tag:theconversation.com,2011:/ca/topics/companies-13633/articlesCompanies – The Conversation2024-03-05T20:57:58Ztag:theconversation.com,2011:article/2246912024-03-05T20:57:58Z2024-03-05T20:57:58ZWomen want to climb the corporate ladder — but not at any price<figure><img src="https://images.theconversation.com/files/578677/original/file-20240115-27-31qawf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Women are just as interested in opportunities for advancement as men are. However, they find them less attainable because of their busy schedules.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><p>The consulting firm <a href="https://www.spencerstuart.com/">Spencer Stuart</a> recently published a study <a href="https://www.spencerstuart.com/-/media/2023/december/f500-profiles/fortune-500-csuite-snapshot-profiles-in-functional-leadership.pdf">of top management at Fortune 500 companies</a>, the 500 richest companies in the United States.</p>
<p>The analysis focused specifically on the gender of the people in these positions, their functions and the source of their appointments, whether they came from inside or outside the organization.</p>
<p>Studying the composition of top management, often referred to as the C-Suite, is particularly important since it allows us to see how many women make it to the position of CEO in an organization.</p>
<p>Respectively Dean of the John Molson School of Business, and an expert for several decades on the place of women in the upper echelons of the business world, we will discuss the main findings of the Spencer Stuart study.</p>
<h2>Starting points</h2>
<p>Three conclusions in particular caught our attention:</p>
<ul>
<li><p>Men represent 60 per cent of the select group that constitutes top management. Men principally occupy the positions that offer the greatest potential for appointment as CEO, <a href="https://www.spencerstuart.com/-/media/2021/december/lastmile/the-last-mile-to-the-top-future-ceos-who-beat-the-odds.pdf">according to the history of appointments to such positions</a>. These include, for example, Chief Operating Officer, Head of Division and Chief Financial Officer;</p></li>
<li><p>Although women are increasingly present in top management positions (40 per cent), they are still found in the positions of Head of Human Resources, Head of Communications, Head of Diversity and Inclusion and Head of Sustainable Development. In other words, women are in so-called support functions that, while important for organizations, are unfortunately perceived as having little impact on shareholder equity and financial performance;</p></li>
<li><p>Appointments to top management positions that lead to the position of CEO come mainly from within the company. What does this mean? That an intimate knowledge of the organization gained over a long period is valued and that there is generally a promotion process in place to feed the succession pool.</p></li>
</ul>
<h2>Global overview of the situation</h2>
<p>Our experience over the last few decades allows us to draw similar conclusions about Canada. So we wanted to check whether this situation was similar in other countries.</p>
<p>A report by the International Labour Organization called <a href="https://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/---publ/documents/publication/wcms_700953.pdf">“The Business Case for Change”</a> provides an overview of the position of women in the upper echelons of power in 13,000 companies operating on every continent.</p>
<p>As in the United States and Canada, the gender divide between positions that could be called support jobs, and those that contribute directly to an organization’s profitability, appears to be widespread. According to the authors of this study, it is also referred to as a “glass wall,” since it limits the pool of potential female candidates for the position of CEO.</p>
<p>But how can this phenomenon be explained?</p>
<h2>Stereotypes, biases and prejudices</h2>
<p>First of all, gender stereotypes and prejudices come into play from childhood.</p>
<p>They have an impact on the toys children play with, the subjects they study, their lives and their future careers.</p>
<p>Girls — generally speaking — aspire to become doctors, teachers, nurses, psychologists and veterinary surgeons. As for boys, they want to become engineers and <a href="https://www.unesco.org/en/articles/smashing-gender-stereotypes-and-bias-and-through-education">work in IT and mechanical fields</a>.</p>
<h2>Organizational culture</h2>
<p>Secondly, organizational culture is a <a href="https://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/---publ/documents/publication/wcms_700953.pdf">mirror of our society and its traditions</a>.</p>
<p>It therefore conveys biases regarding the leadership potential of women compared to men.</p>
<p>According to the International Labour Organization survey cited above, 91 per cent of the women questioned agreed or strongly agreed that women lead as effectively as men. However, only 77 per cent of men agreed with this statement.</p>
<p>Arguably, this leadership bias has an impact on the recruitment, appointment, talent development and “stretch assignment” processes that pave the way for career progression.</p>
<p>There is also reason to believe that these biases are equally present on boards of directors, which are responsible for appointing CEOs and which are still predominantly composed of men.</p>
<h2>Different life goals</h2>
<p>Finally, women and men have different preferences and career goals.</p>
<p>According to a study by Harvard Business School professors Francesca Gino and Alison Wood Brooks entitled <a href="https://hbr.org/2015/09/explaining-gender-differences-at-the-top">“Explaining the Gender Differences at the Top,”</a> women are just as interested in opportunities for advancement as men are. However, they find them less attainable because of their busy schedules. As a result, women have to more seriously take into account the compromises and sacrifices they will have to make to occupy positions of high responsibility and power.</p>
<p>The authors are careful to point out that these results do not mean that women are less ambitious, but that career success means different things to different people. For some, it takes the form of power. For others, it can mean making colleagues happy and helping to make the world a better place in a collaborative and supportive environment.</p>
<p>This research is in line with that of Viviane de Beaufort, a professor at the École supérieure des sciences économiques et commerciales (ESSEC). In a survey of the career aspirations of 295 French women managers, she found that women do want to rise to the highest positions. <a href="https://www.academia.edu/80171918/WP_CERESSEC_CEDE_ESSEC_Viviane_de_Beaufort_2022_avec_le_collectif_WOMEN_BOARD_READY_ESSEC">But not at any price</a>.</p>
<h2>What determines career paths?</h2>
<p>This article therefore raises the following question:</p>
<p>Can we, as women, one day hope to be CEOs or fulfill our professional dreams despite the biases, prejudices, stereotypes and barriers we have to overcome?</p>
<p>Simone de Beauvoir wrote in 1949 in her essay “The Second Sex”:</p>
<blockquote>
<p>Women determine and differentiate themselves in relation to men, not men in relation to women: they are inessential in relation to what is essential. He is the subject, he is the absolute, she is the other.</p>
</blockquote>
<p>This excerpt reminds us that the skills and knowledge required to perform strategic functions have always been defined in terms of the male exercise of power in an environment where the organization’s performance is judged almost exclusively by financial success and growth of shareholder value.</p>
<p>It’s time to think about new career paths and skills that are not defined by gender, but rather, by an organization’s mission and objectives. These goals must take into account <a href="https://hbr.org/2022/07/the-c-suite-skills-that-matter-most">how they contribute to creating a better world</a>, as much as ensuring the financial success of organizations.</p>
<p>Functional skills must be valued as much as softer skills such as emotional intelligence, empathy, a sense of community and boldness.</p>
<p>Breaking down glass walls also means that organizations and their boards have a responsibility to identify and encourage women to take up positions where they can gain experience and develop their leadership skills in front line rather than support roles.</p>
<p>In such a context, women, as much as men, will have a better chance of reaching the highest positions in a company while remaining true to themselves — and doing so on equal terms.</p><img src="https://counter.theconversation.com/content/224691/count.gif" alt="La Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Les auteurs ne travaillent pas, ne conseillent pas, ne possèdent pas de parts, ne reçoivent pas de fonds d'une organisation qui pourrait tirer profit de cet article, et n'ont déclaré aucune autre affiliation que leur organisme de recherche.</span></em></p>Women are increasingly present in top management positions, but they end up in so-called support functions, which rarely lead to CEO positions.Louise Champoux-Paillé, Cadre en exercice, John Molson School of Business, Concordia UniversityAnne-Marie Croteau, Dean, John Molson School of Business, Concordia UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2215072024-01-30T16:52:38Z2024-01-30T16:52:38ZAI companies are merging or collaborating to even out the gap in access to vital datasets<figure><img src="https://images.theconversation.com/files/572123/original/file-20240130-25-xtsqyu.jpg?ixlib=rb-1.1.0&rect=17%2C5%2C3817%2C2149&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/futuristic-concept-data-center-chief-technology-2212675527">Gorodenkoff / Shutterstock</a></span></figcaption></figure><p>Some recent mergers, acquisitions and investments in the business world have highlighted the strategic value of data to companies. These businesses are not just buying assets or market share – they are also acquiring or investing in large, complementary datasets. This process is known in the business world as horizontal integration.</p>
<p>This integration can drive innovation and provide competitive advantages. It can also open up new revenue streams. Some examples include Microsoft’s acquisitions of <a href="https://news.microsoft.com/announcement/microsoft-buys-linkedin/">LinkedIn</a> and GitHub as well as Amazon’s acquisitions of WholeFoods and the Washington Post. Then there has been Discovery Communications’ merger with Warner Brothers, IBM’s investment in <a href="https://www.theverge.com/2024/1/25/24050445/google-cloud-hugging-face-ai-developer-access">Hugging Face</a> and <a href="https://www.forbes.com/sites/qai/2023/10/31/google-invests-in-anthropic-for-2-billion-as-ai-race-heats-up/?sh=35cb756e664e">Google’s investment in Anthropic</a>.</p>
<p>As the last two examples illustrate, data is extremely important for AI companies. It’s vital for <a href="https://www.forbes.com/sites/forbestechcouncil/2022/06/27/training-data-the-overlooked-problem-of-modern-ai/?sh=37d47ee8218b">“training”, or improving, AI systems</a>. Training AI systems on large, new, varied data sets allows companies to <a href="https://hai.stanford.edu/news/data-centric-ai-ai-models-are-only-good-their-data-pipeline">develop more advanced, more powerful AI systems</a>.</p>
<p>But against the background of this scramble, there is also a growing consensus that some form of regulation is needed to address the ethical, safety and fairness concerns associated with AI.</p>
<p>But regulating AI presents a unique set of challenges. This is mainly due to its foundation on intangible elements such as software and algorithms. These elements can be easily modified, replicated and distributed across borders with few physical traces. This helps them evade traditional regulatory mechanisms that rely on controlling physical goods or specific locations. </p>
<p>Yet a promising approach to regulating AI is one that would focus on controlling access to the very data that is the lifeblood of AI development. Since data is behind the rise of <a href="https://www.indeed.com/career-advice/career-development/horizontal-integration">horizontal integration</a> as well as fuelling the growth and sophistication of AI systems, its concentration in the hands of a few entities can lead to monopolistic dominance. In short, it gives too much power to too few companies.</p>
<h2>Antitrust model</h2>
<p>To mitigate this, <a href="https://www.europarl.europa.eu/news/en/headlines/society/20230601STO93804/eu-ai-act-first-regulation-on-artificial-intelligence">regulatory frameworks</a> could be designed that resemble existing <a href="https://competition-policy.ec.europa.eu/antitrust-and-cartels_en#:%7E:text=Antitrust%20rules%20prohibit%20agreements%20between,and%20the%20abuse%20of%20dominance.">antitrust laws</a> – but focused around data aggregation. They would help ensure a diverse and competitive landscape in the access to data. By preventing any single company from amassing an overwhelming data advantage, these regulations would aim to foster a more balanced field. Innovation must be allowed to thrive without being stifled by monopolistic control.</p>
<p>To properly achieve this outcome, we suggest that regulators need to look at limiting horizontal integration. As AI technologies continue to evolve and the demand for diverse and extensive datasets grows, companies will increasingly be motivated to pursue horizontal integration. </p>
<p>This trend towards integration not only consolidates data assets but also potentially reduces competition, as fewer companies come to control larger shares of valuable data. Therefore, regulatory scrutiny of such mergers and acquisitions becomes essential to ensure a competitive landscape where data does not become excessively concentrated in a few hands.</p>
<p>It’s important to note that the trend towards horizontal integration is already moderated to some extent by regulatory and ethical considerations, particularly around data privacy and existing antitrust laws. These considerations play a critical role in shaping the extent and nature of integration. </p>
<figure class="align-center ">
<img alt="AI representation." src="https://images.theconversation.com/files/572200/original/file-20240130-23-vb6lpu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/572200/original/file-20240130-23-vb6lpu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/572200/original/file-20240130-23-vb6lpu.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/572200/original/file-20240130-23-vb6lpu.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/572200/original/file-20240130-23-vb6lpu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/572200/original/file-20240130-23-vb6lpu.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/572200/original/file-20240130-23-vb6lpu.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Powerful AI systems rely on high quality</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/man-using-website-software-technology-ai-2300796931">Deemerwha studio / Shutterstock</a></span>
</figcaption>
</figure>
<h2>The benefits of more data</h2>
<p>When organisations integrate horizontally, they access a more comprehensive pool of data, filling gaps present in individual datasets. This amalgamation not only improves the reliability and accuracy of data but also broadens the perspective, offering deeper insights that are crucial for making informed decisions. </p>
<p>For instance, in merging customer demographic data with purchase history, companies can gain a more nuanced understanding of consumer behaviour. This is invaluable in today’s customer-centric market landscape.</p>
<p>Horizontal integration for AI aligns helps modern companies with their operational efficiency. Companies with similar markets or customer bases can optimise their processes based on richer, more comprehensive data insights. </p>
<p>This leads to improved efficiency in data collection and analysis. This is because making use of existing complementary datasets is more efficient and cost-effective than generating new data from scratch. Companies that successfully use combined datasets can better understand and predict customer needs and market trends. This advantage is especially important in industries where innovation and adaptability are key to survival and growth.</p>
<h2>A balancing act</h2>
<p>Despite the benefits for companies, the potential harm to market competition and consumer welfare from data consolidation necessitates a response. Centralising extensive datasets under dominant entities can potentially marginalise smaller competitors and stifle market diversity.</p>
<p>It also poses privacy concerns and amplifies the risk of market manipulation, diminishing consumer choice and impeding innovation. The potential benefits of data consolidation for customers include enhanced product offerings and personalised services. It is crucial that regulatory frameworks adopt a “rule of reason” approach. They would diligently scrutinise these activities under merger laws or abuse of dominance laws. This ensures a balanced market ecosystem, mitigates potential harm and safeguards competition and consumer interests.</p>
<p>In conclusion, the argument for horizontal integration in the age of AI is compelling. The synthesis of complementary datasets through such integration offers enhanced data quality, improved AI and machine learning capabilities. It provides operational efficiencies and strategic market advantages. </p>
<p>But we must take a balanced approach, weighing the benefits of integration against the ethical implications and regulatory compliance. The future of business in the AI era will likely be characterised by a continued trend towards strategic integration, shaping the way companies operate and compete. </p>
<p>If left unchecked, horizontal integration will concentrate the power of data in the hands of a few. This which will raise safety concerns and is likely to inhibit competition. But regulation based around antitrust principles – where an organisation steps in to prevent companies from behaving in ways that exclude competitors – could help prevent this.</p><img src="https://counter.theconversation.com/content/221507/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>There are risks in huge datasets sitting in the hands of just a few companies.Karl Schmedders, Professor of Finance, International Institute for Management Development (IMD)José Parra-Moyano, Professor, International Institute for Management Development (IMD)Michael Wade, Professor of Innovation and Strategy, Cisco Chair in Digital Business Transformation, International Institute for Management Development (IMD)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2145592023-11-06T13:34:05Z2023-11-06T13:34:05ZClimate change hits indebted businesses hardest, new research suggests<figure><img src="https://images.theconversation.com/files/556689/original/file-20231030-25-gfhibp.jpg?ixlib=rb-1.1.0&rect=297%2C1154%2C6833%2C3452&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Climate change leads to investment droughts, too. </span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/businessman-with-umbrella-standing-on-cracked-earth-royalty-free-image/685394718">mgstudyo/E+/Getty Images</a></span></figcaption></figure><p>Climate change poses the biggest risks to the <a href="https://doi.org/10.1002/wcc.565">most vulnerable people</a>, and the same is true for businesses: Highly leveraged companies – those that have accumulated too much debt – are uniquely susceptible to climate shocks. That’s what we found in a forthcoming study in The Review of Corporate Finance that analyzed data from <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4541036">more than 2,500 U.S. publicly listed companies</a> over 16 years. </p>
<p>As professors who study <a href="https://www.bryant.edu/academics/faculty/kuang-huan">climate finance</a> and <a href="https://www.bryant.edu/academics/faculty/zheng-cathy">corporate governance</a>, we wanted to understand how climate change affects businesses, and how <a href="https://www.investopedia.com/terms/s/stakeholder.asp">stakeholders</a> – people who have a stake in a firm’s success, such as consumers, employees and investors – respond to it. </p>
<p>So we and our colleagues <a href="https://apps.ualberta.ca/directory/person/elghoul">Sadok El Ghoul</a> at the University of Alberta and <a href="https://sc.edu/study/colleges_schools/moore/directory/guedhami_omrane.php">Omrane Guedhami</a> at the University of South Carolina conducted a study to examine how climate risk affects indebted companies.</p>
<p>We found that climate change delivers a one-two punch to highly leveraged firms by intensifying the costs that stakeholders impose on them.</p>
<p>Consider consumers. Researchers know that climate change can push people to mix up their purchasing patterns – by buying greener products, for example, or by engaging in boycotts. And while evolving consumer preferences pose a challenge to all businesses, it’s harder for a company that’s deep in debt to adapt.</p>
<p>Our study suggested as much. Two years after facing intense climate change exposure, highly indebted firms saw sales growth fall by about 1.4% on average, we found. In monetary terms, that translates into an average US$59.7 million loss per company. </p>
<p>Climate change also worries investors, we found. Companies exposed to climate risk face the threat of financial and operational disruptions that may drain lenders’ funds, particularly for firms already burdened with high debt. By examining capital issuance within our sample of companies, we found that climate exposure reduced firms’ net debt issuance – meaning new debt minus retired debt – by around $457 million per firm on average. This is an additional hurdle for indebted businesses trying to raise money.</p>
<h2>Why it matters</h2>
<p>Researchers have long known that indebted companies are at greater risk of product failures and <a href="https://doi.org/10.1111/j.1540-6261.1994.tb00086.x">losing market share</a> <a href="https://doi.org/10.1016/S0304-405X(03)00070-9">when economic conditions go south</a>. Having too much debt can even force companies out of business, as some analysts contend <a href="https://www.washingtonpost.com/business/economy/analysts-toys-r-us-might-have-survived-if-it-did-not-have-to-deal-with-so-much-debt/2018/03/15/42752326-286a-11e8-874b-d517e912f125_story.html">happened with Toys R Us</a>. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/556917/original/file-20231031-25-psqa9x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A STORE IS CLOSED sign is affixed to an automatic door at the entrance of a Toys R Us location." src="https://images.theconversation.com/files/556917/original/file-20231031-25-psqa9x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/556917/original/file-20231031-25-psqa9x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/556917/original/file-20231031-25-psqa9x.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/556917/original/file-20231031-25-psqa9x.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/556917/original/file-20231031-25-psqa9x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=501&fit=crop&dpr=1 754w, https://images.theconversation.com/files/556917/original/file-20231031-25-psqa9x.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=501&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/556917/original/file-20231031-25-psqa9x.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=501&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">A shuttered Toys R Us store in Orlando, Fla.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/toys-r-us-store-that-was-shuttered-in-2018-is-seen-on-june-news-photo/1151373510?adppopup=true">Paul Hennessy/NurPhoto via Getty Images</a></span>
</figcaption>
</figure>
<p>Our research suggests that climate change, which the World Economic Forum predicts will endanger <a href="http://www3.weforum.org/docs/WEF_Global_Risk_%20Report_2020.pdf">about 2% of global financial assets by 2100</a>, will push already shaky companies to the brink. It underscores the immense and asymmetric effects global warming will have on businesses – and the reality that the most vulnerable firms are set to endure the worst.</p>
<h2>What’s next</h2>
<p>Our study highlights the disproportionate impacts of climate change on financially fragile businesses. Moving forward, we plan to explore the influence of climate change on firms’ business behaviors, particularly in terms of their ethical conduct. </p>
<p>Regarding climate solutions, one of us (Huan Kuang) has shown how companies can use innovation to reduce their climate vulnerabilities. In <a href="http://dx.doi.org/10.2139/ssrn.4150960">a working paper</a> co-authored with <a href="https://www.isenberg.umass.edu/people/bing-liang">Bing Liang</a> of the University of Massachusetts Amherst, every 1% increase in climate-related innovation – as measured by patent data – was found to reduce firm-level carbon emissions growth by around 100,000 metric tons.</p>
<p>However, indebted firms may not rush to invest in new technologies without some prodding. That means policy incentives will be key to success, and further research is needed to determine what they should look like.</p>
<p>Climate change could also have more complicated economic effects than many people realize. For example, if it forces companies that aren’t viable out of business, that would be a good thing for the economy – at least in theory, as one of us (Ying Zheng) explored <a href="https://doi.org/10.1057/s41267-020-00309-x">in a recent paper</a> on a related subject.</p>
<p>Many questions remain unanswered, but it’s already clear that climate change will have important and multifaceted effects on the future of business. We encourage other researchers to investigate further.</p>
<p><em>The <a href="https://theconversation.com/us/topics/research-brief-83231">Research Brief</a> is a short take on interesting academic work.</em></p><img src="https://counter.theconversation.com/content/214559/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Global warming plus leverage equals a big mess for companies.Huan Kuang, Assistant Professor of Finance, Bryant UniversityYing (Cathy) Zheng, Associate Professor of Finance, Bryant UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2141362023-10-31T21:38:18Z2023-10-31T21:38:18ZStuck in the waiting room: Why women and minority groups are still underrepresented in top management<figure><img src="https://images.theconversation.com/files/549672/original/file-20230913-33750-imqte4.jpg?ixlib=rb-1.1.0&rect=40%2C0%2C4470%2C2964&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The percentage of women at the helm of companies in North America still hovers around five per cent.
