Business and Corporate Responsibility in Russia

Book coverThis post was contributed by Bill Bowring, Professor of Law in Birkbeck’s School of Law; and a practising barrister at Field Court Chambers, Gray’s Inn. His latest book is Law, Rights and Ideology in Russia: Landmarks in the Destiny of a Great Power (Routledge, 2013). This article was originally published on Who’s Who Legal.

 

“Despite privatisation policies and programmes since 1991, the Russian state still owns two-thirds of the market capitalisation in the Russian stock market.”

 

On 22 August 2012, after 18 years of negotiations, Russia became the 156th member of the World Trade Organization. As a BBC report pointed out, Russia is the EU’s third biggest trading partner, with member countries exporting €108 billion euros of goods to Russia, including €7 billion worth of cars and €6 billion of medicines. Russia also exports enormous quantities of oil and gas around the world. Despite complications arising from Russia’s actions in Ukraine – including EU and US sanctions on Russian financial and other interests, and Russian sanctions on imports from the EU – the Russian economy and its governance are of great importance to the rest of the world.

Does this important step mean that the Russian economy can be compared with those of Western Europe or North America?

There is one particularly striking difference. Despite privatisation policies and programmes since 1991, the Russian state still owns two-thirds of the market capitalisation in the Russian stock market. The state’s ownership is concentrated in four strategic sectors: energy (oil, gas and electricity), banks, defence industries and transport. There is little state ownership in most other sectors in the Russian economy, including consumer goods, non-defence manufacturing, agriculture, insurance and services. But it is precisely in the two-thirds of the economy which has remained in state hands, or been seized by the state (as in the expropriation of Yukos, according to the Hague Court of International Arbitration, and the arrest and imprisonment from 2003 to 2013 of its owner Mikhail Khodorkovsky) that the most senior government officials are in control. This includes Igor Sechin, head of the state oil company, Rosneft, which took over the former assets of Yukos. Many of these officials have become incredibly rich.

Accession to the WTO was not the first marker of Russia’s participation in the global economic order, especially where corporate social responsibility was concerned. On 10 April 2008 the UN Secretary General Ban Ki-moon spoke at a Moscow meeting of more than 30 Russian business leaders, preparing to establish the Russian network of the UN’s Global Compact. Kofi Annan launched the Compact, which carries ten principles, on 26 July 2000. With over 12,000 corporate participants and other stakeholders from over 145 countries, it is the largest voluntary corporate responsibility initiative in the world. On 17 December 2008 the Russian network adopted its statutes.

In 2009 a Report on Corporate Social Responsibility Practices in Russia was published by, the United Nations Development Programme (UNDP), together with the Russian Union of Industrialists and Entrepreneurs (RSPP) and the UN Global Compact Network in Russia. It highlighted the corporate social responsibility commitments of some of the largest Russian enterprises: Viktor Vekselberg’s Renova Group of Companies, employing more than 100,000 people in Russia; Oleg Deripaska’s UC Rusal, the world’s largest aluminium manufacturer; and Vladimir Yevtushenkov’s Sistema investment group. Ironically, Sistema has recently lost its investment in the oil producer Bashneft through court proceedings that have been seen by many as part of the Russian state’s strategy to consolidate its dominance of oil production. Mr Yevtushenkov himself was arrested.

The RSPP is headed by Vladimir Shokhin, formerly Russia’s deputy prime minister and minister of economics. It was founded in 1991 following the collapse of the former USSR, and is based on the foundations of the Scientific and Industrial Union (which launched in 1990). It has a membership base of over 120 regional alliances and industry associations representing key industries, including the fuel and energy, machine-building, investment banking, military industrial, construction, chemical and food industries. It has more than 328,000 members representing industrial, scientific, financial and commercial organisations and individual members in all Russian regions.

The RSPP is itself responsible for a series of initiatives in the field of social responsibility, including the Global Compact. It has its own Charter of Corporate and Business Ethics, established in 2002, and a Social Charter of Russian Business, adopted at its Congress in 2004 and amended in 2008. It covers 254 businesses and NGOs, and more than 6 million workers. On 20 September 2012, in Sochi, the RSPP promulgated its Anti-Corruption Charter of Russian Business in the presence of the current prime minister Dmitry Medvedev.

Some highly influential Western companies promote corporate responsibility in Russia. For example, the Russian website of PricewaterhouseCoopers (PwC) includes glossy report on the firm’s corporate responsibility programme. It is the market leader in professional services in Russia, with eight offices and over 2,000 staff. Its client base of 2,000 companies includes: every single on of the 10 largest financial services companies and banks; nine of the 10 largest oil and gas companies; seven of the 10 largest power industry companies; six of the 10 largest retail companies; five of the six largest telecommunications companies; four of the 10 largest mining companies; and five of the 10 largest ferrous metallurgy companies. The report states that PwC is a signatory to the UN Global Compact, and in 2009 signed the RSPP’s Social Charter of Russian Business: “a set of principles for businesses to follow that are the foundations of responsible business practices”.

PwC’s competitor Ernst & Young also publishes a report on corporate responsibility. It began work in Russia in 1989 and employs 3,000 staff in eight offices. Since 2012 it has had a corporate responsibility expert panel, which brings clients together with representatives of the educational and ecological sectors.

Baker & McKenzie was the first international law firm to open an office in Moscow in 1989, and employs more than 120 qualified lawyers in Moscow and St Petersburg combined, including 27 partners. This year it was voted Law Firm of the Year in Russia. Its report, “Doing Business in Russia (2014)”, describes the country’s legal and judicial systems in detail and presents a picture of a properly and normally functioning rule of law.

Yet a different perspective comes from Medvedev’s initiative, announced on 27 April 2012: the creation of a new business ombudsman. Mr Medvedev’s last day in office as Russia’s president was 7 May 2012 (he was sworn in as prime minister the following day). 7 May also marked the introduction by Vladimir Putin (who had just been elected president, after serving as prime minister for four years) of a national business ombudsman’s office by December 2012.

