stuff – the act says:

Executives in financial institutions from which the government has directly purchased toxic assets in return for a “meaningful equity or debt position” must not be given incentives to take “unnecessary and excessive risks that threaten the value of the financial institution” while the state holds an equity or debt position in that organisation (page 31);
During that period, these same financial institutions must have the power to claw back any bonus paid to a top-5 executive based on performance measures that later turn out to be materially inaccurate (page 31);
During that period, there will be no “golden parachute” payments for top-5 executives at these institutions either (page 31);
Meanwhile, no new “golden parachute” deals are allowed for senior executives at financial institutions from which the government has bought more than $300m of toxic assets through both direct purchases and auctions, and in which it took a meaningful equity or debt position that has not yet been fully unwound (page 32);
These same institutions will lose some tax deductions if they pay their CEO, CFO or highest-paid employee more than $500,000 in a year (page 99-105).

Take a look at the text yourself and say whether you think it all sounds clear or plausible.

Posted in Governance/CSR, Hard times | Permalink

Paul Newman and a lesson in morality

September 29, 2008 1:11 pm by Stefan Stern

Management is a moral task above all. Lives, and people’s well-being, are at stake. In the current frenzy of financial meltdown, with talk of $700bn bail-outs and widespread mortgage foreclosures, it might be as well to remember that.

Maybe I’m just an old Leavsite at heart, but I do like a good morality tale. When news of Paul Newman’s death came in over the weekend, I thought immediately of this superb speech (below) from the film The Verdict (1982, directed by Sidney Lumet, script by David Mamet). If you haven’t seen the film, get hold of a DVD at once.

If you need any persuading of just how good an actor Newman was, compare this rather stark, deceptively quiet text with the shattering performance Newman actually gives. It’s devastating stuff.

[In the film, Newman plays an alcoholic lawyer, Frank Galvin, who sees the chance for redemption in what may be his final case. This speech is his summing up to the jury which comes towards the end of the film.]

GALVIN

You know, so much of the time we’re lost. We say, ‘Please, God, tell us what is right. Tell us what’s true. There is no justice. The rich win, the poor are powerless…’ We become tired of hearing people lie. After a time we become dead. A little dead. We start thinking of ourselves as victims. (pause) And we become victims. (pause) And we become weak…and doubt ourselves, and doubt our institutions…and doubt our beliefs…we say for example, `The law is a sham…there is no law…I was a fool for having believed there was.’ (beat) But today you are the law. You are the law…And not some book and not the lawyers, or the marble statues and the trappings of the court…all that they are is symbols. (beat) Of our desire to be just… (beat) All that they are, in effect, is a prayer…(beat)… a fervent, and a frightened prayer. In my religion we say, `Act as if you had faith, and faith will be given to you.’ (beat) If. If we would have faith in justice, we must only believe in ourselves. (beat) And act with justice. (beat) And I believe that there is justice in our hearts. (beat) Thank you.

Posted in Governance/CSR | Permalink

Church lays into short sellers and false profits

September 25, 2008 5:32 pm by Adam Jones

The point made in my last post about the potential influence of religion on business is reinforced by comments made last night by John Sentamu, the Archbishop of York and an article by Rowan Williams, the Archbishop of Canterbury.

Dr Sentamu castigated HBOS short sellers during a speech at the annual dinner of the Worshipful Company of International Bankers:

To a bystander like me, those who made £190m deliberately underselling the shares of HBOS, in spite of its very strong capital base, and drove it into the bosom of Lloyds TSB Bank, are clearly bank robbers and asset strippers.

We find ourselves in a market system which seems to have taken its rules of trade from Alice in Wonderland, where the share value of a bank is no longer dependent on the strength of its performance but rather on the willingness of the Government to bail it out, or rather on whether the Government has announced its intentions so to do.

Continue reading: “Church lays into short sellers and false profits”

Posted in Governance/CSR | Permalink

Column: no hiding in misinformation age

September 23, 2008 1:32 am by Stefan Stern

You’ll never guess what I’ve just heard. No, really. It has to do with your business, a sensational, unexpected predator who is about to come forward, and a worrying story about some of those rock-solid assets you have taken for granted for so long. I am sorry to have to bring you such startling news. But I read about it just now on the internet. It must be true.

OK, I admit it – I made that all up. But these last few weeks have shown how vulnerable any company can be to the latest piece of tittle-tattle and rumour. In the internet era, lies and distortion can circumnavigate the globe a thousand times before the truth has booted up.

Which comes as a bit of a disappointment, naturally, to Tim Berners-Lee, the moving spirit behind the development of the world wide web. Last week he spoke about his concern at the amount of disinformation being spread around the world every day. He is launching a World Wide Web Foundation, and hoping to see some kind of accreditation or labelling system emerge which might help “filter good information from bad”.

Continue reading “No hiding in misinformation age“. Please post comments below.

Posted in Governance/CSR, Innovation/tech | Permalink

Mokita: the word that encapsulates Wall Street failure

September 18, 2008 10:21 am by Adam Jones

Professors at Wharton business school – which has particularly close links to Wall Street – have been weighing in on the current financial chaos.

Peter Cappelli, a management professor, says executive pay in US financial services has been too closely linked to narrow measures of financial performance, and not to the overall best interests of the company.

It seems to work for the people in charge, but is it really working for the company? It’s certainly not working in the broader society. The shareholders and the executives who have shares in the company are in trouble, but this is spilling over into the economy in a way that I haven’t seen before.

He says too many managers chose not to lead, believing that it would be enough just to hire smart people and give them huge financial incentives.

Thomas Donaldson, a professor of legal studies and business ethics, used a word from Papua New Guinea to describe the failings that led to this mess: “mokita”, meaning truth everyone knows about but agrees not to discuss.

When it came to subprime and many of the other problems that have tripped up Fannie and Freddie and so many others, there was mokita.

The Wharton website also includes an account of a panel discussion in which finance professor Franklin Allen fretted about what would happen if there was a big bank failure in a small country.

Posted in B-schools, Governance/CSR, Hard times, Leadership | Permalink

Cut energy waste instead of jobs, says CSR adviser

September 17, 2008 2:00 pm by Adam Jones

Following my post earlier this week on whether cash-strapped managers will cut back on corporate social responsibility programmes, I got an email from Business for Social Responsibility, a not-for-profit body that advises companies on how to “create a more just and sustainable global economy”.

Eric Olson, one of its senior managers, has just issued some tips on how to tailor CSR efforts to the deteriorating economic conditions. He says, for instance, that managers could crack down on energy waste as a way of cutting costs and helping to avoid layoffs.

He also suggested that spending on CSR be presented as a cost similar to research and development spending, since companies have learned not to skimp on R&D investment in a downturn:

Continue reading: “Cut energy waste instead of jobs, says CSR adviser”

Posted in Governance/CSR, Hard times | Permalink

Will CSR survive the bust?

September 15, 2008 6:58 pm by Adam Jones

Today wasn’t the best day for an investment bank to seek coverage of a big corporate social responsibility initiative. But Lehman’s collapse didn’t stop Goldman Sachs from going ahead with the long-planned announcement of new partners for its “10,000 Women” scheme, which aims to give business and management training to women in less-developed countries.

The public demand for stories about the caring, sharing side of investment bankers is unlikely to be huge right now. But bankers aren’t necessarily the only turn-off in “caring capitalism” ventures these days. I’ve been wondering for a while whether tougher economic conditions will lead to a broader backlash against the CSR industry on the grounds of cost.

Continue reading: “Will CSR survive the bust?”

Posted in Governance/CSR, Hard times | Permalink