Personal politics is a reality of the workplace. But what does management have to do with political issues of gender, ethnicity, class and the environment? By David James
The political case is usually put in the form of statistics. Figures are cited indicating a serious management bias against a group in the community, then demands are made for change.
Take, for example, the issue of women in management or on boards. It is pointed out that only 3% of Australia’s top 500 companies have two or more women on their boards, 24.5% have one woman on the board, and 71% have no women (compared with government boards, which have a 32.2% representation by women). Women hold only 1.3% of senior executive positions in Australia.
This has resulted in political action. Australian companies may now be prosecuted under discrimination legislation. The Equal Opportunity for Women in the Workplace (EOWA) Act 1999 requires that all companies with more than 100 employees report on what they are doing to advance women.
Or consider the effect of environmental concerns. Managers are routinely criticised for failing to consider environmental issues; that is, the wider political considerations. This has led to the triple bottom line accounting standard, a benchmark that combines financial metrics with environmental and corporate responsibility measures. Meeting the standard is challenging. The Sydney-based Ecos Corporation, which advises companies on sustainability strategies, advises that the triple bottom line relates to energy use, water consumption, pollution control, workplace health and safety, ethics and anti-corporate activism.
Political pressure to enforce standards such as the triple bottom line is likely to come from an unlikely source: shareholders. According to a report by the New South Wales State Chamber of Commerce, more than two-thirds of Australians would consider investing all or part of their superannuation savings in an ethical fund, given the choice.
In the United States, ethical investments total $US2.16 trillion (compared with pension funds, which control about $US5 trillion). This is more than 13% of funds under management. In Australia, the market is only 1%, but there are 12 ethical-fund managers and 44 funds with investments in 300 Australian companies.
Race and why we’re scared of it
Ethnicity is another hot political issue. Australian companies have tended to follow Anglo-Scottish lines in choosing their managers. Amanda Sinclair, professor of management at the Melbourne Business School, contends that Australian management has historically valued a narrow template of leadership.
Clarence Da Gama Pinto, program director of the leadership Centre at the Mount Eliza Business School, says research that his group undertook for the Department of Immigration and Multicultural Affairs (DIMA) indicated a failure to deal with diversity by Australian management: “The way Australians like to deal with it is to see it in terms of legalism and economic rationalism. The way [the Immigration Minister, Philip] Ruddock deals with the asylum seekers issue is typical. He just says ‘this is the law’, irrespective of the damage that is being done to Australia’s reputation.”
Da Gama Pinto says informed leadership decisions must take into account the whole context, which includes politics. But he believes that Australian managers have difficulty even discussing ethnicity, still less finding a way of dealing constructively with racial and religious diversity. The DIMA report found that Australians, unlike people in the US, South Africa or Britain, are uncomfortable even with the word “race”. One government interviewee commented: “Race is constantly in the news, but not as race; as mandatory sentencing, reconciliation, stolen children, native title and even as illegal immigration.”
There is also some fear. One interviewee in the DIMA report said that not many people from a non-English-speaking background talk about the effect of ethnicity on preferment, because of fear of jeopardising their career aspirations.
“Our findings were that Australians are race shy and don’t like talking about ethnicity,” Da Gama Pinto says. “Australians tend to deal with it in code names. For example, if you look at what is happening in the current environment [with the asylum seekers] it is about race. You can be sure that the treatment would be very different if the boat people were white farmers from Zimbabwe. You cannot separate politics from management, and any manager or leader must take into account what is out there. If we at least talk about it, it is out in the open. But the tendency is to take an Anglo-Saxon, legalistic approach.”
Da Gama Pinto says trying to separate politics from human resources practices is similarly unhelpful: “How can you not take politics into account when people [staff] have such diverse backgrounds? When they are coming to work, do they see themselves as Australians, or do they think: ‘There is one law for us, and another law for the others?’ Management takes place in a context: a domestic and a global context.”