On 21 June 2012, in advance of the law, Putin appointed business lobby leader Boris Titov as the Ombudsman for Entrepreneurs’ Rights. According to a BBC report published in July 2012, Mr Titov claimed that in the last 10 years Russia has imprisoned nearly 3 million entrepreneurs, many unjustly. He added, “It is hard to find another social group persecuted on such a large scale.” How has this come about?

The answer is to be found in two of the most insidious problems of doing business in Russia. These are “criminal prosecutions to order” and “criminal corporate raiding”. In short, there have been complaints for many years that private and state businesses, and powerful individuals, have been able to frame commercial rivals by paying corrupt police officers and prosecutors to plant evidence and make arrests to order. The judicial system itself has been a willing participant in such activities.

Another reason for creation of the Ombudsman was the $84 billion in capital that left Russia in 2011: a record amount. Russians were investing overseas because they feared for the safety of their businesses at home. Indeed, many Russian entrepreneurs have fled the country for their own safety. London has even been dubbed “Londongrad” because of the many Russians who have taken up residence and carried out business in the city.

The author of this article, who first travelled to Russia in 1983 in the days of the USSR, has since 2003 been employed as an expert witness on Russian law and politics in several cases in the London and Cyprus courts. The cases fall into three categories.

First, there have been requests by the Russian Federation for the extradition of Russian citizens resident in the UK, on the basis of criminal charges. Many of these were activities connected with Yukos and Mr Khodorkovsky. In almost all of these cases the English judge found that the requests were politically motivated. In none of these cases has Russia been successful. Second, expert evidence has been given in appeals against refusal of refuge status. Third, there have been commercial disputes in which an important preliminary issue has been the potential for a fair trial in Russian courts, given the continued prevalence of “telephone justice” and the possibility of political interference or pressure from highly placed and wealthy individuals and interests.

In fact, prior to his arrest in late 2003 and the destruction of Yukos, Mr Khodorkovsky was the leading Russian exponent of good corporate governance and corporate social responsibility. After two trials and 10 years in prison (he was released in December 2013), he now leads a global campaign to transform Russia into a democracy with an independent judiciary, a viable opposition and free and fair elections.

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World Bank watch out, the BRICS Bank is a game-changer

Ali Burak GuvenThis post was written by Dr Ali Burak Güven, Lecturer in International Relations & International Political Economy in Birkbeck’s Department of Politics. It was originally published on The Conversation.

The top news from this year’s BRICS summit was the announcement of a New Development Bank. Headquartered in Shanghai, the bank will become operational in 2016 with an initial capital of US$50 billion. Its core mandate is to finance infrastructure projects in the developing world.

The bank, announced at the summit in Fortaleza, Brazil, will also have a monetary twin to provide short-term emergency loans, the Contingency Reserve Arrangement. While the bank will be open to all UN members, the reserve will lend only to the contributing BRICS countries in times of crisis.

This combination of timing, actors, and institutions is noteworthy. It was in July 1944 that the Allied nations gathered at Bretton Woods to form two of the most vital institutions of the post-war era: the International Monetary Fund and what would become the World Bank. Now, 70 years later and only a few years on from the global financial crisis, the leading developing nations of our time have joined forces to forge new institutions of international economic cooperation with mandates identical to the World Bank and the IMF.

This move is born out of a belief that the Bretton Woods twins, despite numerous governance reform initiatives over the past decade, remain set to reflect the policy preferences of their original creators. In creating complementary institutions, the BRICS will be hoping to use these alternative platforms of international economic governance and as leverage to accelerate the reform of existing arrangements.

Game-changing potential

The New Development Bank is currently the more interesting of the “Fortaleza twins”, for it is designed as a freestanding organisation that’s open to all. Yet it has not received a warm welcome in business columns. While the political symbolism of the new institution is widely acknowledged, its immediate economic utility has been challenged – why do the BRICS need a development bank of their own when infrastructure projects are already easily financed through private as well as official channels, especially through the World Bank?

This is a narrow criticism. In the long run, the New Development Bank has the potential to become a game-changer in development financing. In fact, if its evolution even remotely parallels that of the World Bank, it might end up having a formative impact on economic policy-making and overall development strategy in the Global South.

To begin, while there is no shortage of national and regional development banks as well as private financiers of infrastructure projects, there is still a massive gap in development finance, estimated to be as high as US$1 trillion per year. Many developing countries encountered significant financing problems during the global crisis of the late 2000s. This shortfall necessitated a surge in World Bank commitments, from an annual US$25 billion in 2007 to about US$60 billion in 2010.

But commitments declined just as swiftly over the past few years, and as of 2013 stood at about $30 billion. Given these figures, the New Development Bank’s readily available $10 billion in paid-up capital and the extra $40 billion available upon request are not exactly pocket money for development financing.

Yet just as the World Bank was never simply a money lender, so too will the new bank represent far more than a mere pool of funds. The existing geostrategic and policy inclinations of its founding stakeholders imply a bigger role to play for the institution. In the process, it is bound to offer a formidable challenge to the World Bank’s financial prominence and so influence policy in the developing world.

Client-side

The new bank has been long in the making. It is the culmination of nearly two decades of intense South-South cooperation and engagement. In recent years especially, the BRICS and other emerging nations have become donors and investors in both their immediate regions and in less developed areas of the world – with Chinese and Brazilian involvement in sub-Saharan Africa and parts of Latin America representing the prime examples.

They have made an effort to establish more equal relationships with their lower-income developing peers and emphasised an attractive narrative of partnership, non-intervention and knowledge transfer, instead of smug, superior Western notions of top-down aid and restrictive conditionality. To the extent that it could keep its rates competitive, the New Development Bank is unlikely to suffer from a dearth of clients from among its fellow developing nations.

Paradoxically, BRICS and other large middle-income countries still remain the most valuable clients of the World Bank. Since the financial crisis, India has been the largest borrower of the World Bank, and has been closely followed by Brazil, China and a few other near-BRICS such as Indonesia, Turkey and Mexico. But, once the new bank fully kicks off, it is possible the World Bank will lose a lot more business from this traditionally lucrative market of large middle-income borrowers who now have a serious alternative.