</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><p>Over the past few years, there has been a great deal of research looking at how well women are represented in top companies. The findings continue to be distressing. </p>
<p>Whether in Canada or the United States, the proportion of women in top management in large organizations still hovers around five per cent. </p>
<p>Can we expect this percentage to increase over the next few years? Will today’s pool of up-and-coming female talent ensure a substantial increase in the number of female CEOs, or will other strategies be required to change the game?</p>
<p>As dean of the John Molson School of Business and a decades-long expert on the place of women in the upper echelons of the business world, we are interested in explaining the current standstill.</p>
<h2>Diversity in the C-Suite</h2>
<p>A <a href="https://www.semanticscholar.org/paper/Diversity-in-the-C-Suite%3A-The-Dismal-State-of-Among-Larcker-Tayan/192970d4859158281b752be4b76bdf7e8dc0a2c6">recent study</a> published by Stanford University professors David F. Larcker and Brian Tayan provides us with some interesting information on this subject. The aim of the study was to identify the potential for women and members of cultural communities to be appointed to CEO positions in the top 100 U.S. companies. The authors evaluated those who hold positions that report directly to a CEO. </p>
<p>The conclusions of this analysis are worrying:</p>
<ul>
<li><p>only 25 per cent of women hold such positions;</p></li>
<li><p>few women can be found in the functions that have the greatest potential for promotion, i.e. operations (15 per cent), financial services (14 per cent) and legal services (35 per cent);</p></li>
<li><p>the functions that offer fewer opportunities for promotion to CEO, according to the criteria used to select potential CEOs, are occupied to a greater extent by women (head of human resources, risk management, communications, etc.).</p></li>
</ul>
<p>The greater presence of women in these support functions illustrates <a href="https://hbr.org/2007/09/women-and-the-labyrinth-of-leadership">the leadership labyrinth</a>, i.e. the complex, dead-end detours that women face in their careers due to stereotypes, biases and family responsibilities that they continue to shoulder alone, despite better sharing of these functions with their male partners.</p>
<p>Why, after so many decades of efforts to increase female representation in decision-making bodies, do so few women manage to hold these positions? We are proposing three sources of indirect discrimination as an explanation for this.</p>
<h2>Lack of experience, a discriminatory criterion</h2>
<p><a href="https://www.spencerstuart.com/research-and-insight/predicting-ceo-success-when-potential-outperforms-experience">In a recent article</a> published by consulting firm Spencer Stuart, it was noted that the demand for experienced CEOs had almost quadrupled since the turn of the century, rising from four per cent in 1997 to 16 per cent in 2019. According to executives consulted by the firm, those in charge of selection processes assume that prior CEO experience is a predictor of the impact a candidate will have on shareholder value.</p>
<p><a href="https://www.spencerstuart.com/-/media/2019/hbr-ceo-lifecycle/hbr_ceo_lifecycle_spencerstuart.pdf">The findings of another study</a> carried out by the same firm on the life cycle of CEOs and their performance cast doubt on the assumption that there is a link between prior experience and shareholder value. </p>
<p>After analyzing the performance of 855 S&P CEOs over a 20-year period, the firm found that first-time CEOs produced a higher rate of shareholder return (TSR) than did experienced CEOs. These non-experienced CEOs had also demonstrated the advantage of staying in the job longer and having a less volatile performance overall. </p>
<p><a href="https://www.researchgate.net/publication/272806955_La_remuneration_des_dirigeants_mythes_et_recommandations">According to the results of another study</a> carried out a few years ago by Professors Michel Magnan of Concordia University and Sylvie St-Onge of HEC Montréal, less than 10 per cent of the differences in the stock market performance of the major Canadian banks can be explained by factors specific to each bank. These include the decisions and initiatives of the incumbent CEO, as well as the bank’s employees, customer base, business location and business mix.</p>
<p>The criterion of prior CEO experience, and the importance attached to it, is a factor of indirect discrimination that prevents women, members of cultural communities and young talent from having access to these positions. In addition to being discriminatory, this criterion perpetuates the status quo and limits access to such positions to a restricted group of individuals.</p>
<h2>Hiring people who look like us</h2>
<p>The concept of “cultural fit” aims to select talented individuals who are in line with the company’s culture, i.e. its values, vision, role, objectives and other elements that make up its character. </p>
<p>While using this criterion to recruit has the advantage of attracting talent who will integrate and perform quickly, it has the disadvantage of favouring the status quo and majority rule. It also means we surround ourselves with people who resemble us, whether in terms of gender, age, cultural origins or other differences <a href="https://insight.kellogg.northwestern.edu/article/cultural-fit-discrimination">that might be seen as disrupting the status quo</a>. </p>
<p><a href="https://www.talentinnovation.org/_private/assets/IDMG-ExecSummFINAL-CTI.pdf">A study</a> from the Center for Talent Innovation clearly shows that innovation thrives in an environment where leaders accept difference, are open to change and disruption, and encourage free expression.</p>
<h2>The underestimated financial value of diversity</h2>
<p>A group of researchers from Bryant University and Concordia University <a href="https://journals.aom.org/doi/abs/10.5465/AMPROC.2023.134bp">carried out an empirical study of the financial performance</a> of CEOs at the head of publicly traded U.S. companies. More than 11,600 observations were made each year over a 15-year period (1998-2013). </p>
<p>They found that women of colour and white women outperformed men of colour, who outperformed white men. According to the authors, these results can be explained by the fact that from a very young age, people from minority backgrounds are told by those around them that they need to develop resilience, and that if they want to succeed, they need to be smarter and do better than anyone else. </p>
<h2>More human leadership</h2>
<p>In a world where volatility, uncertainty, complexity and ambiguity prevail, the leadership qualities that are appropriate to such a context should guide selection processes. These qualities — agility, adaptability, empathy, humility — can be found in both men and women. These are what we call “soft skills.” </p>
<p><a href="https://hbr.org/2022/07/the-c-suite-skills-that-matter-most">According to a study published in August 2022</a>, the quest for these qualities has become increasingly important in job descriptions for senior management positions over the past decade. Prioritizing the qualities that allow us to identify the best candidates is the only way we will ensure a level playing field for women and men alike. </p>
<p>Companies can benefit from recognizing the importance of diversity in talent and leadership styles. By promoting the best people to positions of power, companies will become more efficient and more humane.</p><img src="https://counter.theconversation.com/content/214136/count.gif" alt="La Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Les auteurs ne travaillent pas, ne conseillent pas, ne possèdent pas de parts, ne reçoivent pas de fonds d'une organisation qui pourrait tirer profit de cet article, et n'ont déclaré aucune autre affiliation que leur organisme de recherche.</span></em></p>After decades of efforts to increase female representation in corporate decision-making bodies, few women are managing to take the reins of power.Louise Champoux-Paillé, Cadre en exercice, John Molson School of Business, Concordia UniversityAnne-Marie Croteau, Dean, John Molson School of Business, Concordia UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2078012023-09-26T12:24:57Z2023-09-26T12:24:57ZRemote workers are more aware of cybersecurity risks than in-office employees: new study<figure><img src="https://images.theconversation.com/files/549154/original/file-20230919-4851-ll13sr.jpg?ixlib=rb-1.1.0&rect=170%2C51%2C5520%2C3745&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Remote workers lack the same institutional cyber protection as their in-office colleagues.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/mid-adult-woman-holding-mobile-phone-while-using-royalty-free-image/734166095?phrase=remote%20worker%20from%20home">Maskot/Getty Images</a></span></figcaption></figure><p>Workers who telecommute tend to be more aware of cybersecurity threats than those who spend most of their time in a physical office and are more likely to take action to ward them off, according to <a href="https://doi.org/10.1016/j.cose.2023.103266">our new peer-reviewed study</a>. </p>
<p>Our findings are based on <a href="https://www.mturk.com/">Amazon Mechanical Turk</a> survey data collected from 203 participants who recently switched to full-time remote work, as well as from 147 in-office workers, across multiple organizations within the United States. We didn’t collect data on hybrid workers. </p>
<p>We asked employees the same series of questions about their work arrangements as well as their understanding of <a href="https://www.cisa.gov/topics/cyber-threats-and-advisories">cybersecurity threats</a>, and the actions they’ve taken to defend against them. </p>
<p>To account for other factors likely to influence how an employee responds to perceived cybersecurity threats and risks, we controlled for key participant characteristics and various factors, including age, gender, industry type, company size, job position and the duration of remote work. In addition, we tried to ensure the robustness of our data by conferring with other experts and using various statistical techniques.</p>
<p>We found that remote workers, on average, were more mindful of cybersecurity threats and could better recognize safe cybersecurity practices and protection measures compared with office-based employees. Similarly, our data showed that remote workers were more likely to take cybersecurity precautionary measures than their in-office counterparts. </p>
<p>Why might this be the case?</p>
<p>When employees work from the office, they generally expect their organization to provide and deploy security countermeasures to deal with cyber threats and risks. As a result, in-office workers may become complacent about cybersecurity awareness. This could account for in-office workers taking fewer steps to shore up their cybersecurity.</p>
<p>In contrast, the lack of an institutional cybersecurity framework forces remote workers to become more mindful of the risks they may be exposed to. </p>
<h2>Why it matters</h2>
<p><a href="https://theconversation.com/what-are-passkeys-a-cybersecurity-researcher-explains-how-you-can-use-your-phone-to-make-passwords-a-thing-of-the-past-196643">Employees are the first line</a> of defense against cybersecurity attacks, which <a href="https://www.crowdstrike.com/cybersecurity-101/attack-surface/">have been on the rise</a>. Cyber attacks around the world <a href="https://www.securitymagazine.com/articles/98810-global-cyberattacks-increased-38-in-2022#:%7E:text=New%20data%20on%20cyberattack%20trends,according%20to%20Check%20Point%20Research.">increased 38% in 2022</a>, according to Check Point Research, which provides cyber threat intelligence. </p>
<p>And <a href="https://www.shrm.org/hr-today/news/all-things-work/pages/the-weakest-link-in-cybersecurity.aspx">one of the main ways hackers manage</a> to worm their way into corporate computer networks is via employees – <a href="https://theconversation.com/you-know-how-to-identify-phishing-emails-a-cybersecurity-researcher-explains-how-to-trust-your-instincts-to-foil-the-attacks-169804">for example, with a phishing email</a>. </p>
<p>During the early days of the COVID-19 pandemic when much of the workforce was sent home due to lockdowns, <a href="https://www.peoplemanagement.co.uk/article/1743115/half-of-firms-worried-remote-working-has-increased-cybersecurity-threat-poll-finds">cybersecurity was a big concern</a>. In cybersecurity jargon, it increased the “<a href="https://www.crowdstrike.com/cybersecurity-101/attack-surface">attack surface</a>,” or the sum of all ways an organization’s network is exposed to potential security risks. <a href="https://zipdo.co/statistics/remote-work-cybersecurity/#:%7E:text=70%25%20of%20employers%20consider%20cybersecurity,the%20adoption%20of%20remote%20work.">Companies worried</a> whether employees working remotely would take cybersecurity seriously. </p>
<p>With remote work becoming increasingly the norm for many companies, our research suggests that this risk isn’t as great as once feared. </p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/YFRK_sImKkQ?wmode=transparent&start=1037" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Cybersecurity training video for workers.</span></figcaption>
</figure>
<h2>What still isn’t known</h2>
<p>We still need to determine whether heightened cybersecurity awareness and precautionary behavior among remote workers will diminish over time. Research suggests that cybersecurity awareness acquired through training and knowledge programs <a href="https://www.usenix.org/system/files/soups2020-reinheimer_0.pdf">tends to dissipate over time</a>. </p>
<p>As remote working arrangements become more mainstream, does security complacency set in for these workers? It is important to know how long the increased cybersecurity awareness will enable precaution-taking behavior and how remote workers can renew and sustain this vigilance. </p>
<p><em>The <a href="https://theconversation.com/us/topics/research-brief-83231">Research Brief</a> is a short take on interesting academic work.</em></p><img src="https://counter.theconversation.com/content/207801/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A survey of remote and office workers found that people working from home were more likely to take steps to protect themselves against cybersecurity threats.Joseph K. Nwankpa, Associate Professor of Information Systems & Analytics, Miami UniversityPratim Milton Datta, Professor of Information Systems & Cybersecurity, Kent State University Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2087272023-08-30T12:15:21Z2023-08-30T12:15:21ZWorkers like it when their employers talk about diversity and inclusion<p><a href="https://www.raconteur.net/responsible-business/george-floyd-death-racial-equality/">Many companies have made commitments toward</a> diversity, equity and inclusion initiatives in recent years, particularly since the murder of <a href="https://theconversation.com/us/topics/george-floyd-87675">George Floyd sparked</a> weeks of racial justice riots in 2020. </p>
<p>But some of those efforts, such as <a href="https://www.nbcnews.com/news/nbcblk/diversity-roles-disappear-three-years-george-floyd-protests-inspired-rcna72026">hiring diversity leaders</a> and <a href="https://news.bloomberglaw.com/esg/host-of-companies-sued-alleging-unmet-diversity-equity-pledges">creating policies to address racial inequality</a>, <a href="https://abcnews.go.com/US/corporate-america-slashing-dei-workers-amid-backlash-diversity/story?id=100477952">have stalled or reversed</a> at the same time as a growing <a href="https://www.forbes.com/sites/willskipworth/2023/07/21/texas-am-president-resigns-after-conservative-pushback-against-journalism-professor-and-dei/">conservative backlash</a> is threatening to further undermine such initiatives. </p>
<p>Most recently, a June 2023 Supreme Court ruling tossing out affirmative action policies at several universities <a href="https://hbr.org/2023/07/what-scotuss-affirmative-action-decision-means-for-corporate-dei">has prompted businesses and advocates to worry</a> that similar corporate efforts to improve the diversity of their workforces may be next. </p>
<p>That would be bad news for companies, because research has shown that diversity, equity and inclusion initiatives improve <a href="https://www.doi.org/10.1177/0146167210367786">creativity</a>, <a href="https://hbr.org/2013/12/how-diversity-can-drive-innovation">innovation</a>, <a href="https://doi.org/10.1016/S2212-5671(14)00178-6">productivity</a> and <a href="https://www.doi.org/10.1371/journal.pone.0270813">organizational performance</a>.</p>
