Note: some of the linked articles below require an FT subscription to read
Why no company can now ignore sexual misconduct revelations
As waves of sexual misconduct allegations sweep through business and politics, no firm can now be excused for pretending not to know. As well the overriding obligation to protect staff, employers should not forget the demoralising impact that such a poisoned atmosphere can have on company performance. And if they still claim innocence, then several FT articles provide ample examples of misconduct and how victims can respond.
Laura Noonan surveys FT readers’ ‘allegations of serious crimes, including rape, other physical assault and stalking’ and ‘systematic verbal abuse and objectification’ which have prompted workers to leave their jobs. Equally troubling is that female staff too often report that ‘employers ignored serious allegations and that the perpetrators had gone on to greater careers while their victims were sidelined or sacked.’ As Emma Jacobs, FT work and careers columnist, writes: ‘Sexual harassment — whether reported or unreported — can damage women’s careers by diminishing their confidence and enthusiasm.’ …women typically keep quiet, due to fears about being believed, retaliation and harm to their careers. Others are legally bound to silence by non-disclosure agreements.’ But women (and a few men too) can fight back. This practical guide for victims advises as first steps:
‘Talk to someone outside work whom you trust to provide you with support. You may also wish to consider making a report to the police.’
‘Make a note of what happened as soon as possible after the event — if you can email it to yourself from your private email account, that provides you with a date of the note.’
‘Review your employer’s harassment policy and contact HR or an appropriate manager to report the incident as soon as possible.’
‘Consider seeking legal advice within three months of the incident in case matters are not resolved within work.’
Lawyers add: ‘Ignoring it usually doesn’t end well... Reporting triggers your employer’s duty to investigate, and can protect you later if you experience retaliation for complaining… Except in rare circumstances, don’t resign — and certainly not without advice of counsel. Resignation can negatively affect your rights.’
The fight is on. The FT’s US political correspondent Courtney Weaver reports on the wider #MeToo movement, though points to difficulties in creating ‘a movement that is inclusive of experiences that range from unwanted leg touching to violent rape, without losing the distinction between these transgressions.’ There is also the fears that ‘the near daily deluge of allegations will ultimately bring about a kind of fatigue.’
Finally, an ‘optimistic’ finale to the Weinstein story, according to Lex, would be a female-led takeover of the company. Unfortunately, the producer’s own stake remains a key obstacle to a happier conclusion.
It’s the data, stupid: How to tax tech companies.
Tax is never far from corporate decision-making. As well as helping to determine everything from HR remuneration policy to decisions on corporate locations, it has now become a huge public affairs and social responsibility issue, especially for US tech giants. While many of the arguments around who should benefit most from tax reform are currently being voiced in the US Congress, ‘it’s all a distraction from the debate we should be having,’ writes FT’s global business columnist Rana Foroohar, ‘which is how to come up with a fair, growth-enhancing method of taxation for an age in which most wealth is going to reside in intellectual property that can be located anywhere.’
Ms Foroohar notes that half of all US overseas profits come from tax havens. Many people, understandably, view this is an example of companies not paying their fair share, and is giving rise to anti-democratic forces. Unfortunately, there are no easy answers when the ‘vast majority of wealth is being captured by companies that have no need of a major physical presence in their various markets, or even a fixed national headquarters.’ Some tax experts propose lowering rates to encourage US firms to repatriate their cash hoards. But this approach would also require legislators to close loopholes, which many would deem politically unfeasible, and could trigger an international tax race to the bottom, which would once again send companies off in search of more lucrative tax locations.
It’s not just a question of where value is created, but also what value is being created. ‘In the age of digital commerce, data really is the new oil: consumption of online goods and services is what generates the user data that companies can then monetise.’ It’s the data not the algorithm that creates the value—and the ordinary tax payer now wants to know how these large tech companies are using their data and why this isn't being taxed fairly.
How to talk yourself and others into and out of trouble
Two contrasting FT stories illustrate the importance of self-image and presentation in leadership, whether in business or politics. Advice from comedian and performance coach Viv Groskop on How Theresa May can fix her vocal delivery and public speaking, applies to senior executives too.
The UK Prime Minister’s excruciating election campaign was made so much worse by her inept public speaking. Ms. Groskop writes: ‘Her voice is not assured. Her eye contact is shifty. It is hard to focus on her words because her delivery is so distracting. It is painful to see a woman on a public platform with so little authority.’ While Margaret Thatcher was taught by a National Theatre voice tutor recommended by the great Laurence Olivier, captivating both friends and enemies, and Michelle Obama ‘speaks with expression and emotion without ever overdoing it,’ Ms May sadly provides a poor example to ‘younger women who aspire to lead.’