Political implications

A reduced loan portfolio will ultimately translate into declining policy influence for the World Bank, which has held near-monopoly of development wisdom over the past 70 years. Perhaps in recognition of their waning power, there has already been a slight but steady decline in World Bank loans that emphasise policy and institutional reforms.

Also, a larger portion of the Bank’s resources have been allocated to conventional development projects, such as environment and natural resource management, private sector development, human development, and social protection. These are precisely the types of projects the Bank will encounter fierce competition from the new BRICS-led bank.

Knowledge and power

Consider also that the World Bank has labelled itself as a “knowledge bank” in recent years. Employing thousands of policy specialists, it doubles as one of the biggest think tanks in the world. Yet if it loses considerable financial ground to initiatives such as the New Development Bank, this threatens a decline in the power it has through knowledge.

Crucially, none of the BRICS adhere to the Bank’s standard policy prescriptions, nor do they advocate a different common strategy either. Brazil’s social democratic neo-developmentalism is quite different from China’s state neoliberalism, which in turn differs from established policy paths in others in the group. The only common denominator is a substantially broader role given to the state. But beyond this there is much flexibility and experimentation and little in the way of templates and blueprints like there is with the Western institutions. This policy diversity itself dismisses any idea of superiority of knowledge and expertise.

None of this suggests that the World Bank, as the dominant, Northern-led development agency, is now on an ineluctable path of decline. Cumbersome as they may appear, large organisations often accumulate considerable resilience and adaptive capacity over generations. Yet the World Bank does have a serious contender in the New Development Bank.

While it may not overtake the World Bank in financial prowess and policy influence any time soon, at a minimum it should be able to exert significant pressure over the World Bank to respond more sincerely and effectively to the new balance of power in the global economy.

The Conversation

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The Coach on the Couch

This post was contributed by Dr Andreas Liefooghe, Reader in Organizational Psychology and Programme Director for the Postgraduate Certificate in Coaching, launched this week. 

The rise of executive and other forms of coaching is arguably one of the most significant changes in the work context so far this century. Prior to 2000, professional helping relationships were clearly linked to the tasks and operations of the organization, mainly in the guise of consultants. Care of the personal kind, when it happened, had a whiff of failure – no-one would admit to seeing a counselor, far less a psychotherapist or psychiatrist. So the idea that conversations in a specific professional relational context can help someone has finally shifted from Viennese couches to executive boardrooms.

Coach!

Of course, the name helps.  Coaching, derived from sport, has a much more macho feel than the more feeble counseling. Primarily, the focus is on ‘reaching your full potential’, ‘increasing your performance’, ‘finding solutions’. Coaching carries no stigma, unlike counseling with its progression from madness to neurosis to ordinary unhappiness.

Once the sole preserve of the executive classes, coaching has now been democratized and is accessible to most levels in organizations. The focus has shifted for coaches, too. Largely gone is the soul-searching about whether coaches deliver coaching or therapy. It has been replaced by angst about which accrediting professional body will legitimize their actions.

There is still, of course, the niggling doubt as to why coaching should be necessary in organizations. Is there not enough help already? Why does this helping relationship need to be outsourced, and in such numbers?

Helping others

We believe the answer to this might be found in social psychology. Rather glumly, experiments from the sixties and seventies provide evidence that when we would expect people to help, they actually don’t. The famous Good Samaritan experiment demonstrated that, ultimately, we see ourselves as more important than others, particularly when pressed for time. As Darley and Batson (1973) put it, morals are a luxury when the speed of life increases. In today’s fast-paced organizational cultures, helping others may not be efficient.

Instead of a more positive picture, Organizational Citizenship Behaviour (OCB) research sets out why investing more time cultivating OCBs makes commercial sense. Also referred to as contextual performance, this field of study maps the extent to which altruism, civic virtue, sportsmanship, courtesy and conscientiousness are manifested at work. One important predictor of OCB is leadership – if there is a good relationship between the leadership and the employees, more examples of helping behaviours will be found, and higher performance levels (Motowidlo, 2011). And it is perhaps here that an executive coach can make a difference.

Coaching – a menace or a miracle?

Neither. Coaching can promote understanding, facilitate change, and develop potential, amongst others – but it would be wrong to claim it is a silver bullet to organizational helping and performance. Coaching is not a unified approach, and many different things manifest themselves under this moniker.

Edward Wray-Bliss (2013) writes of the deification/demonification of CEOs, and how they become the absolute Good and Evil. These attributions, while flawed, help organizational members make sense of a complex environment. Executive coaching in this context is no exception. Loh and Kay (2003) warned of the coaching menace, where coaching was seen as the silver bullet, and delivered by individuals with dubious credentials to people who didn’t need this macho sports-metaphor at the company’s expense. On the contrary, others see the miracle of executive coaching as further evidence of the well-deserved, god-like status, imbued with machismo, of the Glorious Leader. Indeed, in the late nineties one of the first CEOs I coached mentioned that I came third only to the private jet and his chauffeur…

The Post-Graduate Certificate in Coaching

Given that coaching is perhaps one of the most important organizational developments in the last decade, we decided it was important to spend more time reflecting on its impact. This one-year programme is designed for both established coaches who want more structure to their work, and to help those new to the field build a strong grounding. As you would expect from the Department, we emphasise rigorous academic theory and practice, combined with skills development and reflexive practice.

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A Dance of Death

November is Beat Bullying Month. This blog post was contributed by Dr Andreas Liefooghe, a Reader in Birkbeck’s Department of Organizational Psychology.

From minor family squabbles to nations at war, conflict is a universal fact of life, and one of its most potent features is the bully.  Last month, the CIPD journal People Management ran with the headline “Are you a bully?”, and offered a Cosmo-style quiz to ascertain what kind of bully you might be (there are, apparently, four types). Glib answers for difficult questions have clearly lost none of their appeal.

As David Cameron condemns Unite’s tactics at Grangemouth as “bullying” (they took a life-size rat to a leafy suburb to protest at the house of a director of Ineos, the Grangemouth operator), Unite’s general secretary Len McCluskey dismisses “Bullingdon Bully Cameron” as whipping up media hysteria and using bullying allegations to deflect attention from the reality of closing down factories.  This is a long way away from kids stealing dinner money, or your boss undermining your confidence.  Are we still talking about the same phenomenon?

