213 New Capitalism & The Conflict of Interests
The final part in the series of essays on ethical leadership
This week’s Sunday Letters brings you the final part of the Leadership Series. It’s a shorter piece than previous weeks, and in it, I take a somewhat cynical look at the trend amongst corporates to promote worker wellbeing and environmental initiatives. Are their efforts mere window dressing? I think so because, when it all comes down to it, there is, above all else, the imperative for profit. In this series on leadership, I have examined events from the past, offered expert opinion, and referenced psychological research to demonstrate that in the pursuit of the corporate aim, leaders often take unmitigated risks. Their sense of humanity and concern for others only reaches so far until the well-being of the organisation and their own survival take precedence. It is a phenomenon of the way we live, and it is, unfortunately, alive and well. To overcome it, we’ve got to live by our own personal values, hold to our own individual minds, and always be vigilant. The alternative is to be swept along by a mentality that’s not of our own making.
I’m a Work & Organisational Psychologist. Given my 20+ years of self-employment, the material has context for me and has helped me frame many of my personal experiences running a business. It has helped me better understand my decisions over the years, both good and bad. In many cases, if I had to do it all over again, I would most certainly be better equipped. Youth tends not to furnish us with the wherewithal necessary for creating favourable outcomes. It’s only with the experience of getting it wrong that we have the opportunity to learn something about ourselves. I say opportunity because we often end up making the same mistakes over and without the benefit of new information and a degree of self-awareness.
Within the field of work and organisational psychology, there is an intense effort to understand the personal and environmental conditions that lead to reduced worker wellbeing. Corporate leaders have come to understand that knowledge of the causes of stress, anxiety, depression, and burnout amongst their staff can inform solutions to those problems. Solutions can drive higher performance and, subsequently, corporate profit. As such, organisations invest heavily in the area, and one might assume that staff wellbeing in itself was of primary concern. But I’ve always been a little cynical and less inclined to take that premise at face value. Besides, the best will and intent in the world often give way to the commercial demands of operating a business. Sure, people care for people and the environment, but corporations? I’m not so certain.
In the pursuit of profit, the efforts of corporations to ensure the wellbeing of staff and the environment often amount to nothing more than window dressing. In his book The New Corporation, Joel Bakan writes of the case of BP under the leadership of Lord John Brown. Brown took over BP as CEO in 1995, growing the company from a two-pipeline concern to one of the world's largest oil and gas producers. However, that growth came at a cost. Several major disasters occurred, including the 2005 Texas City explosion, where fifteen people died. The following year the Thunder Horse rig in The Gulf of Mexico sank due to poor construction. And at Alaska’s North Slope, a poorly maintained pipeline resulted in the largest ever spill in the region. But these events were only the warm-up to the 2010 Deepwater Horizon explosion that destroyed the ecosystem in The Gulf of Mexico.
Bakan cites Nancy Leveson, an Industrial Safety Expert at MIT who advised the National Commission investigating the Deepwater Horizon spill;
“They (BP) were producing a lot of standards, but many were not very good, and many were irrelevant.”
Before the Deepwater Horizon accident, Leveson had apparently told colleagues that BP was an accident waiting to happen. BP had been focused on the personal safety of workers but not on process safety. Adequately formed and applied process safety procedures are likely to have prevented the disasters and loss of life at Texas City and Deepwater Horizon. But these process safety measures, Bakan argues, were too expensive. Worker safety is easier and less expensive to apply, Bakan argues, but safety measures related to the maintenance of pipelines, drilling rigs and wells are not.
Costs were cut in the pursuit of market share and increased profit. For example, in Texas City, the plant’s process safety budget was cut twice, once in 1998 by 25 per cent and again in 2005 by another 25 per cent just before the explosion. Adding further insult to the loss of life, three further deaths occurred at the Texas City plant. The US Chemical Safety and Hazard Investigation Board report found that BP did not take effective steps to avoid the risk of a catastrophic event occurring.
The bottom line here is that John Brown, through his commitment and ambition, was blinkered to the practical measures required to maintain the safety of his employees and the environment. His role as CEO was to pursue shareholder profit while externalising as much of the cost of business as possible. He seemed to have done this very well, but at an enormous cost to others.
Joel Bakan sums up the BP story and suggests;
“People who manage and run large publically traded corporations, like Lord Brown, are not guided by their own lights. Whatever the personal values and ideas might be, when they go to work at their companies, they are bound to the rules of the game. Their decisions must always advance their companies’ financial interests and hence that of their shareholders. The corporate form is agnostic about how they do it. But they must do it.”
Leadership seems to be a different animal inside a corporation than outside it. Once inside it, as Lord Brown’s case with BP indicates, the leader is bound by the rules of the game no matter what the impact on human life and the planet. He was willing to take unmitigated risks to do his job. I’m sure he felt remorse for the loss of life - I hope he did - but that offers nothing in the face of the imperative he is obliged to uphold; the pursuit of profit. No matter how remorseful leaders may seem to be at the loss of human life or damage to our environment, they have to get over it to do their job. That is the limit placed on them if they are to function successfully in the corporate world. The risk to your employees’ lives may not be high, but their well-being is always at risk. It is a limit placed on everyone who operates in the corporate world no matter the role played, and we almost always are asked to sacrifice something of ourselves in the doing of our job.
Work demands us to forgo our humanity for the sake of profit, stock options or wages. Whatever the reward may be, you can’t take the job without adopting a new self, a different self, and subjugating your emotions to the rule of the unspoken neo-liberal law. I believe, however, that it’s only a matter of time before our compromise of personal values and ethics catches up with us. We live in an inherently conflicted state where personal interests are at odds with those of the working role. On the one hand, we have concern for other human beings and the planet upon which we live, and on the other, we cast those concerns aside for the worker's self-image and material gain.
I believe this game is at the root of all stress, anxiety and ill-health in the workplace, and we can’t sustain it. In my opinion, our efforts to counter this ill-health are merely a sticking plaster on an open wound. We cannot continue to take living breath organisms, place them in a fake plastic environment, and expect them to be healthy. Something has to change in how we see ourselves and the roles we play in society. So what can we do as leaders? I believe personal ethics and values have to take centre stage in our decision-making; otherwise, we get swept along by the momentum of a soulless entity that exists for the accumulation of mere symbols of health and wellbeing.
Thanks for taking the time to follow this series on Leadership. If the topics in this series are important to you, get in touch with me to find out how to implement ethical leadership strategies in your organisation.
Bakan, J. (2020). The New Corporation: How" good" Corporations are Bad for Democracy. Vintage.