Tag: #Employees

Do nudges work in organisations?

By Leonie Decrinis

◦ 3 min read ◦

Introduced by Thaler and Sunstein in 2008, nudges have become popular policy tools to change the behaviour of consumers and citizens in desirable ways without compromising their freedom of choice. Their success in public policy domains has sparked the interest of management teams to apply nudges in organisations as means to guide the decisions of employees. However, in comparison to the ever-growing literature on the use of nudges in the public sphere, relatively little is known about their applicability at the workplace. 

More and more organisations are pursuing corporate social responsibility and sustainability strategies, for which changes in workplace behaviour are key. Nudges can help organisations promote the needed behavioural change in relevant domains, such as employee health, energy conservation, green transportation, waste management, ethics and diversity, to name just a few. A number of studies report, for example, success in promoting healthier food choices of employees through alterations in the choice architecture of workplace canteens. Other nudging interventions have led to reductions in electricity use by providing feedback to employees on the desirable behaviour of peers. Regarding workplace diversity, evaluating job candidates jointly rather than separately has proved to promote gender-mixed teams. Further, in the ethical domain, honest employee behaviour appeared to rise by reminding people about their shared moral values at critical decision points. 

The mentioned examples provide an idea of the potential of nudges as cost- and time-efficient alternatives to traditional organisational intervention tools that mostly involve trainings and sanctions with limited success. A key advantage of nudges is their behaviourally informed approach, acknowledging the role of unconscious decision processes that often contradict people’s good intentions.

By altering the choice environment rather than trying to rewire the human brain, nudges can steer employees to desirable behaviours while preserving their freedom of choice.

Just recently, the United Nations Behavioural Science Week has convened experts from international agencies, governments, academia and the private sector to discuss about these possibilities. However, what has also been recognised, as much as workplace nudging involves opportunities, it comes with challenges that need to be addressed. 

The first question that one might ask is how nudging individuals inside organisations for specific concerns leads to impactful organisational change in line with strategic corporate goals. Theory tells us that this is possible indeed by nudging a significant amount of employees. Organisations are made up of people. When enough people are nudged to alter their behaviour in a specific way, the new behaviour has the potential to become a norm, i.e. a rule for expected and accepted behaviour. Once embedded in the culture of an organisation, people are likely to conform to the new norm, so that organisational behaviour changes as a whole. 

This idea comes with a caveat though. Organisations are complex social constructs with formal and informal components of organisational culture conveying a variety of messages to employees. A gentle nudge might thereby not be strong enough to induce the desired behavioural change. Signals elsewhere in the organisation could simply counterbalance the effect of a choice-preserving nudge. Typically, nudges are designed and tested for very specific instances of human behaviour. What works in one context might not work in another one, sometimes even resulting in unintended consequences. Clarifying the effectiveness of nudges is difficult in complex organisational settings, particularly regarding their impact in the longer term. This requires consequent piloting and testing over considerable periods of time, allowing for a flexible and adaptive approach to a particular setting.

Contrary to the idea of nudges being top-down policy tools, successful intervention implementation in complex organisational choice environments requires the active contribution of employees. The latter should be consulted about their needs, involved in the design of nudges and informed about the intervention implementation. A high degree of transparency is also necessary to ensure the acceptance of nudges by employees.

Another aspect to keep in mind is that widespread organisational change, such as switching from a solely profit-oriented corporate performance to a more encompassing economic, social and environmental one, cannot be addressed by nudges alone.

Complex organisational problems need to be broken down into micro pieces, suited to be managed by a variety of measures and instruments. Not all of the resulting aspects will have human behaviour at their core. Some might be fundamentally technological in nature, requiring innovative technical solutions. For those problems that remain to be behavioural, the ones that involve serious risks will always call for stringent enforcement tools. Others, however, might be better addressed through a voluntary, trust-based approach. This is where choice-preserving nudges come into play. Clearly, a single nudging intervention can only address a very specific concern. The wider organisational success depends on the aggregate of multiple nudges as well as their interplay with other policies. Measures ultimately need to send consistent messages about desirable behaviours, aligned with an organisation’s broader strategic goals. By influencing organisational culture in an encompassing way, widespread organisational change will gradually take place. 

Further readings

Beshears, J., & Gino, F. (2015). Leaders as decision architects: Structure your organization’s work to encourage wise choices. Harvard Business Review.

Foster, L. (2017). Applying behavioural insights to organisations: Theoretical underpinnings (EC OECD seminar series on designing better economic development policies for regions and cities). Paris: OECD and European Commission. 

