When the big names screw up we all foot the bill

By Neil Patrick

When ordinary people lose their jobs, it’s usually not their fault. When the great and the good lose theirs, it nearly always is and it costs the rest of us a small fortune.

Usually, this blog is about the world of work experienced by normal people. But this week has seen some astonishing events unfold in the UK, involving some of the most senior, highly paid and high-profile people in the land. It’s been like watching three train wrecks at the same time. If they were just fools wrecking their own careers, it would simply be amusing. But it’s not. These people’s actions are destroying the lives of others who are entirely without blame. And costing us all a fortune in the process…

The prize for this week’s biggest contribution to job destruction in the UK must go to Dominic Chappell (he insists this is pronounced ‘Shap-elle’) boss of Retail Acquisitions, the latest owner of BHS. Formerly a stalwart of the UK high street, British Home Stores (presumably pronounced ‘Breeteesh Ohm Store’) has been struggling for years to reinvent its business to function in the digital age. On 25 April 2016, BHS was put into administration.

Chappell’s outfit bought BHS from Philip Green for just £1 in 2015. During his 15 year ownership, Green’s family took an alleged £586m in dividends, rental payments and interest on loans. At the same time, the BHS pension fund went from a surplus to a deficit of £571m. Green has now been summoned to account for this in front of a cross-party parliamentary panel of MPs.

Monaco-resident and retail supremo Green has lost some of his lustre lately as the efficiency of his tax avoidance tactics have come under media and government scrutiny. It’s a tough call to decide whether Chappell or Green is the greater enemy of the Treasury and taxpayer.

Chappell meanwhile has incurred the ridicule of many in the business community by lodging a bid to buy back the business he bought for £1 in 2014. During his period of ‘leadership’, he successfully put BHS into administration, and then sought to offload its pension deficits to the Pension Protection Fund. Himself twice bankrupt and a former racing driver, a BHS spokesperson said of Chappell, ‘…he’s living in cloud cuckoo land’. Whilst he may no longer be the owner of BHS, unless he’s spent it already, he’s got a sizeable war chest filled with ‘professional fees’ of over £25m that he and his mates have charged to BHS during their 13 month period of control.

So at this point, BHS has £571 million in unfunded pension liabilities and 11,000 jobs are now seriously under threat. If BHS collapses, the losses for its creditors (and that’s almost everyone in the UK thanks to pension fund investments) will be around £1.3bn.

Next on this week’s wall of shame is the now former Chief Constable of South Yorkshire, David Crompton, who was told to pack his bags after the final verdicts of the inquest jury at the about the culpability of the South Yorkshire Police for the Hillsborough disaster in April 1989 in which 96 football fans were crushed to death. The jury found the police to have been guilty of unlawful killing in what the Labour Party called ‘the greatest miscarriage of justice of our times.’ Further legal actions against Crompton and other senior police chiefs are being pursued after the enquiry uncovered a deliberate attempt by South Yorkshire Police to cover up the evidence of their failures. Costs to date of the 18 year legal investigations are estimated at over £14m by the BBC.

Last but hardly least, Ken Livingstone, former Lord Mayor of London and one of the most high profile members of the Labour Party was suspended from the Party pending investigation after he tried to defend Labour MP Naz Shah’s idiotic social media post from two years ago when she posted on Facebook the statement, “problem solved” showing a map of Israel imposed on the USA.

Livingstone amazed everyone, not least others in his party, by attempting to defend Shah’s actions by claiming that it was not anti-Semitic, merely anti-Zionist (that’s OK then?). He may be technically correct, but that matters not. Such a distinction is lost on most of the public and in any case anti-Zionism is often a symptom of an anti-Semitic mindset.

Whilst completely unconnected, these three events reveal the circumstances in which the great and ‘good’, routinely commit career suicide through their ill-judged actions. But I don’t care about their careers. What I care about is that their actions inflict untold collateral damage on the lives and wealth of thousands of innocent people who haven't screwed things up. And that the rest of us have to pay for their incompetence.

Over 11,000 jobs are likely to be lost at BHS unless a buyer is found swiftly. Even if this is achieved, largescale restructuring and redundancies seem inevitable. The cost to the UK of this failure will be £1.3bn and directly or indirectly, we will all carry our share of this cost. And that’s before we add in the benefits cost of all those employees who will struggle to find new jobs.