The rise to prominence in Australian business by people of Eastern-European descent (entrepreneurs such as Frank Lowy and Richard Pratt) has dramatically changed this picture, but the emphasis on a single ethnicity remains in most large corporations. More than four million Australians were born overseas, and 2.5 million speak a language other than English at home. But according to a study by the University of Melbourne, only 22% of Australian businesses see ethnic diversity as a crucial social responsibility, and few know how to use it for competitive advantage. There were exceptions, such as Australia Post, Hewlett-Packard and Mobil, but the general trend was clear. Of the business leaders surveyed, 73% said their general managers were alike in terms of their ethnicity, and 81% said their senior managers were ethnically homogeneous.
In other words, a familiar picture of political hegemony by white, Anglo-Celtic males. Cliff Stoneman, managing director of EOC consulting, a human resources and employment consultancy, says discrimination is rarely overt in Australian organisations: “It is subtle; it is certainly not policy. Australia is very tight in its human-resource policies. Companies will look at a position when there is an obvious imbalance. If an organisation has mainly male executives, it may well be facing a challenge from female employees, so companies need to tackle that through their induction process. But in the end, it comes back to the performance of the business. Most businesses will want to leave things the way they are, irrespective of what government authorities or regulators say, if the business is performing well for shareholders and directors.”
Peter Carre, a former Asia-Pacific head of the financial services firm Wiltshire Global Advisers and co-founder of the life-sciences incubator Xcelerator, says the political bias of Australian management leads to a lack of accountability among directors. “There is little rigor in the search process for directors. That allows board members to indulge in that quintessential Australian act: help your mates. Boards in Australia generally keep replicating themselves with the same Anglo-Celtic males from the same kind of corporate background. That prevents a true search for the skills and the people who will truly adhere to director accountability and help to prevent insular conflicts of interest.”
But, do political agendas belong in management? Critics of triple bottom line accounting say that it is hard enough for managers to perform against one line, let alone three.
The mostly male Anglo-Celtic senior executives in Australian corporations agree that, in theory, there should be more women in management, but they do not see that there is anything they can do about it. Mandatory quotas, they argue, would go against every principle of management, which stands or falls on merit.
They have a point. Management is a function, whose role has been one of creating maximum efficiency. It is typically measured according to financial metrics such as return on capital employed, or return on equity, and it has mostly been considered separate from political debates (other than the imperative to be humane towards staff, responsive towards consumers and accountable to shareholders).
Many managers already feel powerless enough in the face of epochal changes to the nature of work and the perpetual demand to improve productivity and competitiveness. Why load on them even more difficult problems of power and politics for which they have little solution?
Worse, they already have to deal with a lower-level form of politics in their daily work lives. Author Mark Holden writes in Positive Politics that organisations are political webs. Attempting to adhere to a wider political agenda could be an invitation to career suicide. In his research on Australian organisations, he found that 100% of respondents thought workplace politics were common, 85% thought it was necessary to be political to get ahead in an organisation, and 67% agreed that organisations would be happier places to work without politics. If two-thirds of the people surveyed thought politics got in the way of workplace fulfilment, why add to the burden by introducing wider gender, class, race and ecological political considerations?
It’s all about context
On the face of it, management should be broadly representative. Clear divisions between bosses and workers, workers and home makers, labor and capital, and young and old no longer apply in the Australian workplace. Just as the trade union movement is in decline, so is the cultural distinctiveness of the management community.
Johann Olaisen, head of knowledge management and dean of the Norwegian School of Management, says management education is increasingly being organised around teams to reflect the realities of the new workplace: “What you like to have these days is people who are responsible in the way they create their own future.” The implication is that in a knowledge economy, in which workers “own” the means of production, the old political divisions are losing relevance.
Even the most basic of political divisions in Australia, that between labor and capital, is beginning to blur. Industry funds (union-based savings funds) will soon have some of the largest pools of capital. When this starts to make itself felt, workplace politics will be felt powerfully in the investment community.
Workers and shareholders will have changed places, or at least be hard to distinguish.
Equally, any attempts to “socially engineer” the political constitution of management in Australia – by mandating quotas or by using other forms of influence – would seem to be an invitation to disaster. If there is one agreed principle in contemporary management, it is that it should be a meritocracy.