Ilieva, V., & Drakulevski, L. (2018). Applying behavioral economics insights at the workplace. Journal of Human Resource Management. 

Venema, T., & van Gestel, L. (2021). Nudging in the Workplace. In R. Appel-Meulenbroek, & V. Danivska (Eds). A Handbook of Theories on Designing Alignment between People and the Office Environment.

About the Author

Leonie Decrinis is PhD fellow at Copenhagen Business School with research interests in corporate social responsibility, sustainability governance and behavioral sciences. Her PhD project focuses on applying behavioral insights to corporate sustainability in order to align governance objectives with organizational behavior.

Photo credit: Rudzhan Nagiev on iStock

Corporate Social Responsibility (CSR) in Asia: Then and now

By Wendy Chapple & Jeremy Moon

◦ 3 min read ◦

This blog post is a repost and has first been published by Business and Society (BAS) blog on 27th of April 2022.

It is both a bit weird and a great honour to be invited to reflect on our paper, “Corporate Social Responsibility (CSR) in Asia: A Seven Country Study of CSR Web Site Reporting”. The process has given us a chance to reflect on what we knew then, what we know now, and how much things have evolved. Our reflections cover memories of the context and origins of the paper; the data available – and unavailable – to us at the time; the approach we took – and what we see as its virtues – and the results; and the relevance of the paper to CSR in Asia today – nearly twenty years on.

As is often the case, the origins of a well-known paper are curious. Our paper grew from the internationalization strategy of the University of Nottingham (UoN) where we then worked in the International Centre for Corporate Social Responsibility (ICCSR). UoN had opened a campus in Malaysia and was opening another in China. So, the Vice-Chancellor encouraged us to engage with our colleagues there …which made us think that we should probably know a bit about Corporate Social Responsibility (CSR) in Asia … hence the paper. Little did we know what this would lead to!

Thanks to the ICCSR, we had the funds to employ researchers with whom we analyzed web site reporting of 50 companies’ CSR in seven Asian countries: India, Indonesia, Malaysia, the Philippines, South Korea, Singapore, and Thailand (bringing a range of business systems in terms of size, religion and culture, political system, and economic development). Hang on, you say, what about China? Our answer is simply that at that time there were barely any Chinese MNCs with English language website reporting… which is certainly not the case now! Although our choice of sample skewed the population to the larger companies with a strong international business profile, this did not concern us as it strengthened the testing of the CSR-shaping role of national business systems.

We focused on broad CSR waves, i.e. community involvement, socially responsible production processes, and socially responsible employee relations. Whilst it enabled broad generalizability of the character of CSR nearly twenty years ago, it does raise some questions of compatibility with current CSR agendas in Asia. However, the more inductive identification of component CSR issues (e.g. community development; education & training; health and disability; environment) makes the findings amenable to temporal comparison, providing a more fine-grained analysis of activity within the waves. We also focused inductively on the dominant CSR modes (i.e. how the issues were addressed). This is when things got interesting. We started to see distinctive country patterns emerge in terms of issues within the waves (e.g. community issues were particularly prominent in India, Thailand, Malaysia and the Philippines, but less so in the other three countries), but this was not the case in the modes. The modes deployed within each of the waves were strikingly similar: philanthropy dominated community investment, and codes  and standards dominated production processes. In other words, the “what” rather than the “how” was nationally distinctive.

Some conclusions now seem uncontentious, most obviously that ‘community involvement’ is the CSR priority in Asia. Similarly, there is no “Asian CSR” model, but a set of nationally distinctive patterns of CSR behaviour, resulting from the national business systems, rather than development. Reflective of the impact of globalization on CSR, we found that companies operating internationally were more likely to adopt CSR than those operating only in their home country. One might expect that international exposure might lead to an increase in similarity of approaches across countries; however, we instead found that the CSR of the multinational companies operating in Asian countries tended to reflect their host rather than their home countries, reinforcing the national distinctiveness. However, this finding may be a little simplistic in the light of emerging tensions between international CSR approaches and host country experiences.

It is great to see that CSR in Asia has attracted a volume of research and we are delighted that our paper has been a reference point for some of this research.

Blog Editor’s note: The authors’ paper, “Corporate Social Responsibility (CSR) in Asia: A Seven Country Study of CSR Web Site Reporting” , is open access until December 31st 2022 as part of the journal’s 60th anniversary celebrations

About the Authors

Jeremy Moon is Professor at Copenhagen Business School, and Chair of Sustainability Governance Group. Jeremy has written widely about the rise, context, dynamics and impact of CSR.  He is particularly interested in corporations’ political roles and in the regulation of CSR and corporate sustainability. He is the Project Lead of the RISC research project.

