Uber good news

After my last rather gloomy post, today there is some good news. I’ve posted elsewhere about the rise of uberfication and the gig economy, and also about how this links to supposed ‘self-employment’, which is really employment shorn of any protections. (I do not write about this in the current edition of the book, but it will be covered in the fourth edition, which comes out next month).

Today, the company after which the phenomenon was named, taxi app firm Uber, was subject to a significant ruling by a UK employment tribunal. Specifically, Uber was told that it cannot treat its drivers as self-employed, and must pay them the national living wage and holiday pay, and possibly even pensions. The ruling (which is likely to be appealed against by Uber) will, if it stands, have significant implications for other companies operating the same or similar business models. As the lawyer representing the drivers who brought the case (with the support of the GMB union) said:

“This is a ground-breaking decision. It will impact not just on the thousands of Uber drivers working in this country, but on all workers in the so-called gig economy whose employers wrongly classify them as self-employed and deny them the rights to which they are entitled.”

This ruling comes at a significant time, politically. In both the EU Referendum (and for those interested in Brexit, do take a look at my Brexit blog tracing developments) and, even more, the US presidential race, the issue of how changing work practices erode security has been an issue. More widely, this connects with the political consequences of globalization and the hollowing out of middle class employment.

Of course, even on minimum wage and protection terms, employment remains a far cry from the post-war social democratic model of secure employment with a social welfare net. Even so, the ruling suggests that the direction of travel need not inevitably be downwards, and that globalization and technology are not forces of nature but may be corralled by politics and legislation. As I argue throughout my book, what happens in organizations is not pre-ordained but is an outcome of the choices we, collectively, make about how to live.

Prisoners of austerity

A couple of years ago I had some spare money and decided to donate it to a charity. There are so many charities that command out attention – all of them worthy, but some more fashionable than others. So I thought that I would try to seek out as unpopular a cause as possible and did an internet search on just that. The result (and I wonder if you can guess it?) was a charity that supports ex-prisoners into work, for example by paying for training, or travel fares to job interviews. Whether this is truly the most unpopular charity I don’t know – it might come up on a search engine just by having those words somewhere on its website – but it seemed plausible and I donated accordingly.

I was thinking about this because of the news this week of a murder in Pentonville prison. Violence in prisons is getting worse and the connection with my charity search is that, I suppose, most of us don’t really care. Of all of the problems and injustices in the world somehow those that befall criminals bother us least. After all, they are the dregs of society so at best why should we care and at worst they probably deserve it, right?

Wrong, I think. We sentence criminals, quite properly, to the punishment decreed by the courts. That may include incarceration, but it doesn’t include being subject to violence up to an including murder. And as so often, the dictates of morality and those of practicality are linked: if our prisons are brutally violent not only is that morally repugnant it also makes the chances of rehabilitation remote.

Prison violence – including violence against staff - is rising for a simple reason: funding cuts and consequent understaffing. Austerity economics has a cheery make-do-and-mend, belt-tightening sound to it, but the reality after several years of cuts is stark and is happening right across the piece. Sometimes the consequences are direct: roads fall into disrepair, libraries close, the court system clogs up or the armed forces can’t fulfil the basic requirement of protecting the nation. Other times the consequences are indirect: social care provision disappears creating ‘bed-blocking’ in hospitals. In fact, the problems of prison violence are in part due to the inadequacy of (in particular mental) health services.

For years it has been a truism that you can’t solve public service problems by ‘throwing money at them’ – the alternative always being reorganization, subcontracting and privatization – which easily mutates into the absurdity that money doesn’t matter at all. The consequence is that, for a while, things hold together. Savings can be made, a bit; people working in services can work harder, a bit; cuts can be made, a bit. But, gradually, the public sphere breaks down. I think that that is where we are getting to now in the UK – a spreading paralysis and crisis in every area of public life.

At the root of all this is a dishonesty. The small-state political Right could say that the government should get out of huge swathes of public provision and cut public spending accordingly. Or the social democratic Left could say that government must deliver public provision and raise taxes accordingly. Instead, we have lived for decades with the pretence that we can both have extensive public provision and have spending and/or tax cuts. That pretence has now run out of steam, and the choice will have to be faced up to, unless slow decline and periodic scandal are to continue.

Wells Fargo farrago

The unfolding scandal at US bank Wells Fargo, one of the most historic organizations in the USA, is an interesting illustration of the perils of managerial target-setting (see p. 30 of book). What seems to have happened is that sales staff were under such pressure to meet sales targets that they simply invented new bank and credit card accounts – and not just here and there: as many as two million bogus accounts were created.

