Category Archives: Leadership

EU credibility as a people’s union rests on the social pillar

Buffeted by the pandemic and by populism, the EU needs the European Pillar of Social Rights to become a solid anchor of security for all.
By Liina Carr – Next week, the European Commission is set to unveil its Action Plan for putting the European Pillar of Social Rights into practice. The European Trade Union Confederation is pressing hard for an ambitious plan, which provides the means to achieve and monitor tangible social progress.

The EPSR was adopted by member states in 2017 but—partly due to the social and economic damage inflicted by the pandemic—European citizens might be forgiven for wondering what difference it has made to their lives. It was the former commission president, Jean-Claude Juncker, who announced the initiative in his 2015 State of the Union address. The text was finally proclaimed by European Union leaders at the Social Summit in Gothenburg.

The ETUC played a major role in developing its 20 principles, which we see as crucial to strengthening the EU’s social dimension—ensuring that the welfare of workers and their families is not subordinated to the economic interests of the single market.

Despite its legalistic language, the pillar however lacks legal force: the principles do not give direct rights to any individual. It has been described as an agenda, ‘a compass for a renewed process of upward convergence towards better working and living conditions in Europe’.

The ETUC sees it as a guiding strategic framework, enabling the commission to bring forward legislation and other initiatives to strengthen social wellbeing. But at a time when the EU is under intense scrutiny for its handling of the Covid-19 crisis, implementing the pillar in a way that touches people’s lives is a question of credibility for European institutions and member-state governments in the eyes of their citizens. There is no time to waste. more>

Updates from McKinsey

Purpose for asset owners: Climbing a taller mountain
In the wake of the pandemic, the world’s long-term investors are reexamining their purpose.
By By Duncan Kauffman, Bryce Klempner, and Bruce Simpson – The world’s pension funds, sovereign-wealth funds, and endowments are no strangers to purpose—they intentionally strive to create positive societal impact. After all, they have long been using purpose as a not-so-secret weapon to attract talent while competing with higher-paying private-sector investment managers. As one chief talent officer of a major asset owner put it, “We can’t compete with Wall Street head-to-head on compensation, but we can emphasize the mission of the work we do: helping millions of our fellow citizens save for their retirements. That’s pretty meaningful.” Nevertheless, amid the pandemic, many institutions are redefining, or simply sharpening, their emphasis on purpose, with promising implications for their constituents and the societies in which they operate.

Experienced climbers

For asset owners, purpose begins with their mandate, one that many owners have taken great care to define. The mandate informs all strategic choices an asset owner makes, so many CEOs and chief investment officers (CIOs) are careful to align their top teams and board. For example, the website for the Ontario Teachers’ Pension Plan states, “Our name captures our purpose: to secure the future for Ontario’s teachers.” The Abu Dhabi Investment Authority describes its purpose as “. . . to secure and maintain the future welfare of the Emirate.” And the Yale Investments Office “seeks to provide high inflation-adjusted returns to support the current and future needs of the university.

These purpose statements typically share a common concept: asset owners commit to investing the capital they have been entrusted to preserve, by enhancing the long-term purchasing power of their beneficiaries. This purpose is noble; it is focused on helping others—and, in many cases, doing so on a large scale, for millions of beneficiaries or even an entire nation. It aims to help others by enhancing their autonomy. And it is typically cast as helping to orient institutions toward the long term—a horizon in which all stakeholders’ interests tend to converge. The power of these three dimensions of purpose has afforded asset owners comfort (and perhaps competitive advantage) in their distinctive purpose vis-à-vis other investment firms and financial institutions.

Many asset-owner executives may thus feel justifiably proud of their progress on organizational purpose. Yet increasingly, partly impelled by the global health crisis and partly by other societal forces, several asset owners are mulling an even taller mountain: using their capital, capabilities, and influence to contribute to the economic and social recovery of the communities in which they operate, so that they can deliver positive social impact beyond what they currently achieve.

Why do more?

Like many industries with a noble purpose, asset owners have a long history of harnessing some of the advantages that come from a strong shared sense of purpose—in talent (recruitment, retention, motivation, productivity), external engagement (policy and regulatory freedom), and risk management (in their own organizations and portfolios). Yet there are three reasons why asset owners are increasingly seeking to do more. more>

How to speak in public

Public speaking can feel like an ordeal, but take a lesson from the ancients: it’s a skill you can develop like any other
By John Bowe – Whether you’re facing a large crowd, a handful of colleagues at a conference table, a job recruiter over Zoom, or trying to hold your own during a family fight, the all-too-common experience of speech anxiety can feel like a frustrating act of self-betrayal. You wish to share your knowledge, beliefs and feelings. Yet the moment you decide it’s time to communicate them, the words … don’t … seem. To Want. To Come. Out. Of. Your Mouth.

