New Capitalism & The Conflict of Interests
We've entered an era of heightened concern for worker wellbeing, the planet, and ethics in business. But is it merely a facade?
I’m a student of Work & Organisational Psychology. The material has context for me, given 20+ years of self-employment, and it has helped me frame many of my personal experiences running a business. I’ve better understood the decisions I have made 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 to make better decisions. Youth tends not to furnish us with the wherewithal necessary for creating favourable outcomes. It’s only with experience that we learn.
Within the field of work psychology, there is an intense effort to understand the individual and environmental conditions that lead to reduced worker well-being, such as stress, anxiety, depression and burnout, and higher performance of leaders and organisations. Organisations invest heavily in the area, and one could assume that well-being is a primary concern for business leaders. But I’ve always been 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 sure.
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 that investigated the Deepwater Horizon spill, who said,
“They (BP) were producing a lot of standards, but many were not very good, and many were irrelevant.”
Before the Deepwater Horizon accident, apparently, Leveson had told colleagues that BP was an accident waiting to happen. BP had focused on workers' personal safety but not 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, 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 step the risk of a catastrophic event occurring.
The bottom line here is that John Brown was, through his commitment and ambition, 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. 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. It’s a limit placed on everyone no matter the role played.
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. A self that either chooses not to see the fire that blazes all around you or has a thick skin that protects you. 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 with an inherent conflict of interests. 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 material gain.
It’s a game I believe is at the root of all stress, anxiety and ill-health in the workplace and it cannot be sustained. We cannot continue to take living breath organisms, place them in a fake plastic environment that is the workplace and expect them to be healthy. Something has to change.
Taking Time Out
I’m taking some extra time to complete assignments and work projects so there won’t be an issue of The Lead for the next couple of weeks. In the meantime, Sunday Letters continues. I’ll see you folks in a few weeks. Thanks for being here 🤙