According to voice coach Caroline Goyder, an expert on stage paralysis, Ms May lacks energy. ‘…Her clarity of thinking is not communicated powerfully enough for the role of prime minister.’ Powerful leadership demands focused self-expression.
May’s posture ‘cuts off the breath support and reduces the power and resonance of the voice.’ Her diplophonic voice ‘alternates between two tones simultaneously, giving it a slightly wobbly effect.’ But the wider problem is tension in the neck, shoulders and mouth, which makes her appear embarrassed about what she’s saying. ‘The voice has to be honest and authentic or we will read the lack of congruence as dishonesty.’
By contrast, consider the self-belief displayed in Dick Fuld’s quiet comeback on Wall Street. The head of Lehman Brothers was responsible for the biggest corporate collapse in history, in 2008, but has now established a new private wealth and asset management partnership to exploit ‘opportunities in a flawed and highly fragmented financial services market.’ This unwarranted self-confidence trick was evident during Congressional hearing into the financial crisis, when he blamed Lehman’s collapse on ‘looser lending standards, homeowners who used their homes “like an ATM” and regulators who “mandated” the firm’s bankruptcy.’ Nothing to do with him, of course.
Finally, if effective storytelling—about yourself or someone else—is indeed key to success, then Amy Goldstein’s gritty tale of a Wisconsin town, Janesville, is worth reading. In describing some of the catastrophic damage caused by Mr Fuld et al, and throwing light on Donald Trump’s subsequent political ascent, it is a worthy winner of the FT-McKinsey 2017 business book of the year.
China’s soft approach to global power
The elevation of President Xi Jinping’s status at last week’s Communist Party of China (CCP) congress marks a political turning point for China. It could also redefine the balance of global power and influence over coming decades. As corporate leaders re-assess their international strategies they might do well to re-envisage risks and opportunities resulting from a more authoritarian and assertive China. ‘The west must be alert to Beijing exporting an authoritarian model’ writes the FT, as ‘China tilts back towards a cult of personality.’ President Xi’s ‘has defined himself in opposition to the “hegemonic” west,’ and for the first time in decades, ‘put forward China’s autocratic system as a model for other countries.’ It seems that China will disprove a long-held western maxim that countries democratise as they get richer.
As well as ‘building a vast and powerful military,’ says the FT, China is ‘also intent on enhancing China’s soft power,’ whether this is through football and entertainment or Confucius Institutes that now operate in more than 500 universities worldwide. These claim to satisfy overseas demand for learning Chinese, and offer language and cultural classes that earn students credits towards a degree. But they are directly administered by Beijing, and stand accused of subverting academic freedom, particularly regarding Tibet, Taiwan and Tiananmen, especially in cash-strapped colleges. Much of China’s movement to ‘charm, co-opt or attack well-defined groups and individuals’ is being run through the so-called United Front Work Department, according to FT’s China editors.
But what exactly is China’s global role to be? Mr Xi has previously spoken about a new parity in China-US relations, especially regarding rules of international institutions. This suggests greater international policy activism, in business as well as politics.
The productivity challenge, with or without robots
Economist are still struggling to explain the UK’s poor productivity performance. ‘Productivity is no higher now than it was just before the 2008 financial crisis,’ writes the FT’s Gemma Tetlow, ‘in stark contrast to the average annual growth of 2.1 per cent recorded during the decade before the crash.’ With the Office for Budget Responsibility, the UK fiscal watchdog, no longer forecasting a return to pre-crisis productivity growth, the UK chancellor (Finance Minister) is now prioritising the issue.
Ms. Tetlow gives four possible reasons for the post-crisis productivity stagnation which afflicts many sectors but is particular weak in finance, telecoms, energy and management consulting. The first explanation is low investment in productivity-enhancing machinery—running at a mere 5% above its pre-crisis peak—and not always in areas that improve worker efficiency. Economic uncertainty may be a big reason for this reluctance to invest. A second explanation might be the way productivity is measured—previously under-playing the longer term costs of investment in, for example, the oil and financial services sectors, while understating the returns on investment in digital technologies. But the FT reckons that this would explain only one quarter of the assumed shortfall. A third reason could be that historic low interest rates have sustained ‘zombie’ companies, with fewer bankruptcies following this recession compared with previous downturns. This, however, would only explain 15% of the assumed productivity gap. Finally, business has not laid off its unproductive workers. With more people now willing to work, labour has become less expensive, resulting in ‘labour hoarding,’ while deterring investment in labour-saving technology.
This latter explanation appears not to apply to sports shoe manufacturer Nike. According to the FT's Long Read on how Nike’s focus on robotics threatens Asia’s low-cost workforce, Nike has been introducing automated gluing and laser cutting at its Mexico plant that is helping to slash costs and increase flexibility in what is normally a fickle, fashion-conscious market. Long a symbol of outsourcing--with almost half a million employees in 15 countries--Nike looks set to reverse that process through automation. As wages rise, automation looks ever more attractive; and Nike’s own labour costs could fall 50%. ‘The apparel industry is likely to watch this closely,’ say analysts.