Think about our usual ways of describing the problem: ‘I’m shy.’ ‘I suffer from speech anxiety.’ ‘I just don’t know how to be myself in front of a group.’ We often act as though the problem stems from a psychological or emotional shortcoming within us. After years of watching our looser-tongued peers express their ideas and passions, it’s easy to become resentful and alienated. These negative feelings can reinforce our original reaction: There’s too much stuff inside of me that I can’t express! There’s something wrong with me.

This diagnosis would have seemed utterly baffling to the ancient Greek educators and philosophers who invented language theory in the 4th century BCE, and then taught it to virtually every student in the West for 2,000 years until a couple of centuries ago. From the ancient perspective, public speaking, like writing or, for that matter, military prowess, was considered an art form – teachable, learnable, and utterly unrelated to issues of innate character or emotional makeup. To them, the idea of expecting the average, speech-ignorant person to be reliably eloquent would be like expecting an untrained adolescent to perform like a seasoned warrior on the battlefield. Their take holds true today – it’s unrealistic to expect yourself to be competent, much less masterful, in an art form you’ve never been taught to practice.

Under the larger discipline of rhetoric (the study of persuasion in all its forms), students in antiquity spent years acquiring a strategic understanding of how to temper logic, emotions and words with poise. Speaking well depended upon learning how to analyze all sides of an argument and assaying all possible avenues of commonality with one’s audience be­fore expressing an opinion. Similar to our approach to reading and writing today, speech training was a comprehensive, critical approach to knowledge, with an additional emphasis on psy­chology and social interaction. more>

From an industrial renaissance to an economy of value

By Francisco Jaime Quesado – While having to endure the ongoing era of a global pandemic, we are facing the prospect of an effective industrial renaissance that can change the way our economy works

In the new global economy, in which industry is becoming more important, companies have a new challenge – to redefine its value chain and to integrate the existing global networks with new ideas, new solutions and new proposals of competence. This industrial renaissance will be a contract of trust in this new agenda of change and a new effective vision for the future as it should mobilize those that have a set of effective value creations in the economy.

A post-pandemic industrial renaissance is the point of contact between those that believe in the power of people to create new solutions to more complex problems that are arising in society and those that want innovation and creativity to be the platform for the creation of value in a globally competitive economy. This ‘renaissance’ is, in essence, the confirmation of a process of integration of people into society – an individual’s contribution must be a commitment to the organization of society and its main elements.

The next stage in the process of rebirth must apply to the most critical factors of competence and trust, which includes a focus on innovation and the sharing of positive dynamics. We need society to have a new challenge. Society must be able to be the real platform of a more entrepreneurial society that is centered on new areas of knowledge and sectors of value.

In a modern and active society, the keyword is ‘co-creation’, which is used to promote a dynamic and active creation process that involves each citizen in the next big challenge for society. more>

Gig workers: guinea pigs of the new world of work

Most discussion of gig workers has focused on their material insecurity. More attention also needs to be paid to what goes on in their heads.
By Pierre Bérastégui – The ‘gig’ economy has grown to become an intrinsic part of our society and yet the benefits and risks of this new way of working are still much debated. Understandably, the employment status of gig workers captures most public attention.

Most European Union member states lack clear regulations on this, so a platform’s terms and conditions determine the status of its ‘users’, based on the existing regulatory framework. Although there are instances of platforms offering employment contracts, most consider gig workers as self-employed.

This is often referred to as ‘bogus’ self-employment: workers are treated as such for tax, commercial and company-law purposes, yet remain subject to subordination by and dependence on the contractor and/or platform. As new forms of work outpace regulation, the key legal challenge is to ensure no workers are left outside of the regulatory framework.