The South Yorkshire Police are almost obliged to implement a complete change of leadership. Plus they will continue to run up huge legal bills in the coming years as subsequent legal actions against them are defended. Given what the costs to date of this shameful episode have been, it seems likely that this will inevitably run into millions.

Shah and Livingstone’s stupidities might not cost us much from our pockets, but it has distracted Jeremy Corbyn’s Labour Party from concentrating on being an effective opposition, whilst the Party squabbles and argues within its own leadership. So no bill to pay, but a minor catastrophe nonetheless. With the Labour Party in disarray, we have a government which will be rubbing its hands with glee whilst the essential counter balance of the opposition is focussed on its internal bickerings instead of doing its job.

There is much debate about CEO’s salaries and compensation, but CEO’s are not the only ones getting away with daylight robbery. Our senior public servants are too.

Each of these three cases can be traced back to bad decisions made by people who ought to know better. People who are in positions of trust. And people who have been massively financially rewarded for their failure. Sound familiar? Yet none of them are CEOs…

If a normal employee committed any of these acts, they would be in the dole queue in the blink of an eye. But no normal person who screws up and loses their job as a result, can match the costs to society of these examples of comical cock-ups, gutless greed and shameless self-interest.

It really does seem that power just doesn’t just corrupt, it turns people into idiots.

What drives employers’ attitudes to employee age?

By Neil Patrick

Age related behaviours in organisations are not random. They are determined by measureable factors and here’s what they are.

When we are early in our careers, we seek an employer that will support our career progression goals. When we are older, we want our age and experience to be duly valued and utilised. For all of us, knowing which employers have the most enlightened attitudes and policies in relation to their employees’ age is valuable.

The young grumble that employers don’t invest enough in their career development. That they cannot become experienced if they aren’t given opportunities to prove themselves and grow. The old complain their skills and experience are disregarded. That they are overlooked in favour of younger candidates.

Are employers' attitudes to age set in stone?

These are heated debates which often revolve around opinion and anecdote. Neither are very helpful in establishing what’s really going on. So I recently turned to the world of academic research to try and get some hard facts.

I wanted to know what information existed about the behaviour of different employment sectors in this respect. Could these things be measured? And if so, what can we discover about the different behaviours of different employment sectors?

This topic is now important to employers. Not because of a sudden growth in organisational empathy, but for the simple fact that demographic shifts are compelling organisations to recognise and respond to an aging workforce, which risks the loss of key skills and knowledge unless they can adapt to these changes.

But many employers are struggling with this

From an employers’ perspective, it is clear that many are struggling to adopt effective strategies to cope with current demographic shifts. According to Deloitte and the Boston College Center on Aging and Work, almost 6 in 10 businesses report that they have a weakness in creating and managing age diversity programs for their workforces:

“Among global business and HR leaders, 58% reported that their organizations have 'weak' capabilities in 'providing programs for younger, older, and multi-generation workforces’"

Source: Global human capital trends 2014: Engaging the 21st-century workforce. Deloitte University Press.

Do different employment sectors have different attitudes?

Yes and the good news is that age-related behaviours across different sectors can be measured. And when we measure it, we find that different sectors are behaving differently.

In this post I have distilled some of the findings of an academic study titled: “Looking up to regulations, out at peers or down at the bottom line: How institutional logics affect the prevalence of age-related HR practices”.

A couple of weeks ago I was delighted to hook up with one of the authors* of the study, Monique Valcour, Executive Coach, Faculty Affiliate at the Third Path Institute and Professor of Management at EDHEC Business School in Nice.  Monique is also a contributor the Harvard Business Review. She has also been kind enough to review and edit this post with her expert insights. Thank you Monique!

What was the scope of the study?

The paper looked at the aging workforce in the US and which business sectors are doing the most to progress their HR practices to respond to the changing demographics. As the baby boomers steadily exit the workforce, this places an imperative on organisations to respond.

Apart from the demographic shift, the recession has forced many organisations to become ultra-lean versions of their previous selves, making them more vulnerable to the loss of key skills and intellectual capital as the most experienced employees retire from organisations.

The research sampled 420 organisations in the USA with an average of 455 employees.