To raise awareness of bullying, subtlety had to fall by the wayside – simple messages were important, and it clearly worked.  Awareness around bullying, both in schools and at work, has increased considerably over the past two decades. This week sees the launch of anti-bullying month for schools. On the 7 November it is National Ban Bullying at Work day. Awareness, yes. But understanding?

National Ban Bullying at Work Day is held annually in memory of Andrea Adams and Tim Field, two pioneers who devoted their lives to eradicating bullying. Not so often mentioned is Adams’ co-author, Tavistock psychotherapist Neil Crawford, who also died a decade ago. Crawford brought the subtleties of psychoanalytic thinking to the bullying at work field. “I feel I was robbed … my confidence disappeared”, states a victim of bullying I talked to recently. Stealing is at the core of bullying. Envy, Crawford argues, involves identifying with the goodness of others and stealing it. Bullies are insecure, and feed off others, sucking the life out of them.

Bully Blog Nov13

Danse Macabre, by Alex Cree

Being robbed, feeling bereft, death. Dr Sheila White, who continues and reshapes psychoanalytic thinking in the field, gives us the notion of the dance of death to understand workplace bullying.  She describes it as a perverse and pernicious form of projective identification, occurring around organizational vacuums and structural fractures. Individuals, seeking recognition, get trapped in ‘a dance of death’. Adult bullies do not have secure feelings about who they are, and through envy and the quest for recognition, hook into others and won’t let go. Her book gives in-depth insights into the core issues of workplace bullying from the perspectives of the individuals involved, their interpersonal relationships, the group dynamics and – crucially – their organizational contexts.

Bullying will only occur if the organizational context is suitable for bullying. “Just as plants only grow if the conditions of the soil, temperature, light levels etc are favourable, so bullying will only occur if an organizational context fosters a bully’s need to bully”, argues White.  So what are these unsuitable organizational contexts? White describes organizations that have vacuums where there is no support for individuals or groups. She also highlights structural fractures, where job descriptions are unclear and communication is poor or inconsistent; expectations of performance are unrealistic and there is an over-identification with targets/quotas. Often, management are unaware of how negative projections filter down the organization, generating the potential for dysfunctional behaviour along the way.

Workplace bullying is costly: increasingly petty conflicts are being registered as formal complaints and, in no time, legalities take over and costs spiral out of control. Preventive actions and interventions need to be based on a sound knowledge of the deeper issues which foster bullying scenarios.  White’s book makes a major contribution to this understanding, and is an essential read.

Dr Sheila White’s book is launched at Birkbeck on 21 November.Booking is essential.

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Skills are a risky investment

This post was contributed by Dr Frederick Guy of Birkbeck’s Department of Management.

A shortage of skills is a source of perpetual anxiety within Britain’s political class. Here’s Tory backbencher Dominic Raab, a few months back in the Telegraph:

The next great problem is our chronic skills gap, which saw Britain plummet down the international rankings in maths, literacy and science. Labour’s arbitrary goal of getting 50 per cent of youngsters into university led to the proliferation of what one of its ministers called “Mickey Mouse” courses, which have benefited neither the students nor the economy. A 2005 Ofsted report found that almost half of those in their twenties said their education had not prepared them for their first job. Far from blaming Europe for this, Michael Gove is rightly learning from it – promoting innovative Swedish-style free schools and a more German emphasis on vocational training.

If we put aside the sniping at Labour and the currying of Gove’s favour, most of this could actually have been written by any of hundreds of politicians from any party at any time in the past thirty years: the schools aren’t delivering the goods, and we don’t do near as good a job at vocational training as the Germans. The skills gap feeds an endemic collective anxiety, the root of the county’s endless obsessive-compulsive re-engineering of its education system – because, surely, finding the right curriculum, the right way to teach, to test, or to select and motivate and cull teachers, is the key to setting this situation right. As for vocational education and apprenticeships, the on-going, multi-party failure in that area could lead one to believe that our Oxbridge-educated leaders can’t bring themselves to really care about something so far from their collective experience: true, perhaps, but like the anxiety about primary and secondary education it misses the point.

The lack of a risk insurance system 

The real problem, which no party in recent decades has even tried to face up to, is that investment in skills is risky. Britain does not have a good system for insuring against this risk. At the root of the skills crisis are the benefit system for those who lose their jobs; and the financing of further and higher education, especially for mature students.

Learning a skill is an investment, and a choice: it takes time that could have been used earning money, or in learning something different. A sensible young person, offered the opportunity to train in some specialist area, might frame the risk like this: “if this skill becomes obsolete when I am forty-five, or if the jobs in this industry get off-shored, who will support me and pay for retraining so that I can get another good job? Will I lose my house?” In many countries on the Continent – Denmark and the Netherlands are actually better examples of this than Germany – the answer is that the social welfare system and the education system will work together to see that you have a new opportunity, and that you don’t have to go through a personal financial crisis before you get to your new career.

The benefits debate

Britain’s ongoing domestic quarrel over the benefit system focuses on people who use it for the long term: are they scroungers, or do they deserve our compassion and support? Lost in this debate is the fact that the system, while too generous to some long-term claimants, is too mean with people who need serious midlife re-training in order to again be productive members of the workforce. The UK benefit system is unusual in allowing so many people to stay on benefits for so long. But for a benefit system to move people on to good jobs, it needs to provide for adequate training and education; and, if we want young people to take risks when they select their educational paths, the jobless benefit needs also to provide income insurance which is adequate to make that the investment in skill attractive despite the risk: during the re-training period it needs to be generous, and proportional (up to some cap) to the individual’s prior income.

The differences between Britain and the rest of Europe

Britain’s benefit system does not do that, and for that reason it leads people here to make different choices about what skills to obtain than do people of Germany, Scandinavia, Switzerland, and the Low Countries – the high-skill manufacturing and exporting engines of Europe. The skills employees have then affect such things as the investments companies make in innovation, a question Andrea Filippetti and I address in a study available here.

