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 Work & Organisational Psychologist. I’m concerned with how people work, and how the workplace supports or thwarts people’s welfare. The material has particular context for me, given my 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 the decisions I faced. The enthusiasm of youth tends not to furnish us with the wherewithal necessary for creating favourable long-term outcomes. Ocasiuonally perhaps. But it seems that only through 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. Internal and external conditions such as stress, anxiety, burnout, depression, and, indeed, factors that lead to higher performance. Organisations invest heavily in the area, and one could assume, as a consequence, that well-being is a primary concern for business leaders. But I’ve always been cynical in this regard 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. People are often sacrificed in the noble and righteous pursuit of profit.
Sure, people care for people and the environment, but do 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 significant disasters occurred, including the 2005 Texas City refinery explosion, where one hundred and seventy people were injured and fifteen people died. The following year, the Thunder Horse rig in The Gulf of Mexico sank due to poor construction. A valve installed backwards had caused the rig to flood during a hurricane. Other problems, discovered later, included a shoddy welding job that left underwater pipelines brittle and full of cracks. “It could have been catastrophic,” said a senior engineering consultant on the project. In 2006, at Alaska’s North Slope, a poorly maintained pipeline resulted in a spill of over 5,000 barrels of crude, the largest ever in the region for which BP was fined over $25m. However, 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.”
Apparently, before the Deepwater Horizon accident, 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 Bakan argues that these process safety measures were too expensive for BP to implement. Worker safety is easier and less expensive, but safety measures related to the maintenance of pipelines, drilling rigs, and wells were not.
Costs were cut in 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. Three more deaths occurred at the Texas City plant, adding further insult to the loss of life. The US Chemical Safety and Hazard Investigation Board report found that BP did not take effective steps to reduce the risk of a catastrophic event.
The bottom line 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. Would you believe that since leaving BP, Edmund John Phillip Browne, Baron Browne of Madingley, as it were, has become a champion of green energy. Perhaps his conscience got to him.
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 shows, 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 must 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, you can’t take the job without adopting an altered state of being, a different self. A self that either chooses not to see the fire that blazes all around it or has to seal its humanity inside an impenetrable shell that protects it from the truth. 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 interest. 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.