What factors determine employers’ HR practices related to employees’ age?

The research postulated that employee age-related policies, attitudes, behaviours and HR practices are determined by the presence or absence of three main “organisational logics”. These are the beliefs and assumptions that drive the way an organisation’s leaders interpret information and make decisions related to workforce aging and age diversity. These categories are not mutually exclusive - multiple organisational logics can coexist within a single organisation.

The three organisational logics identified in the study were:

1. A strategic logic exists in organisations that are focused on the financial impact (e.g., ROI, staffing costs) of HR issues and management practices
2. A benchmarking logic exists in organisations that seek to emulate peers in their sector, for example, by benchmarking their competitors’ practices and seeking awards that are recognized within their industry.
3. A compliance logic exists in organisations that are focused on adherence to legal obligations, such as those relating to non-discrimination and to safety.

Takeout: Like people, organisations often behave according to overall sets of assumptions and beliefs that affect what information they pay attention to and how they respond to the information they take in.

What did the research find?

Organisations are more likely to actively assess the age demographics of their workforce when they are focused on benchmarking competitors and/or on regulatory compliance. These two logics also tend to be reflected in HR practices targeted at older workers (like transferring knowledge from older to younger employees and providing options for phased retirement).

Organisations are more likely to use age-neutral HR practices, such as recruiting and promoting employees of diverse ages, when they have a strong strategic and/or benchmarking logic.

Which sectors are most likely to assess age so that they can respond to shifting demographics?

The research found little difference across sectors, except that organisations in the mining and oil and gas sector are more likely to use age-neutral HR practices, while organisations in the arts, entertainment and recreation sector are less likely to actively assess the age demographics of their workforces or to use age-targeted or age-neutral HR practices.

Which sectors are most likely to respond to the practices of their peers in relation to employee age?

The financial and STEM sectors were slightly more likely to adjust their behaviours and decisions with external references to their peers, while the health care and social assistance sectors were slightly less likely to make use of this benchmarking logic.

What this tells us

There are two elements in organisational behaviour required to create an effective response to the ageing workforce. First is the gathering and interpretation of relevant data. Second is the conversion of this data into HR policies, procedures and practices which contribute to addressing the problem.

This research proved that a correlation exists between these three organisational logics and behaviours which contribute to positive practices with regard to employee age. In other words, the greater an employer’s focus on strategy, benchmarking and/or compliance, they more likely they are to measure employee demographics and attempt to respond to the changes with positive practices to protect their future human resource.

The inverse is also implied – if an employer pays scant attention to strategy, benchmarking and/or compliance, they are less likely to have adopted positive practices for managing the demographic aspects of their workforce.

If you are seeking an employer with the most progressive attitudes and positive practices relating to employee age, don’t rely on hearsay or anecdote, but instead consider the presence or absence of these three organisational logics. It’s not a guarantee, but it is a statistically proven indicator.

*The full list of contributing authors was:

Ariane Ollier-Malaterre Rouen Business School, France (now at the Université du Québec à Montréal)

Tay McNamara Sloan Center on Aging & Work, Boston College, USA

Christina Matz-Costa Graduate School of Social Work, Boston College, USA

Marcie Pitt-Catsouphes Graduate School of Social Work, Boston College, USA

Monique Valcour EDHEC Business School, France

Are Britain’s worst brands also the worst employers?

By Neil Patrick

Here’s a question for you. If a firm serves its customers poorly, does that also mean they treat their staff poorly?

According to a new piece of research, this is exactly the case. The research by Belinda Parmar of LadyGeek led to the creation of what she calls ‘The Empathy Index’. I also think it’s a useful way of deciding who you really don’t ever want to work for…

It used a UK nationwide poll of 1,000 members of the public, online feedback from 25 employees per company and analysis of 100 of each firm's tweets.

Whilst we have to be careful to not mix up cause and effect, I think it’s fair to assume that if a firm tops the index, it is almost certainly a better employer than one from the bottom. Moreover, whilst I have no direct personal experience of working for any of these firms, I know people who do and I also have experienced most of them as a customer. The index certainly ‘felt right’ to me.

