Down-under, are things upside down?

Last week we talked about executive pay and bonuses. If you read or watch the news today in Australia you will come across an entirely different story though. In a time when bankers have to be told off by governments to stuff their pockets, CEOs get stripped of royal titles for their reckless actions or presidential hopefuls turn out to be ruthless maximizers of personal wealth – this story sounds like a fairytale.

Ken Grenda, the owner of a bus operating and manufacturing company in Melbourne has given all his staff a AUD 15 million bonus (US$ 15.3m), averaging $8,500 per employee with some receiving as much as $30,000! The background of the payout is a sale of the family-owned company which netted Ken some $400m. His rationale:

"A business is only as good as its people, and our people are fantastic. This is to recognise that. We have had people here who are second generation, and one fellow in the same job for 52 years. We have grown from just four bus routes ... in 1945 to operating 1300 buses in Melbourne, Adelaide and Perth. You only get there if you have good people."

Now that’s exceptional. And good on Ken and his family – sure enough. The facebook page of the event is full of praise, amazement and disbelief. It is indeed a gesture which is rare, if not unprecedented in today’s economic climate.

It makes you think though. Ken’s rationale, above, is perfectly sound. Especially in a service company, the personnel at the customer interface, such as bus drivers, can make all the difference. In a time, when bonuses have become a common instrument for people at the top, there is no good reason to exclude workers from the same thinking.

Recently, The Guardian has published a piece on the intellectual heritage of the current situation of excessive bonuses. It is really hard to understand why Michael Jensen and his colleagues, when suggesting share-price related remunerations for top management, never thought to include the lower ranks.

The real question here though seems to be why those performance related elements have to be just this discretionary, pseudo-feudal benevolence of a rich guy. It’s a great gesture of philanthropy, as some bloggers say, but if employees are really so vital to a company’s performance why not make it a right of the employee? After all, $15m of $400m is not all that much. What would be a fair share? And who should decide about that?

As we have commented earlier in this blog, there is a funny bifurcation in the debate on CSR and industrial relations.  From a CSR perspective we should praise the Grenda family; but from an industrial relations perspective we might ask the question why – if what Ken Grenda says above is true – the employees should not have a right to their share in the growth of the company’s value to begin with?

It all points to the role of worker’s representation and collective bargaining. These used to be the classic tools to make sure that workers participate in a company’s overall prosperity. But Australia and New Zealand have seen the highest declines in trade union membership over the last two decades, between roughly 30 to 50%. In that sense then, Australian industrial relations are pretty similar to the rest of the world and Grenda's example more a one-off than something of a rule. Other solutions might be share ownership of employees, which apart from examples such as John Lewis (department stores, UK), Westjet (airline, Canada) or W.L. Gore (Gore-Tex, US) have remained exceptions.

In as much as gestures such as that of Ken Grenda deserve praise and respect as a single incident – they also raise these more general question of how sustainable this approach is. As critics in the Australian blogosphere point out, is this just the final golden handshake, before the new Brazilian owners of Grenda take over and expose workers to an entirely new game to make their new investment pay off?

Picture by Natinaal Archief, reproduced under the Creative Commons License.

Is too much transparency a bad thing?

It’s been quite a week or so for transparency. The incendiary WikiLeaks release of almost a quarter of a million classified cables from the US diplomatic service has set news media across the world alight with daily revelations that have acutely embarrassed politicians everywhere. Last week also saw the FIFA bribery scandal reach new heights with the screening of the BBC Panorama program alleging corruption, followed by last Thursday’s selection of Russia and Qatar as the hosts of the 2018 and 2022 World Cups respectively. Yes, that’s Russia, the country labeled a “virtual mafia state” in one of the WikiLeaks cables. Both cases involve a whole host of ethical issues, but perhaps more than anything they pose critical questions about the appropriate limits of transparency. How much should we know about what goes on behind the scenes in organizations such as the US diplomatic service or a global sporting body such as FIFA? And can too much transparency really be a bad thing?

