More than 100 years ago, the Cadbury family built a model town, Bournville, for their workers, away from the overcrowded tenements of central Birmingham, England. Cadbury’s vast chocolate factory was at the center of thousands of purpose-built villas, a village green, schools, churches and civic halls.
The message was clear. Cadbury cherished and invested in their workers, expecting commitment and loyalty back, which they got. Sir Adrian Cadbury, now in his 80s, still proudly shows visitors how his Quaker forefathers felt a genuine sense of responsibility to their workers. His family believed in capitalism for a purpose — innovation and human betterment.
Amazon founder Jeff Bezos would regard the Cadbury family as crazed. His relationship with his workforce is entirely transactional: They are to give their heart and soul to Amazon, undertaking to follow Amazon’s “leadership principles,” set on a laminated card given to every employee, and can expect to be summarily sacked if they do not make the grade. These injunctions are aimed at not only Amazon’s forklift truck drivers and packagers, but also at its executive workforce.
At first glance, the principles seem unexceptional, exhorting “Amazonians” to be obsessed with customers, drive for the best and think big. In practice, they mean workers have to be available to Amazon virtually every waking hour, as a devastating article claimed in the New York Times last week. The workers should attack each other’s ideas in the name of “creative challenge” and buy into the paranoid culture Bezos believes is essential to business success, with their hourly performance fed into computers for Big Brother Bezos to monitor.
Working at Amazon has become synonymous with stress, conflict and tears — or, if you swim rather than sink, a chance to flourish. It is, as one former executive described it, “purposeful Darwinism”: If the majority of the workforce can flourish in such a culture, you have a successful company. In his defense, Bezos would claim that he has founded the US’ most valuable retailer that ships 2 billion items a year. Cadbury ended up being taken over. Better his approach to capitalism than defunct Quakers, except now everyone is expendable. This is the route to success. Or is it?
The nature of firms is changing. The capitalist world of the so-called “Golden Age” between 1945 and the first oil crisis in 1974 was defined by Cadbury-type companies. Even if they did not build estates in which their workers could live, big companies offered paid holidays, guaranteed pensions related to your final salary, sickness benefit and recognized trade unions. Above all, they offered the chance of a career and personal progression.
This was the domain of the corporation man commuting to a steady job in a steady office in a steady company with their laboring counterparts no less secure in a steady factor. It delivered, though. If Western economies could again grow consistently at 3 percent or 4 percent, underpinned by matching growth in productivity, there would be delight all round.
The companies were much more exciting than they looked. They were purposeful — repositories of skills and knowledge, seeking out new markets and applying new technologies with an appetite for growth. In Britain, big companies, such as ICI, Glaxo, EMI, Unilever, Thorn, British Aircraft Corporation, Marconi and Cadbury were centers of growth and innovation.
A critical doctrine at the time was that they were held back by trade unions and soft economic policy that encouraged inflation. The proof that inflation was so damaging is scant and beyond the print, coal, rail and motor industries, British trade unions were pretty weak and pliant. What instead held these companies back was the evaporation of the guaranteed markets of empire. Second, a short-term, gentlemanly, disengaged financial system was unable to mobilize resources behind these companies and their greater purpose as imperial markets shrank. That was not widely understood then — and certainly not now. Instead, the economic problem was defined as pampered, unionized workers, a view further entrenched by an avalanche of free-market economics from the US. Worker privileges and rights must cease.
So to the firm of today. The new model firm no longer has workers who are members of the organization in a relationship of mutual respect and shared mission with committed, long-term owners; rather, the new ownerless corporation with its tourist shareholders employs contractors who have to pay for benefits themselves and can be hired and fired at will.
They are throwaway people, middle-class workers at risk as much as their working-class peers. Unions are not welcome; pension benefits are scaled back; sickness, paternity and maternity benefits are pitched at the regulatory minimum. Last week, Britain’s Citizens Advice Bureau said it estimated that 460,000 people nationwide had been defined by employers as self-employed (and thus entitled to no company benefits), even though they worked regularly for one employer, often in office roles. It is the same approach that has delivered 1.4 million zero-hours contracts. All this is allegedly to serve growth. Except over the past 20 years, growth, productivity and innovation in both Britain and the US have collapsed. These new firms, whose only purpose is short-term profit with contractualized workforces, turn out to be poor creators of long-term value. The exceptions, paradoxically, are the great high-tech companies, such as Amazon, Google, Apple and Facebook.
The alchemy of their success is that they combine innovative technology, produce at continental scale, invest heavily and commit to a great purpose, usually because of the powerful personal commitment of the founder. Bezos might have constructed a Darwinian work environment, but it is all “to be the Earth’s most customer-centric company.” He has invested hugely to achieve that end, but his workplaces, by contrast, seem terrible.
However, even Bezos does not want to be depicted as an employer with no moral center: He urged his employees to read the offending article and refer examples of bad practice to his human resources department.
Ultimately, long-term value creation cannot be done by treating workforces as cattle. It is a great debate about today’s capitalism. It would be a triumph if it was taken seriously in Britain.
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