This difference between Britain and its continental neighbors is long standing: with respect both to welfare systems and skills, it has roots going back at least to the 1920s. In recent decades, however, the riskiness of investment in skill has been greatly amplified by the globalizing knowledge economy. More rapid technological change is making skills obsolete more quickly. Rapid technological change and shorter product life cycles have also increased the volatility in company financial results, and in the size of the typical company’s workforce; this undermines not only “jobs-for-life”, but also employers’ willingness to share the workers’ risk by providing training, and re-training, internally. Offshoring (made feasible by the combination of modern communications and transportation technologies, and trade liberalization) can shift whole industries from one country to another in very short periods, and that produces extreme uncertainty about the demand for the skills associated with those industries. The risk of offshoring can, in the absence of insurance, actually make offshoring inevitable: if risk depresses investment in skills an industry needs, this in itself can make the industry uncompetitive, and offshoring proceeds apace. As if all that were not enough, climate change is now making its own contribution to the volatility of demand for skill, a contribution which will grow as the needs of adaptation and mitigation will compel rapid change in the technologies we build, install, and use. As long as Britain’s social insurance system cannot compensate for the increased riskiness of investment in skill, the skills of Britain’s workforce can be expected to deteriorate in relative terms.

Skills investment from pre-school to university

Skills that are risky investments are found not only in vocational and technical training, but among university subjects. Wang et al find that students view STEM subjects (science, technology, engineering and mathematics) in that way. In response, students flood degrees in Business and Management – they are not Mickey Mouse, they are Low Risk. They are, for those who can’t go to Oxford, the modern and democratic equivalent of PPE or Classics, qualifying one to work in any industry, in a wide range of roles, up to a point. Often we pretend that this is a virtue, labeling low-risk skills as “transferable”. We do all need some transferable skills, but in education, as in entrepreneurship or in battle, some things can only be accomplished by taking risks.

Risk aversion shapes not only the choice of subjects to study, but also the way in which particular subjects are learned and taught. British employers complain that they can’t find skilled computer programmers, despite years of policy directed at improved IT training at all levels (and I do mean all: six years ago, when my son started nursery at the age of eleven months, that little institution was scrambling to deal with the one black mark in their Ofsted report – a lack of IT training. For better or worse, they fixed the problem.) Part of the problem, infamously, is that UK IT training has emphasized the use of shrink-wrapped software, the administration of Microsoft packages at the expense of the skills needed to program, and to customize collections of open-source software. This dismal offering is actually what many students want, because it economizes on investment in risky skills. In industries from banking to race cars to computer graphics, the skill shortage then shows.

Why don’t children in Britain learn enough math and science? It’s common to blame the schools, but however good the teaching a child could be expected not to concentrate on those subjects, if her literacy skills are sufficient to read the writing on the wall of the job market: knowledge of math and science may be transferable but, as we have just seen, many of the skill sets that benefit most from math and science are relatively risky investments. Universities teach a lot of overseas STEM students, in part because UK students don’t fill the places. Many of those foreign students stay on; through this avenue, and others, the UK relies on imported skills. The supply of imported skills, however, is insufficient to the task, and skills shortages remain.

All of these problems could be substantially alleviated by a generous, earnings-linked, time-limited jobless benefit, conditional on participation in an education or training program. But, even if we had that, who would pay for the training itself? Tuition fees and loans shift the risk inherent in educational choices from the state to the student, and that compounds all of the problems addressed here. The problem has been magnified by the Equivalent Learning Qualification (ELQ) rule, a foolish Treasury decision late in the last Labour government, which removed state funding (and subsidized loans) for students earning a qualification at or below a level they had already attained, with exceptions for certain subjects. There is now a good prospect that the ELQ rule will be reversed, which would be a small improvement, but still the fees remain.

One solution would be to include full fees for the duration of the approved programme, along with the jobless benefit: support the jobless as full time students. A drawback to that approach is that it punishes people who anticipate the need for re-tooling, rather than hanging on to a precarious job until they are sacked and thus eligible for benefit; it’s also not clear how it would apply to the self-employed, and if it can’t be it punishes entrepreneurship. The best way to avoid these perverse incentives would be simply to eliminate tuition fees or, short of that, to do so at least for students over some age threshold – 25, say.

Today’s educational choices are affected by expectations about what social insurance will give, and what tuition fees will take, at some unknown moment ten, twenty, or thirty years from today. The hard part of all this, for Britain, is that its majoritarian electoral system is given to extreme policy swings, making it hard to produce confidence in social policy decades hence. Short of a constitutional earthquake in favour of a more consensual system of government, it seems unlikely that the skills shortage can be solved unless there somehow emerges a cross-party understanding that a combination of good social insurance and affordable continuing education are needed if we want young people to take chances when investing in skills.

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Beyond Bad Apples: Bullying at the BBC

This post was contributed by Dr Andreas Liefooghe, a Reader in the Department of Organizational Psychology.

The Respect at Work Report states that ‘uncomfortable levels’ of bullying are being reported at the BBC. Uncomfortable to whom, we might ask.  A corporation that prides itself on people being “our greatest strength” has to cope with increasing levels of criticism of the way it treats and protects its employees. Covering the period between 2005 and 2012, bullying behaviour appeared to go unchallenged by senior managers, with certain individuals “seen as being untouchable due to their perceived value to the BBC”.

BBC director general Tony Hall wants “zero tolerance of bullying”, and emphasized he wants to get rid of the culture of fear, and “get employees to speak out” about bullying. Following in the footsteps of many a Chairman before him, he will focus on changing behaviour from the top. Professor Stale Einarsen from the University of Bergen suggested in a recent lecture at Birkbeck that bullying had little to do with good or bad leadership – it was those leaders that do nothing and create a vacuum that really damage the culture in organizations. People are not huddling in corners in fear of a perpetrator out there, but they are de-spirited and humiliated by ever demanding working practices. For this reason, a policy to ‘get rid of bullies’ in organisations will only have a limited effect, and will not address these organisational issues. Bullying is arguably far more often the system and one’s role in it than individual personalities, stated Prof Einarsen.