<p>What’s more, a majority of workers <a href="https://www.pewresearch.org/social-trends/2023/05/17/diversity-equity-and-inclusion-in-the-workplace/">say they want their employers</a> to do DEI. <a href="https://scholar.google.com/citations?user=697eQncAAAAJ&hl=en&oi=ao">My own research</a> in corporate communications suggests how employees communicate their efforts is just as important as having them.</p>
<h2>DEI and the workplace</h2>
<p><a href="https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-diversity-equity-and-inclusion">Diversity, equity and inclusion</a> are three related values that companies and other organizations use to guide their efforts to create workplaces that are welcoming to people from all walks of life. These values emphasize the respect of individual differences and fair treatment of all people, regardless of race, gender, age, sexual orientation or other factors.</p>
<p>The <a href="https://www.shrm.org/resourcesandtools/hr-topics/behavioral-competencies/global-and-cultural-effectiveness/pages/12-ways-companies-are-boosting-their-dei.aspx">implementation of DEI measures</a> varies across organizations, with strategies ranging from policies that ensure the fair treatment of workers of color to training and the establishment of <a href="https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/effective-employee-resource-groups-are-key-to-inclusion-at-work-heres-how-to-get-them-right">employee resource groups</a>, which are internal communities built around workers’ shared identities or interests. Examples include networks for women, people of color or veterans. </p>
<p>While strategies may vary, DEI is in wide use across corporate America. <a href="https://www.hrdive.com/news/2022-fortune-companies-dei/627651/#:%7E:text=As%20of%20at%20least%20July,to%20diversity%2C%20equity%20and%20inclusion">Every Fortune 100 company</a> listed some kind of DEI initiative on its website as of July 2022, and a <a href="https://www.hrpolicy.org/insight-and-research/resources/2021/hrpa/12/press-release/">2021 survey</a> found that 82% of chief human resource officers said DEI was their foremost concern. </p>
<figure class="align-center ">
<img alt="a woman holding a sign protests outside of the Supreme Court building amid several other affirmative action-related signs" src="https://images.theconversation.com/files/545112/original/file-20230828-26-uerino.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/545112/original/file-20230828-26-uerino.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/545112/original/file-20230828-26-uerino.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/545112/original/file-20230828-26-uerino.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/545112/original/file-20230828-26-uerino.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/545112/original/file-20230828-26-uerino.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/545112/original/file-20230828-26-uerino.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Some believe corporate diversity programs will be targeted next after the Supreme Court in June 2023 ended affirmative action in college admissions.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/SupremeCourtAffirmativeAction/30fcf455c5844ff5be44c519266cd4d2/photo?Query=affirmative%20action%20supreme%20court&mediaType=photo&sortBy=&dateRange=Anytime&totalCount=31&currentItemNo=1&vs=true">AP Photo/Jose Luis Magana</a></span>
</figcaption>
</figure>
<h2>Broad benefits of DEI</h2>
<p>Numerous studies on diversity, equity and inclusion policies have found them to have many positive impacts on corporate performance. </p>
<p>Consulting company McKinsey in May 2020 reviewed data on over 1,000 companies in 15 countries and found that the “<a href="https://www.mckinsey.com/%7E/media/McKinsey/Featured%20Insights/Diversity%20and%20Inclusion/Diversity%20wins%20How%20inclusion%20matters/Diversity-wins-How-inclusion-matters-vF.pdf">business case for inclusion and diversity is stronger than ever</a>.” </p>
<p>Its analysis showed that in 2019 companies in the top quartile in terms of ethnic and cultural diversity were 36% more likely to report above-average profits than those at the bottom, slightly better than in 2014. And companies with the most gender diversity among executives were 25% more likely to outperform the market, up from 15% in 2014. </p>
<p>A 2019 study that analyzed workforce diversity in the U.S. federal government found that racial diversity <a href="https://www.doi.org/10.1177/0091026019848458">is significantly and positively related</a> to organizational performance.</p>
<p>One of the reasons DEI initiatives have a positive impact is because workers appreciate them. For example, a survey conducted in early 2023 found that most employees – 56% – <a href="https://www.pewresearch.org/social-trends/2023/05/17/diversity-equity-and-inclusion-in-the-workplace/">think it’s a good thing</a> if their company is focused on DEI.</p>
<h2>Talking up DEI</h2>
<p>But my own work suggests that getting many of these benefits from DEI initiatives may depend on how well employers are communicating their efforts to workers. In 2021, colleagues Sunny Qin, Renee Mitson, Patrick Thelen and I <a href="https://www.doi.org/10.1080/1062726X.2023.2222859">conducted an online survey</a> with 657 full-time employees across 27 industries in the U.S. We published the findings in June 2023. </p>
<p>We asked respondents how well they thought their employers communicated around the topic of diversity, including efforts to promote a diverse workforce. We also assessed participants’ engagement in their companies as well as the employees’ <a href="https://doi.org/10.1111/j.1740-8784.2007.00082.x">cultural intelligence</a>, or the ability to interact and adapt across cultures. We then used a statistical technique called <a href="https://www.statisticssolutions.com/free-resources/directory-of-statistical-analyses/structural-equation-modeling/">structural equation modeling analysis</a> to spot relationships between all their answers. </p>
<p>We found that the employees who worked for companies that talked more about their commitment to fostering a diverse and inclusive environment were also more engaged in their work. This was also correlated with higher levels of cultural intelligence, and together they contributed to a more inclusive work environment. </p>
<p>Importantly, we found that this effect was strongest for racial minorities, whose level of engagement was more highly correlated with how well their employer created an inclusive climate than for white people in our survey. </p>
<h2>Valued and included</h2>
<p>Overall, our study supports the notion that employees still value and appreciate their companies’ focus on diversity, equity and inclusion efforts. </p>
<p>And as we found, a more diverse and inclusive work environment leads to a more engaged workforce when companies continually communicate about their stance, values and commitment to DEI. Such communications signal to employees that their employers hear their voices and stand with them. </p>
<p>Having a diverse and inclusive workplace isn’t just about checking off boxes. It’s about making sure everyone feels valued and included.</p><img src="https://counter.theconversation.com/content/208727/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rita Men does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Policies that foster diversity, equity and inclusion have been shown to have many positive operational impacts − including leading to more worker engagement.Rita Men, Professor of Public Relations and Director of Internal Communication Research, University of FloridaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2110682023-08-21T13:47:46Z2023-08-21T13:47:46ZHow rising interest rates are affecting UK businesses<figure><img src="https://images.theconversation.com/files/543717/original/file-20230821-23-2hink2.jpg?ixlib=rb-1.1.0&rect=0%2C33%2C7326%2C4858&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/worried-business-owner-working-his-shop-2199248649">Stock-Asso/Shutterstock</a></span></figcaption></figure><p>From <a href="https://www.theguardian.com/business/2023/aug/03/were-just-treading-water-uk-small-business-owner-higher-interest-rate-taking-their-toll?utm_term=64ccabd424ac776f6436d425fc8da30c&utm_campaign=BusinessToday&utm_source=esp&utm_medium=Email&CMP=bustoday_email">chip shops</a> to <a href="https://theconversation.com/silicon-valley-bank-how-interest-rates-helped-trigger-its-collapse-and-what-central-bankers-should-do-next-201697">tech start-ups</a>, and even large, <a href="https://www.standard.co.uk/news/uk/wilko-administration-high-street-retail-interest-rates-b1098476.html">well-established companies</a>, rising interest rates have had an impact right across the business world. After <a href="https://theconversation.com/how-the-bank-of-englands-interest-rate-hikes-are-filtering-through-to-your-finances-210344">14 consecutive base rate hikes by the Bank of England</a> since 2021, this is causing particular problems for companies with a lot of debt. </p>
<p>We recently saw the chaos this can cause when English utility <a href="https://www.bbc.co.uk/news/business-66051555">Thames Water</a> nearly collapsed under the weight of its debt and had to seek emergency funding from its shareholders earlier this year. </p>
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Read more:
<a href="https://theconversation.com/how-thames-water-came-to-be-flooded-with-debt-and-what-it-means-for-taxpayers-208788">How Thames Water came to be flooded with debt – and what it means for taxpayers</a>
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<p>More recently, budget retailer Wilko’s borrowing not only affected the business and its shareholders, but also its employees when its recent collapse put <a href="https://www.wionews.com/business-economy/uk-retailer-wilko-collapses-due-to-big-debts-12500-jobs-at-risk-624323">12,500 jobs at risk</a>.</p>
<p>Similar problems could arise among many other companies and industries. Financial markets expect the bank base rate – which dictates the rates on many types of loans – will keep climbing: it’s currently <a href="https://www.thetimes.co.uk/money-mentor/article/when-will-interest-rates-go-down-uk/">forecast to peak</a> between 5.75% and 6% by the start of 2024. And the <a href="https://www.statista.com/statistics/793368/value-of-business-corporate-loans-united-kingdom/">total value of UK business loans</a> is also expected to rise to an estimated £513 billion as of 2023. This is £78 billion higher than in 2018, an increase of 18%.</p>
<p>Company insolvencies have <a href="https://www.reuters.com/world/uk/england-wales-report-40-rise-company-insolvencies-2023-06-16/">already jumped by 40%</a> over the year to May 2023 in England and Wales – the highest level since monthly records began in January 2019. And significant debt problems within an industry or even one firm can cause a domino effect across the UK economy. </p>
<p>Research shows the effects of an insolvency or bankruptcy <a href="https://www.cambridge.org/core/journals/journal-of-financial-and-quantitative-analysis/article/spreading-the-misery-sources-of-bankruptcy-spillover-in-the-supply-chain/B87035D235D7AA2A443B5164C28EBA5B">can spread</a> to a firm’s trading partners. Wilko started to defer supplier payments and extend the timeframe in which it settles invoices <a href="https://www.retailgazette.co.uk/blog/2022/09/wilko-delays-supplier-payments/">last year</a> to try to ease pressure on its cash flow as it struggled to manage its debts.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/wilko-is-the-latest-shop-to-be-edged-out-by-competition-but-it-doesnt-have-to-mean-the-end-for-the-budget-retailer-211161">Wilko is the latest shop to be edged out by competition but it doesn't have to mean the end for the budget retailer</a>
</strong>
</em>
</p>
<hr>
<p>So, with interest rates likely to continue to rise, being able to tell if another company or industry is at risk is important for customers, employees, investors and other connected businesses such as suppliers.</p>
<h2>The rising cost of business borrowing</h2>
<p>The average cost of new borrowing from banks by private non-financial companies was <a href="https://www.bankofengland.co.uk/statistics/money-and-credit/2023/june-2023">6.36% in June 2023</a>, more than 4 percentage points above the December 2021 rate of 2.03% (when the Bank of England base rate increases began). For small and medium-sized enterprise (SMEs), new loan rates increased from 6.86% in May to a record high of 7.13% in June (compared with 2.51% in December 2021). </p>
<p>Companies already holding debt that’s not on a fixed rate of interest could also see an increase in the interest owed to their lender. This could come as a shock since UK interest rates were <a href="https://www.bankofengland.co.uk/boeapps/database/Bank-Rate.asp">1% or less</a> for more than 13 years from February 2009 to June 2022. During this time, the pressure of debt on borrowers was light or negligible.</p>
<p><strong>The base rate has recently climbed from low levels</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/543679/original/file-20230821-23-2cqa28.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Line chart showing the Bank of England base rate rising from less than 1% in 2020 to 5.25% by August 2023. by" src="https://images.theconversation.com/files/543679/original/file-20230821-23-2cqa28.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/543679/original/file-20230821-23-2cqa28.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=345&fit=crop&dpr=1 600w, https://images.theconversation.com/files/543679/original/file-20230821-23-2cqa28.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=345&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/543679/original/file-20230821-23-2cqa28.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=345&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/543679/original/file-20230821-23-2cqa28.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=433&fit=crop&dpr=1 754w, https://images.theconversation.com/files/543679/original/file-20230821-23-2cqa28.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=433&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/543679/original/file-20230821-23-2cqa28.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=433&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The Bank of England base rate from January 2020 to August 2023.</span>
<span class="attribution"><a class="source" href="https://www.bankofengland.co.uk/explainers/what-are-interest-rates">The Bank of England</a></span>
</figcaption>
</figure>
<p>Companies that got used to being able to borrow at a low cost are now starting to feel the pinch, or even come under extreme pressure if they are heavily indebted. This is what worsened the <a href="https://news.sky.com/story/thames-water-secures-additional-750m-from-shareholders-in-race-to-avoid-nationalisation-12918285">financial position of UK utility Thames Water</a>. When the company was privatised in 1989, it had no debt. But over the years it borrowed heavily to fund new investments. </p>
<p>Generally speaking, debt is a <a href="https://www.ofwat.gov.uk/thames-debt-and-water-sector-finance/">prudent low-cost source of finance</a> with low interest rates fixed for the long term. But Thames Water borrowed too much. It had <a href="https://www.bbc.co.uk/news/business-66051555">£14 billion in debt by the end of June 2023</a>, which amounted to 80% of the value of the business and made it the most heavily indebted of England and Wales’ water companies, according to analysts. Its loan repayments were not only linked to the bank base rate, but also inflation, which has also spiked over the past year. This triggered fears about the company’s ability to continue to service its debts.</p>
<p>Thames Water was lucky, in a sense – it avoided being nationalised because it was able to secure timely funding from its shareholders. But the situation revealed the extent of the iceberg under the water in this industry. Shortly afterwards, another English utility, Southern Water, announced <a href="https://www.reuters.com/world/uk/britains-southern-water-suspends-dividend-amid-growing-debt-pile-rating-2023-07-07/">it would not pay dividends</a> until at least 2025 after its credit rating was downgraded. This shows investors, lenders and credit ratings agencies are getting more nervous about debt-related trends within industries.</p>
<p>Businesses can help to ease such concerns by being transparent.