These are the firms that topped the Index :

Congratulations to Linkedin! I was also pleased to see John Lewis coming in at number 4 – their employees are always exceptionally helpful and deliver great service. It’s no co-incidence that they all seem to be happy in their work.

But it’s the bottom of the list that I was more interested in. This hall of shame contained few surprises for me:

The bottom firms on this table are fully deserving losers in my view. At the very bottom are Carphone Warehouse who ignore data privacy requests and Ryanair who advertise cheap "no-frills" flights to secure bookings and then upsell us “options” at the airport when we have no choice. If you have a musical instrument with you, that’s an extra £60. Airport check-in fee - £70. More than one bag - £40.

Ryanair’s chief exec Michael O’Leary's disdain for his customers and "colorful" language makes for headlines of the wrong sort. He must subscribe to the idea that there's no such thing as bad publicity. In 2012 Ryanair got a pasting on social media for charging a customer £236 to print out five boarding passes. He claimed that “99.98 per cent” of Ryanair passengers printed their boarding passes in advance: “To those who don't, we say quite politely: ‘B***** off’”. Just how exactly is that polite Michael?

In 2013, Ryanair was also voted by consumer group Which? as having the worst customer service in a survey of 100 of Britain’s biggest brands. Angry customers took to Twitter to tell the Irish aviation boss personally what an ‘a***hole’ they thought he was.

‘I am an a***hole,’ he admitted. ‘But they still love me.’ Erm, I’m not so sure about that, Michael…

I’ve never been a customer of Carphone Warehouse, but here’s what Wikipedia has to say:

During 2005, customers who bought mobile phones from Carphone Warehouse retail outlets alleged that their landline accounts were subsequently switched without their consent.

On 15 August 2006, the Information Commissioner's Office issued Preliminary Enforcement Notices for breaches of PECR (The Privacy and Electronic Communications Regulations) against Carphone Warehouse and TalkTalk for making marketing calls to people who are signed up to the Telephone Preference Service (TPS) or people who have asked that the company make no further calls to them.

On 28 October 2006, in a Times interview, Richard Thomas, Britain's Information Commissioner, stated:

“We're taking action against some of the telecom companies, Talk Talk and Carphone Warehouse… because we've had a lot of complaints that they've been telephoning people with marketing calls, people whose name is on the telephone preference service. And then we do these prosecutions, particularly with private detectives. We've got a big case coming up.”

And finally we have BT. One of my friends worked for them and described the culture he experienced as “Daily agony.” A bullying culture that set unrealistic goals and punishing schedules. An expectation that people would work seven days a week and be grateful. The outsourcing of customer service to India where unintelligible workers in call centres would robotically read scripts to customers making helpdesk enquiries.

I think it’s fairly safe to say that the daily working experience for staff of the firms at the bottom of this index is just as miserable as it is for their customers. In fact probably worse, because they have to endure working with unhappy customers day after day after day.

In case you wish to discover how your current or potential employer performed on the Index, here’s a link to the complete document.

The one job sector that's booming

By Neil Patrick

The fastest growing sector isn't tech, it's the black economy...

The other day, I met an old friend I’d not seen for years. Decades in fact.

He’s a talented graphic designer. Naturally we talked about how his career had played out. It turned out that he’d drifted from job to job, but due to health problems had never managed to hold a job down for any great length of time.

To survive he’d taken any casual work he could find. Much of this work was paid for in cash; part of the booming black or ‘underground’ economy.

With so few jobs paying an adequate wage to meet the cost of living, millions of educated and skilled people now exist in an underground economy. In the US alone, this has ballooned to over $2 trillion annually.

Most people struggle to imagine a billion dollars, let alone a trillion. Two trillion dollars is $2,000,000,000,000. To put this in perspective, according to the IMF, the total GDP of the UK is ‘only’ $2.3 trillion…

That's maybe 10 million jobs in the US since the start of the recession

America's underground economy is not new, but since the Great Recession hit, analysts estimate it has more than doubled in size, driven by unemployed or underemployed people desperate to just survive. What other sectors can match that sort of growth?

I estimate this is equivalent to at least 5 million new jobs created in the US since 2008. This is fag packet maths I know, but let's say that of this estimated $1tr growth, each person earned on average $20,000 a year (this is probably much higher than the real figure, so I'm being cautious). That equates to 5 million jobs. If the actual average was $10,000, then we're talking about 10 million jobs...