Wendy Chapple is a full Professor of International Business and CSR at the Vienna University of Economics and Business (WU Vienna). She has played central roles in programme design and development, designing CSR related programmes and has been programme director for MSc and MBA programmes in CSR in the UK.  Wendy gained recognition for the development of faculty, programmes and research, by winning the Aspen Institute faculty pioneer award in 2008.  At WU, she will contribute CSR and Sustainability modules to the CEMs and undergraduate programmes.

Photo: Wikimedia Commons

Nudging for a Better Workplace: How to Gently Guide Employees Towards Ethical Behaviour

By Leonie Decrinis

◦ 2 min read ◦

Corporate scandals caused by unethical behaviour can have dramatic consequences for a company’s bottom line. The Volkswagen emission scandal created a financial damage of over 45 billion US dollars thus far. The Enron accounting scandal ended in the company’s bankruptcy back in 2001. Most recently, the #MeToo movement has brought to light sexual harassment at the Weinstein Company, Fox News and Uber, to name just a few, all subject to payments of significant fines. How can we explain such scandals and what can companies do about it? 

Why good people do bad things 

In general, when we think of bad behaviour we think of it as a matter of bad character: bad people do bad things. But research tells us that this is view is misguided. Normally, employees involved in unethical behaviour have high moral values and good intentions, in line with their companies’ sets of ethical standards. Yet, their behaviour can deviate significantly from personal and organisational principles.

In fact, the moment they engage in unethical behaviour, they might not even realise that they are doing the wrong thing. 

Context matters in explaining such ‘ethical blindness’. Environmental cues in the workplace, like monetary signals, trigger the adoption of a business decision frame, whereby people favour self-interested choices over ethical behaviour without necessarily being aware of it. By applying mechanisms of moral disengagement, they think that they are doing the right thing, while in fact acting unethically. For example, they may justify their detrimental conduct by portraying it as serving a socially worthy purpose, which makes them temporarily blind to the harm they are causing.

Building a culture of control does not solve the problem

In response to issues of moral misconduct, companies usually tighten their internal control systems. They strengthen the requirements for ethics trainings by making them mandatory and introduce monitoring and surveillance systems. They also try to incentivise ethical conduct through rewards and punishments. However, these instruments do not always lead to the intended behavioural outcomes and instead might even aggravate wrongdoing. This is because such instruments send signals that reinforce the adoption of a business decision frame, which is prone to moral disengagement. For example, in the case of Volkswagen, a CEO who led through fear and bound high expectations for engineer development to tempting bonus payments encouraged employees to circumvent the rules by engaging in emissions cheating. 

Nudging – beyond carrots and sticks

To promote ethics in the workplace, building a culture of fairness and trust is pivotal. Nudges are instruments that align with these principles. They do not mandate or forbid choices nor do they meaningfully alter the financial incentives related to various behaviours. Instead, by considering the psychology of decision-making, they try to gently guide people towards certain outcomes while preserving their freedom of choice. Nudges do so by subtly altering the context (choice architecture) in which humans make their decisions. Examples include default settings or social norm feedback as well as the simplification of information or the framing and priming of messages.

While initially mostly applied by governments to steer the behaviour of private citizens or consumers, more and more companies are relying on nudges to improve the choices of their employees.

JP Morgan, for example, uses proprietary algorithms to predict unethical trading behaviour before it occurs. Traders then receive pop-up messages prompting them to reconsider transactions when they are at risk of breaking the rules. Scientific studies further support the power of nudges in form of photos of close others or moral symbols at the workplace that encourage employees to adopt an ethical decision frame, which helps them to act in line with moral values. Overall, while much remains to be explored when it comes to ethical workplace nudging, the gentle steering tool seems to provide a promising route for improving behavioural ethics outcomes in organisations. 

Further Readings

Desai, S. D., & Kouchaki, M. (2017). Moral symbols: A necklace of garlic against unethical requests. Academy of Management Journal.

Hardin, A. E., Bauman, C. W., & Mayer, D. M. (2020). Show me the … family: How photos of meaningful relationships reduce unethical behavior at work. Organizational Behavior and Human Decision Processes.

Palazzo, G., Krings, F., & Hoffrage, U. (2012). Ethical blindness. Journal of Business Ethics.

About the Author

Leonie Decrinis is PhD fellow at Copenhagen Business School with research interests in corporate social responsibility, sustainability governance and behavioral sciences. Her PhD project focuses on applying behavioral insights to corporate sustainability in order to align governance objectives with organizational behavior.

