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The Bottom Line

Evan Davis gets to the heart of the big finance stories at The Bottom Line.

‘The power of technology’ and ‘How long is long in years of service in the same organisation’ are the twin themes of the latest BBC/Open University The Bottom Line programme. Evan Davis's three guests are drawn from General Electric International, SES Global, which brought us the Astra broadcasting satellite system, and Ford Europe. The central thrust of their argument about the power of technology is that partnerships with the state are crucial in enabling technological change and innovation. The guest from SES Global, echoing the Open University‘s new Vice Chancellor, suggested that technology is not enough in itself: it is about the role of processes and people engaging in entrepreneurial and innovative activity. The rider should have been added to all three guest contributions that the love of the “new” does not preclude the “old”. That is, many of the technologies their companies deal in are based on “old” technologies, including the internal combustion engine and the aero engine. Indeed, the inspiration for Astra came from the first Soviet Union satellite, Sputnik, launched in the late 1950s.

BBC Micro in Broadcasting House window.
Picture © copyright Rain Rabbit, used under Creative Commons licence.

The fixation with the new informs every society as the art historian and critic, Robert Hughes, wrote and narrated in his 1980 television series entitled The Shock of the New: Art and the Century of Change. In the accompanying book, Hughes examined the development of art and culture from the late 19th to the late 20th century: the period of what is known as modernism. Essentially, modernism is a view of the world that posits the progress of science and technology and its underlying culture as the organising principle of rational modern society. The early proponents of modernism proclaimed that it had dramatically changed the world in a very short period.

The late architectural writer, Reyner Banham, was the author of the book, Theory and Design in the First Machine Age. For Banham, the First Machine Age was ushered in by the invention of electricity which created the conditions for innovations like the telephone, the gramophone, the washing machine, etc. The Second Machine Age, starting around the 1960s, is characterised by mass production techniques producing electronic devices, which are consumed universally and symbolised by a single source of mass communication – the television. The Third Machine Age can be said to have started with the invention of the personal computer and the mobile. Whether the Internet represents a fourth age or a fifth Kondratieff wave (named after the Soviet economist Nikolai Kondratieff, who developed the idea of 50 year cycles of technological innovation) is open to question. But, despite the recent febrile claims that we live in a weightless economy, it is the mass of human interaction with technology that appears to be the central condition of our species.

This truism leads us to the question of employment longevity. There have always been claims that how we organise our economy is a break with the past. Labour market flexibility, portfolio and virtual workers are part of the heady stuff reported by journalists every day as though it was the global reality of the contemporary work environment. Unfortunately, journalists too frequently psychologically externalise their own experience onto everyone else. My grandfather was a flexible worker: he was part of the casual labour system at Southampton Docks at the start of the 20th century – he worked when he was chosen from the queue of men similarly seeking a day’s pay. My father worked for 30 years for a nationalised industry that, in the 1950s, threatened to sack all the staff at the engineering base on a Friday night and re-employ them on inferior contracts on the following Monday morning: flexibility is nothing new.

The average length of employment in the same company is 5.6 years in the UK, yet there appears to be a cultural aversion to long service in this country as though it was antediluvian. It was heartening to hear that the three guests on The Bottom Line had been with their companies for a long time and that a third of Ford workers had spent twenty-five years there. In a society in which there are more 60 year olds than 16 year olds, it is doubly curious. Moreover, the loss of corporate and policy memory was shown to almost devastating effect at the onset of the financial crisis. In many important sectors of the economy, experience is at a premium. Yet discrimination in the workplace and too strong an emphasis on the beauties and beatitudes of new technology, sui generis, and every associated ‘nouvellle vague’ blights all our lives. Ageism like any form of short or long discrimination is not rational. More importantly, it is not right.

Find out more

Over 50 and in their prime

Radical innovation

The long view on innovation

Courses

Technology Strategy

Creativity Innovation and Change

Strategic Human Resource Management

About the author

Leslie Budd is Reader in social enterprise at The Open University Business School. He is an economist and has written extensively on the relationship between regional and urban economics, and international financial markets.

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Money Programme

Get the facts behind the big business and finance stories from around the world – and down your street, in The Money Programme.

Recent corporate scandals and cases of corporate espionage have focused attention on business ethics. Are these instances of a few unscrupulous individuals or are business managers less ethical? The quest for answers to questions such as this has led to internal scrutiny within the academic community about the way qualifications such as the Masters of Business Administration (MBA) are being taught in business schools.

The late Professor Sumantra Ghoshal of the Advanced Institute of Management Research (AIM) and London Business School argued that the roots of business misconduct may be traced to ideas expounded by business schools over the last three decades. He suggested that “by propagating ideologically inspired amoral theories, business schools have actively freed their students from any sense of moral responsibility”. This was because attempts to make management a science meant denying any moral or ethical considerations.