There are also huge implications for developing markets more generally. As the article notes, the ILO estimates that ‘about 56 per cent of employment in Cambodia, Indonesia, the Philippines, Thailand and Vietnam is at a high risk of being automated over the next decade or two, with clothing and footwear manufacturing jobs among the hardest hit.’ However, for a brand-sensitive company such as Nike, which was once attacked for poor labour practises in its supply chain, closing a factory is likely to be controversial. Nike could be the litmus test for one of the great industrial dilemmas of our era.
When robot recruiters outperform people, and other human failings.
The big HR question that won’t go away—can a robot do your job—is well illustrated by Leslie Hook, the FT’s San Francisco correspondent, in this article on robot recruiters. She refers to a chatbot named Mya that screens high-volume applications for hourly-wage jobs. Its initial filter uses simple questions that require straightforward answers, such as: can you work in the evenings; are you comfortable with the pay range, and how soon can you start? One benefit for applicants is that they get meaningful (if limited) feedback rather than falling into the typical HR black hole. That is not to lay the blame entirely with humans: job hopping is now more common and the internet has made it easier to pump out applications at scale, massively increasing the job of sifting through CVs.
The recruitment process for low-skilled, hourly-wage jobs will be the first to be automated. But machine learning can also assist with searches and matches for more skilled jobs, especially among LinkedIn’s half a billion profiles, and internal job moves. Recruiters themselves probably won’t become extinct anytime soon, if only because in cultural terms, ‘you still need a human to evaluate whether someone is a good fit for a job.’ Nevertheless, the focus may shift to a more ‘sales-type personality’ who can persuade the best candidates to take a job. And when it comes to senior-level recruiting, where personal relationships are vital, the old-fashioned approach seems sure to continue.
Another, example of the clash between human fallibility and high-speed automation can be found in Pilita Clark’s amusing column on the etiquette around email errors. It doesn’t require such egregious examples as the Deutsche Bank staffer who accidentally transferred $6bn to a customer, or the central banker who mistakenly emailed a secret study to a journalist, to elicit concern. Usually, such gaffes generate embarrassment rather than commercial damage, though Ryanair’s email launch of a 24-hour sale ‘to celebrate remaining in Europe’, just before the Brexit vote, was particularly humiliating. But sender beware: most attempts to recall an email sent in error merely draws attention to a mistake that most recipients would otherwise have overlooked. In short, Ms Clark advises: ‘just apologise and move on.’
What keeps you going in your job, or makes you want to leave?
Insecurity is a desirable attribute according to this FT article on ‘insecure overachievers’. Although problem-solving, creativity, intellectual curiosity, energy and passion are deemed desirable traits for ambitious executives, especially in professional services firms, few mention ‘insecure over-achievement.’ Yet companies have found that ‘praise-hungry perfectionists’ tend to be particularly productive. So much so that one HR director, interviewed in Cass Business School research, admits acting ‘like a drug dealer, deliberately seeking out vulnerable people and getting them hooked on the high-status identity.’ If there’s one lesson about how best to harness anxious energy, it’s to avoid undermining the executive's self-esteem and potentially ruining a career in the quest for ever greater output.
Whether similar insecurity applies to executives looking for a career change is touched upon in these FT profiles. Mainly in their 40s and 50s, these executives express a range of fears and emotions, but all embrace change as a means of self-realisation—something that HR professionals might bear in mind as they try to engage and enthuse their staff. A forex trader who became a costume designer is following a long-held interest and is more excited than worried about the life change. A well-paid Google employee left to establish a technology consultancy, and ‘swings between self-doubt and almost manic enthusiasm.’ A supermarket manager overcame the shock of redundancy and wants more family time though worries about her next job. Meanwhile, a 33-year-old rock musician who is retraining as a software developer thinks he may be too old. Finally, a science graduate and full-time mother retrains to be a lawyer but questions if it’s the right for her young family.
Ms Merkel’s underwhelming election victory
Despite Angela Merkel’s fourth general election victory, the German Chancellor will find it harder to build a stable coalition and lead radical change in the EU. Corporate strategists may have to adjust their long-term assumptions. The FT’s excellent analysis of the results in charts and maps show how centrists parties—Ms Merkel’s Christian Democratic Union (CDU), its Bavarian ally the Christian Social Union (CSU), and the Social Democrats (SPD)—performed so badly. The CDU lost votes to the liberal Free Democratic party (FDP), while the SPD lost much of its traditional working class support. (As in the UK, the main leftist party attracted more young voters and those in high-quality jobs). The SPD will not join a centrist coalition, leaving a CDU/CSU bloc, the FDP and the Greens as the most realistic option.