Photo by Shridhar Gupta on Unsplash

The Concept of Fragmented Labour Markets

By Janine Leschke and Sonja Bekker

◦ 4 min read ◦

The employment and social impacts of the Covid-19 pandemic have been larger on some groups of workers than others. In particular, low-wage workers and workers in forms of employment that differ from full-time wage and salary work with a permanent contract seem to have been especially exposed to job and income losses (see ILO-OECD Covid-19 report). The concept of fragmented labour markets, which we propose here, highlights the large and growing diversity in employment relationships. It demonstrates the relevance of relating the impact of the crisis on jobs, income and social security to the degree of ‘resilience’ workers had prior to the crisis in terms of job stability and decent earnings. It is therefore very suitable for detecting vulnerabilities that have been built into labour markets over the past decades.

Rise of diverse types of non-standard employment relationships

The concept of fragmented labour markets focuses on the group of workers commonly termed ‘outsiders’ or the population in non-standard (also termed atypical) employment. It goes beyond traditional views on segmented, dual or primary versus secondary labour markets, which divide employment into ‘good’ and ‘bad’ jobs. There are a number of arguments as to why the use of binary divisions with regard to labour market status or outcomes are obsolete, such as the substantial variety within both the groups of standard and non-standard jobs.

Over the past decades, a further fragmentation of employment status has occurred. Some speak of an ‘explosion’ of diverse types of non-standard employment relationships, making these types of jobs an often occurring or even ‘normal’ phenomenon at least for some labour market groups, such as women. Consequently, within the group of ‘outsiders’, an ever greater variety of forms of employment is materialising, making the groups themselves far from homogeneous. 

Call for a new approach

The inadequate binary division of the labour market into groups of ‘insiders’ and ‘outsiders’ has spurred a call for a new multidimensional approach to understanding inequalities in work and employment. These suggestions go beyond merely defining non-standard work as all forms of work that deviate from the standard employment relationship.

Based on the trends and observations highlighted above, we develop the concept of fragmented labour markets as a way to both define and explore the most vulnerable types of non-standard employment. We build on the work of authors who point at key elements of such a definition, including the different labour market groups that have different sets of rights and labour conditions, and refer to different employment statuses such as part-time work, fixed-term contracts, temporary agency work, self-employment, marginal employment, platform work and other ‘non-standard’ forms of employment.

Additionally, we look at the earnings that workers (can) generate with their jobs, and whether they combine several employment statuses (e.g. being part-time as well as fixed-term employed). Moreover, we zoom in on certain occupational groups. The latter focus is relevant in order to prevent certain vulnerable groups remaining ‘hidden’ in overall labour market averages (see, e.g., the example of the occupational groups of cleaners below).

Therefore, we define fragmented labour markets as:

Labour markets characterised by an accumulation of insecurities. Fragmentation is evident where workers combine non-standard employment with low wages or where they combine several forms of non-standard employment − situations that are dominant in particular occupational groups.

We argue that using the concept of labour market fragmentation may render visible which labour market groups are generally more insecure and vulnerable to job and/or income loss and fluctuations and would therefore need additional support particularly when crises occur.

Exploring selected occupational groups in Germany and the Netherlands

Using this concept exploratory with a focus on two affluent countries – Germany and the Netherlands – highlights vulnerability in some occupations, particularly among women, but at times also among men.

For instance, almost 70% of female personal care employees in Germany are part-time employed and 18% of those combine part-time employment with a fixed-term employment contract (see EU-LFS). In the Netherlands, 43% of women in the occupational group of cleaners and helpers & service employees are marginal employed (less than 15 working hours per week) and 27% of those combine marginal part-time employment with fixed-term employment. Both occupations, and particularly cleaning are at the same time characterised by low wages (see SES). These groups would have been ‘invisible’ if only data on the average economy had been used. 

Additionally, the use of the concept of labour market fragmentation shows that in some occupations and groups, there are hardly any standard jobs left.

For instance, among women in the Dutch personal care and cleaners and helpers occupations, nearly everyone has a part time job (>90%), while in Germany the vast majority of women with a cleaning and helpers occupation has a part time job (>85%). At the same time these jobs are commonly relatively poorly paid and it is not uncommon that these part-time jobs are combined with other flexible forms of employment to make ends meet.

This not only has consequences for employment and earnings security while being in a job but also has important knock-on consequences for accessibility to and adequacy of social security, which is affected to a large degree by the level of earnings and job tenure (with the exception of social minimum benefits).