<a href="https://onlinelibrary.wiley.com/doi/full/10.1002/bse.3055">Research</a> shows that the more firms disclose financial and non-financial information, the more likely they are to be able to secure loans and access lower rates. This also applies to companies that are <a href="https://www.sciencedirect.com/science/article/abs/pii/S0167268117302263">more open with external partners</a> by sharing resources and knowledge to enhance innovation. The more information a bank has, the more comfortable it will be about lending to a company. It also reduces the bank’s own risk rating, allowing it to lend more and offer lower rates. </p>
<figure class="align-center ">
<img alt="Man in suit with blue tie holding three blocks showing bank symbol, rating symbol and chart symbol with arrow and percentage, with " src="https://images.theconversation.com/files/543720/original/file-20230821-15-ev2p8p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/543720/original/file-20230821-15-ev2p8p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/543720/original/file-20230821-15-ev2p8p.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/543720/original/file-20230821-15-ev2p8p.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/543720/original/file-20230821-15-ev2p8p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/543720/original/file-20230821-15-ev2p8p.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/543720/original/file-20230821-15-ev2p8p.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Credit ratings influence how much and to which companies banks will lend.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/credit-rating-concept-finance-banking-investment-2248616763">Panchenko Vladimir/Shutterstock</a></span>
</figcaption>
</figure>
<h2>What to look out for in the current environment</h2>
<p>Business leaders that are addressing rising interest rates head-on may announce adjustments to their growth or expansion plans, especially if a plan previously relied heavily on debt. They may also consider different sources of finance. The UK water regulator, for example, has called on utilities to consider the role of equity funding (<a href="https://www.british-business-bank.co.uk/finance-hub/what-is-equity-finance/">for example, selling shares</a>) and <a href="https://www.ofwat.gov.uk/thames-debt-and-water-sector-finance/">not just debt</a> in financing new investment.</p>
<p>A company’s <a href="https://www.investopedia.com/terms/d/debtratio.asp#:%7E:text=The%20debt%20ratio%20is%20defined,that%20are%20financed%20by%20debt.">ratio of debt versus assets</a> will also tell you how much it holds in debt. A “good” debt ratio is around 1 to 1.5, but <a href="https://www.british-business-bank.co.uk/finance-hub/what-level-of-debt-is-healthy-for-business/">the ideal can vary</a> by industry. Manufacturers, for example, tend to need a lot of equipment and so may have ratios greater than 2.</p>
<p>More interest rate rises will pile pressure on companies, employees and the economy. But by anticipating the impact on their debt and being more open about their current state and future plans, businesses can help to minimise the pain.</p><img src="https://counter.theconversation.com/content/211068/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Erwei (David) Xiang does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Recent interest rate hikes are not just a problem for mortgage borrowers, many companies are suffering too.Erwei (David) Xiang, Senior Lecturer (Associate Professor) in Accounting, Newcastle UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2111612023-08-08T13:42:46Z2023-08-08T13:42:46ZWilko is the latest shop to be edged out by competition but it doesn’t have to mean the end for the budget retailer<figure><img src="https://images.theconversation.com/files/541707/original/file-20230808-25-voz4jb.jpg?ixlib=rb-1.1.0&rect=54%2C48%2C4000%2C2974&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A Wilko branch in Kingston, Surrey.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/kingston-surrey-uk-march-2023-shop-2280497075">Abdul N Quraishi - Abs/Shutterstock</a></span></figcaption></figure><p>By selling pick ‘n’ mix, stationery, garden tools and bird boxes, Wilko has spent <a href="https://www.wilko.com/en-uk/corporate/our-history">the last 90 years</a> transforming from a one-store business into one of the UK’s major budget retail players. It now has <a href="https://uk.style.yahoo.com/list-wilko-stores-close-retailer-110635636.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAK3HWr0ZFmy82Gqbc4XcmRBzKRsZecgOYZhp8ckmsrAEkeeXj78loWi5j5Ku8tzOrcbuyBmlHjaEYhMXLXJm1zL5UEKRF_cwa4vAgdKz6rMeGEpD667Do_rCpRHnC_4cAG7eEs1eqcZJimKn4idSIaKL_7UwcomxZj02zInKj7X1#:%7E:text=So%20far%2C%20a%20rival%20discount,through%20a%20company%20voluntary%20arrangement.">around 400 stores</a>, but it has also become the latest high street shop to face serious financial troubles.<br>
The decline of Wilko has been gradual and <a href="https://www.ft.com/content/d548b6ea-e4bd-4427-baae-eacae255a8d4">predicted</a>. It reported <a href="https://find-and-update.company-information.service.gov.uk/company/00365335/filing-history">losses over the last four years</a>, and closed <a href="https://www.theguardian.com/business/2022/jan/10/wilko-to-close-up-to-15-stores-england-wales-high-street">15 stores</a> last year after attempts to restructure the business.</p>
<p>More changes to its business will now be needed, including <a href="https://www.independent.co.uk/news/business/wilko-closure-stores-jobs-where-b2387701.html">further store closures</a> and job losses as the company files for <a href="https://www.insolvencydirect.bis.gov.uk/freedomofinformationtechnical/technicalmanual/ch49-60/chapter%2056-1/Part%201/Part%201.htm">administration</a>. This doesn’t mean failure - yet. </p>
<p>Rather, this procedure will see Wilko’s financial future examined by insolvency specialists from accountancy firms who will assess if the company can be rescued as a going concern (PwC is reported to have been <a href="https://www.theguardian.com/business/2023/aug/03/budget-retailer-wilko-makes-administration-move-risking-12000-jobs">lined up for the job</a> after helping Wilko try to find a buyer in recent months).</p>
<p>It could reportedly take <a href="https://www.thetimes.co.uk/article/inside-wilkos-demise-and-why-a-rescue-could-cost-70m-g0bfm3qjp">£70 million</a> to rescue the company. Potential buyers include rival discount retailers and private equity firms that specialise in turning around struggling businesses. </p>
<p>The problems the chain has faced have not been unique to Wilko. When <a href="https://www.theguardian.com/business/2008/nov/26/woolworths-administration-high-street-retailers">Woolworths</a> entered administration in 2008, all 807 of its stores were eventually closed, resulting in 27,000 job losses. Like Wilko, Woolworths was a fixture on the high street for almost 100 years, but it fell victim to a significant spike in competition fuelled by other budget retailers – including Wilko. Now, it looks like Wilko is set to suffer the same fate.</p>
<p>This is a form of “<a href="https://www.e-elgar.com/shop/gbp/the-interpretation-and-value-of-corporate-rescue-9781839101397.html">creative destruction</a>” – when companies are naturally replaced by new, more efficient competitors over time. Woolworths replaced the need to shop at multiple smaller businesses, and then Wilko swooped in to take Woolworths’ core market share. Now, if it fails, Wilko could be replaced by other more streamlined businesses.</p>
<p>Just as the success of Wilko played its part in the demise of Woolworths, other budget retailers have expanded into Wilko’s core territory. Wilko’s decline has been more gradual, but The Range, Home Bargains, Poundland and B&M, as well as traditional supermarkets such as Tesco and Asda, have continued to increase their presence on Wilko’s patch. In particular, this includes DIY supplies, bathroom products and household wares. </p>
<p>Combined with the continued growth of internet companies such as Amazon, this competition has left Wilko without a unique selling point. Also, rising prices such as the UK has seen over the past year and a half forces people to cut spending but also undermines <a href="https://www.forbes.com/sites/jennmcmillen/2023/01/09/7-consumer-loyalty-trends-that-will-shape-retail-in-2023/">customer loyalty</a> as people shop around for the best bargains.</p>
<figure class="align-center ">
<img alt="Quiet cobbled street with blackboard in the foreground that says 'Closed' with an image of a virus." src="https://images.theconversation.com/files/541711/original/file-20230808-25-brvy37.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/541711/original/file-20230808-25-brvy37.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/541711/original/file-20230808-25-brvy37.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/541711/original/file-20230808-25-brvy37.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/541711/original/file-20230808-25-brvy37.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/541711/original/file-20230808-25-brvy37.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/541711/original/file-20230808-25-brvy37.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Many retailers lost business during the COVID pandemic.</span>
<span class="attribution"><span class="source">Corona Borealis Studio/Shutterstock</span></span>
</figcaption>
</figure>
<h2>Retail headwinds</h2>
<p>Of course, retailers have faced multiple challenges in recent years. The <a href="https://www.ons.gov.uk/economy/grossvalueaddedgva/articles/effectsofthecoronaviruscovid19pandemiconhighcontactindustries/2022-05-06">coronavirus pandemic</a> certainly did not help the retail sector, but some businesses were more adversely affected than others. Wilko, as a traditional store that relied on foot traffic, has previously said it experienced a <a href="https://www.theguardian.com/business/2022/jan/10/wilko-to-close-up-to-15-stores-england-wales-high-street">40% fall</a> in visitor numbers after the March 2020 lockdown. </p>
<p>Government <a href="https://www.gov.uk/government/collections/financial-support-for-businesses-during-coronavirus-covid-19">financial assistance</a>, which included business rates relief, tax holidays, and restrictions on landlord’s ability to call rents, provided some temporary relief. But once this assistance ended, Wilko was exposed to the post-pandemic world, which has seen its fair share of retail casualties since the start of the pandemic. </p>
<p>The demise of <a href="https://www.theguardian.com/business/2020/dec/01/debenhams-close-stores-jobs-department-store-jd-sports">Debenhams</a> shocked the high street in December 2020, as did the failure of the <a href="https://www.bbc.co.uk/news/business-55139369">Arcadia Group</a> (which included major high street brands like Topshop, Topman, Miss Selfridge, Dorothy Perkins, Evans and Burton) the month before. </p>
<p>In general, companies that have failed to address the cost of living crisis by cutting prices or offering better deals when compared to their competitors are struggling to survive. We saw this with the collapse of online furniture retailer Made.com last year. High street and online powerhouse Next bought the <a href="https://www.reuters.com/markets/deals/uks-next-buy-madecom-furniture-retailer-enters-administration-2022-11-09/">brand and website</a> in November 2022.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/how-made-com-went-from-a-pandemic-era-business-superstar-to-a-failed-company-in-just-18-months-194323">How Made.com went from a pandemic-era business superstar to a failed company in just 18 months</a>
</strong>
</em>
</p>
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<h2>Rethinking the future</h2>
<p>Wilko undoubtedly faces a dire situation, but unlike recent retail failures, it does have a future – it could just be in a different form. Sometimes brands are bought, which can cover intellectual property such as website domain and brand name, but not the stores or employees, as Next did with Made.com or <a href="https://www.ft.com/content/015699a2-bbb0-4fc5-a4f8-47028de35ba9">Asos did with Topshop</a>. </p>
<p>In other cases, the struggling company might reinvent itself, although this requires extensive restructuring, and may only prolong the misery. The latter was the fate of former high-street giants <a href="https://www.theguardian.com/business/2016/apr/25/bhs-heading-for-administration-as-rescue-deal-fails">BHS</a> and <a href="https://www.thisismoney.co.uk/money/markets/article-9147665/The-30-retailers-failed-2020.html#:%7E:text=the%20brand%20name-,Debenhams,-Department%20store%20chain">Debenhams</a>, and more recently the greeting cards retailer <a href="https://www.bbc.co.uk/news/business-66421173">Clintons</a>, who now plans to shut around 20% of its shops in an effort to stay in business.</p>
<p>In the case of Wilko, unfortunately this situation is likely to lead to the closure of many stores, and a reduction in staff and the range of products it sells. But it could also lead to new initiatives such as <a href="https://www.retailgazette.co.uk/blog/2022/11/wilko-trading/">developing its online presence</a> further and expanding its delivery options. </p>
<p>Change always risks alienating certain loyal customers, but in economic times like these, brands like Wilko need to put survival above all else.</p><img src="https://counter.theconversation.com/content/211161/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Wood does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>New competition often displaces older, less efficient business models but companies can survive these shifts.John Wood, Lecturer in Law, Lancaster UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2027062023-08-03T12:25:29Z2023-08-03T12:25:29ZMany global corporations will soon have to police up and down their supply chains as EU human rights ‘due diligence’ law nears enactment<figure><img src="https://images.theconversation.com/files/538609/original/file-20230720-27-c0f2jp.jpg?ixlib=rb-1.1.0&rect=130%2C142%2C7809%2C5154&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Forced and child labor has been reported in mines in the Congo, which produces over 70% of the world's cobalt. </span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/artisanal-miners-carry-sacks-of-ore-at-the-shabara-news-photo/1244417469">Junior Kannah/AFP via Getty Images</a></span></figcaption></figure><p>The European Union <a href="https://www.reuters.com/business/environment/eu-lawmakers-back-human-rights-environmental-checks-big-companies-2023-04-25/">will soon require thousands of large companies</a> to actively look for and reduce human rights abuses and environmental damage in their supply chains. And although it’s an EU law, it will also cover foreign businesses – including American ones – that have operations in the region.</p>
<p>The European Parliament <a href="https://www.europarl.europa.eu/doceo/document/TA-9-2023-0209_EN.html">approved a draft of the new rules in June 2023</a>, and now EU member states and the European Commission will negotiate to finalize the law, which is expected to begin rolling out in phases a few years from now. </p>
<p><a href="https://www.business.uconn.edu/person/rachel-chambers/">We study</a> the <a href="https://peoplefinder.lsbu.ac.uk/researcher/8xxx0/dr-david-birchall">impacts of human rights</a> disclosure and due diligence laws on businesses. In the past, governments have generally asked only that companies voluntarily comply with efforts to advance human rights. The EU law would be the biggest attempt yet to legally mandate compliance – with major implications for human rights and businesses around the world. </p>
<h2>Human rights and big business</h2>
<p><a href="https://www.ohchr.org/en/what-are-human-rights">Human rights are those fundamental rights</a> that all individuals hold simply by virtue of being human, such as rights to life and freedom of thought.</p>
<p>Human rights usually inform laws that limit what governments can do – for example, by obliging them to refrain from torturing people. Increasingly, however, <a href="https://www.lawfareblog.com/business-and-human-rights-requirements-are-rise-2023">they are also informing business regulations</a>, because powerful companies can have serious impacts on individuals’ human rights. </p>
<p>Businesses have a <a href="https://www.routledge.com/Business-and-Human-Rights-History-Law-and-Policy---Bridging-the-Accountability/Bernaz/p/book/9781138683006">long history of human rights abuses</a>, from the British East India Co.’s pivotal role in the <a href="https://theconversation.com/taboo-the-east-india-company-and-the-true-horrors-of-empire-73616">slave trade</a> and IBM’s complicity in <a href="https://www.theguardian.com/world/2002/mar/29/humanities.highereducation">the Holocaust</a> to more recent deadly environmental disasters involving <a href="https://www.leighday.co.uk/latest-updates/news/2021-news/legal-claim-by-more-than-2-500-zambian-villagers-in-a-case-against-vedanta-resources-limited/">oil and mining companies</a>.</p>
<p>More contemporary examples of this are <a href="https://www.npr.org/sections/goatsandsoda/2023/02/01/1152893248/red-cobalt-congo-drc-mining-siddharth-kara">children in the Democratic Republic of Congo mining cobalt</a> destined for cellphones or <a href="https://www.nytimes.com/2022/05/27/business/cotton-xinjiang-forced-labor-retailers.html">forced labor being used in the production of cotton</a> in China’s heavily Muslim Xinjiang region.</p>
<p>In 2011, the United Nations Human Rights Council took a step toward policing these abuses by unanimously adopting “guiding principles” on business and human rights. These principles <a href="https://www.ohchr.org/sites/default/files/documents/publications/guidingprinciplesbusinesshr_en.pdf">urge governments to compel</a> companies in their jurisdictions to respect human rights wherever they operate. Such an approach stands in contrast to more common voluntary standards, such as <a href="https://ecovadis.com/glossary/supplier-code-conduct/#:%7E:text=What%20is%20a%20Supplier%20code,of%20employees%2C%20and%20ethical%20practices.">supplier codes of conduct</a>, which <a href="https://theconversation.com/why-apparel-brands-efforts-to-police-their-supply-chains-arent-working-136821">some observers have suggested have been ineffective</a>. </p>
<p>In 2017, France <a href="https://www.dlapiper.com/en/insights/publications/2021/03/human-rights-due-diligence-legislation-in-europe#">became the first country</a> to actually mandate that companies police their supply chains for human rights abuses. </p>
<p>The EU’s human rights due diligence law, <a href="https://ec.europa.eu/commission/presscorner/detail/en/ip_22_1145">first drafted in 2022</a>, builds on the French version – but goes a few steps further. </p>
<figure class="align-center ">
<img alt="protesters march in streets holding signs in front of apple logo on a building" src="https://images.theconversation.com/files/539098/original/file-20230724-21-tniwth.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/539098/original/file-20230724-21-tniwth.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/539098/original/file-20230724-21-tniwth.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/539098/original/file-20230724-21-tniwth.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/539098/original/file-20230724-21-tniwth.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/539098/original/file-20230724-21-tniwth.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/539098/original/file-20230724-21-tniwth.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Apple is among the U.S.-based companies that would likely have to comply with the EU rules.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/hongkongers-tibetans-uyghur-muslims-and-their-supporters-news-photo/1245513825">Wiktor Szymanowicz/Anadolu Agency via Getty Images</a></span>
</figcaption>
</figure>
<h2>Doing your due diligence</h2>
<p><a href="https://www.ohchr.org/en/special-procedures/wg-business/corporate-human-rights-due-diligence-identifying-and-leveraging-emerging-practices">Human rights due diligence</a> is a process by which companies are meant to map out, understand and address all potential human rights abuses that occur throughout their operations. </p>
<p>The term “<a href="https://www.investopedia.com/terms/d/duediligence.asp">due diligence</a>” is borrowed from the common business practice of financial due diligence, wherein financial risks are investigated before any large investment. So just as businesses evaluate financial risks, <a href="https://www.ohchr.org/sites/default/files/Documents/Issues/Business/ExecutiveSummaryA73163.pdf">human rights advocates argue</a> companies should put similar effort into investigating the risk that an activity might violate someone’s human rights.</p>
<p>The EU law would mandate that all large companies that operate in the bloc conduct human rights due diligence among their suppliers – by, for example, making sure child or forced labor wasn’t involved – but also on how their products are used by consumers – such as when a piece of technology is used to surveil citizens. </p>
<p>The law would cover most human rights, including labor rights and environmental rights, past or present. In practice, that would mean companies would have to map any harmful impacts that have occurred or could occur and take action to remedy or prevent them.</p>
<p>The rules would also include provisions for enforcement and penalties for noncompliance through fines and other sanctions. And victims of abuse would be able to seek damages.</p>
<p>In its current form, the law would cover EU companies with at least 500 workers and 150 million euros US$162 million) in net revenue, but those thresholds fall to 250 workers and 40 million euros ($44.5 million) in sectors with a higher risk of abuse, such as clothing, footwear and agriculture. Non-European companies must comply if they have EU revenues that meet those thresholds. An estimated 13,000 EU companies and 4,000 based outside of Europe – including household names like Apple, Amazon and Nike – <a href="https://www.csis.org/analysis/european-union-releases-draft-mandatory-human-rights-and-environmental-due-diligence">would be subject to the law</a>. </p>
<p>If it works as intended, the EU law <a href="http://corporatejustice.org/wp-content/uploads/2021/03/asi_eccj_report_final.pdf">could be transformative</a> in protecting human rights, including worker health and safety and workers’ free speech, around the world. According to a recent report by human rights scholars, it could be “<a href="https://media.business-humanrights.org/media/documents/TraffLabReport_March23.pdf">particularly valuable</a> in the context of transnational supply chains, where the fragmented nature of production has long presented formidable legal and practical barriers to efforts to secure greater corporate accountability for labor rights violations and poor working conditions.”</p>
<h2>Bad for business?</h2>