Although the ability to deal with people is a core management skill, Holden comments that the assumption is mostly otherwise. Workplace politics is usually considered an impediment. Similar approaches will be taken to outside political influences. Most managers will assume them to be an obstacle to be overcome, rather than an opportunity to be exploited.
Yet, the argument can just as easily be turned around. If managers are typically those most skilful at dealing with political issues in the workplace, they should be well equipped to deal with politics from other forums. And if they are not, it may be because of the cultural homogeneity of the environment in which they find themselves.
Da Gama Pinto says analyses of the relationship between ethnic diversity and business performance have tended to be circular. By concentrating on narrow economic and financial metrics, managers have ruled out in advance the great benefit of diversity: the catalysing of an understanding of the overall context.
Da Gama Pinto says Australian managers have tended to assume that politics is “external”, when it should be seen as integral to a proper understanding of the commercial and cultural environment: “How can you make decisions about a market when you don’t understand its politics? A manager must have knowledge of the context. Unless you do a bit of stock-taking about who is in the board room and who is in management, you will never be able to make informed decisions.”
Politics: Problem or opportunity?
It is reasonable to draw a parallel between the ability of managers to deal with wider political issues and their ability to deal with markets that are becoming more complex. Being able to manage gender issues effectively should be a good background for managing gender differences among customers. Being able to manage people from different races and cultures should be good preparation for operating in a country in which one-fifth of the population is foreign-born.
Knowing how to deal with concerns about the environment should prepare a manager well for challenges in the ecological area. Dealing with “ageism” should be good training for a market that has complex inter-generational dynamics, and rapidly changing technological habits.
Changes to organisational structures may make it easier to deal with broader political issues. Stoneman says the use of outsourcing has made it easier to handle political issues: “Outsourcing was the buzzword in the late 1980s and 1990s. Some say it was a way of outsourcing responsibility and accountability. Organisations may pursue a contract appointment in the first instance to test the water. It is a way of drawing in a general manager, or even a more junior person without making a commitment. Labor for hire is just as common in senior ranks. We have an incredible skill shortage, globally and in Australia, and organisations need to respond to it.”
If not at work, then where?
Proponents of political agendas are unlikely to be stopped by objections from managers that it gets in the way of the organisation performing properly. If political agitators cannot have an effect on the workplace, then they will have failed.
Yet politics is deeply affected by what happens in the workplace. The class divisions between workers and employers arose out of the character of industrial-era work, which was based on heavily supervised repetitious processes. In an era of “knowledge work”, these industrial-relations divisions look increasingly redundant. It is not always clear whether the workplace influences politics, or vice-versa. What is clear is that it is an issue that managers must deal with.
English management thinker Charles Handy writes in The Elephant and the Flea that technological change is altering the workplace and politics. “Politicians will find that national parliaments get squeezed out between more powerful local assemblies and the growing importance of regional economic blocs. They will squeal loudly about the loss of national sovereignty as it happens, but disintermediation is one of those unintended but inevitable consequences of the way new technologies push everything to be more local as well as more global, losing the middle in the process.”
The disruption of formal political divisions suggests that political influence on the workplace will be changing continually. Although discriminating against anyone on the basis of gender, ethnicity, age or class is considered unacceptable, this also suggests that favoring anyone for the same reason is wrong. In other words, politics should be kept out of the workplace.
Viewing politics in extreme terms – as something to be enforced or something to be resisted – may finally be damaging. As the chairman of Microsoft, Bill Gates, recently told a group of executives in China, the response to change tends to be exaggerated. “It is typical to over-estimate changes that take place in the short run and also very typical to under-estimate the changes over a 10-year period.”
Gates’s comments can be applied to the politicisation of management. In the short term, it often seems to be over-done. Expecting organisations, especially in established industries, to begin reflecting wider political concerns is likely to be misplaced, and efforts to enforce it are probably counter-productive. In the long-term, the political changes will have an influence any way. Organisations reflect the society they inhabit and so it will prove with politics and management.