As a benchmark, one of the fastest growing employment sectors, computer systems design, provides around 1.5m jobs in the US. The BLS forecasts this will be 2.1m  jobs by 2020.

So the underground economy is huge. And it’s not just criminal businesses like drugs, cyber-crime or prostitution. Research shows that a great deal of the black economy exists in completely legal industries such as bars, clubs and restaurants. It’s simply non-criminal work that isn't declared to the government by the employer and/or the employee.

Just as many people have been hard hit by the recession, so too have many businesses. It’s a huge temptation for business owners who in better times would probably run their businesses completely legally. Faced with a stark choice between closing down or slipping into the underground economy, many businesses have chosen the latter. Ironically therefore, whilst a decision to operate in the black economy takes tax out of the treasury, it also saves governments money on welfare payments to people who at least maintain some earned income.

Suddenly, the archetypal figures of the underground economy - the drug dealers and Mafia godfathers, now have a lot more company. Their new 'co-workers' are no longer just other criminals in the conventional sense of the word.

So most of these new participants in the underground economy today are ordinary citizens not evil greedy low-lives. They’re doing anything they can to survive and increasingly, this means taking jobs that pay "under the table" because they simply have no choice.

"It's typical that during recessions people work on the side while collecting unemployment benefits," Bernard Baumohl, chief global economist at the Economic Outlook Group, told The New Yorker.

He went on to say: "...the severity of the recession and the profound weakness of this recovery may mean that a lot more people have entered the underground economy, and have had to stay there longer."

Who works in the underground economy?

Some of the folks who've become trapped in the underground economy have been there for years, such as construction workers, illegal aliens and housekeepers. But it's a mistake to think these are all poorly educated immigrant workers.

The huge job losses caused by the recession have forced more people to switch from well-paid professional jobs to low paid service jobs.

But the biggest contributor to the underground economy in the past few years has been employers increasing their use of freelancers or "independent contractors" - even many who actually work full-time.

The weak U.S. economy has already given businesses plenty of incentives to cut costs by paying workers under the table. But the arrival of Obamacare gave them even more. The rules that demand that employers with 50 or more employees provide health insurance for full-time staff while allowing them to avoid offering plans to part-timers naturally encourages employers to offer more part-time work and less full time work.

"This type of regulation could put more people out of work and into an underground economy," Peter McHenry, an assistant professor of economics, told CNBC.

The underground economy hurts everyone

The rapidly growing amount of unreported wages in the U.S. is costing the nation billions in lost tax revenue. The Internal Revenue Service estimates that the losses from unreported wages have grown from about $385 billion in 2006 to about $500 billion currently.

That means the people who play by the rules are getting a raw deal.

"Those working and not paying the taxes put the burden on those who pay the tax," said David Fiorenza, an economics professor at Villanova University. "Taxes could be lower if the government were able to capture the underground economy instead of raising taxes on those currently paying the various income and payroll taxes."

But even those getting paid under the table don't get an easy ride. They forfeit contributions to Social Security, which will reduce benefits in their retirement years. They also get no healthcare, paid vacation or other benefits.

And they certainly end up with lower pay than those in the rest of the workforce. Government regulations about minimum wages hold no sway at all in the black economy. Ironically this is the most free market sector of all…which means pay is constantly being forced lower.


What the growth of the black economy really means

Whilst very little hard data is available about the underground economy, I am convinced that the majority of people within it are there not because they want to be, but because they have no real alternative.

And its explosive growth means that if you want to work, more and more of the work that is available is within the black economy. It’s Hobson’s choice…no work or work that is officially illegal. It’s not a symptom of an increasingly dishonest population, it’s a symptom of economic policy failure.

Both the IRS in the US and the Inland Revenue in the UK have announced numerous new initiatives to clamp down on the black economy. More investigations; harsher punishments. And yet the non-payment of tax by businesses like Amazon and Google continue more or less unchallenged.

It’s unjust and it targets those who are least able to defend themselves.

Government presents these moves as being a drive for a more equitable society. For everyone to pay their fair share. This is disingenuous. If we had economic success, we’d still have tax evasion, but only by those who had the freedom of choice. Unlike global corporations, most citizens who avoid tax today have few choices left.