<p>While <a href="https://www.ioe-emp.org/fileadmin/ioe_documents/publications/Policy%20Areas/business_and_human_rights/EN/_2015-03-16__Economist_Intelligence_Unit_Report_-_Today_s_Challenges_for_Business_in_Respecting_Human_Rights.pdf">many companies</a> <a href="https://www.business-humanrights.org/en/big-issues/mandatory-due-diligence/companies-investors-in-support-of-mhrdd/">have already endorsed mandatory due diligence</a> rules, others worry this kind of government mandate <a href="http://corporatejustice.org/wp-content/uploads/2021/03/debating-mhrdd-legislation-a-reality-check.pdf">would be too onerous</a>.</p>
<p>A full map of risks in a company’s value chain – from raw materials to consumers – is difficult to establish when suppliers are separate companies operating on the other side of the world and global supply chains are frequently large and complex. </p>
<p>Some companies also <a href="https://www.supremecourt.gov/opinions/20pdf/19-416_i4dj.pdf">strongly resist</a> the idea of being held responsible for human rights violations that take place in their supply chains overseas. </p>
<h2>Ripe for US rules</h2>
<p>For this reason, the U.S. <a href="https://heinonline.org/HOL/LandingPage?handle=hein.journals/nyujolbu18&div=17&id=&page=">has so far preferred voluntary rules</a> when it comes to pushing companies to respect human rights. </p>
<p>But that’s slowly beginning to change.</p>
<p>In 2012, California implemented the <a href="https://oag.ca.gov/SB657">Supply Chain Transparency Act</a>, which requires companies operating in the state to disclose their “efforts to eradicate human trafficking and slavery” in their global supply chains. And in 2021, Congress passed the <a href="https://www.cbp.gov/trade/forced-labor/UFLPA">Uyghur Forced Labor Prevention Act</a>, which bans the importation of goods mined, produced or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region of China – home of the Uyghur people, who have been <a href="https://news.sky.com/story/whats-happened-to-chinas-uyghur-camps-12881984">subjected to an intense program of state suppression since 2017</a>. </p>
<p>Between these rules there is a clear trend developing of an increasing number of U.S. companies being obligated to implement some form of human rights due diligence. But these rules, unlike the developing European approach, are very narrowly tailored and don’t require companies to routinely undertake due diligence.</p>
<p>As a result, the U.S. companies that would be subject to the EU rules would be at a competitive disadvantage to many of their domestic rivals. </p>
<p>That’s why we believe the time may be ripe for Congress to consider its own more comprehensive human rights due diligence law, which would let the U.S. take the lead on the issue and have more of a say in these global standards. We believe that such a move would also be a major boon to protecting the human rights of marginalized groups across the world.</p><img src="https://counter.theconversation.com/content/202706/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rachel Chambers and David Birchall received a small grant from Universitas 21 for the research project that this article forms part of.</span></em></p>A new EU law would require thousands of multinational companies, including many based in the US, to look for signs of human rights abuses in their supply chains.Rachel Chambers, Assistant Professor of Business Law, University of ConnecticutDavid Birchall, Senior Lecturer in Law, London South Bank UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1881022023-07-27T12:25:29Z2023-07-27T12:25:29ZHypocrisy penalty: Investors especially hate companies that say they’re good then behave badly – unless the money is good<figure><img src="https://images.theconversation.com/files/538420/original/file-20230720-17-3at2fi.jpg?ixlib=rb-1.1.0&rect=27%2C1143%2C4473%2C3201&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Investors don't like it when companies do one thing and then say another. </span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/rear-view-of-a-businessman-with-his-fingers-crossed-royalty-free-image/dv1161053?phrase=business%20suit%20fingers%20crossed">Adam Gault/Photodisc via Getty Images</a></span></figcaption></figure><p><em>The <a href="https://theconversation.com/us/topics/research-brief-83231">Research Brief</a> is a short take about interesting academic work.</em> </p>
<h2>The big idea</h2>
<p>Stock investors punish companies caught doing something unethical a lot more when when these businesses also have a record of portraying themselves as virtuous. This hypocrisy penalty is <a href="https://doi.org/10.1177/01492063211002622">the main finding of a study</a> we recently published in the Journal of Management. </p>
<p>Companies often espouse their supposed virtue – known as “<a href="https://www.merriam-webster.com/dictionary/virtue%20signaling">virtue signaling</a>” – usually with the aim of getting benefits, such as higher sales, positive investor sentiment or better employees. We wanted to know what happens when such companies then do something wrong. </p>
<p>So we examined corporate communications and media coverage for every company in the Standard & Poor’s 500 to develop a comprehensive database of both virtue signaling and misconduct. </p>
<p>To gauge virtue signaling, we conducted linguistic analysis of each company’s letters to shareholders. This is a form of computer-aided text analysis that identifies and categorizes language to draw inferences. For example, we looked for words and patterns to identify conscientiousness, empathy and integrity and considered how language patterns developed over time. Each company received a score that reflected how much of their corporate communication was devoted to virtue rhetoric.</p>
<p>We then examined over half a million news articles to identify unethical behavior, such as egregious events like a CEO’s being fired for sexual misconduct, but also less severe transgressions, like not treating employees fairly. </p>
<p>Finally, our study considered how shareholders respond. Specifically, we looked at price swings the day after the media initially reported the misbehavior. </p>
<p>We found that share prices fell 1.5% overnight in response to unethical behavior when companies had engaged in lots of virtue signaling, compared with 0.4% for those that did less virtue signaling or none at all. For an average company, that difference amounts to <a href="https://www.investopedia.com/terms/s/sp500.asp#:%7E:text=The%20S%26P%20500%20total%20market,the%20stocks%20in%20the%20index.">over half a billion dollars</a> in lost value.</p>
<p>Keep in mind, too, that these ethical violations are not uncommon events. About a quarter of companies in our sample engaged in this kind of behavior in any given year. Stated simply, bad things happen, and when they do the stock market will clobber those who do not seem to be walking their talk.</p>
<p>Well, with one critical exception related to a company’s expected future performance. If investors anticipate that a company will perform well in the future, there is no hypocrisy penalty – the consequences of misconduct are the same for those that use virtue signaling and those that do not. </p>
<p>Apparently, shareholders are very concerned about executives who say one thing and do another – unless the company is expected to make lots of money, in which case there is little or no penalty for unethical behavior.</p>
<h2>Why it matters</h2>
<p>Many companies, and the CEOs who run them, <a href="https://system.businessroundtable.org/app/uploads/sites/5/2023/02/WSJ_BRT_POC_Ad.pdf">publicly say they care</a> a lot about their people, the environment and the communities around them, among other virtuous signals. </p>
<p>For example, ice cream maker <a href="https://www.benjerry.com/values">Ben & Jerry’s proudly declares</a> that it seeks to “advance human rights and dignity, support social and economic justice for historically marginalized communities, and protect and restore the Earth’s natural systems.” At the other end of the political spectrum, restaurant chain <a href="https://www.chick-fil-a.com/about/who-we-are">Chick-fil-A proclaims</a> that it is “about more than just selling chicken”; its corporate purpose: “To glorify God by being a faithful steward of all that is entrusted to us.”</p>
<p>Whether from the right or the left, this virtue signaling establishes, and implicitly promises adherence to, a set of ethical standards. What happens, though, when behavior does not align with virtuous talk?</p>
<p>Academics have two decidedly different views about how to answer this question. Some contend that <a href="https://www.jstor.org/stable/pdf/43700526.pdf">virtue signaling buffers companies</a> from the negative ramifications of misconduct. Another perspective suggests that there’s a more severe adverse reaction <a href="https://doi.org/10.1002/9781118540190.wbeic102">whenever anyone deviates from expectations</a>. Think, for example, of the special vehemence reserved for the priest who pilfers from the church coffers.</p>
<p>Our study confirms that the latter – a hypocrisy penalty – is more likely what is happening. </p>
<h2>What’s next</h2>
<p>We are now exploring different types of shareholders and how they respond to organizational behavior – and misbehavior. For example, social activist funds could be especially put off when companies in which they invest behave badly, whereas the most powerful institutional investors are less likely to be concerned about a mismatch between a company’s words and deeds.</p><img src="https://counter.theconversation.com/content/188102/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A new study finds that investors punish companies for behaving badly over three times as much if they have a record of saying they’re virtuous.Brian L. Connelly, Professor of Management and Entrepreneurship, Auburn UniversityLori Trudell, Assistant Professor of Entrepreneurship, Clemson UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2038572023-05-25T08:54:02Z2023-05-25T08:54:02ZNot all interruptions are bad: how surprise breaks can unleash creativity at work<p>Interruptions are an inevitable part of working life. Some last a short time – a phone call, an urgent task, or a colleague stopping by for a chat. While these can take a brief toll on productivity, extended interruptions such as supply-chain issues, extreme weather or machinery breakdowns, can have a more significant impact. But what if there were a silver lining?</p>
<p>In <a href="https://pubsonline.informs.org/doi/abs/10.1287/orsc.2023.1660">our research</a> at the Hamburg University of Technology, we were curious to explore how different types of disruptions can influence employees’ creative performance and how one can even harness them to boost innovation at work.</p>
<h2>Differentiating interruptions</h2>
<p><a href="https://journals.aom.org/doi/10.5465/annals.2017.0146">Not all interruptions are the same</a> and they can be broadly differentiated based on two characteristics: whether they allow for idle time or not, and whether they are unexpected or not. We can therefore distinguish three types of extended interruptions:</p>
<ul>
<li><p><em>Surprises</em> are unexpected interruptions that release idle time and allow employees’ minds to wander. A supply-chain disruption leading to a temporary halt in production might qualify as one, for example, or a power outage that requires a pause until electricity is restored. A critical software system going down could also be considered a surprise, as they prevent employees from completing their daily tasks.</p></li>
<li><p><em>Intrusions</em> are unexpected interruptions that do not come with idle time. They typically require employees to switch their attention to the new, pressing issue. These can negatively impact creativity, as employees’ focus is diverted away from their original tasks. Examples of intrusions include urgent client requests, where a high-priority client suddenly requires immediate assistance to resolve an issue with their order or service. Employees must pause their tasks and address the client’s concerns promptly. Another example is an emergency meeting in response to a sudden crisis.</p></li>
<li><p><em>Planned breaks</em> represent expected interruptions with idle time. They are scheduled and deliberate, allowing employees to step away from their work and focus on personal activities or goals and play a crucial role in employee well-being and work-life balance. Examples of planned breaks include vacations, public holidays or company-wide breaks.</p></li>
</ul>
<h2>The impact of different interruptions on creativity</h2>
<p>By examining the effects of these interruptions on employees’ performance, we can identify which ones have the potential to boost innovation and how organizations can best manage them.</p>
<p>Conducted at a manufacturer in the automotive industry, <a href="https://pubsonline.informs.org/doi/abs/10.1287/orsc.2023.1660">our research</a> investigates the creative outputs of employees during various interruptions. We used natural experiments, exploiting events such as supply-chain shortages, extreme weather events, and school breaks to explore how different types of interruptions impact creative performance.</p>
<p>Our findings suggest that <em>surprises</em> with idle time can significantly increase employees’ creative performance, understood here as the number and quality of ideas they put forward to improve their firm’s products and services. We found that individuals exposed to such interruptions generated 58% more ideas than their uninterrupted peers in the three weeks following the disruption. This boost in creativity is attributed to continued thinking about work and maintaining work goals during the interruption, which enables idea incubation.</p>
<p>In contrast, <em>intrusions</em> harm creativity. When employees are forced to switch their attention to the incoming task, their attention residue – or the amount of attention that lingers on the interrupted task – drops, reducing their creative performance.</p>
<p>As for <em>planned breaks</em>, such as vacations or school holidays, we found that they do not positively affect creative performance. During these expected interruptions, employees tend to disengage from work and focus on non-work-related goals, which lowers attention residue and hinders idea incubation. This comes nevertheless with the important caveat that breaks remain essential for employee well-being and rejuvenation.</p>
<p>But why is it that some interruptions are conducive to creative performance while others are not? One answer may lie in <a href="https://doi.org/10.1016/j.obhdp.2009.04.002">attention residue theory</a>, which posits that some attention lingers on an interrupted task even after the individual has shifted focus elsewhere. This lingering attention can help ideas incubate and foster creative thinking. With extended interruptions, the amount of attention residue depends on whether the interruption allows for idle time and whether it is unexpected or not.</p>
<p>During surprises, employees have idle time to think about their work and keep their work goals active, which results in higher attention residue and increased creative performance. In contrast, during intrusions, attention residue is reduced as employees must focus on the incoming task. Similarly, during planned breaks, attention residue decreases as employees disengage from work and concentrate on non-work goals.</p>
<h2>The art of interruption: a rulebook</h2>
<p>The good news is that it is possible for organisations to stir up creativity by applying a series of guidelines:</p>
<ul>
<li><p><em>Surprises</em>: When unforeseen events free up time, organisations can encourage employees to use it to reflect on their work and generate new ideas. One way for management to go about this is provide tools and resources that encourage idle pondering, such as access to idea submission systems, brainstorming sessions after the interruption, or quiet spaces for contemplation.</p></li>
<li><p><em>Intrusions</em>: Management ought to establish clear priorities and minimize distractions during an intrusion to enable employees to concentrate on the task at hand. Before attending to an intrusion, <a href="https://pubsonline.informs.org/doi/abs/10.1287/orsc.2017.1184">ready-to-resume plans</a> in which one notes where work has been left off help to resume the original task. Once the interruption ends, support re-engagement with original work by having people reflect how they will resume the original task or promoting collaboration and communication among colleagues.</p></li>
<li><p><em>Planned breaks</em>: Organizations should encourage employees to disconnect from work during vacations and other scheduled breaks to recharge and maintain a healthy work-life balance. Upon returning from a break, create opportunities for employees to share their experiences, insights, or inspirations, potentially sparking new ideas or fostering a creative mindset.</p></li>
</ul>
<p>Extended interruptions are an unavoidable part of working life. However, by understanding their impact on creativity and implementing strategies to leverage their potential, one can transform these disruptions into rich opportunities. By embracing surprises, managing attention during intrusions, and encouraging deliberate disconnection during planned breaks, organizations can unleash the creative potential of their employees and foster a more innovative work environment.</p><img src="https://counter.theconversation.com/content/203857/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tim Schweisfurth has received funding from Tempowerk, Hamburg, Germany</span></em></p>Has your computer just crashed and you are waiting for it to reboot? If so, do not despair. In fact, recent research shows surprise interruptions might even boost your creativity.Tim Schweisfurth, Full Professor in Organizational Design and Collaboration Engineering, University of TwenteLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1978622023-03-26T12:56:31Z2023-03-26T12:56:31ZCorporate management: Women are losing ground and need to be more strategic, but the culture must also change<figure><img src="https://images.theconversation.com/files/504760/original/file-20230116-16-2boffm.jpg?ixlib=rb-1.1.0&rect=110%2C11%2C7238%2C4891&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">There are fewer women in management positions than before the pandemic. There are several reasons for this, but the fact that women prefer to work from home is not helping them rise.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><p>Management consulting firm McKinsey recently released its eighth <a href="https://www.mckinsey.com/%7E/media/mckinsey/featured%20insights/diversity%20and%20inclusion/women%20in%20the%20workplace%202022/women-in-the-workplace-2022.pdf">study on the advancement of women in the corporate world</a> (<em>Women in the Workplace 2022</em>). Although it focuses on large U.S. companies, many of its findings point to a future where women’s representation in senior management positions will become increasingly rare, and where women will need more stamina, perseverance and fighting spirit to hold on to these positions.</p>
<p>Who will lose in this future? Women, men and society as a whole.</p>
<p>Some of the findings of the study are of particular concern:</p>
<p>1) Over the past year, women leaders have left their jobs at a higher rate than their male colleagues and this gap is the largest seen in the past five years.</p>
<p>2) A lower representation of women in engineering and technology positions compared to 2018 means that men are now 2.5 times more represented than in 2018. This is of great concern since this is the fastest growing sector with the highest-paying jobs.</p>
<p>As Dean of the John Molson School of Business and as an expert on women’s place in the upper echelons of the business world for several decades, respectively, we are concerned about this regression.</p>
<h2>The malaise goes beyond work-family balance</h2>
<p>What are the reasons that lead women to either withdraw from the labour market or to seek new employment that is more in line with their priorities and values after reaching leadership positions?</p>
<p>Difficulties in reconciling work, family and personal life are certainly part of the explanation, but other reasons need to be mentioned, in particular those that have more to do with the quality of the work environment compared to men:</p>
<p>1) Lack of recognition: 37 per cent of women leaders see other colleagues taking credit for their good ideas while this phenomenon happens to only 27 per cent of men </p>
<p>2) Frequent questioning of their decisions by male colleagues on the grounds that they do not have the appropriate skills to make them</p>
<p>3) More difficult access to promotions because of their gender or family responsibilities</p>
<p>4) Microaggressions</p>
<p>5) Lack of corporate commitment to diversity, equity and inclusion (DEI)</p>
<h2>Getting to the top, but not at any price</h2>
<p>It is important to note the changing needs of women in the last two years in relation to their workplaces.</p>
<p>Both women leaders and women under 30 say that opportunities for advancement is the most important issue for them. Younger women also place a higher priority on flexibility and the companies’ commitment to workplace wellness and DEI programs.</p>
<p>In addition, young women say they would be more interested in becoming leaders if they had more role models of female leaders who achieve the kind of work-life balance they desire.</p>
<figure class="align-center ">
<img alt="A young woman, sitting at a computer, facing a window" src="https://images.theconversation.com/files/498790/original/file-20221204-55987-z2bf2g.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/498790/original/file-20221204-55987-z2bf2g.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/498790/original/file-20221204-55987-z2bf2g.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/498790/original/file-20221204-55987-z2bf2g.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/498790/original/file-20221204-55987-z2bf2g.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/498790/original/file-20221204-55987-z2bf2g.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/498790/original/file-20221204-55987-z2bf2g.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Opportunities for advancement are the element young women are most concerned about and they prioritize flexibility and companies’ commitment to well-being at work.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
</figcaption>
</figure>
<p>Such findings are of concern, as the retention of women in management positions and the maintenance of a rich pool of female potential will surely be hampered in the future by issues related to quality of work life and employee well-being.</p>