That should, however, not hide the fact that gig workers deal with unique challenges when it comes to working conditions. In addition to the specific hazards entailed by the different types of activities mediated through online labor platforms, there are also risks related to the way gig work is organized, designed and managed. Addressing these is essential, to safeguard working conditions and ensure a socially responsive transition to the new world of work. more>

Updates from McKinsey

America 2021: Renewing the nation’s commitment to climate action
To America’s leaders, innovators, and changemakers; here’s how you can help build a low-carbon economy that is resilient, competitive, prosperous, and fair.
By Dickon Pinner and Matt Rogers – The new federal administration has arrived in Washington with ambitious plans to address the climate crisis—and in so doing, revitalize the US economy and reclaim a leadership position on the international stage. During their campaign, President Joe Biden and Vice President Kamala Harris highlighted “the opportunity to build a more resilient, sustainable economy—one that will put the United States on an irreversible path to achieve net-zero emissions, economy-wide by no later than 2050 […] and, in the process, create millions of good-paying jobs.”

Their vision recognizes that the global transition to a low-carbon economy is well under way. The cost of many clean-energy technologies fell significantly during the past decade—as much as 90 percent for some renewable-energy projects. The capital markets are funding the use of these technologies at historically low costs of capital, thereby accelerating scale-up investments. A climate-friendly policy tilt is taking hold in many places. With China, Japan, and the European Union having announced targets to achieve net-zero emissions, more than 110 countries, accounting for more than 70 percent of global GDP, have made net-zero pledges. Of the US states, 23 have established emissions-reduction goals and 12 have instituted carbon-pricing policies. Groups representing prominent American companies have endorsed the use of market-based mechanisms to promote emissions reductions. Some large businesses, along with four former Federal Reserve chairs (including the new treasury secretary), have voiced support for a nationwide carbon tax. These trends are creating possibilities for American leadership, innovation, entrepreneurship, competitive advantage, and economic growth.

With the wind at their backs, government agencies and private-sector organizations can continue advancing the new national climate agenda that’s been set in motion already. The stimulus and government appropriations bill of December 2020, which received bipartisan support, set out tax incentives and funding for energy innovation and climate-related programs. And within days of his inauguration, President Biden signed executive orders initiating the process to reenter the Paris Agreement, positioning climate as a foreign-policy and national-security issue and calling on federal agencies to coordinate an all-government push to cut greenhouse-gas emissions, purchase clean-energy technologies, support innovation, conserve nature, and create economic opportunities across America. 1 Making good on these intentions will require new information, products, operations, and market innovations from public officials and business leaders. To inform their work, this memo highlights four sets of practices with notable potential to deliver the prosperity, security, and social-justice outcomes that the administration has prioritized. more>

Updates from Chicago Booth

Psychology can help set the stage for business success
Use the environment you create to help employees, and your company, succeed
By Linda E. Ginzel – Remember the traditional classrooms you’ve learned in throughout your life. What do they look like and have in common?

You’re probably picturing a large space with few distractions, desks facing the front of the room, and all eyes on the teacher. Most students are taking notes; the teacher attempts a joke and students attempt to laugh. The people in the room are a diverse set of individuals and yet they all behave exactly the same way. They are all engaging in classroom behavior.

The first educators to create this environment didn’t know it at the time, but they were thinking like social psychologists. In particular, they were following what would later be the advice of the father of the discipline, Kurt Lewin, who said that behavior is a function of a person and their environment.

Business executives and teachers have similar goals for obtaining certain desired behaviors from employees and pupils, but there is little they can do to change the people themselves. Under Lewin’s equation, that leaves the environment, which is something managers have at least some control over. If you want to change someone’s behavior, including your own, your best bet is to go to work changing the circumstances.

Social psychologists focus on the external circumstances that affect the behavior of individuals. They talk about creating strong environments that help to move people in the direction of their goals, which is what I teach my executive MBA students in classrooms much like the one described above.

So, how do you do it? Business executives decide who is on a given team, the roles they play, how they are compensated, and the resources at their disposal. Your own behavior is a big part of the situation. If you want to change the behavior of others, start with your own actions. As an example, think about how you give team members feedback since that will shape how they feel about coming to you with suggestions or questions in the future. more>

Related>

TThe US jumps on board the electric vehicle revolution, leaving Australia in the dust

By Jake Whitehead, Dia Adhikari Smith and Thara Philip – The Morrison government on Friday released a plan to reduce carbon emissions from Australia’s road transport sector. Controversially, it ruled out consumer incentives to encourage electric vehicle uptake. The disappointing document is not the electric vehicle jump-start the country sorely needs.