It strikes me that Lord Hall is somewhat disingenuous. Employees have spoken out, they may perhaps not have been heard. Bectu (the media and entertainment union) reported as early as 2008 that the culture at the BBC was one of fear. Why was this not picked up then? The Savile Enquiry gave rise to this current report, but it seems that what is being reported goes way beyond some individual culprits and bad bosses. The 500 or so voices of these employees point to something far more akin to institutionalised bullying. If the link is made here with findings on racism, for instance in the MacPherson Report , it becomes clear that it is not just about a few bad apples that need to be removed from the organisation, but the very practices (from recruitment and reward to ‘how things are done around here’) that need to be scrutinised.

The BBC is not alone. My research since 1998 has consistently shown that to stop bullying it’s not personalities but the systems and policies that need to be tackled – many of these are designed to cut costs, not to preserve dignity nor foster respect. Within these systems, managers are put under pressure to increase staff performance, reduce overtime, and cut costs to meet their targets – how employees experience this process is not top of the organizational agenda. BBC employees, like many others elsewhere, feel their respect at work is eroded by being kept in the dark, being serially restructured, not being consulted in earnest, feeling that sauce for the ‘grafting’ goose is definitely not sauce for the ‘talented’ gander. Telling the author of the report that the above is bullying corresponds closely to Bectu’s findings, and indeed the NUJ comments on institutionalised bullying.  Yet BBC responses to the report’s findings seem designed to tackle only bullying of the inter- and intra-personal kind.

Part of coping with bullying is challenging the organisational systems that in an ever increasing, unrelenting fashion erode the self-esteem and self-efficacy of an entire workforce – as evidenced by this recent report. What can be done to stop this organisational bullying and change a culture of fear? Arguably, the answer would be to question all organizational policies that are in place, and evaluate these in terms of their appropriateness with a dignified working life, balancing values with costs. So not just re-writing your bullying policy as suggested, BBC, if you really want to tackle these issues.

Dr Andreas Liefooghe has recently completed an ESRC Seminar Series on bullying at work called Vulnerable Selves, Discipling Others, footage available on line. He is currently analysing data from the first pan-ASEAN research study into bullying at work.

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The Gender Agenda in the Business Agenda: of Women’s Empowerment Principles Events and gender equality in marketing

This post was contributed by Dr Wendy Hein, a lecturer in Birkbeck’s Department of Management.

How to increase women’s leadership positions and empowerment was central to the recent UN Global Compact Women’s Empowerment Principles (WEP) Event which I attended earlier this month. These principles are an initiative, mainly adopted by private sector organisations, to work towards equality based on seven fundamental guidelines. The conference brought a range of leading companies, policy-makers, non-profit organisations and business educators together. The WEP’s main message for equality is that it ‘means business’. Equality is, in fact, seen to drive growth and potential within organisations. There is a resulting importance in retaining talent and maintaining women within the value creation process, to enable them to reach ‘the top’. This certainly touches on some important issues of contemporary work life. In this particular event, the need to mobilise men to participate in the necessary changes was also heard loud and clear. If we are looking to change existing gender dynamics and structures, we should incorporate those who are occupying ‘top spots’, who tend to be men.

Measuring talent, value and work

Yet, more fundamental challenges of how we measure talent, what we perceive as ‘value’, what constitutes ‘work’, or of the cultures that some companies are built on remained implicit. The language in the above paragraph already reflects a culture of organisations that exist from the ‘top’; that are competitive and fast-paced. Rather than seeking to integrate women into organisations that often represent masculine values, and asking them to embrace these, is there not more that women can and should do? Also, when it comes to women’s working lives, all too often it is not just about ‘business’, but also about the ‘personal’. Men’s private lives can certainly play a role at work, but particularly when it comes to maternity and motherhood, women’s families and their commitment to a home life often enter the work arena. Considering the blurring of these lives, and a call for companies to support women and men at work, shouldn’t there also be further support of home life in a similarly equal way? Shouldn’t a mother, father or partner be as valued as the worker? Then we also come to think of those who do not have a job, either in any of these great companies, or those who do not work – what kind of support can they hope for? And if you were thinking of organisations in the UK, change the context into emerging and developing countries – what support do women and men have there for receiving an education, getting work and managing a ‘home’? It just shows how our society can be perceived to value and privilege those who are in ‘producing’ positions – but is being a mother or father not some type of ‘job’ or ‘production’?

The intersection of work culture and private lives

From my own perspective as a marketing and consumer researcher, I find the issues of work cultures and organisations meeting private lives all the more interesting. As we become involved in programmes and projects through our roles as business researchers and educators, we recognise that marketing is one area where the public blurs with the private, business with the personal, and production with consumption. Think about it: the marketing industry has its own cultures – whether we are looking at marketing departments within certain companies, marketing entrepreneurs or advertising agency culture. Marketing ‘produces’, and in very gendered ways. This becomes even clearer through initiatives such as those by Kat Gordon that seek to create a contrast to the well-documented male ‘locker room’ ad agency cultures. Kat is founder of the “3% Conference” (3% being the number of female creative directors in advertising agencies) and founder of the marketing agency ‘Maternal Instinct’, which specialises in marketing for mothers, by women. She has built her reputation on understanding female consumers (who some would argue form the majority of consumers), based on her experience that marketing for these consumers is often produced by men.

Marketing as an educational tool

Now, think about this: most ads that tell women how to be beautiful (‘you’re worth it’), successful, slim, attractive, or taking care of family, house and home, are made by men. On the other hand, these men also tell other men how to shave, how to ‘fool the missus’ into believing they are vacuuming the house (when really they are in the pub), and how a regular teenager can be chased by a herd of super-model women. Of course, I am exaggerating and these are not all the images that advertising and popular culture produces… but, there are quite a few of them. Considering the number of ads and messages that we are exposed to on a daily basis marketing is placed in quite a powerful position to educate mass audiences on gender. This then is another characteristic of marketing – it does not just address the workers of one company or organisation, but can spread much wider. Wouldn’t you think that gender equality plays a more central role here? Then again, what does gender equality mean in marketing?