I don’t condone tax evasion by anyone. I just think that government needs to remember that it exists to serve its citizens not the other way round. Government is happy to punish people for not declaring income in just the same way as if they robbed a bank. And yet it is failed government economic management that has created the situation that forces most people into these desperate choices.

If forced to choose between your family having nothing to eat or paying your tax bill, what would you do?

Who employs older workers?

By Neil Patrick

There are always plenty of opinions floating around about which types of business employ younger people and whether or not this is fair or even sensible. I have expressed my own views on this often enough on this and other blogs.

Today though I opted for a different tack. I thought I’d run some numbers and see what they revealed.

This was by no means an exhaustive study, but I was amazed by what I found.

I expected there to be few discernible patterns and yet I found quite the opposite. This quick dip into the numbers showed conclusively that there is a huge variation across business sectors when it comes to the age of their staff.

My method was simple enough. I just took the average age of employee as recorded in the Sunday Times top 50 best UK companies to work for as reported for 2014.

To calculate a simple benchmark, assuming a normal distribution curve based on an age range of 18 years to 65 years old, the mean age of employees should be 41 years. Higher than this means the workforce is older; and vice versa.

Now of course this assumes also that the available workers for each age group are the same, which of course, they are not. The baby boomers for example created a significant swelling of their age group as a proportion of the total population. So my purely mathematical average cannot be taken as wholly accurate – just a rough approximation.

Meet the new boss...

I simply wanted to discover which, if any sectors had demonstrably older workers and which ones had younger workers.

Since the average age of employee is not a significant factor in the Sunday times’ ranking, we can take this as a more or less randomised sample of the age profiles of people working in UK businesses today.

Moreover, every one of these firms has been assessed to be well liked by their employees, so they also represent some of our best employers.

So based on this data, here is the average age of employee at the top 50’s best UK firms to work for which I have re-ranked by oldest average age of employee to youngest (the original list rank is also shown in the first column):

N.b. I am not suggesting that my re-ranking makes any of these companies more or less ageist. There are plenty of perfectly valid and legitimate reasons why a company might have an older or younger age profile within its workforce.

What I was interested in was to see if there were any patterns when I re-ranked the list - and there certainly are.

The two firms ranking first and second are both from the same sector – contract catering.

Three of my list’s top 10 are from the pharmaceutical/medical sectors.

On the other hand, four of the five firms at the youngest end of this list were from two sectors – recruitment and financial services.

This list reveals other facts too. First the range of average ages 45 at oldest to 21 at youngest, reveals a huge range of age profiles across the sample firms – clearly if you are only in your early forties, you are already well past the average age of the majority of sectors’ employees.

Second, taking the approximate average age we’d expect to see – c.41 years - only 6 firms (12% of the list) had an average age that was older than this.

To sum it up, if you are over 40 and looking for work, contract catering looks like your best bet unless you have experience from the pharmaceutical sector…

Why one is an oppressive number

By Neil Patrick

In the early 20th century, rigid hierarchies caused a lot of suffering. In the 21st century workplace, they're still causing disenfranchisement...

"What?" I hear you say, “One is just a number. How can a single number mean anything, let alone be oppressive?”

Well hear me out.

In the early 20th century, ‘civilized’,' respectable', professional men from the British Commonwealth would serve one career, one boss, one wife, one monarch and one God. Ideally for the whole of their adult working life.

This was espoused as the ideal; the 'bio' of a good citizen.

1914 marked the zenith of what we could call the 'world of ones'. Before that date, loyalty to king and country was seen as a British citizen's overarching duty. After that date, the sense of obligation slowly but steadily ebbed away.

This cultural shift can be largely attributed to the fact that World War One resulted in the deaths of over a million people from Britain and the Commonwealth countries.

In the words of historian Samuel Hynes:

"A generation of innocent young men, their heads full of high abstractions like Honour, Glory and England, went off to war to make the world safe for democracy. They were slaughtered.... Those who survived were shocked, disillusioned and embittered by their war experiences, and saw that their real enemies were not the Germans, but the old men at home who had lied to them. They rejected the values of the society that had sent them to war, and in doing so separated their own generation from the past and from their cultural inheritance."