<p>The recent study by ESSEC professor Viviane de Beaufort on the professional aspirations of 295 French women managers allows us to take these observations further: women want to reach the highest positions <a href="https://www.academia.edu/80171918/WP_CERESSEC_CEDE_ESSEC_Viviane_de_Beaufort_2022_avec_le_collectif_WOMEN_BOARD_READY_ESSEC">but not at any price</a>. This study adds some very interesting explanatory elements to the reigning sense of female disillusionment, from a disconnect between discourse and reality, to unethical governance, persistence of boys’ club mentalities, non-exemplary behaviour of leaders and lack of trust in employees.</p>
<h2>Labour market becoming more masculine again?</h2>
<p>If this trend continues in what de Beaufort so aptly describes as a “sideways movement,” it will result in places of power becoming more masculine again in the coming years.</p>
<p>This trend could even be accentuated by another phenomenon: working from home, which women favour in their search for better work/life balance. However, as the saying goes: out of sight, out of mind. Lack of contact and visibility in the workplace could mean that fewer women will be promoted to management positions or considered for the list of candidates for management positions.</p>
<p>A trend towards fewer female leadership appointments will, once again, create a male-dominated labour market <a href="https://www.catalyst.org/research/women-in-male-dominated-industries-and-occupations/">that is not conducive to the inclusion and development of female leadership</a>. Furthermore, this scarcity will reduce the opportunity for young women aspiring to leadership roles to meet other experienced women who could serve as role models. The female support network within companies will diminish and, consequently, limit the number of sponsors and mentors that young aspiring decision-makers need.</p>
<p>Another phenomenon emerging as a result of the pandemic is the increase in learning difficulties among some children. <a href="https://atlantic.ctvnews.ca/pressures-of-homeschooling-during-pandemic-reveal-gender-imbalances-study-1.5502627">It is often women who are tasked with helping children</a>. So this additional responsibility raises another barrier to career advancement for young women.</p>
<h2>New skills</h2>
<p><a href="https://theconversation.com/un-monde-du-travail-a-reinventer-pour-faire-une-meilleure-place-aux-femmes-173862">As discussed in a previous article</a>, the typical career path in medium and large organizations is rather linear. It is based on knowledge, experience and relationships developed over time, and power gradually acquired as one moves up the ladder.</p>
<p>This typical progression does not take into account the peripheral vision that is now needed in order to create both financial and non-financial value for the organization. Indeed, the expectations for organizations to contribute to environmental protection, societal needs and better governance (ESG) <a href="https://www.forbes.com/sites/forbestechcouncil/2022/05/12/five-reasons-to-develop-women-to-lead-and-influence-your-corporate-esg-operating-models/?sh=4ac0810b1c23">require new, often less traditional skills</a> such as in-depth knowledge of sustainable development, public policy or environmental science. These disciplines are more popular with women than with men, so this opens up a new form of promotion for women.</p>
<h2>A world of work to be reinvented</h2>
<p>We have also become aware of the importance of reimagining work from the perspective of well-being and balance. <a href="https://www2.deloitte.com/us/en/insights/topics/leadership/employee-wellness-in-the-corporate-workplace.html">According to the findings of a recent Deloitte study</a>, this has become a priority for senior leaders. Organizations need to offer more than one promising career path to their employees and promote <em>inclusive</em> excellence where performance measures are rethought in light of DEI and ESG principles.</p>
<p>Talent acquisition and retention represent the biggest HR risk management challenges of the future. A new way of thinking about work and human resource development within organizations will have to emerge, and this will have to foster a better alignment of the demands of family, work and personal life.</p>
<p>Women are ambitious and want to progress within their organization and society. It is therefore our collective responsibility to readjust our ways of doing things and to remain on the lookout for our unconscious biases, while remaining rigorous and clear on the corporate objectives we are trying to achieve. This objective is certainly ambitious, but it will be the pillar of greater equity in the world of work for both women and men.</p><img src="https://counter.theconversation.com/content/197862/count.gif" alt="La Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Les auteurs ne travaillent pas, ne conseillent pas, ne possèdent pas de parts, ne reçoivent pas de fonds d'une organisation qui pourrait tirer profit de cet article, et n'ont déclaré aucune autre affiliation que leur organisme de recherche.</span></em></p>Far from progressing, the position of women in management in companies is regressing. Several post-pandemic factors are at work, but both men and women are losing out.Louise Champoux-Paillé, Cadre en exercice, John Molson School of Business, Concordia UniversityAnne-Marie Croteau, Dean, John Molson School of Business, Concordia UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1901582022-09-22T18:28:14Z2022-09-22T18:28:14ZWhy South Africa’s courts are quick to declare dishonest directors of non-profit companies delinquent<figure><img src="https://images.theconversation.com/files/483490/original/file-20220908-24409-790ck6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>The Johannesburg High Court in South Africa recently declared a dishonest director of a non-profit company delinquent. This <a href="https://www.saflii.org/za/cases/ZAGPJHC/2022/598.html">case</a> shows how important it is for non-profit companies to be very careful about who they appoint to their board.</p>
<p>The delinquency remedy is available under the country’s <a href="https://www.onlinemoi.co.za/act?section=162">Companies Act</a> to directors and other stakeholders to hold directors accountable. The concept of a court declaring a director delinquent is a significant innovation of the Companies Act. This remedy was introduced when South Africa’s corporate law regime was reviewed about ten years ago. It is designed to maintain high corporate standards and to <a href="https://perjournal.co.za/article/view/1246">protect</a> stakeholders and the investing public against director misconduct. </p>
<p>The delinquency remedy has been used <a href="https://juta.co.za/catalogue/the-removal-of-directors-and-delinquency-orders-under-the-south-african-companies-act_28210">increasingly by stakeholders</a> over the past 10 years and has attracted a great deal of <a href="https://juta.co.za/catalogue/the-removal-of-directors-and-delinquency-orders-under-the-south-african-companies-act_28210">litigation</a> and <a href="https://theconversation.com/when-a-company-falls-out-with-its-ceo-lessons-from-south-africas-old-mutual-130135">publicity</a> in South Africa. For example, in a case that dominated news headlines for several months and involved vitriolic public attacks, the former CEO of Old Mutual Peter Moyo applied to court to declare the entire Old Mutual board delinquent for blocking him from returning to the company as the CEO. His application was <a href="https://www.news24.com/fin24/companies/peter-moyo-loses-last-ditch-court-bid-against-old-mutual-20220518">not successful</a>. </p>
<p>A delinquency order bans a person from being a director for at least seven years. But a court can lengthen this period and even extend it to the director’s <a href="https://uir.unisa.ac.za/handle/10500/27621">lifetime</a>. For example, in the case between <a href="https://uir.unisa.ac.za/handle/10500/27621">Organisation Undoing Tax Abuse v Myeni</a> the court declared Dudu Myeni, a former director and chairperson of <a href="https://www.flysaa.com/">South African Airways SOC Ltd</a>, a <a href="https://www.citizen.co.za/news/south-africa/courts/2441331/dudu-myeni-is-officially-a-delinquent-director/">delinquent director for life</a>. It found that she had caused substantial harm to the airline and had knowingly taken it to the brink of disaster. And <a href="https://uir.unisa.ac.za/handle/10500/27621">had</a> grossly abused her position. </p>
<p>For a court to declare directors delinquent, they must be guilty of serious misconduct. For example, they must grossly abuse their position, take personal advantage of information or an opportunity, harm the company intentionally, or be guilty of gross negligence, wilful misconduct, or breach of trust. Poor decision-making or ordinary commercial misjudgment is not enough for a delinquency order. </p>
<p>Australia and the UK also allow stakeholders to apply to court to disqualify directors. But in my <a href="https://uir.unisa.ac.za/handle/10500/27187">research</a> I found that South Africa’s delinquency remedy is much stricter. For example, <a href="https://uir.unisa.ac.za/handle/10500/27187">a much wider group</a> of stakeholders can apply to court declare directors delinquent. </p>
<p>Courts in Australia and the UK have a choice whether or not to disqualify directors from holding office. South African courts do not have this choice and must declare directors delinquent if they breach any of the delinquency grounds. </p>
<h2>Non-profit companies</h2>
<p>The <a href="https://www.onlinemoi.co.za/schedule?item=1&schedule=1">Companies Act</a> has special rules for non-profit companies. Non-profit companies are formed for a public benefit object or an object relating to a cultural or social activity, or a communal or group interest. </p>
<p>The law requires non-profit companies to use all their assets and income to further the company’s objectives. They may not distribute their income and property to the directors, except in limited circumstances. </p>
<p>For example, directors may get reasonable remuneration for services they render to the company. They may also get reimbursed for money they spend to further the company’s objectives. </p>
<p>A non-profit company can be formed with or without members, but it must have at least three directors. If it has members, they can choose the directors. If there are no members, the board or other persons choose the directors on the basis set out in the company’s constitution. </p>
<p>Non-profit companies usually rely on funding from donors or on grants. These donations cover their operational expenses and help the company to achieve its objectives. Non-profit companies can get a partial income tax exemption and an exemption on donations tax.</p>
<h2>Dishonest directors of non-profit companies</h2>
<p>A director of Breadline Africa RSA NPC, Farzeen Bhana, was recently <a href="https://www.saflii.org/za/cases/ZAGPJHC/2022/598.html">declared delinquent by the court</a>. The company forms part of an international public benefit organisation called <a href="https://breadlineafrica.org/">Breadlines Africa</a>. It is involved in many projects, including giving funding and practical assistance to address conditions of poverty.</p>
<p>Bhana gave in a falsified CV during her interview for a position to the board of the company. She claimed to have degrees from <a href="https://www.wits.ac.za/">the University of the Witwatersrand</a> and the <a href="https://www.lse.ac.uk/">London School of Economics</a>, and other postgraduate qualifications. None of this was true. She also submitted a false reference at her interview. </p>
<p>Bhana went to international board meetings of the company while she was a director. There she made false presentations about the work she was doing to further the company’s objectives. She also tried to defraud the company.</p>
<p>One of the company’s directors applied to court to have Bhana declared delinquent. If a non-profit company has members, a member can bring the delinquency application. If there are no members, many other stakeholders, including a director, the company secretary, the Companies and Intellectual Property Commission and even a person acting in the <a href="https://uir.unisa.ac.za/handle/10500/27621">public interest</a> can bring the application.</p>
<p>Approving of research I conducted on the <a href="https://uir.unisa.ac.za/handle/10500/27187">potential abuse of the delinquency remedy</a>, the court agreed that because a wide range of people can apply to court to declare a director delinquent, it is important to make sure that <a href="https://theconversation.com/why-south-african-law-on-directors-delinquency-is-open-to-abuse-122205">frivolous</a> and <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3679426">vexatious</a> applications are not lodged. It is especially important to guard against the abuse of the delinquency remedy in a non-profit company because the application can harm the company’s reputation and thus its ability to attract funding. </p>
<p>The court held that the director bringing the delinquency application against Bhana was not motivated by malice. It said that her application was also not frivolous or vexatious. </p>
<p>The court said that Bhana breached her <a href="https://www.onlinemoi.co.za/act?section=76">fiduciary duty</a> in a serious way. It ruled that her conduct amounted to wilful misconduct and breach of trust. It also held that her actions in trying to benefit herself personally showed that she grossly abused the position of director. </p>
<p>The court did not state how long its delinquency declaration will last. Presumably it will be for the minimum period of seven years. </p>
<p>Even though Bhana did not cause monetary harm to the company, the court said that the reputational harm and risk was immense. </p>
<h2>Lessons to be learnt</h2>
<p>This case shows that if directors of non-profit companies are dishonest, courts will not hesitate to declare them delinquent. As the court said, the integrity of non-profit companies is their agency to ensure that funds are donated so that they can fulfil their objectives. </p>
<p>Dishonest directors of non-profit companies may seriously harm the company’s reputation locally and internationally. This can hamper its ability to attract funding. It can also hamper its ability to meet its objectives and serve the public good.</p>
<p>Boards of directors of non-profit companies must be vigilant about who they appoint as directors. They must take steps to properly screen potential directors before they appoint them.</p><img src="https://counter.theconversation.com/content/190158/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rehana Cassim does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Boards of non-profit companies must be vigilant about who they appoint as directors and do proper screening.Rehana Cassim, Professor in Company Law, University of South AfricaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1859172022-06-30T18:18:15Z2022-06-30T18:18:15ZAbortion benefits: Companies have a simple and legal way to help their workers living in anti-abortion states – expand paid time off<figure><img src="https://images.theconversation.com/files/471708/original/file-20220629-14-teswcu.jpeg?ixlib=rb-1.1.0&rect=251%2C58%2C5338%2C3662&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">As the last abortion clinic in Mississippi closes, workers in the state may get some support from their employers. </span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/AbortionMississippi/a2fff0257576414787850e495707d606/photo?Query=abortion%20clinic&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=1561&currentItemNo=26">AP Photo/Rogelio V. Solis</a></span></figcaption></figure><p>Employers looking for ways to support their workers seeking abortions in states where it’s now illegal or soon will be don’t have it easy. </p>
<p>From an employer’s standpoint, abortion is considered <a href="https://www.jacksonlewis.com/publication/group-health-plan-considerations-face-potentially-changing-abortion-laws">a type of health care benefit</a> – and the rules that apply to that benefit are <a href="https://www.nytimes.com/interactive/2022/us/abortion-laws-roe-v-wade.html">shifting rapidly</a> from state to state. Abortion is also a <a href="https://www.pewresearch.org/fact-tank/2021/06/17/key-facts-about-the-abortion-debate-in-america/">political flashpoint</a> guaranteed to produce controversy. And the problem is not going away anytime soon.</p>
<p><a href="https://www.nytimes.com/article/abortion-companies-travel-expenses.html?partner=slack&smid=sl-share">Some companies are vowing</a> to cover the cost of traveling out of state to get the procedure where it is still legal. Others are emphasizing that their insurance plans explicitly cover abortions. </p>
<p>As a <a href="https://law.uoregon.edu/directory/faculty-staff/all/tippett">legal scholar specializing in employment law</a>, I believe there’s also a third option that may not be as generous but is less likely to run into legal problems – and will help more workers, especially those with low incomes. </p>
<h2>Covering medical costs directly</h2>
<p>As of 2020, the <a href="https://www.healthaffairs.org/doi/pdf/10.1377/hlthaff.2021.01528">median cost of an abortion</a> was US$500 to $600 in the first trimester, and around $900 in the second trimester.</p>
<p>Although <a href="https://www.sciencedirect.com/science/article/abs/pii/S1049386713000224?via%3Dihub">most women</a> seeking an abortion pay for the procedure out of pocket, some companies cover abortion in their health plans. In a recent statement, for example, <a href="https://www.nytimes.com/article/abortion-companies-travel-expenses.html?partner=slack&smid=sl-share">Uber touted</a> that its employee health plan includes abortion costs. And employers in a <a href="https://www.guttmacher.org/state-policy/explore/regulating-insurance-coverage-abortion">handful of states</a> such as California and New York are required to include abortion in any health plan they offer. </p>
<p>However, other states outlaw health coverage for abortion under <a href="https://www.littler.com/publication-press/publication/impacts-dobbs-decision-employer-benefit-plans">state insurance laws</a>. Even before the recent <a href="https://theconversation.com/a-revolutionary-ruling-and-not-just-for-abortion-a-supreme-court-scholar-explains-the-impact-of-dobbs-185823">Supreme Court abortion decision</a>, 11 states including North Dakota and Texas <a href="https://www.guttmacher.org/state-policy/explore/regulating-insurance-coverage-abortion">had already prohibited or limited</a> private insurance from paying for the procedure.</p>
<p><a href="https://www.littler.com/publication-press/publication/impacts-dobbs-decision-employer-benefit-plans">Companies that fund</a> their own health benefit plan may be in a better position to avoid restrictions in state insurance laws. But switching to a self-funded plan is unaffordable for most small or medium-sized businesses. And self-funding may not protect companies if states decide to <a href="https://observer.com/2022/06/big-u-s-employers-like-walmart-and-home-depot-arent-talking-about-workplace-abortion-rights/">criminalize</a> abortion.</p>
<p>In other words, companies do not have a lot of room to maneuver when it comes to covering abortions in states that are determined to prohibit the procedure.</p>
<figure class="align-center ">
<img alt="An abortion procedure room with a computer screen and a medical bed" src="https://images.theconversation.com/files/471915/original/file-20220630-20-86ck3h.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/471915/original/file-20220630-20-86ck3h.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/471915/original/file-20220630-20-86ck3h.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/471915/original/file-20220630-20-86ck3h.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/471915/original/file-20220630-20-86ck3h.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/471915/original/file-20220630-20-86ck3h.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/471915/original/file-20220630-20-86ck3h.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Patients can expect to spend around $500-$600 on a first-trimester abortion.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/AbortionTexasLouisianaClinic/55574dda45234990bbd8f264583f3265/photo?Query=abortion%20procedure&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=508&currentItemNo=87">AP Photo/Rebecca Blackwell</a></span>
</figcaption>
</figure>
<h2>The travel expense option</h2>
<p>Microsoft, Citigroup and <a href="https://www.reuters.com/world/us/companies-offering-abortion-travel-benefits-us-workers-2022-06-24/">at least 50 other U.S. companies</a> have pledged in recent weeks to reimburse workers for travel expenses associated with out-of-state medical care, including abortion. </p>
<p>Kroger and <a href="https://www.cbsnews.com/pittsburgh/news/dicks-sporting-goods-travel-expense-reimbursement-employees-seeking-abortions/">Dick’s Sporting Goods</a>, for example, offered employees up to $4,000 to cover such expenses, while Zillow said it would reimburse up to $7,500 when travel is required for abortion or certain other medical procedures.</p>
<p>Nevertheless, I suspect many companies may shy away from adopting similar policies. A <a href="https://www.mercer.us/our-thinking/healthcare/scotus-overturns-roe-understanding-the-impact-on-your-benefit-plans.html">survey in early June found that</a> only 14% of companies already had a policy in place to reimburse abortion-related travel expenses, while another 25% said they were considering it.</p>
<p>Although those numbers could grow, leading <a href="https://www.littler.com/publication-press/publication/impacts-dobbs-decision-employer-benefit-plans">law firms have cautioned</a> <a href="https://www.jacksonlewis.com/publication/group-health-plan-considerations-face-potentially-changing-abortion-laws">that</a> such policies could <a href="https://www.wsj.com/articles/after-roe-v-wade-ruling-companies-reimbursing-medical-and-travel-expenses-for-abortion-risk-blowback-11656109337">create legal risks</a> similar to those involved in covering health care costs.</p>
<p>Anti-abortion states could even directly prohibit travel reimbursement for out-of-state abortions. Texas lawmakers, for example, are already threatening to <a href="https://www.nbcnews.com/business/business-news/companies-offering-abortion-related-travel-expenses-legal-exposure-rcna35559">pass a law</a> that would “bar companies from doing business in Texas if they pay for residents of the state to receive abortions elsewhere.”</p>
<p>And while there are reasons to believe <a href="https://www.law.cornell.edu/supremecourt/text/19-1392#writing-19-1392_CONCUR_6">interstate travel</a> would be constitutionally protected, any ensuing litigation would take years to resolve. </p>
<p>As a result, many companies may simply <a href="https://observer.com/2022/06/big-u-s-employers-like-walmart-and-home-depot-arent-talking-about-workplace-abortion-rights/">decide against</a> offering abortion travel benefits to workers in states where the procedure is banned.</p>
<figure class="align-center ">