We started this excursion from the marketing producer side, but clearly marketing also plays a role on the consumer side. Women and men struggle on a daily basis to live their lives through and around stereotypes often perpetuated by marketing discourse, popular culture, and social structures influenced by these. Marketing pervades our public and private lives. It tells us how to be good/bad mothers, good/bad partners, good/bad men and women, often through a creation of norms based on inclusion and exclusion. Doesn’t this clash with our understanding of equality?

Gender in management education

It is surprising to see then how some companies have focused their efforts on creating gender equality as part of internal structures or policies, when our surroundings and homes are often filled with images, discourses and practices that are frequently far from equal. What’s more, if we understand the centrality of gender in business and management (as advocated by UN principles), it is also surprising to see how often gender is (not) taught as part of management education. This however, we can change.

As part of a group of academics from across the globe who cover different business and management disciplines, I am involved in collating material, research, experiences and perspectives on gender education, in my case within the marketing discipline. To view the growing repository of teaching material that members of the PRME working group on gender equality have put together, please visit this site. This work is open to ideas, support and external contributions, so please feel free to share stories, practices (both from marketing producers and educators) or resources.

We hope this initiative leads to a re-thinking of business and management schools, and to placing gender in a more central place across all of its  these disciplines. We also hope to inspire both women and men to challenge existing structures they may encounter in their work AND home lives, and to create new images, discourses and practices that can be gender aware.

Let’s not let this gender agenda fade, for the sake of both women and men, home and work lives, in emerging and developed countries. Whether it’s business or personal, men’s or women’s day, this is too important for all of us to ignore.

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Let’s join the fashion club; or how ‘Rihanna’s horror show’ may represent retail avant-garde

This post was contributed by Dr Wendy Hein, a lecturer in the Department of Management.

We are still recovering from the glitz and glamour of London Fashion Week (LFW). Arguably, fashion is becoming the ‘big consumer sport of today’ – a participatory sport allowing us to virtually and materially reinvent ourselves. However, it is still an elite space – only those in the front row or the red carpet can legitimately claim their rightful place. There are a select few who seem to be in ‘the know’, while others are desperately trying to join this ‘club’.

New technologies ‘democratising’ fashion

The importance of fashion enthusiasts has not gone unnoticed in the haute couture circuit, and its doors are ajar to participation from outsiders. We could view this as a ‘democratising’ trend. Thanks to new technologies, we can now experience live shows streamed over the internet; we can select our favourite pieces and create an expressive collage of our ideal ‘me’ on Pinterest/Instagram/Tumblr, and can share it with others on Facebook, Twitter, and the many forms of digital exchange. Understanding the importance of these experiences and the size of the growing fashion industry helps us understand its gravity in today’s society. The good news may be that the trickle down from runway to reality is faster. Yet, the divide between the real insiders and outsiders persists. The magic of the front row may not be the same if it wasn’t for its exclusivity. On the other hand, ‘insiders’ would never be recognised for their competence and taste if it was not for fashion’s many fans.

Fashion collaborations

All of this takes place at a time when retail is struggling. With youth unemployment continuing to hit record figures in the UK, the list of retail closures appealing to youth markets is extensive.  High street fashion has, however, recognised the desire for design from the ‘common crowd’ and numerous collaborations have paved the way towards letting some of this fame and fortune rub off:  Karl Lagerfeld, Stella McCartney, Lanvin, Versace or Marni for H&M; Valentino or Pierre Hardy for GAP; or Mary Katrantzou for Topshop.  The power of celebrity and popular culture has equally been tried and tested by retailers; think Topshop and Kate Moss, New Look and Kelly Brook, or H&M and David Beckham. Rather than a claim to design, these celebrities use their star power to lure customers into the shops.  While some retailers have made inroads to high fashion through collaborations, others have gained their own legitimate place in fashion show lineups. TheUS retailer JCrew has earned its place as a stable contributor toNew York fashion week, and the Olsen twins, as well as our very own Victoria Beckham in theUK have claimed their places amongst the fashion glitterati.

Rihanna and River Island

At London Fashion Week AW2013 we see similar scenarios and even a new mix of the above tried and tested formulae. One of the big surprises came with Rihanna presenting her new designs in collaboration with the UK retailer River Island. Her show certainly received marked attention, but not always positive. Of course, this may have been due to the ‘brand’ that Rihanna seeks to represent – rebellious, untamed and youthful (on a good day) –but may have also been linked to reactions of the high fashion club. The Daily Beast labelled it a ‘horror show’ and a ‘tiresome, underwhelming and uninspired marketing exercise’.  We may go along with the mantra that even bad press is good press, but despite these controversies, the deliberate nature of connecting Rihanna’s developing brand and River Island with the runway certainly found its critics. Serious fashion enthusiasts were quick to comment that this show was, once again, not part of the official LFW lineup. I was fortunate to be asked about my views in an interview prior to the show  and I clearly saw a potential mismatch between high fashion,RiverIsland and Rihanna. The homogeneity of audiences and their expectations may not have worked to their advantage. While there may certainly be promise in connecting the high street with haute couture, and pop star kudos with clothes, bringing all three together without extensive previous record may or may not have paid off. Rihanna and Versace – yes; Rihanna andRiverIsland – yes; but could there be a missing link between Rihanna,RiverIsland and LFW?

Marketing milestone or misplaced experiment?

Whether this experiment goes down as the new ‘retail avant-garde’ that will be adapted by others (possibly more experienced), or whether it will be remembered as a marketing experiment, is questionable. What is clear is that fashion continues to seek its share of the desire and exclusivity produced by art & design, but success may increasingly depend on how this is managed. Whether it was achieved in this instance is now up to consumers to decide.RiverIslandlargely depend on the technologies that have facilitated ‘fashion as a new consumer sport’, and the success of its campaign could highlight to what extent these are embraced by the broader (youth) public. It may also be interesting to observe the potential strategies of the fashion elite in creating a division between insiders and outsiders. As argued above, without this distinction, the exclusivity that outsiders crave may not exist.

Lastly, success may also depend on the price of this exclusivity. Rihanna’s line will hit the shops today (5 March 2013) but as I write this piece, prices are rumoured, but not confirmed byRiverIsland. With a youth struggling to find work, yet a retailer looking for fame in high fashion, I for one can’t wait to find out how this pans out.