In contrast, the United States has recently gone all-in on electric vehicles. Like leaders in many developed economies, President Joe Biden will offer consumer incentives to encourage uptake of the technology. The nation’s entire government vehicle fleet will also transition to electric vehicles made in the US.

Electric vehicles are crucial to delivering the substantial emissions reductions required to reach net-zero by 2050 – a goal Prime Minister Scott Morrison now says he supports.

It begs the question: when will Australian governments wake up and support the electric vehicle revolution? more>

Why Immigration Drives Innovation

Economic history reveals one unmistakable psychological pattern.
By Joseph Henrich – When President Coolidge signed the Johnson-Reed Act into law in 1924, he drained the well-spring of American ingenuity. The new policy sought to restore the ethnic homogeneity of 1890 America by tightening the 1921 immigration quotas. As a result, immigration from eastern Europe and Italy plummeted, and Asian immigrants were banned. Assessing the law’s impact, the economists Petra Moser and Shmuel San show how this steep and selective cut in immigration stymied U.S. innovation across a swath of scientific fields, including radio waves, radiation and polymers—all fields in which Eastern European immigrants had made contributions prior to 1924. Not only did patenting drop by two-thirds across 36 scientific domains, but U.S-born researchers became less creative as well, experiencing a 62% decline in their own patenting. American scientists lost the insights, ideas and fresh perspectives that inevitably flow in with immigrants.

Before this, from 1850 to 1920, American innovation and economic growth had been fueled by immigration. The 1899 inflow included a large fraction of groups that were later deemed “undesirable”: e.g., 26% Italians, 12% “Hebrews,” and 9% “Poles.” Taking advantage of the randomness provided by expanding railroad networks and changing circumstances in Europe, a trio of economists—Sandra Sequeira, Nathan Nunn and Nancy Qian–demonstrate that counties that ended up with more immigrants subsequently innovated more rapidly and earned higher incomes, both in the short-term and today. The telephone, hot blast furnace, screw propeller, flashlight and ironclad ship were all pioneered by immigrants. The analysis also suggests that immigrants made native-born Americans more creative. Nikola Tesla, a Serbian who grew up in the Austrian Empire, provided George Westinghouse, a New Yorker whose parents had migrated from Westphalia, with a key missing component for his system of electrification based on AC current (Tesla also patented 100s of other inventions).

In ending the quotas imposed under the Harding-Coolidge administration, President Johnson remarked in 1964 that “Today, with my signature, this system is abolished…Men of needed skill and talent were denied entrance because they came from southern or eastern Europe or from one of the developing continents…” By the mid-1970s, U.S innovation was again powerfully fueled by immigrants, now coming from places like Mexico, China, India, Philippines and Vietnam. From 1975 to 2010, an additional 10,000 immigrants generated 22% more patents every five years. Again, not only did immigrants innovate, they also stoked the creative energies of the locals. more>

Was it a coup? No, but siege on US Capitol was the election violence of a fragile democracy

By Clayton Besaw and Matthew Frank – Did the United States just have a coup attempt?

Supporters of President Donald Trump, following his encouragement, stormed the U.S. Capitol building on Jan. 6, disrupting the certification of Joe Biden’s election victory. Waving Trump banners, hundreds of people broke through barricades and smashed windows to enter the building where Congress convenes. One rioter died and several police officers were hospitalized in the clash. Congress went on lockdown.

While violent and shocking, what happened on Jan. 6 wasn’t a coup.

This Trumpist insurrection was election violence, much like the election violence that plagues many fragile democracies.

The uprising at the Capitol building does not meet all three criteria of a coup.

Trump’s rioting supporters targeted a branch of executive authority – Congress – and they did so illegally, through trespassing and property destruction. Categories #2 and #3, check.

As for category #1, the rioters appeared to be civilians operating of their own volition, not state actors. President Trump did incite his followers to march on the Capitol building less than an hour before the crowd invaded the grounds, insisting the election had been stolen and saying “We will not take it anymore.” This comes after months of spreading unfounded electoral lies and conspiracies that created a perception of government malfeasance in the mind of many Trump supporters.

Whether the president’s motivation in inflaming the anger of his supporters was to assault Congress is not clear, and he tepidly told them to go home as the violence escalated. For now it seems the riot in Washington, D.C., was enacted without the approval, aid or active leadership of government actors like the military, police or sympathetic GOP officials. more>