But this story is also interesting in showing that such perverse incentives are not just an arcane matter of organizational theory. The scandal led to the company having to pay out on a $185 million lawsuit, and the resignation this week of its Chairman and CEO, John Stumpf. And it shows the weakness of corporate whistle blower legislation.

Target setting lies at the heart of many organizational failures and scandals in recent years, whether that be the British NHS or mortgage lenders’ payment protection policies. There is little sign that the lessons of these have been learned. A huge scandal in waiting is the UK deregulation of pensions, which allows people to draw down and spend or invest their pension pot on the advice of salespeople working, of course, to sales targets. Watch this space for what will undoubtedly result in the coming years: pensioners in poverty because they have blown their savings under the paradoxical dogma of 'choice'.

Targets encapsulate the core issue of formal and substantive rationality in organizations (pp. 21-25) because they prioritise the former over the latter. Formal rationality valorises target setting as a means of control; substantive rationality valorises ethical conduct. The irony is that the former is seen as hard-headed business logic whilst the latter is seen as fluffy ethical stuff but, as Wells Fargo shows, that is a false logic. Had Wells Fargo been more substantively rational, it would not face its current problems.

Flying too high?

In my book I talk a lot about issues around bureaucracy and post-bureaucracy, and make the point (p.86) that for all that post-bureaucracy arguably allows freedom and innovation it necessarily entails additional risks when the checks and procedures of bureaucracy are done away with.

The British education system has been a particular site for the application of the idea that the shackles of bureaucracy should be thrown off and head teachers – or school leaders as they are more likely to be called within post-bureaucratic discourse – given freedom from rules. Indeed ‘academy schools’ and ‘free schools’ – exempt from the national curriculum and from local authority control – have been a flagship policy since 2010. It is therefore unsurprising that schools have become vulnerable to malpractice. If you strip away controls it does not make malpractice inevitable, but it increases the likelihood that it will occur.

In a post on this blog back in June 2013 I drew attention to the case of a head teacher who was at that time accused of (and in 2014 admitted) misconduct in the form of abuse of funds. This case was significant because she had hitherto been lauded as an outstanding head teacher, headed an academy school, and was widely praised by politicians including Tony Blair.

I'm returning to this theme following the news that on 30 September another free school head, again the subject of Prime Ministerial praise (this time from David Cameron), has been jailed for fraud, along with two other staff members. I wondered if there was a pattern in this and I think there is. An internet search of ‘head teacher fraud’ throws up an enormous number of cases. Some of them do not result in criminal trials (being rather professional malpractice cases), and some which go to trial do not result in convictions – but even in these cases there is evidence of lax accounting and monitoring. Not all of the cases are about money – many seem to be about employing family members who should not have been employed, the kind of nepotism that Weberian bureaucracy stamps out. Many of the cases involve academy and free schools.

It’s important to keep monitoring such cases because the effects of public policy are long term, and it is therefore easy to view them as isolated events rather than systemic changes. There is of course a need for caution here. I do not know whether fraud and malpractice amongst head teachers is more frequent than before schools were given more freedom from central and local government and control. I don’t recall there being so many cases in the past, but that is only an impression. Moreover, the fact that many of the schools involved are free schools or academy schools might just reflect the fact that so many schools now have this status. Nevertheless, the recurring theme in many of the cases is the way that the head teachers involved were able to treat their schools and budgets as personal possessions rather than acting as public custodians, and that I think does reflect the lack of the ‘ethics of due process’ that Paul du Gay (2000) argues are the hallmark of bureaucracy (see p.24-25 of the book).

But I wonder if there is not something else, related but slightly different, going on here. In the specific cases referenced above the head teachers involved had been regarded as exemplary and had attracted high level praise, awards and adulation. In another case, an “inspirational super head” knighted for his services to education (though subsequently stripped of his award) admitted false accounting and in 2013 received a suspended prison sentence.

Is it possible that somehow these things are linked? That those who are lauded are somehow given licence by themselves and by others to behave as they wish, to be above and beyond the normal rules? That is to say, the issue is not just the suspension of bureaucratic, organizational rules of conduct but a kind of Icarus complex (these are related, since, in Weberian terms, the erosion of rational-legal authority and the rise of charismatic authority are linked). Immune, apparently, from the earth-bound constraints, these high-flying leaders - super heads, no less! - fly too close to the sun and crash. I haven’t mentioned the names of the individuals in these cases because, if that analysis is right, the fault lies not so much, or not simply, with those individuals as with those of us who adulate them.

Reference

Du Gay, P. (2000) In Praise of Bureaucracy. London: Sage.