The biggest shock of recent years has been the rise of the right-wing nationalist Alternative for Germany (AfD) which captured 12.6% of the vote, many from previous non-voters. The four-year old, anti-immigration party will be the first right-wing group to enter the Bundestag for half a century, with some 88 seats. Its supporters are ‘typical of the new crop of European rightwing parties that have emerged as reactions to new problems [such as asylum abuse and Islamist terrorism] which haven’t been dealt with by the traditional parties,’ according to German-Israeli historian Michael Wolffsohn.
The AfD also introduces a sharply Eurosceptic element into the German legislature. Ms Merkel will now find it more complicated to support plans for EU reforms, including a larger eurozone budget, a euro finance minister, a European monetary fund, and a common bank deposit insurance scheme, advocated by France’s new President Emmanuel Macron. Any new euro pact will have to be modest, and not require a treaty change. Ms Merkel will also come under increasing pressure to address the EU-wide migration issue, shoring up Schengen with tougher external border controls. However, a fairer distribution of legitimate refugees is likely to intensify tensions with Hungary and Poland. As for Brexit, Germany is much less likely to lean on the EU’s negotiating team for a softer line on Britain's negotiating team, as the latter has long hoped and assumed.
Managing the flow of weak ideas and fake news
How do we decide what to believe and what to reject? Or to put it differently, what should busy executives make the time and effort to read? Three recent FT articles encapsulate much of the difficulties involved: from the fake news that undermines our sense of objectivity, to the energy-sapping ‘thought-leadership’ of pseudo consultants, to the hubris and vanity of CEO books.
The FT’s management editor Andrew Hill, as usual, skewers the surplus of quacks with their barely-formed or reheated ideas that face executives like ‘a great river of swill flowing towards them as they struggle to work out what is important in their world.’ He notes here that half a million LinkedIn users claim to be thought leaders, too often motivated by marketing or public relations rather original thinking. Mr Hill argues that the ‘best thought leaders should recast themselves as “thought-provokers”’—a simple idea that itself probably qualifies as genuine thought leadership.
What we read is not unconnected with how we read it. Research suggests that executives prefer their thought leadership in feature-length reports and books. The latter might well confer a sense of greater scholarship, but according to another FT opinion piece, ‘CEOs and investors should beware the curse of authorship. Books by the chief are often an indicator of over-confidence.’
The article notes how former General Electric chief Jack Welch’s memoir marked GE’s peak, while Conscious Capitalism, by Whole Foods Market co-founder John Mackey, preceded a 60% share-price collapse. Part of the risk lies in long, 12-18- month publishing lead times during which a lot can go awry for a company. But perhaps more damming is the observation that: ‘When CEOs believe their “principles” can help “anyone” to “achieve their goals”, hubris has set in.’
A final and ever-growing concern about the value and efficacy of the published word relates to fake news. The FT’s editor Lionel Barber in a recent Oxford alumni address provides important historical and professional context for understanding the danger of us failing to ‘attend to the facts and to pursue the truth.’
50 ideas that could change the world
The FT’s quest to find ‘50 ideas with the power to solve the challenges facing the world’ will be a fascinating and ongoing discussion that L&D and corporate leaders should follow in detail. The subject categories—skills and education, population, energy and resources, health, nature and the universe—will affect the global business environment in almost every sphere, including how we learn.
Predicting the successful innovations is no science. History tells us that it’s not always the most dazzling invention that gets widely adopted, and it may be the incidental benefits not the initial purpose that truly change the world. As Tim Harford notes, it was seemingly mundane innovations such as toilet paper, barbed wire or shipping containers that did so much to shape the modern world. Companies understand only too well that bringing a new product to market is an unpredictable process. It’s why many embrace rapid failure and apply numerous commercial reality checks along the way.
However, we can still make educated guesses about what the future might hold. As the FT evolving list of scientific breakthroughs suggests, we already know what capabilities exist, even though they may take a generation or more to bear commercial fruit. We might also consider past experience of the social backlash as a guide to future reactions—as the debate over ‘job-stealing’ robots illustrates. And of course, there is science fiction, which at the very least has been a lodestar for the dreams of scientists and entrepreneurs, as is evident from our growing fascination for space travel.
For business to ignore such speculations would be a failure of imagination as well as strategy. One only has to look at the FT’s own expert recommendations, especially in healthcare, such as wearable MRI scanners with potential mind-reading capabilities, holographic computers used to teach anatomy, and self-learning neuromorphic chips that can identify heart abnormalities, to imagine the impact on that sector alone. Not only is the list of potential breakthroughs staggering in its breadth and implications, we have yet to consider how they might interact with each other, multiplying their potential impact.