Thus emerged the first widespread questioning of the legitimacy of governments to demand the ultimate sacrifice from their citizens. Exactly one hundred years have passed since the outbreak of the First World War. It was also called "the war to end all wars". Except it wasn't and it didn't.

The 20th century was a world of rigid hierarchies. For its people, it was experienced through top down command and control structures. Despite several notable relapses, most western governments became increasingly democratic. Nonetheless, most of these structures still retained features of medieval feudalism.

Credit: Wikipedia

Fast forward to today and this ‘world of ones’ is starting to look increasingly archaic:

• Loose informal networks create more and more of our professional contacts and engagements.

• News sources include almost as many independent commentators as staff journalists. 

• Influence and communications don't just move top down. They also move laterally from one to many. Peer to peer. Social media and its enabling of the Arab Spring is a great example of this.

• Fewer people than ever experience a whole lifetime with the same spouse.

• More and more people work within complex matrix structures at work, where, they don’t just serve one boss, they have to deal with many.

• No-one still seriously expects to have just one job for the whole of their adult life. In fact the average tenure in jobs has been getting shorter and shorter.

The rise of social media has brought with it a democratization of communication that would be terrifying to the ruling elites of the early 20th century. Their top down command and control structures would be seriously destabilized.

The ‘world of ones’ is now well past its sell-by date and has become redundant in more and more walks of life. But it shows few signs of retreat in most workplaces.

Most employers still cling to a requirement for absolute fealty from their employees. They apply binding contracts. They demand complete loyalty. And in some cases even require a promise that if we leave or are sacked, we won't compete with them.

They however remain free to dictate what will and won’t happen to our jobs. And usually these decisions rest with just a handful of people.

It's an unequal contract in which the employee waives much of their freedom in exchange for a pay cheque and a limited selection of other privileges.

Enlightened employers such as Zappos are bravely moving forward with new ideas more in keeping with the 21st century, like abolishing job titles and placing decisions in the hands not of managers, but self-governing circles. Employees may be members of several circles and hold a different position within each.

I’m not an anarchist or a communist or anti-monarchist. I don’t advocate revolution, or infidelity, or the abandoning of religious beliefs. I just think it’s time for all employers to get into the 21st century in terms of how they think about their relationship with their people and how those people are organised, motivated, governed and rewarded.

After all, as CEOs are always reminding us, their people are their most valuable asset. Not their serfs. Aren't they?

The secret saviours of jobs are small businesses

By Neil Patrick

The UK economic recovery is forging ahead with record numbers of people in work, but is this really the good news we've all been longing for?

Yesterday, I was reading a post on the Daily Telegraph website with the headline, “UK Jobs Growth Rises at Fastest Rate in 43 Years”.

It quotes the ONS which reports that UK jobs “growth between January and March rose to a 43-year high, driving down the unemployment rate to its lowest level in more than five years”.

Other headlines were:

• The number of people in work rose to 30.43m - a record high 
• The unemployment rate dipped a tenth of a percentage point to 6.8% 
• The number of people out of work in the quarter fell by 133,000 to 2.21m compared with the previous three-month period. 
• At the same point last year unemployment stood at 2.52m. 

Of course the government are reporting these numbers with glee as well. And I don’t wish to rain on the parade. We all need some good economic news and this certainly isn’t bad news.

But neither is it particularly good news when we look behind the headlines. In fact the most noticeable aspect of the data can only be described as stagnation.

“Self-employment” is the number one reason behind both the rise in the number of people in work and the lower jobless rate.

Almost one in seven people - some 4.55m - are now classed as being self-employed, the highest level since records began in 1971. The number of people working for themselves has risen by 375,000 over the past year.

But many of these people working for themselves are not able to get enough work, with 1.29m of them working part time, though for some this is a matter of choice.

Aengus Collins, UK analyst at the Economist Intelligence Unit has highlighted the real concern:

"The latest numbers confirm the rapid and continuing improvement of the headline labour market numbers, with unemployment now at a five-year low. However, just as the recession of the last few years was no ordinary recession, so the recovery is displaying some curious patterns (professional understatement? –Ed.).