The concept of fragmentation thereby transcends labour markets and its value becomes particularly evident in times of crisis. As a result of the pandemic, low-wage workers and workers in diverse forms of non-standard employment relationships have been especially exposed to job and income losses. Moreover, in times of economic downturns, new jobs will often be more likely to be non-standard contracts than in times of economic upturns.

Both in Germany and the Netherlands, social security coverage has been problematic for some of these groups during the coronavirus crisis.

Understanding the growing flexibility in labour markets

The concept of fragmentation thus assists in achieving a more profound understanding of what growing flexibility in labour markets really entails in terms of cumulative insecurities for some labour market groups. It helps fuel discussion on making social security more inclusive for workers, regardless of their labour market position. Last but not least, with respect to occupations where up to 90% of (female) workers are in non-standard employment, often combined with other forms of non-standard employment and/or low wages, it helps raise questions as to how much labour market fragmentation affluent societies can legitimise.

Further reading

Bekker, S. and Leschke, J. (2021), Fragmented labour markets in affluent societies: examples from Germany and the Netherlands, OSE Paper Series, Research Paper No.48, Brussels: European Social Observatory, 24p.

About the Authors

Janine Leschke, political scientist, is prof MSO in comparative labour market analysis. Her research interests comprise issues such atypical work, job quality, labour mobility and migration, youth unemployment, as well as gender. She is currently the Danish lead partner in the Horizon 2020 project HECAT, participant in EuSocialCit and one of the editors of Journal of European Social Policy.

Sonja Bekker is an associate professor European Social Policy at both Utrecht University and Tilburg University. Her research interests include European employment policies and social policies, particularly focused on vulnerable groups such as people with flexible employment relations, youth, people experiencing in-work poverty. She is part of the Horizon 2020 WorkYP project.

Photo by Danny Sunderman on Unsplash

How organizations avoid to hire highly-skilled migrants

By Annette Risberg and Laurence Romani

◦ 2 min read ◦

Labor integration of migrants is a topic frequently on the public and political agendas, as it is increasingly seen as the first step to successful societal integration. Often the light is turned on the migrants and what they need to change and improve to get a job. They are expected to make themselves employable by learning the local language, by adapting to local ways of applying for jobs, and by adding local skills to their existing competencies. So, it seems, the moment migrants show some form of adaptation, they should do fine on the job market. But do they?

Why do organizations under-employ highly-skilled migrants? 

Well, maybe there is more to it. Highly-skilled migrants are often underemployed. This means they get jobs below their qualification level. We have all heard of the medical doctor driving a taxi. But who asks ‘why does a taxi company hire a medical doctor as a driver’? In a recent study, we decided to turn the light on the employers, the hiring organizations, instead of the migrants. We searched for an answer to the question of why organizations under-employ highly-skilled migrants.

We followed a mentor program aiming to integrate highly-skilled migrants in the labor market through mentorship and internship. In this program, support was given to migrants to learn the rules of the Swedish employment game, how to write a strong CV, cover letters, the importance of networks, for example. In our interviews, we talked to both mentors and mentees (migrants). They told us about arguments used in organizations to explain (or shall we say justify?) the under-employment of highly-skilled migrants. 

Alleged risk, but for whom?

They said that migrants are often described as lacking local job-seeking skills, how to write a CV, how to present oneself in the application letter, how to get in contact with a potential employer. At times, they may lack local language skills too. Yet, these skills were precisely what they acquired in the program (and in internships) and many of the migrants we interviewed possessed those skills, yet, remained unemployed. More interestingly, we got to hear that the highly-skilled migrants were also talked about in terms of bringing with them the unknown and the unfamiliar: unknown diplomas, unfamiliar job references, unfamiliar working cultures, and habits, for example. And, interestingly, in the interviews, this unknown was associated with a risk… but a risk of what? And, a risk for whom?

Keeping migrants in a lower symbolic position to maintain the power of ‘normality’.

Using the relational theory of risk, a theory where risk is seen as socially constructed, we realized two things. First, if people talked about risk, it was because they felt that something that they value was being threatened.  We found that they valued their usual (habitual) ways of doing things, the organizational normality, more than the new skills and experiences the skilled migrants could bring to the organization.

Hence, highly-skilled migrants were perceived to be a risk to the valued organizational normality and kept away from employment, to avoid disruption of this normality.

Second, if employed, they were hired at a level that did not allow them to fully contribute to the organization, at a level that indicated: your skills are not valued here, they are not to be considered, they are not to transform our usual way of doing things. 

These findings point to an organizational ground for the underemployment of migrants, independent from migrants’ skills and adaptation efforts. In simple terms, organizations may have an interest in under-employing migrants: they assure that their ‘normal’ way of working is not changed, that they are not challenged in their comfortable, everyday routines. The organization’s interest in under-employing migrants goes beyond having a (cheap) skilled workforce without recognizing its value, it is also to clearly indicate that ‘the way we do things around here is valued and we don’t want to question it’.