WikiLeaks is clearly the most significant case of the two, and it looks set to be something of a landmark on the ethics of transparency in the digital age. On the one side, high profile rightwingers in the US, including Presidential hopeful Mike Huckerbee, have responded by suggesting the source of the leaks should be tried for treason. “Anything less than execution is too kind a penalty,” he commented. WikiLeaks founder Julian Assange is under investigation in the US and Australia, wanted for questioning in Sweden (for an unrelated charge), and on Interpol’s red list – not to mention being cast by Sarah Palin as an “anti-American operative” who should be pursued with “the same urgency [as] al Qaeda and Taliban leaders”. Bradley Manning the army private who is supposedly the original source of the material is sitting in a military jail awaiting court marshal and a possible 52 years in jail. US internet companies Amazon, Paypal and EveryDNS, meanwhile, have responded to pressure by US authorities and ceased supporting WikiLeaks by allow it to use their servers, domains, and payment services respectively. As a result, the organization has been forced offline several times in the last week.

On the other side of the debate, five respected news organizations – the New York Times, The Guardian, Le Monde, El País, and Der Spiegel – received prior access to the cables and have shown little hesitation in splashing front page stories over the past 10 days. Various commentators, hackers, and net activists have heralded the leaks as a new phase in the radical transparency of digital information. Columbia, meanwhile, has offered Assange immunity, whilst Amazon has been touted as a boycott target for caving to “censorship” and political restrictions on “free speech”. Clearly, things are complicated, to say the least.

The publishing of the embassy cables by WikiLeaks is in many ways a more ethically ambiguous act than many of their previous leaks, most notably the well known Iraq and Afghanistan war logs which detailed the hidden impacts of US military action. Other WikiLeaks though have also won acclaim focusing on documents alleging political and corporate corruption, public interest media reports suppressed by injunction, and secret Congressional research reports. The embassy cables, just by their sheer volume, represent a less focused campaign.

Yes, there are clearly some important public interest revelations in the material that has come to light. These include: the exposure of a US spying campaign targeted at UN leaders; the naming by US diplomats of China’s propaganda chief Li Changchun as the orchestrator of the Google hacking late last year; and disclosures that the Brazilian government deliberately covered up the existence of terrorist suspects within its borders to protect the country’s image, to name just a few. Oh and of course claims that the media organization al-Jazeera is heavily influenced by state foreign policy in Quatar, where the 2022 World Cup is going to be held. But it has to be said that many of the big news stories are no more than allegations by diplomats in what they thought were confidential dispatches rather than necessarily well-founded or verified facts. There is also a whole lot more material that is just plain gossip and rumor-mongering rather than what you might genuinely call ‘intelligence’.

All this makes the WikiLeaks cables less clear cut in terms of making the hidden “truth” public. They provide us with a unique insight into how international diplomacy works, and what emerges is hardly pretty or a paragon of honesty and integrity. But it is hardly the case of a whistleblower bringing a miscarriage of justice to light or an exposé of corporate malfeasance or political corruption, except in the very broadest of terms. Sure the material in the leaks is incredibly interesting, but how we have to ask how much of it is genuinely in the public interest. If it doesn’t pass this test, then why should supposedly classified information become public?

On the other hand, the arguments emanating from the US that the release of the cables has injured the national interest and put lives at risk is also rather flimsy. Yes it has embarrassed the government, but then who hasn’t it embarrassed? Putin, Burlosconi, and others have been just as much the target as those in the US. And no one yet has managed to unearth anything that has genuinely put lives at risk even if it has probably hampered US diplomatic efforts in general. This of course begs the question of why so much information should be classified in the first place if it’s not actually protecting anything.

It is this – the transparency versus confidentiality issue – that is at stake here. Some would clearly like to see all but the most critical security information made public so that the state can be held to account. Others believe that a communication made under the presumption of confidentiality should remain that way unless there is a clear public interest reason for disclosing it. In the FIFA case, there seems little doubt that the BBC was right to go public with its allegations of corruption, even if some commentators were unhappy that it potentially hampered England’s bid to host the 2018 tournament. And even if FIFA President Sepp Blatter complained of “the evils of the media"

The WikiLeaks cables though are so indiscriminate as to fail the public interest test, at least when considered as a whole. However, with appropriate sorting and contextualizing (which the newspapers appear to be doing a pretty good job of), this changes the complexion somewhat. Newspapers like the New York Times and The Guardian have given a good account of their motives and methods. As the New York Times editor says:

"The more important reason to publish these articles is that the cables tell the unvarnished story of how the government makes its biggest decisions, the decisions that cost the country most heavily in lives and money. They shed light on the motivations — and, in some cases, duplicity — of allies on the receiving end of American courtship and foreign aid. They illuminate the diplomacy surrounding two current wars and several countries, like Pakistan and Yemen, where American military involvement is growing. As daunting as it is to publish such material over official objections, it would be presumptuous to conclude that Americans have no right to know what is being done in their name."