“This is particularly true of labour market conditions. The UK's unemployment rate fell to 6.8%, but we have concerns about the profile of the jobs that are driving this. The increasing use of zero-hours contracts is well documented …but one of the labour-market developments that can get overlooked …is the rapid rise since the crisis of the number of self-employed people in the UK.

“The recovery of total employment since the crisis has been driven by rising self-employment. (My emphasis –Ed.) Given the backdrop, this is less likely to represent a surge in entrepreneurial dynamism than a fall-back strategy for people who lost jobs during the crisis."

He added that the forced move into self employment may be the major factor behind what he called the "shocking halt" in productivity growth that has occurred since the financial crisis hit in 2008.

And I think he is right. All is plain to see in the graph below. So what if we have a record number of people in jobs? That number means very little if productivity and incomes are not rising too.

Zero-hours contracts result in many low paid workers having completely random amounts of work and consequently pay. Many of those statistically classified “self-employed” are in reality self-unemployed.

Jeremy Cook, chief economist at World First:

"We have seen the biggest quarterly improvement in employment since records began, in 1971, over the past three months. Unfortunately this has not come with a continued rise in ‘real wages’, with average earnings only rising by 1.7pc, the same as last month.

“The disappointment surrounding real wages outweighs any positive sentiment coming from the fall in the overall rate of unemployment to 6.8pc. This lack of wage inflation will keep overall CPI lower in the short term and, more importantly, will allow the Bank of England to maintain low rate expectations into next year."

John Salt, director of jobs website totaljobs.com:

"Unemployment has now been trending downwards since late 2011. This has led to a steady supply of good news stories for the government, with job creation becoming the cornerstone the Conservative Party’s election campaign for 2015.

"However, the underlying problems in the job market endure. Yes we are seeing more people in work, but youth unemployment remains high when compared to other developed economies as nearly a quarter of a million under 25 year olds have been out of work for more than a year. The government needs to invest more to help the young find full time work and create meaningful job market growth.”

These commentators all make valid points in my view. We remain a long way from a real jobs recovery in the UK. In fact what we have is essentially more people classed as being in work, when in reality they are at best only working occasionally; low paid workers seeing falling standards of living as inflation exceeds income growth and a polarised recovery with strong growth in London and the South east and stagnation elsewhere.

But there is some genuinely good news if we look deeper still:

The number of UK micro-businesses has grown by over half a million since the Great Recession began.

Some believe that this will be short-lived, and that when the economy gets back on its feet, things will return to ‘normal’. However, this ignores the fact that self-employment and the number of micro-businesses had been increasing at a steady rate long before the recession began:

The number of micro-businesses in the UK has grown by an average of 3% a year since the start of this century. They are now very much a ‘normal’ feature of our economic system.

Studies also suggest that at an individual level, the likelihood of a business owner returning to a typical job is low. A Survey by RSA found that only 7% of micro-business owners plan to close their business in the next 3-5 years and do something else.

Governments are not really fans of micro-businesses. They are after all a great deal more difficult to manage and help than large businesses. Governments are large bureaucracies. They like big, policy-based initiatives which can be implemented universally.

A micro-business is the exact opposite. It’s local. It exists day to day on the wits and skills of often just one or a handful of people. They work to extraordinarily short time-scales. They have no time to engage with governments on governments’ terms. They are completely unable to spend their time writing business plans, compiling data and jumping through administrative hoops. They have to find new customers and serve the ones they have to the best of their ability. Every single day.

Micro-businesses are not scaled down large businesses. They require a completely different type of government support. And governments find such complexity difficult to deal with.

The UK has a growing entrepreneurial class of micro-business owners. And these businesses hold the keys to the real future of the UK economy. Not because they will all become large businesses, but because they are by their very nature entrepreneurial. They create jobs and vital experience for the young. And they foster a spirit of self-reliance.

They may not be the next Apple or Amazon but critically, they keep money within their local economy, rather than it disappearing via some complex corporate structure and accounting mechanisms into an offshore tax-haven.

Politicians of all parties need to learn what these businesses really need and start providing it in a way that they can easily absorb it. Not pandering to the wishes of large corporations. Not creating more complex bureaucracy laden ‘initiatives’, but recognising that small businesses need help much more than big businesses. And delivering it in an appropriate way.

The statistics prove the green shoots are here. And the most valuable ones are in the small business sector.