<img alt="silhouettes of protesters with signs in front of supreme court building" src="https://images.theconversation.com/files/471916/original/file-20220630-14-pvsa00.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/471916/original/file-20220630-14-pvsa00.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/471916/original/file-20220630-14-pvsa00.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/471916/original/file-20220630-14-pvsa00.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/471916/original/file-20220630-14-pvsa00.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/471916/original/file-20220630-14-pvsa00.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/471916/original/file-20220630-14-pvsa00.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Abortion-rights activists protest outside the Supreme Court on June 25, 2022.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/AbortionCrossingStateLines/d7c0c8e2bc13426c9b540145b1f14089/photo?Query=abortion%20travel%20state&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=28&currentItemNo=1">AP Photo/Jose Luis Magana</a></span>
</figcaption>
</figure>
<h2>A simpler solution that helps everyone</h2>
<p>This doesn’t mean that companies are completely powerless to help workers in an anti-abortion state. </p>
<p>Workers who need to drive hundreds of miles for care unavailable in their state will – at a minimum – need time off work. And while most workers have some access to paid leave, those benefits are <a href="https://www.bls.gov/news.release/pdf/ebs2.pdf">predominantly available</a> to high-wage earners. By contrast, roughly half of workers on the low end of the wage scale lack paid <a href="https://www.bls.gov/news.release/pdf/ebs2.pdf">sick leave or vacation time</a>.</p>
<p>These workers are left in an impossible position if they need to travel for an abortion. They generally aren’t even entitled to unpaid time off, unless they are covered by the Family and Medical Leave Act and their condition qualifies as a “<a href="https://www.dol.gov/agencies/whd/fact-sheets/28-fmla">serious health condition</a>.” Instead, they are left to cajole co-workers to cover their shifts and hope managers cut them a break. </p>
<p>And every hour a worker without vacation or sick leave spends driving to another state for medical care is an hour they aren’t being paid. An employee making $15 an hour who loses a week of work for an out-of-state abortion stands to forgo as much money as the cost of the procedure itself. In other words, the workers who can least afford to forgo wages for an abortion are most likely to be put in that position. </p>
<p>If companies are reluctant or unable to pay for travel expenses – or the procedure itself – they can at least pay workers for the time they are away from work. </p>
<p>Expanding sick leave and vacation leave to a broader swath of workers may also avoid some of the pitfalls of other corporate interventions. Even if state legislatures pass draconian laws such as the Texas law that prohibits “<a href="https://capitol.texas.gov/tlodocs/87R/analysis/html/HB01515H.htm">aiding and abetting</a>,” companies rarely know exactly how workers spend their time off – particularly when it comes to vacation time. It’s harder then to pin liability on the employer.</p>
<h2>More privacy, less controversy</h2>
<p>For the same reason, sick leave and vacation policies also provide workers with a measure of privacy. Unlike policies involving travel or health benefits, employees can often avail themselves of time off without providing receipts or documentation. </p>
<p>Finally, a quiet expansion of the company’s paid time off enables employers to help women without attracting controversy. <a href="https://nypost.com/2022/06/27/meta-worker-blasts-firm-for-banning-discussion-of-abortion-ruling/">Companies are already nervous</a> about abortion-related discussions at work. They may not want to generate more internal conflict at a time when partisan rancor is at a fever pitch.</p>
<p>And while expanding paid time off may not seem like a lot, it would be one less hurdle for women experiencing nothing but hurdles.</p><img src="https://counter.theconversation.com/content/185917/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Elizabeth C. Tippett does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Some companies say they will cover travel expenses to help workers in states where abortion is illegal get the procedure, but doing so could pose legal challenges.Elizabeth C. Tippett, Associate Professor of Law, University of OregonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1813562022-04-20T08:47:36Z2022-04-20T08:47:36ZTo stay in the game directors need to rewire corporate missions and bring new faces to the table<figure><img src="https://images.theconversation.com/files/458140/original/file-20220414-26-qodhm3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Getty images</span></span></figcaption></figure><p>In the first ever case of its kind, <a href="https://www.clientearth.org/">ClientEarth</a> – a UK-based organisation that works with NGOS to fight legal battles on environmental issues – is taking <a href="http://clientearth.org/latest/latest-updates/news/we-re-taking-legal-action-against-shell-s-board-for-mismanaging-climate-risk/">Shell’s board of directors to court</a> for failing to properly prepare for an energy transition. This involves moving from carbon-emitting fossil fuels in line with climate science, and at a pace and scale that aligns with the <a href="https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement">Paris Agreement</a> goal to keep global temperature rises to below 1.5°C by 2050. </p>
<p>In mid-March the campaign group <a href="https://www.clientearth.org/latest/latest-updates/news/we-re-taking-legal-action-against-shell-s-board-for-mismanaging-climate-risk/">began legal proceedings</a> based on the claim that Shell board’s mismanagement of climate risk puts it in breach of its duties under the <a href="https://www.legislation.gov.uk/ukpga/2006/46/contents">UK Companies Act</a>. Under English law, company directors have a duty to assess, disclose and manage material risks to the company.</p>
<p>In an age-old narrative of litigation where the interests of the planet and public are often out-gunned by the corporate dollar, pound, renminbi or rupee, the entrance of an empowered NGO into the courtroom arena to strike at the legal duties of the board <a href="https://www.tcfdhub.org/wp-content/uploads/2021/06/Primer_on_Climate_Change_Directors_Duties_and_Disclosure_Obligations_CGI_CCLI.pdf">changes the rules of the game</a>. And it should make board directors everywhere sit up and take note.</p>
<p>In March, the Institute of Directors <a href="https://www.iod.com/news-campaigns/news/articles/IoD-It-is-no-longer-tenable-for-British-people-to-hold-board-positions-in-Russian-companies">stated</a> it was:</p>
<blockquote>
<p>no longer tenable for British directors to be involved in governance roles in the Russian economy. </p>
</blockquote>
<p>It called on them to do their “<a href="https://www.iod.com/news-campaigns/news/articles/IoD-It-is-no-longer-tenable-for-British-people-to-hold-board-positions-in-Russian-companies">moral duty</a>” and resign over the invasion of Ukraine. </p>
<p>In a poll of its members and wider community, 86% supported the view that all British directors should now resign their Russian board mandates. Many answered the call and relinquished their well-paid positions in Russian companies, but some chose to stay put, risking public opprobrium and legal action.</p>
<p>Larry Fink, US billionaire and chairman and CEO of the investment company BlackRock asked CEOs in his now-familiar annual letter this year if they wanted to be a <a href="https://www.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter">dodo or a phoenix</a>. He stated categorically that stakeholder capitalism</p>
<blockquote>
<p>is capitalism, driven by mutually beneficial relationships between you and the employees, customers, suppliers, and communities your company relies on to prosper.</p>
</blockquote>
<p>Into this context the Intergovernmental Panel on Climate Change <a href="https://theconversation.com/ipcc-report-where-to-begin-slashing-emissions-180919">released</a> its latest assessments. They outlined with brutal clarity the effects of climate change and the narrowing window for action left to humanity. In his response to the latest mitigation report UN Secretary <a href="https://www.un.org/sg/en/node/262847">General Antonio Guterres</a> laid out the facts for everyone when he said:</p>
<blockquote>
<p>Some government and business leaders are saying one thing – but doing another. Simply put, they are lying.</p>
</blockquote>
<p>Boards are facing pressure from inside and outside the tent to find relevancy and step up to the new world order. </p>
<p>And it is clear that to respond to this new challenge, board directors need to pay full attention to the state of society and the planet for the simple reason these are two vital elements of their operating space. If our climate and nature can’t thrive, nor can business. As many an activist and sustainability thought-leader has put it “you can’t do business on a dead planet”.</p>
<p>Social instability or violent conflict can undermine economic growth and development – revolution or war, even more so. Scarcity of vital ecological “infrastructure” - such as water, or the agricultural conditions needed to feed the near-nine-billion global population, will threaten the business prospects or operations of many companies.</p>
<p>Building on earlier scholarship work on <a href="https://policydialogue.org/publications/working-papers/transparency-in-the-profit-making-world/">corporate transparency</a>, my current research focus on shifts in corporate law and governance indicates that directors will increasingly be held to account for failures to take such external risks – and their companies’ contribution to causing them – into account.</p>
<p>From many years of experience serving and advising boards, my sense is that directors are “diligently coasting”. They deliver what’s expected rather than seeking what is needed. </p>
<p>Now, a step-change is needed. </p>
<h2>The danger of being blind-sided</h2>
<p>A combination of systemic shocks and global pressures suggests a seismic ratcheting up of risks and also social, legal and political changes. When pent-up concern suddenly catalyses an epochral reaction, businesses may be blind-sided or flat-footed in response. A critical piece of self-reflection is recognising that it is often the business-as-usual practices of the for-profit sector that is eroding social well-being and environmental integrity, or that of their wider value and supply chains.</p>
<p>In theory at least, non-executive directors are best placed to bring this perspective to bear – provided they are sufficiently well informed and have the independence of mind to challenge a status quo approach. They will need to provide new direction and oversight.</p>
<p>Hence, resetting the mission of a company so that profitability is a means to an end – the organisation’s social purpose – and not an end in itself is essential.</p>
<p>In practice boards must have the right information at their disposal so that they can benefit from strategic foresight. To this end they need to build their ability to understand the complex context in which business must operate, the tough systemic changes that characterise the current era of global change (social, economic and political as well as environmental). In turn, this will enable directors to ask the right questions of their executives.</p>
<h2>Courage needed, and new skills</h2>
<p>The change will take courage as well as new skills – and in most cases new and different kinds of board members. Greater gender, ethnic and cultural diversity are vital, and recruitment must look beyond business alone, to welcome members from the non-profit and public interest sector. Many boards are already progressing with diversity and inclusion, often in response to the regulatory environment. In Norway, Spain, France and Iceland, for example, the law requires that women make up <a href="https://diligent.com/en-gb/blog/contrasting-corporate-governance-in-uk-europe-us/">40% of board members</a> at publicly listed companies.</p>
<p>However, age continues to be a blindspot. A <a href="https://www.pwc.com/us/en/governance-insights-center/annual-corporate-directors-survey/assets/pwc-annual-corporate-directors-survey-2018.pdf">2018 survey</a> by the consultancy firm PricewaterhouseCoopers showed that the average age of board directors in top US listed companies was 63 and with just 6% of directors 50 or younger. Only 21% of directors highlighting the importance of age diversity.</p>
<p>Younger generations are looking down the barrel of an increasingly volatile world where their futures are at stake. Without a doubt they must have representation at the table to challenge existing narratives and accelerate understanding and action.</p>
<p>These unusual board voices, often bringing with them the perspectives of those willing to risk everything – freedom, career, media opprobrium – to change the climate, nature and social sustainability discourse, offer the fastest route to positive disruption. Their meaningful inclusion is vital; the future legitimacy of the corporate board will depend on it.</p>
<p>It is time for boards to challenge the sacred cows of business-as-usual and refashion themselves in response to the new reality. They must step up to meet the challenge of the age and ask the difficult questions. This is the gauntlet we at the University of Cambridge’s Institute for Sustainability Leadership are throwing down to boards – to reset their mission and rewire their approach to leadership, so as to fundamentally rethink the role of business in society and the economy.</p><img src="https://counter.theconversation.com/content/181356/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Richard Calland is a Fellow of the University of Cambridge’s Institute for Sustainability Leadership (CISL), and leads its work on and with Boards. He is the co-chair of the UN Secretary-General's Expert Group on International Climate Finance and co-director of the African Climate Finance Hub. He is also a founding partner of political economy consultancy, The Paternoster Group, and a member of the advisory council of the Council for the Advancement of the South African Constitution.</span></em></p>Companies need to reset their mission so that profitability is a means to an end - the organisation’s social purpose - not an end in itself is essential.Richard Calland, Associate Professor in Public Law, University of Cape TownLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1701972021-11-12T20:41:00Z2021-11-12T20:41:00ZThe ‘great resignation’ is a trend that began before the pandemic – and bosses need to get used to it<figure><img src="https://images.theconversation.com/files/431721/original/file-20211112-19-vbt798.jpg?ixlib=rb-1.1.0&rect=220%2C117%2C5021%2C3370&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Employers are having a harder time recruiting new workers. </span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/JobOpenings/7ce2eafd791145eaae976773fc302d3c/photo?Query=quitting&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=3176&currentItemNo=1">AP Photo/Marta Lavandier</a></span></figcaption></figure><p>Finding good employees has always been a challenge - but these days it’s harder than ever. And it is unlikely to improve anytime soon. </p>
<p>The so-called quit rate – the share of workers who voluntarily leave their jobs – <a href="https://www.bls.gov/news.release/jolts.nr0.htm">hit a new record of 3%</a> in September 2021, according to the latest data available from the Bureau of Labor and Statistics. The rate was highest in the leisure and hospitality sector, where 6.4% of workers quit their jobs in September. In all, <a href="https://www.bls.gov/news.release/jolts.t04.htm">20.2 million workers left their employers</a> from May through September. </p>
<p>Companies are feeling the effects. In August 2021, a survey found that 73% of 380 employers in North America were having <a href="https://www.willistowerswatson.com/en-US/News/2021/08/difficulty-hiring-and-keeping-workers-will-last-into-2022-willis-towers-watson-survey-finds">difficulty attracting employees</a> – three times the share that said so the previous year. And 70% expect this difficulty to persist into 2022.</p>
<p>Observers have <a href="https://www.pbs.org/newshour/economy/states-that-cutoff-of-jobless-aid-see-no-surge-of-job-seekers">blamed a wide variety of factors for all the turnover</a>, from fear of contracting COVID-19 by mixing with co-workers on the job to paltry wages and benefits being offered.</p>
<p>As a <a href="https://merage.uci.edu/research-faculty/faculty-directory/ian-williamson.html">professor of human resource management</a>, I examine how employment and the work environment have changed over time and the impact this has on organizations and communities. While the current resignation behavior may seem like a new trend, data shows employee turnover <a href="https://info.workinstitute.com/hubfs/2020%20Retention%20Report/Work%20Institutes%202020%20Retention%20Report.pdf">has been rising steadily</a> for the past decade and may simply be the new normal employers are going to have to get used to. </p>
<p><iframe id="rilEn" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/rilEn/1/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>The economy’s seismic shifts</h2>
<p>The U.S. – alongside other advanced economies – <a href="https://data.worldbank.org/indicator/NV.SRV.TOTL.ZS">has been moving away from a focus</a> on productive sectors like manufacturing to a service-based economy for decades. </p>
<p>In recent years, the <a href="https://www2.deloitte.com/us/en/insights/economy/issues-by-the-numbers/trade-in-services-economy-growth.html">service sector accounted for about 86%</a> of all employment in the U.S. and 79% of all economic growth. </p>
<p>That change has been seismic for employers. A majority of the jobs in service-based industries require only <a href="https://www.doi.org/10.1287/orsc.1110.0722">generalizable occupational skills</a> such as competencies in computing and communications that are often easily transportable across companies. This is true across a wide range of professions, from accountants and engineers to truck drivers and customer services representatives. As a result, in service-based economies, it is relatively easy for employees to move between companies and maintain their productivity.</p>
<p>And thanks to information technology and social media, it has never been easier for employees to <a href="https://sociallyrecruited.com/2020/02/27/social-media-recruitment-statistics-2020/">find out about new job opportunities</a> anywhere in the world. The <a href="https://www.gartner.com/smarterwithgartner/3-workplace-reopening-guidelines-for-hr-leaders/">growing prevalence of remote working</a> also means that in some cases employees will no longer need to physically relocate to start a new job. </p>
<p>Thus, the barriers and transition costs employees incur when switching employers have been reduced. </p>
<p>Greater options and lower costs to move mean that employees can be more selective and focus on picking jobs that best fit their personal needs and desires. What people want from work is inherently shaped by their <a href="https://www.emerald.com/insight/content/doi/10.1108/13527600910930022/full/html">cultural values and life situation</a>. The U.S. labor market is expected to become far <a href="https://www.diversityresources.com/projected-composition-of-the-american-workforce/">more diverse</a> going forward in terms of gender, ethnicity and age. Thus, employers that cannot provide greater flexibility and variety in their working environment will struggle to attract and retain workers. </p>
<p>Employers now have a greater obligation than in the past to convince existing and would-be employees why they should stay or join their organizations. And there is no evidence to suggest this trend will change going forward.</p>
<h2>What companies can do to adapt</h2>
<p>It has been estimated that the <a href="https://www.oxfordeconomics.com/recent-releases/the-cost-of-brain-drain">cost to the employer of replacing a departing employee</a> is on average 122% of that employee’s annual salary in terms of finding and training a replacement.</p>
<p>Thus, there is a large incentive for businesses to adapt to the new labor market conditions and develop innovative approaches to keeping workers happy and in their jobs. </p>
<p>A May 2021 survey <a href="https://www.ey.com/en_gl/news/2021/05/more-than-half-of-employees-globally-would-quit-their-jobs-if-not-provided-post-pandemic-flexibility-ey-survey-finds">found that 54% of employees</a> surveyed from around the world would consider leaving their job if they were not afforded some form of flexibility in where and when they work. </p>
<p>Given the heightened priority employees place on finding a job that fits their preferences, companies need to adopt a more holistic approach to the types of rewards they provide. It’s also important that they <a href="https://www.researchgate.net/publication/315023855_Person-Organization_and_Person-Job_Fit_Perceptions_of_New_IT_Employees_Work_Outcomes_and_Gender_Differences">tailor the types of financial, social and developmental incentives and opportunities</a> they provide to individual employees’ preferences. It’s not just about paying workers more. There are even examples of companies <a href="https://fintechs.fi/2021/05/23/dominos-pizza-employees-can-get-salary-in-bitcoin-in-netherlands/">providing employees the choice</a> of simply being paid in a cryptocurrency like bitcoin as an inducement. </p>
<p>While customizing the package of rewards each employees receives may potentially increase an organization’s administrative costs, this investment can help retain a highly engaged workforce. </p>
<h2>Managing the new normal</h2>
<p>Companies should also plan on high employee mobility to be endemic and reframe how they approach managing their workers.</p>
<p>One way to do this is by investing deeply in external relationships that help ensure consistent access to high-quality talent. <a href="https://www.elgaronline.com/view/9781845429263.00026.xml">This can include enhancing the relationships</a> they have with educational institutions and former employees. </p>
<p>For example, many organizations have adopted <a href="https://sloanreview.mit.edu/article/rethinking-the-war-for-talent/">alumni programs</a> that specifically recruit former employees to rejoin.</p>
<p>These former employees are often less expensive to recruit, bring access to needed human capital and possess both an understanding of an organization’s processes and an appreciation of the organization’s culture. </p>
<p>The quit rate is likely to stay elevated for some time to come. The sooner employers accept that and adapt, the better they’ll be at managing the new normal. </p>