Would you camp outsideRiverIsland’s store to get your share of Rihanna’s River Island designs?

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The tricky task of achieving life/work balance

On Monday 25 February Birkbeck held an Athena SWAN mentoring event, primarily aimed at women working in STEM (science, technology, engineering and mathematics) fields. Professor Annette Karmiloff-Smith, Professorial Research Fellow in the Department of Psychological Sciences, shares her advice, gained over her 36-year career as an academic in Switzerland, Holland and the UK .

 

My experience with mentoring young scientists has been that most females focus on how to balance career with having children, and less often on how to advance their careers, yet of course they should do both. By contrast, males tend to focus mainly on career advancement, rarely raising the problem of balance with family life, yet they too should do both.

The two-body problem

Academics often have academic partners, although the problems are just as difficult when one partner’s career is outside academia.  One lesson I have learnt is that one must discuss everything beforehand.  Don’t wait until the problems arise and resentment creeps in.  Be objective, realising in advance that one of you may get a superb offer in a place where the other cannot find something suitable.  What will happen if that arises?  Whose career will have precedence (certainly not automatically the man’s!)?  How will you find compromises that meet both your needs to some extent, even if not to perfection?  Whose career is more transportable?  All these issues must be faced in advance, without which debates end up in resentment for one party and guilt for the other…. often resulting in a doomed relationship.  You have to ask yourself, which is more important: career or relationship, even if both are important.  The solution isn’t to pretend the issue won’t arise!

Integrating family and career

Many young academics desire a child.  It is often assumed that a busy career means a single child.  In a newspaper article many years ago, Katherine Whitehorn raised the question “one child or many?” and concluded that, if you are a busy professional, it may be better – albeit counterintuitive – to have several children!  She reasoned that a singleton waits desperately for mum (or dad) to come home, whereas several children just muck in together and barely notice their parent is away.  What about maternity leave?  Fortunately, since I was a mother, maternity (and paternity) leave has vastly improved, so you could devote yourself entirely to the new arrival. This is clearly your right, but is it such a good idea?  My advice is that, if you intend to pursue your career, then don’t cut off completely during the maternity leave.  Save a special time each day to check email, read the latest article, jot down notes for your next article or research project.  You are going to have to juggle both once you return to work, so start practising gently now.  Remember that the smaller the baby the more s/he sleeps, so take your baby to special lectures or a conference.  Feed the baby just before it starts and hopefully s/he’ll sleep right through.  Do sit on an aisle seat, though, in case s/he starts screaming!!   And, once you’re back fulltime at work, agree with your partner in advance on how you will both decide who will come home anytime the baby is sick – not automatically the mother!

Focus your research

When you had no home responsibilities, it may have been fine to dabble in numerous research projects, but once there are family responsibilities, it is essential to focus your research. Try to arrange to teach on courses that are related to your research so that your reading serves both.

Avoiding guilt

Remind yourself frequently that you cannot be superwoman!  Keep an eye on your health and remember that sleep isn’t only a time of rest, but that parts of the brain are more active during sleep than wakefulness and that sleep is critical for the consolidation of memory.  Avoid guilt, and learn to say “No” to requests to take on extra tasks.  Protect yourself at this time of your career; you can be an avid volunteer in the future.  Tell yourself that it’s OK to use day-care and, when you drop off your child, leave with a confident stride.  Babies pick up on their parents’ doubts.  Do ask for help when you need it.  You don’t have to prove you can do it all alone.

You never stop being a mum…

A personal ending:  I thought that when my daughters left the nest, had their own careers and families, I could simply get on with my career without a second thought… Alas no!  Now the potential guilt raises its head again:  how do I juggle expected grandmother duties (I have seven) with the pressures of my academic career?  Rest assured, I have no regrets… having children, grandchildren and a busy career have fulfilled my life.

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A Time for Entrepreneurs

Andrew Atter, Birkbeck’s Entrepreneur-in-Residence, writes about the current opportunities for entrepreneurship in London.

As we draw to an end of Global Enterpreneurship Week, you might be forgiven for being overwhelmed by all the hype. Everywhere you look there are conferences and workshops. President Clinton delivers his key note speech at Entrepreneurs 2012 today. And, as you flick through papers, millionaires promise to share their secrets of success. Who said there’s no free lunch!

What does all this mean?

Well, behind the entire buzz, is a very serious point. As anyone who has seen the expression on Mervyn King’s face will have realized, as a society we face years of stagnation and low growth.

This means for students and alumni, work opportunities, job prospects and career growth through traditional corporate structures will be far more limited than in the past. As both an economy, and as individuals, we will all need to access new markets and create new products and services. This is what Entrepreneurs do: they take initiatives that create wealth and opportunity, for themselves and the society around them.

Looked at through the lens of an entrepreneur, the conditions for starting new businesses are good. According to the FT, new company formations rose by 2% last year, and HEFCE report that knowledge transfer from universities increased by 7% in 2010-11. The UK economy overall might be stagnant, but that is not true for London, and certainly not true for the M11 and M40 corridors linking London to Cambridge and Oxford.

Entrepreneurs with sharp business plans, focused on early sales growth, can get funding. And, the good news is that businesses formed in recession tend to be leaner, meaner and more sustainable that fanciful creations funded by bank debt in boom times. I speak from experience.  A business I founded in the post dot.com crash is still going strong, whereas a business launched at the peak in 2007 became an out of control, over complicated monster, and had to have the plug pulled out.

So, beware of the hype generated by charlatans and snake oil salesman, but also don’t be out off by the Mervyn Kings of the world.

Birkbeck students are situated at the nexus of the greatest concentration of financial, technical and creative resources on the planet, in one of the world’s most entrepreneurial societies. To prove it, next time you have a Dhall Curry at the farmers market in Torrington Square, just reflect on the simple fact that someone put the formula Students+Curry+Lunch = Opportunity together before you did. In other words, someone ate your lunch.

To avoid that happening again, simply join the Birkbeck Enterprise Hub (aka Starts Hub), join a Coaching Seminar, attend a CEO Workshop, and start making things happen for yourself and those around you!

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