Who should be seen as a risk? The migrants or the organizations?

In a nutshell, we got to hear that migrants are presented by some as being a risk. But, frankly, a risk for whom? For those comfortably installed in their routines? How about we turn things around and consider that those organizations, not the migrants, should be seen as a risk.

Indeed, by stopping the integration of highly-skilled migrants, are those organizations not a risk to a sustainable society and the (labor) integration of the migrants we welcomed?

The good news is that often, this comfort of the ‘normality’ is not so difficult to change. Organizations’ routines are constantly in the making and it is actually beneficial to challenge and change them from time to time to continuously adapt to the organization’s changing environment.  So, the next time you hear that it is ‘normal’ to expect a local degree for this position, ask yourself: who really benefit from this ‘normal’? And, who should be seen as a threat here?

Further reading

Risberg & Romani (forthcoming) “Underemploying highly skilled migrants: An organizational logic protecting corporate ‘normality”. Human Relations. 

About the Authors

Annette Risberg is a Professor of Diversity Management at Copenhagen Business School and Professor of Organization and Management at the Inland Norway University of Applied Sciences. Her research focus is on practices of diversity management in general and the inclusion of immigrants in organizations. Her latest co-edited book is The Routledge Companion to Organizational Diversity Research Methods and Diversity in Organizations.

Laurence Romani is an Associate Professor at the Stockholm School of Economics. Her work focuses on representation and interaction with the cultural Other in respectful and enriching ways. She currently investigates the conditions of integration of the perceived cultural Others (e.g. ethnic minorities, migrants) in the Swedish labor market. She critically studies race, gender and class hierarchies in organizations’ work with cultural diversity.

Insecure work: rethinking precarity through Kenya’s tea plantations

By Hannah Elliott

Over the last decade, the term ‘precarity’ has become ubiquitous in studies of work and labor, as jobs are increasingly characterized by temporary and insecure contracts; lack of basic welfare provisions such as paid leave; and low pay. The informalization of work has gained pace in a post-Fordist world. And we can expect to see more precarity. The COVID-19 pandemic is pushing employers the world over to think of new ways to reduce labor costs as economies flounder.

Anthropologist of work Kathleen Millar has argued that we need to be careful about how we think about ‘precarity’ when we talk about insecure work. The term can inadvertently “smuggle in a conservative politics”, valorizing and romanticizing a Fordist past of full-time wage labor. This employment past is not universal. In the majority of the world, economies have historically been characterized by informality. Here, formal secure work has been more of an idea, a promise tied up in teleological ideals of modernization and development, than a reality. Furthermore, in former settler colonies such as Kenya and South Africa, formal wage employment has roots in colonial capitalism, coercion and exploitation.  

I’ve been thinking about precarity through the case of changing employment conditions on Kenyan tea plantations, where I’ve been researching the production of certified sustainable tea as part of the SUSTEIN project. I carried out my latest fieldwork between January and March this year, right up until the majority of European countries went into lockdown. A few weeks later, Kenya followed suit. In Kericho, the heart of Kenya’s tea production and where I spent most of my stay, there was little sense that the world was on the brink of an impending global pandemic, let alone reflection on what that could mean for the tea industry. And yet, in conversations with diverse actors in the sector, there was a shared narrative that the industry, responsible for one of Kenya’s biggest export commodities and foreign exchange earners, was struggling.

Enduring low prices of tea on the global market and rising costs of production have led multinational companies owning large tea plantations to look for ways to cut labor costs.

Tea is a labor intensive crop, and companies have historically depended on large resident workforces to pluck tea, plant and prune tea bushes and operate factories, among a multitude of other tasks required to maintain vast tea plantations. Biannual collective bargaining agreements led by the workers’ union have seen wages increase at a rate companies say is unsustainable for business. Citing high wages relative to other agricultural sectors in Kenya and the additional costs of employee benefits such as free housing and water, payment of retirement funds, and contributions to health insurance, along with the costs of maintaining infrastructures used by workers and their dependents such as schools and dispensaries, companies argue for the need to reduce labor forces.