For example, Ghoshal asserted that few managers would question the economist Milton Friedman’s assertion that a business organisation’s only responsibility was to its shareholders. Yet Thomas Kochan, Professor of Management at MIT’s Sloan School of Management, attributed corporate scandals in the United States to widespread overemphasis on shareholder value at the expense of other constituencies. Ghoshal challenged the priority given to shareholder value, reasoning that other constituencies such as employees, including managers, produce the value created by a company. Furthermore, he argued that employees bear more risk, because it is generally more difficult for them to find alternative employment than for shareholders to sell their stocks.

Robert Cooke, who was the Director of the Institute of Business Ethics at DePaul University, has identified fourteen danger signs that an organization that is at risk of unethical behaviour. These are if it:

• normally emphasizes short-term revenues over long-long considerations
• routinely ignores or violates internal or professional codes of ethics
• always looks for simple solutions to ethical problems and is satisfied with ‘quick fixes’
• is unwilling to take an ethical stand when there is a financial cost to the decision
• creates an internal environment that either discourages ethical behaviour or encourages unethical behaviour
• usually sends ethical problems to the legal department
• looks at ethics solely as a public relations tool to enhance its image
• treats its employees differently than its customers
• is unfair or arbitrary in its performance-appraisal standards
• has no procedures or policies for handling ethical problems
• provides no mechanisms for internal whistle blowing
• lacks clear lines of communication within the organization
• is only sensitive to the needs and demands of the shareholders
• encourages people to leave their personal ethical values at the office door

There are signs that things are changing. Ethics are increasingly being woven into the curriculum of business schools. Recognition of the need for attention to ethics is evident in the Association of MBAs’ (AMBA) requirement that a business school’s curriculum pay attention to ethical and social issues to meet its accreditation criteria. Finally, Ghoshal concluded that the situation be rectified by encouraging a diversity of ideologies and positive perspectives on behaviour.

Find out more

An introduction to business studies

Marketing and society

Managing human resources

Take it further - sharpen up your business skills

Corporate Accountability and Ethics - a disregard for ethics can lead to trouble: remember the Enron saga

‘Danger signs of unethical behaviour: how to determine if your firm is at ethical risk’ by Robert Cooke, in the Journal of Business Ethics, volume 10, (April 1991)

'Bad management theories are destroying good management practices' by Sumantra Ghoshal, in the Academy of Management Learning & Education,  volume 4 (2005)

'Addressing the crisis in confidence in corporations: Root causes, victims and strategies for reform' by Thomas Kochan, in the Academy of Management Executive, Volume 16 (2002)

About the author

Fiona Harris is a lecturer in management in the OU Business School. Her research interests include social marketing and marketing ethics.

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Blogging about

Money Programme

Get the facts behind the big business and finance stories from around the world – and down your street, in The Money Programme.

Great Britain is acknowledged to be the most watched nation in the world. It has been estimated that there is one CCTV camera for every fourteen citizens of this country, and you can be caught on camera up to 300 times merely by walking around the streets of your nearest city.

Surveillance is the collection of data (be this visual, biometric, location or personal data) on a person, object or ‘target’, with the explicit intention of influencing or managing what that ‘target’ does or where it goes.

Following the 9/11 attacks on New York, and more recently, the 7/7 attacks on London, a significant part of the UK government's response has been to invest more in surveillance infrastructure and systems.

"Businesses have always watched over their employees"

But this isn’t just something that governments employ: businesses are increasingly using surveillance techniques and technologies to keep an eye on customers and employees. To be fair, businesses have always watched over their employees. Indeed, the word ‘supervisor’ literally means ‘overseer’, and monitoring performance is a core management task. However, what and whom businesses monitor, and how they do so is a central question. Current examples include:

• Call centre employees are constantly listened to, and their keystrokes are monitored.
• Retail and factory employees are subject to CCTV monitoring.
• Employees in the logistics industry are RFID tagged, and delivery drivers’ lorries are monitored by GPS and RFID.
• Many North American organizations routinely drug test their employees.

One company in Cincinnati has even begun to implant RFID chips in its employees’ skin for access control purposes. The notags.co.uk website describes a RFID chip as a:

"tiny embedded microchip that can carry around its own information. This chip or tag is triggered by a radio signal set on a specific frequency."

RFID chips do not have their own power supply. They are stimulated to transmit information by a reader which can be held near to the chip, but does not actually touch it. Whoever is holding the reader can then read the information contained on the chip, which normally concerns the thing to which it is attached.

Tiny RFID chips can be implanted in people by means of an injection. The chip is contained in a sterile glass capsule which, once implanted, is not felt by the wearer. The chip is read by a scanner, which then confirms the identity and presence of the wearer at its location.

Customers’ buying habits and personal credentials are profiled and checked to determine their creditworthiness, and eligibility for discounts, offers, and products. There is a price for preference: banks and other money lenders now ‘cherry pick’ the most valuable customers for premium products and restrict opportunities for those who are deemed less valuable.