With appropriate journalistic selecting and framing, there is little doubt that there is an important if rather delicate media task at work here. This doesn’t condone the release of the cables en masse, though, which in our opinion is harder to defend from an ethical point of view, unless one’s view is that all government should be 100% transparent.

Regardless of the rights and wrongs of WikiLeaks in this particular case, though, the broader lesson seems to be fairly clear. In business ethics, one of the standard rules of thumb is the New York Times test – if you wouldn’t want your actions to be reported on the front page of the newspaper then maybe you shouldn’t be doing it. No doubt US diplomats didn’t expect this to so literally come true, but in a digital world, the prospects for doing so are increasing exponentially. And if you don’t want to be a news star, then you’ll need to work a lot harder than the US government in making sure what is said in confidence stays that way.



WikiLeaks graphic by Anna Lena Schiller reproduced under Creative Commons Licence
America Shhh image reproduced from Boycott Amazon for Dumping Wikileaks  

Oil

While in New York recently, we took in Edward Burtynsky’s latest exhibition, ‘Oil’, at the Hasted Hunt Kreutler Gallery in Chelsea. It’s an impressive collection, put together over more than a decade, and tracing the value chain of oil from extraction to use, and disposal.

Some of the shots are simply stunning, more akin to abstract art than photojournalism. From Australian mines to Azerbaijani wells, and Shanghai car factories to LA freeways the overwhelming scale and embeddedness of oil as a feature of the contemporary global landscape is thrown right in our faces. Burtynsky’s large format pictures are simultaneously shocking and beautiful, prompting for us a strong, but somewhat ambiguous response. Yes, this addiction to oil has got out of hand; yes, our thirst for oil has ravaged the environment; but, wow, isn’t this pinnacle of modernity also in some ways just downright amazing?

Now for those of us interested in issues of corporate responsibility such ambiguity is nothing new. Balancing the good with the bad, the value creation for some with the value destruction for others, is what much of what our field is all about. But Burtynsky takes this a little further. By seeking to absorb us in the global experience of oil, by joining up the dots in ways that make us want to learn more about what we’re looking at, what we are … yes, enjoying, he draws into the debate not just business ethics nerds like Crane and Matten, but also people that might like a good picture but who might never otherwise give much of a second thought to the ‘oil problem’.

Burtynsky’s exhibition, which is showing simultaneously in New York, Toronto and Washington, is also accompanied by a book, also called simply ‘Oil’. As he says in the introduction:

“In 1997 I had what I refer to as my oil epiphany. It occurred to me that the vast, human-altered landscapes that I pursued and photographed for over twenty years were only made possible by the discovery of oil and the mechanical advantage of the internal combustion engine. It was then that I began the oil project. Over the next ten years I researched and photographed the largest oil fields I could find. I went on to make images of refineries, freeway interchanges, automobile plants and the scrap industry that results from the recycling of cars. Then I began to look at the culture of oil, the motor culture, where masses of people congregate around vehicles, with vehicle events as the main attraction. These images can be seen as notations by one artist contemplating the world as it is made possible through this vital energy resource and the cumulative effects of industrial evolution.”

Growing up in Ontario as the son of a former GM worker, Burtynsky had his initiation into these cumulative effects at first hand. He has described for instance how his father’s death from cancer (and that of many of his co-workers) might be linked to PCBs in oil used in the workplace. The moral ambivalence of flying in a helicopter to take beautiful shots of the substance that likely killed his father injects an urgency into his work that makes it all the more compelling. Of course, as fellow Ontarians now, this has particular resonance for us. It’s perhaps no surprise that a Burtynsky piece hangs in the boardroom on our school … and next week the film based on his work, Manufactured Landscapes, is going to be shown in our Responsible Business Movie Night series. But Burtynsky speaks not just to his neighbours; his captivating depictions of the global culture built around oil have something for everyone. And you don’t even need to grow your carbon footprint flying to New York to see it. Click here for some large format shots at Photo District News and here for some previews from The Guardian newspaper.