The gradual reduction of company-employed low-level or ‘general’ workers has been taking place through parallel processes of mechanizing tea harvesting and outsourcing tasks outside of companies’ core activities of tea harvesting and factory processing. While workers carrying out core tasks continue to be employed directly by the company, thus receiving a union-negotiated wage and the package of employment privileges described above, outsourced workers are hired on insecure terms by external service providers who hold contracts with tea plantation companies. Outsourced workers are typically employed on short contracts, sometimes for as little as a few days. This renders them ineligible for union membership, and most earn less than half the daily salary of a company employee. If they are unable to work due to sickness, they will not be paid. The contractors who employ them are required by the company to make deductions from their salaries to national health insurance and social security schemes, but low wages and short-term employment mean that contributions are meagre.

Kenya has a large work-seeking population, and people are prepared to take outsourced jobs because of few employment opportunities.

In spite of the striking unsustainability of labor outsourcing for these workers, international sustainability standards say surprisingly little about this category and establish few mechanisms to safeguard them.

In the context of decreasing opportunities for employment in permanent company jobs on tea plantations, current and former workers talk with nostalgia about a time when company jobs and their related securities were a plenty. This nostalgia echoes the valorization of stable, full-time wage labor that Millar identifies as lurking in the notion of precarity. But, without dismissing workers’ nostalgia, we should be careful not to romanticize plantation jobs of the past which were, in spite of their securities relative to outsourced work, inherently precarious.

During the early twentieth century, the colonial administration sought to disrupt and undermine subsistence economies so that people would be forced to seek work on infrastructure projects and in settler industry and agriculture, including tea plantations. For decades, the industry struggled with labor shortage which undermined its growth and expansion. During the 1940s and 50s, efforts were made to create permanent resident labor forces through welfare provisions such as housing, kitchen gardens and retirement funds. Yet workers could never own the houses they lived in, nor the land they were given to cultivate, which remained the property of the company.

In seeking to create a stable workforce that could make Kenya’s tea industry sustainable, the colonial administration destabilized rural economies and created a class of people who would be forced, for generations, to seek wage labor.

If, in these uncertain times, we shouldn’t wish for a whole-sale return to permanent, full-time wage labor, what might we hope for instead? Millar argues for a critical politics of precarity that problematizes the centrality of economically productive work and its promise in contemporary capitalism rather than calling for a return to stable full-time work. Campaigns that propose alternatives to work include Universal Basic Income – where governments makes regular unconditional payments to every individual – and Universal Basic Services. A 2017 study by UCL’s Institute for Global Prosperity proposing Universal Basic Services in the UK argues that government provision of basic services such as food, shelter and transport has the potential to reduce dramatically the cost of living for those on the lowest incomes, making participation, belonging and cohesion possible in the face of increasingly precarious work. These initiatives are becoming more compelling as the world reels from the pandemic and we try to imagine a recovery that prioritizes social and environmental justice.

References

Kathleen M. Millar (2017) ‘Towards a critical politics of precarity’. Sociology Compass, 11 (6), pp. 1-11.

Henrietta Moore, Andrew Percy, Jonathan Portes and Howard Reed (2017) Social prosperity for the future: A proposal for Universal Basic Services. Social Prosperity Network Report: Institute for Global Prosperity, UCL.

About the Author

Hannah Elliott is a postdoc at MSC focusing broadly on the political and economic anthropology, in particular in eastern Africa where she has been conducting research since 2009. Her current research examines the production of certified sustainable tea in Kenya as part of the SUSTEIN project. 

Top Leadership Compensation: From Hockey-Stick to Shared Pay-checks

“Sharing is Caring” is a way to manage post-COVID19 Economic Crises and Layoffs

By Anirudh Agrawal & Bharat Dhamani

10 of the 25 Linkedin review of best companies to work in India published in 2019 are firing their employees in 2020.  They paid huge performance based salary to top management, who drove performance by reducing pay of the lower rung employees [1].

There is a moral dilemma when we compare top management compensation with those employed at the lower levels or those employed on temporary contracts in India Inc. The median top management salary in India is as much as 243 times than those at the lowest strata of the organisation [2]. During the recent Covid-19 crises, this wage asymmetry between the lowest rung employees and top management the resulting crises of legitimacy were further highlighted. This opinion piece discusses three strategies to control hockey stick pay-outs to the corporate leadership. Contrary to current narrative on free market  and invisible hand, the corporate must self-reflect and implement policies for greater employee rights and dignity, collective bargaining and equality of pay to create  sustainable competitive advantage. 

India Inc. must learn from Scandinavian enterprises about their top leadership compensation model where the compensation is decided collectively ( along with the employee union), ensuring fairer pay and shared accountability towards organizational performance. Scandinavian strategy of collective bargaining has ensured multiple benefits [3].