Surveillance practices are slowly creeping into our personal lives. What we buy, where we live, where we go and literally the characteristics of our bodies determine our access to goods, services and work opportunities. Has surveillance gone too far, and is it is fair?

Why monitor?

Why would a business want to employ monitoring and surveillance techniques?

• To ensure that productivity and performance are maintained, and sales levels are at their optimum.
• To protect corporate interests and trade secrets.
• To limit legal liabilities, as surveillance data contains evidence which can be used in an employment tribunals or other lawsuits.

"It places the interests of consumers and employees firmly in second place"

Hence businesses use surveillance to control risks, profits, quality, liability; to protect their financial interests, and to ensure flows of value. This may be understandable, but it places the interests of consumers and employees firmly in second place.

Costs of surveillance

As research has shown, intensive employee surveillance systems can increase stress and health problems. They can also result in more sabotage and resistance, as employees try to find ways in which they can live and work with an exacting system. Monitoring invades employee and consumer privacy if data is used in a way for which they didn’t expect or give their permission.

Privacy

Privacy has two basic elements:

1. Authority to disclose
2. Target of disclosure

Privacy is protected if an individual gives authority for their information to be disclosed, and is invaded if information about them is gathered without their permission. A common example is where CCTV is installed to monitor employee theft and then management realise they can also use it to monitor the performance and whereabouts of their staff.

Similarly, privacy is protected if that information is only disclosed to a target with the individuals’ consent, and is invaded if that information is disclosed to a third party without that consent. A recently observed example is where employers combine access data with other employee data concerning sickness, absence and medical conditions to make judgements about the suitability of employees for particular posts.

Whether this is good management practice is another question. Judging employees with surveillance data alone has the danger of misrepresenting employee efforts. Surveillance data doesn’t reveal how an employee’s thoughts and feelings might have affected their performance.

On a more general level, exacting surveillance has the effect of suppressing innovation and creativity, as employees are worried about being monitored. Monitoring encourages ‘anticipatory conformity’, which threatens to stifle innovation, motivation and commitment. Exacting surveillance is also disempowering for employees as it constrains the range of behaviour that bosses deem acceptable and gives a message of distrust from management.

Good practice

So, is surveillance in business all doom and gloom? It doesn’t have to be. Clearly the manner in which surveillance is undertaken gives a message to employees and consumers about how the company views them. Nevertheless, of equal importance, particularly in the case of employees, is the contribution made by surveillance to judgements about performance, remuneration and reward.

Employee surveillance has the potential to affect how employee effort is represented to management, and, hence, how rewards are allocated. However, complete reliance on surveillance techniques to determine reward, rather than methods such as coaching or appraisal is likely to be considered unfair.

Whether employees have a voice in the monitoring process and, in particular, whether employees can challenge or question it is also important. For example, if an employer, without consultation, changes its access systems from magnetic swipe cards exclusively to biometrics such as electronic finger-printing or iris scanning, this is likely to be perceived as unfair.

Ultimately, businesses have a choice as to how they use surveillance techniques on their customers and employees. Whilst surveillance systems will always meet the interests of business, businesses can take responsible decisions about using surveillance which incorporate the interests of their workers and customers.

As well as acting within existing legislation about data protection, it is vital to consider the ethical and privacy related issues surrounding the use of surveillance. Benefits in terms of reputation, brand, employment relations, customer loyalty, and employee turnover are just a few of the reasons why.

Further reading

• The Maximum Surveillance Society: The Rise of CCTV by G Armstrong and C Norris, published by Berg Publishers
• The Intensification of Surveillance: Crime, Terrorism and Warfare in the Information Age by K S Ball and F Webster, published by Pluto Press
• Reclaiming the Streets: Surveillance, Social Control and the City by R Coleman, published by Willan Publishing
• The New Politics of Surveillance and Visibility by K D Haggerty and R V Ericson, published by University of Toronto Press Inc
• The Glass Consumer: Life in a Surveillance Society by S Lace, published by Polity Press
• The Electronic Eye: The Rise of Surveillance Society by D Lyon, published by Polity Press
• Surveillance & Society
• Roger Clarke’s Dataveillance and Information Privacy Home-Page
• Surveillance mailing list
• How private is private? – discover the ideas behind CCTV and data collection

Activism and campaigning

• Privacy International
• EPIC (Electronic Privacy Information Centre)
• CASPIAN (Consumers against supermarket privacy and numbering)
• New York Surveillance Camera Players
• Liberty
• Statewatch
• notags.co.uk

Research projects

• The Surveillance Project
• Urbaneye Project
• For Whom the Bell Curves

About the author

Kirstie Ball is senior lecturer in organisation studies at the Open University Business School. Her research interests cover surveillance in organizations and society, call centre management, and human resource information systems.

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