  1. It has ensured that the rights of the lowest-ranked individual is protected.
  2. It has ensured that organizations follow sustainable policies both internally and externally, keep sharing the impact from shareholders to stakeholders, and
  3. The employees at each level and the communities work in sync towards ensuring organisational mission and competitiveness politics, cliques and influence of personal interest groups are limited.
  4. The collective agreements ensure that the employee flights to competitors are limited.

The effect of Scandinavian model has ensured an overall positive impact on organisational longevity, brand recall and competitiveness [4].

The India Inc should engage with their Indian public sector counterparts and learn their functioning and how they treat their employees through fairer pay and work conditions. India Inc should reflect and study the pay structure adopted by the Indian Public sector [5].

The public sector salaries have ensured respect for each, preservation of rights, longevity in the job and service to all irrespective of caste, colour or religion.

For example, the public sector banks like SBI ensure delivery of financial services to the poorest of the poor while ensuring that its banking officials are paid well. Our common sense would suggest that the Indian private sector to emulate some of the public sector compensation methodology, ensuring that the employee at the lowest strata get decent wages. The private sector can learn from the public sector on how to manage organisational compensation and increase organisational loyalty and in doing so, it must also increase benefits to the lowest ranking employee in the organisation. Similarly, the public sector should develop agility to reflect on market forces and learn to innovate to ensure that it is aligned and competitive as the competition demands. 

Narayan Murthy of Infosys rightly questioned his senior management about the lack of accountability despite hockey stick payouts. He pointed out that shareholders might approve the actions of the top management but the corporate leadership must be accountable to the stakeholders that includes the public and the employees [6]. 

Therefore, top management compensation should be duly decided by following a strong corporate governance principles, transparency and by installing elements of corporate ombudsman. 

Firms with strong accountability and stakeholder interests would perform better in the long run, than those firms which are driven by offering high incentives to top management for performance.

Some Indian private sector organisations belonging to distressed industries and markets had taken large public owned capital to run their businesses, paid hefty compensation to higher management but when things went wrong, both the promoters and top management had no public accountability. Besides, when the business failed to perform, the top management were just let go while the lower-ranked employees struggled to pay their bills. The audit reports were hardly made public and the accountability measures and corporate governance rules of such organisations were never questioned.  

The organisations while deciding top management compensation must also bring proportionality in accountability and stakeholder engagement.

Collective bargaining, equality in pay similar to public sector and corporate social and moral accountability are three strategies that the Indian corporations must reflect and incorporate in their managerial processes. Some of the NIFTY fifty Indian corporations like the Tata Group, Infosys, Mahindra and Mahindra, Hero Motors, ICICI Bank have implemented in their processes and one can see these effects on the employee satisfaction on Glassdoor employer ratings, brand recall by the consumers and overall stakeholder satisfaction is reflected positively.

Therefore, if the Indian private sector implements the policies that lead to greater accountability, equality in pay, collective decision making while ensuring its flexibility to market forces, we will see a disruptive and positive change in the image, governance mechanism, competitiveness and longevity of Indian corporations.

While the hockey stick model of compensation shifts the responsibility entirely on the top management, the collective bargaining and equitable compensation distributes the responsibility to each and every employee, bringing greater sense of employee engagement and employee accountability. Such a strategy has a potential to create long term competitiveness and shareholder value.

References

[1] https://www.businessinsider.in/here-are-the-25-most-popular-workplaces-in-india-according-to-linkedin/articleshow/68704338.cms
[2] https://economictimes.indiatimes.com/news/company/corporate-trends/india-incs-top-executives-earn-243-times-more-than-average-staff/articleshow/63359591.cms
[3] https://www.socialeurope.eu/why-trade-unions-at-work-do-work
[4] http://norden.diva-portal.org/smash/get/diva2:816030/FULLTEXT02.pdf
[5] https://www.spjimr.org/blog/learning-public-sector
[6] https://www.hindustantimes.com/india-news/narayan-murthy-recounts-his-spat-with-vishal-sikka-to-drive-home-point/story-YNG126VbaGMO5nDgFx0XCM.html

About the Authors

Anirudh Agrawal is Impact Investing and Social Entrepreneurship Fellow at Copenhagen Business School and Lecturer of Entrepreneurship and Strategy at Department of Entrepreneurship at FLAME University India. He is researching on the institutional theory framework to reflect on debates in social entrepreneurship and social innovation. 

Bharat Dhamani is a Lecturer of Entrepreneurship and Strategy at the Department of Entrepreneurship at FLAME University India. He practices engagement oriented learning through simulation and practical work. His subjects include financial management, business plan preparation, new venture business strategy and social entrepreneurship.

Photo by Sharon McCutcheon on Unsplash