<p>[<em>You’re smart and curious about the world. So are The Conversation’s authors and editors.</em> <a href="https://theconversation.com/us/newsletters/the-daily-newsletter-3?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=youresmart">You can read us daily by subscribing to our newsletter</a>.]</p><img src="https://counter.theconversation.com/content/170197/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ian O. Williamson received funding from the National Science Foundation. </span></em></p>A record share of workers quit their jobs in September. A human resources scholar explains how this is a trend that predates the pandemic.Ian O. Williamson, Dean of the Paul Merage School of Business, University of California, IrvineLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1677652021-09-14T12:49:51Z2021-09-14T12:49:51ZWho’s covered by a vaccine mandate? Here’s a quick guide to America’s patchwork of COVID-19 shot requirements<figure><img src="https://images.theconversation.com/files/420901/original/file-20210913-25-1jysscp.jpg?ixlib=rb-1.1.0&rect=62%2C38%2C5114%2C3011&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Tyson Foods is one of the companies that already said it would require workers to be fully vaccinated against COVID-19. </span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/VirusOutbreakWorkplaceVaccines/58f0a3afbb9946b99e616f952f785dc9/photo?Query=vaccine%20AND%20workplace&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=41&currentItemNo=26">John Konstantaras/AP Images for Tyson Foods</a></span></figcaption></figure><p>President Joe Biden’s <a href="https://www.whitehouse.gov/covidplan/">orders requiring vaccinations</a> for about two-thirds of the U.S. workforce add to a patchwork of vaccine mandates aimed at pushing more people to get their shots and bring the pandemic under control. </p>
<p>The president had largely resisted issuing federal mandates, but in recent months, many states, companies and schools have issued their own mandates in order to inoculate reluctant or resistant Americans. </p>
<p>Currently <a href="https://www.whitehouse.gov/briefing-room/speeches-remarks/2021/09/09/remarks-by-president-biden-on-fighting-the-covid-19-pandemic-3/">nearly 80 million vaccine-eligible Americans</a> have yet to get a single dose, according to the White House. Health experts believe this <a href="https://www.cnbc.com/2021/08/24/cdc-study-shows-unvaccinated-people-are-29-times-more-likely-to-be-hospitalized-with-covid.html">helped the delta variant thrive</a> in many parts of the country over the summer.</p>
<p>“The unvaccinated overcrowd our hospitals … leaving no room for someone with a heart attack or pancreatitis or cancer,” <a href="https://www.nytimes.com/2021/09/09/us/politics/biden-vaccine-mandates-transcript.html">Biden said in a speech on Sept. 9, 2021, announcing the new orders</a>. “We’ve been patient, but our patience is wearing thin. And your refusal has cost all of us.”</p>
<p>I’m a <a href="https://zicklin.baruch.cuny.edu/faculty-profile/debbie-kaminer/">law professor</a> who has written about the legal questions around vaccination laws. While it’s unclear how many people in total are covered by the overlapping vaccine mandates, they most likely now affect a significant majority of eligible Americans.</p>
<h2>Biden’s new orders</h2>
<p>The <a href="https://www.whitehouse.gov/covidplan/">newest vaccine requirements</a> cover <a href="https://www.reuters.com/legal/government/how-will-bidens-vaccine-mandate-impact-workers-companies-2021-09-13/">over 100 million workers in total</a> – and it’s unknown how many of these people remain unvaccinated.</p>
<p>The biggest part of Biden’s orders involve having the Occupational Safety and Health Administration develop a rule that companies with 100 or more employees ensure their workers are fully vaccinated or are tested weekly for COVID-19. Although less than 2% of U.S. companies have 100 or more employees, according to <a href="https://www.census.gov/data/tables/2018/econ/susb/2018-susb-annual.html">recent Census data</a>, they employ over <a href="https://www.cbsnews.com/live-updates/biden-covid-19-vaccine-mandates-announcement/">80 million workers</a>. </p>
<p>The penalty for noncompliance could be fines for the employer of up to US$14,000 per violation.</p>
<p>Biden will also require federal employees, government contractors and health care workers who treat patients on Medicare and Medicaid to get vaccinated – about 20 million people – with no option to undergo frequent testing instead. </p>
<p>In addition, the new plan urges large entertainment venues like concert halls and sports stadiums to require proof of vaccination for entry and demands companies provide workers with paid time off to get their shots and to recover from possible vaccine-related side effects.</p>
<figure class="align-center ">
<img alt="An employee of Katz's Deli in New York City looks down to inspect a customer's vaccination card" src="https://images.theconversation.com/files/420898/original/file-20210913-17-15g83xg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/420898/original/file-20210913-17-15g83xg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/420898/original/file-20210913-17-15g83xg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/420898/original/file-20210913-17-15g83xg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/420898/original/file-20210913-17-15g83xg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/420898/original/file-20210913-17-15g83xg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/420898/original/file-20210913-17-15g83xg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">New York City has some of the strictest vaccine requirements in the country.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/VirusOutbreakNewYork/ba240dcc544d460faed57501afb6348b/photo?Query=vaccination%20AND%20proof&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=163&currentItemNo=43">AP Photo/Mary Altaffer</a></span>
</figcaption>
</figure>
<h2>State and local governments</h2>
<p><a href="https://www.littler.com/publication-press/publication/mandatory-employee-vaccines-coming-state-near-you">Approximately half of U.S. states</a> have enacted their own COVID-19 vaccine mandates. And in some cases, exemptions may be allowed for medical or religious reasons. </p>
<p>While these mandates differ from state to state, provisions typically cover some combination of government employees and contractors, health care workers, teachers and employees in state-operated settings such as prisons. The majority of these state mandates permit frequent testing and mask-wearing as an alternative to vaccination. </p>
<p>These statewide vaccine mandates exist almost exclusively in states with Democratic governors. <a href="https://www.littler.com/publication-press/publication/mandatory-employee-vaccines-coming-state-near-you">While Maryland, Massachusetts and Vermont</a>, all of which are <a href="https://www.nga.org/governors/">led by Republicans</a>, also have vaccine mandates, their populations tend to lean liberal.</p>
<p>California and New York City have some of the most rigorous mandates. California, for example, appears to be the only state that <a href="https://kesq.com/news/2021/08/18/california-to-require-vaccination-proof-or-negative-covid-test-for-indoor-events-with-1000-attendees/">requires proof of vaccination</a> of a negative COVID-19 test to attend an indoor event with 1,000 or more people. New York City <a href="https://www1.nyc.gov/site/doh/covid/covid-19-vaccines-keytonyc.page">requires vaccination</a> for an even wider variety of indoor venues, including restaurants and gyms, regardless of how many people are there.</p>
<p><a href="https://ballotpedia.org/State_government_policies_about_vaccine_requirements_(vaccine_passports)#Recent_news">About 20 states</a>, all of them led by Republican governors, have taken the opposite approach and prohibited vaccine mandates either through legislation or executive orders. Policies vary, but they typically prohibit state agencies from implementing any type of COVID-19 vaccine mandate, prohibit private companies from requiring their customers to be vaccinated, or both. </p>
<p><a href="https://www.forbes.com/sites/kimberleespeakman/2021/08/25/gov-abbot-bans-vaccine-mandates---again/?sh=4cc9f9d51843">Montana</a> is currently the only state that prohibits private employers from mandating the vaccine for their employees. </p>
<p>The new federal vaccine mandates would preempt some of these state laws and are likely to face legal challenges. </p>
<h2>Universities and schools</h2>
<p>Many educational institutions have also played an important role in mandating the vaccine. </p>
<p><a href="https://www.chronicle.com/blogs/live-coronavirus-updates/heres-a-list-of-colleges-that-will-require-students-to-be-vaccinated-against-covid-19">Over 1,000 U.S. universities</a> have some form of a vaccine mandate for students, employees or both, including many large public universities. Beyond the usual exemptions for medical or religious reasons, some of these mandates also exclude students learning entirely remotely.</p>
<p>In August 2021, the United States <a href="https://www.scotusblog.com/2021/08/barrett-leaves-indiana-universitys-vaccine-mandate-in-place/">Supreme Court refused to block Indiana University’s</a> vaccine mandate that covered virtually all students and employees and included both religious and medical exemptions. For that reason, I believe similar vaccine mandates at other universities will also likely withstand constitutional scrutiny.</p>
<p>At the grade school level, just <a href="https://www.edweek.org/policy-politics/where-teachers-are-required-to-get-vaccinated-against-covid-19/2021/08">two states, Oregon and Washington</a>, have mandated the COVID-19 vaccine for almost all K-12 school employees, while another seven require that teachers and other employees either be vaccinated or undergo regular testing. </p>
<p>In most states, however, vaccine mandates <a href="https://www.edweek.org/policy-politics/where-teachers-are-required-to-get-vaccinated-against-covid-19/2021/08">are being determined at the local level</a> – some cities or districts are passing mandates despite a state law that explicitly prohibits them. An ongoing survey of 100 large urban school districts around the country <a href="https://www.nytimes.com/2021/09/13/upshot/schools-testing-vaccines-biden.html">found that a quarter</a> require teachers to be vaccinated.</p>
<p>Los Angeles is the only major school district in the country that <a href="https://apnews.com/article/health-education-los-angeles-coronavirus-pandemic-969ac9c8c83b3518619d4ecccff583dd">requires eligible students 12 and older to get vaccinated</a> against COVID-19.</p>
<p>Vaccine mandates for schoolchildren are hardly new, however. Prior to the pandemic, <a href="https://repository.law.wisc.edu/s/uwlaw/media/304807">every state in the nation had some form of mandatory vaccination requirement</a> for K-12 students. </p>
<h2>Private businesses</h2>
<p>Before the new rule covering private businesses, many companies had already decided to require their workers receive their shots. </p>
<p>Earlier in the year, the Equal Employment Opportunity Commission <a href="https://www.eeoc.gov/wysk/what-you-should-know-about-covid-19-and-ada-rehabilitation-act-and-other-eeo-laws">gave companies the green light</a> that they could adopt mandatory vaccination policies as long as they remained in compliance with antidiscrimination laws.</p>
<p>While companies were initially slow to require vaccines, that changed recently after the Food and Drug Administration gave full approval to the Pfizer vaccine on Aug. 23. <a href="https://fortune.com/2021/08/23/companies-requiring-vaccines-workers-vaccination-mandatory/">Dozens of businesses</a>, including Walmart, Goldman Sachs and Google, now require employees to be vaccinated. </p>
<p>Health experts still don’t know how many more people need to be vaccinated to curtail the spread of the coronavirus. But the mandates, if upheld by courts, will likely help the U.S. get closer.</p>
<p>[<em>Understand new developments in science, health and technology, each week.</em> <a href="https://theconversation.com/us/newsletters/science-editors-picks-71/?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=science-understand">Subscribe to The Conversation’s science newsletter</a>.]</p><img src="https://counter.theconversation.com/content/167765/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Debbie Kaminer does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Overlapping vaccine mandates at the federal, state and local levels aims to reduce the number of unvaccinated Americans.Debbie Kaminer, Professor of Law, Baruch College, CUNYLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1596042021-05-06T13:40:24Z2021-05-06T13:40:24ZRemote working has led to managers spying more on staff – here are three ways to curb it<figure><img src="https://images.theconversation.com/files/398679/original/file-20210504-23-7mnb18.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">'Look less bored, this is your final warning.'</span> <span class="attribution"><a class="source" href="https://unsplash.com/photos/u3hmzw5U-SI">LinkedIn Sales Solutions</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>With <a href="https://www.enhesa.com/resources/article/the-rise-of-remote-work-in-the-covid-era-and-beyond/">so many more</a> people working from home during the pandemic, employers have <a href="https://www.peoplemanagement.co.uk/news/articles/one-in-seven-workers-say-employer-monitoring-has-increased-during-covid">stepped up</a> the extent to which <a href="https://www.eurofound.europa.eu/publications/report/2020/employee-monitoring-and-surveillance-the-challenges-of-digitalisation">they are</a> monitoring <a href="https://prospect.org/labor/remote-controlled-workers-digital-surveillance/">them online</a>. Not so many years ago, <a href="https://slate.com/news-and-politics/2013/03/harvard-email-search-scandal-can-your-employer-read-your-private-messages.html">employees were</a> having to adjust to having their work emails monitored; but that seems almost quaint compared to the digital surveillance we are seeing today. </p>
<p>Employers can use <a href="https://www.business.com/articles/what-is-keystroke-logging/">specialist software</a> to track workers’ keystrokes, mouse movements and the websites they visit. They <a href="https://www.bbc.co.uk/news/business-54289152">can take</a> screenshots of employees to <a href="https://www.nytimes.com/2020/05/06/technology/employee-monitoring-work-from-home-virus.html">check whether</a> they are at their screens and looking attentive, or even use <a href="https://www.brookings.edu/blog/techtank/2021/01/05/how-employers-use-technology-to-surveil-employees/">webcam monitoring software</a> that measures things like eye movements, facial expressions and body language. All this can be checked against a worker’s output to draw conclusions about their productivity. </p>
<p>Besides specialist software, managers can <a href="https://www.infoworld.com/article/2613609/can-a-vpn-log-really-point-to-employee-slacking-.html">view statistics</a> from their corporate private network to see who logged in and for what duration, and again cross-reference this to workers’ productivity data. In some organisations, staff who do not open work applications early in the morning could potentially be viewed as late for work or not productive enough.</p>
<p>Home-working has also raised the prospect of more informal staff monitoring. For example, if a worker would normally log in to meetings by turning on their video, but one day they are in a car or a new location, the employer might think they are not committed or focused enough. </p>
<p>This all <a href="https://link.springer.com/article/10.1023/A:1023014112461">raises questions</a> about how such surveillance is affecting people’s work practices, privacy and general wellbeing. Given that home-working <a href="https://www.theguardian.com/us-news/2021/feb/10/salesforce-office-in-person-work-tech">looks set</a> to extend beyond lockdown <a href="https://theconversation.com/remote-working-why-some-people-are-less-productive-at-home-than-others-new-research-160059">for many people</a>, this is clearly a moment for some serious reflection. </p>
<h2>The productivity dimension</h2>
<p><a href="https://www.bbc.co.uk/news/business-54289152">Managers justify</a> this kind of surveillance by claiming that it is <a href="https://www.datasociety.net/pubs/fow/WorkplaceSurveillance.pdf">good for productivity</a>. Some workers even seem to agree with this – provided the monitoring is done by a peer and not a manager. </p>
<p>Many have signed up to an <a href="https://www.bbc.co.uk/news/business-56083631">online service</a> called <a href="https://www.bbc.co.uk/news/business-56083631">Focusmate</a>, for example, which matches anonymous strangers on “work dates” where they briefly say what they will be doing during the appointment and then they can rate one another’s approach to work at the end. The service aims to make workers more productive and to feel less lonely at work. </p>
<p>That said, home-working during the first UK lockdown in spring 2020 <a href="https://wiserd.ac.uk/publications/homeworking-uk-and-during-2020-lockdown">did not have</a> a major effect on productivity. Workplace surveillance may even have held it back, given that it appears to have increased at the same time. Certainly, there is <a href="http://www.rogerclarke.com/DV/Biel15-DuDA.html#App3">evidence that</a> such techniques can make people feel vulnerable, afraid and less creative. It can also reduce their <a href="https://www.sciencedirect.com/science/article/pii/S0736585311000633">job satisfaction</a> and <a href="https://www.bbc.co.uk/news/business-54289152">lower their morale</a>. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/398681/original/file-20210504-22-1i77btv.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Cartoon of two office workers, one of whom looks more productive than the other" src="https://images.theconversation.com/files/398681/original/file-20210504-22-1i77btv.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/398681/original/file-20210504-22-1i77btv.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=416&fit=crop&dpr=1 600w, https://images.theconversation.com/files/398681/original/file-20210504-22-1i77btv.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=416&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/398681/original/file-20210504-22-1i77btv.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=416&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/398681/original/file-20210504-22-1i77btv.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=523&fit=crop&dpr=1 754w, https://images.theconversation.com/files/398681/original/file-20210504-22-1i77btv.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=523&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/398681/original/file-20210504-22-1i77btv.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=523&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Some people are more productive at home than others.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-vector/office-workers-battery-charge-level-indicator-1344115550">Andrew Rybalko</a></span>
</figcaption>
</figure>
<p>Also bear in mind that this surveillance is taking place in someone’s home, which may make them feel particularly vulnerable. Some people <a href="https://theconversation.com/remote-working-why-some-people-are-less-productive-at-home-than-others-new-research-160059">have struggled</a> with their mental health while working at home, and many have had to fit in other responsibilities such as caring for children and home-schooling. </p>
<h2>Next steps</h2>
<p>In view of all this, companies need to adopt an “<a href="https://www.taylorfrancis.com/books/edit/10.4324/9780429029943/business-ethics-care-organizations-marianna-fotaki-gazi-islam-anne-antoni">ethics of care</a>” approach to their workers, meaning they make a commitment to take care of them. They need to investigate their surveillance practices and analyse how exactly line managers use them to check up on workers. </p>
<p>While carrying out such an investigation, companies should recognise that <a href="https://scholarship.law.upenn.edu/jil/vol38/iss2/4/">some employees might be</a> finding workplace surveillance more difficult than others. This will depend on to what extent they think it invades their privacy, and <a href="https://www.sunypress.edu/p-3659-boundaries-of-privacy.aspx">how they weigh</a> the risks and benefits of sharing their data. </p>
<p>This is likely to be affected by things like their cultural background, gender and the context in question. Those already struggling with home-working, perhaps because they have to care for children at the same time, are particularly likely to feel that this surveillance is making their lives even harder. Workers can therefore try and evade surveillance techniques – for example, by keeping an automatic mouse-moving application open to make sure they appear online all the time. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/398683/original/file-20210504-17-1ckde30.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Man with headphones on trying to work at home with two children bothering him" src="https://images.theconversation.com/files/398683/original/file-20210504-17-1ckde30.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/398683/original/file-20210504-17-1ckde30.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=397&fit=crop&dpr=1 600w, https://images.theconversation.com/files/398683/original/file-20210504-17-1ckde30.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=397&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/398683/original/file-20210504-17-1ckde30.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=397&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/398683/original/file-20210504-17-1ckde30.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=499&fit=crop&dpr=1 754w, https://images.theconversation.com/files/398683/original/file-20210504-17-1ckde30.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=499&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/398683/original/file-20210504-17-1ckde30.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=499&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The quick and the dad.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/work-home-man-works-on-laptop-1681318753">Sharomka</a></span>
</figcaption>
</figure>
<p>Companies should be ensuring from these investigations that employees are aware of what data is collected about them and how it’s used. They should hold open discussions with workers and unions on how these monitoring practices affect workers, and allow workers to have their say without threatening disciplinary action. If workers feel that their employers care about them as individuals, they will hopefully feel empowered and trusting towards them, and <a href="https://www.tandfonline.com/doi/full/10.1080/09585192.2016.1225313">less likely</a> to find workarounds or to react negatively. </p>
<p>Equally, it is important for regulators like the UK Information Commissioner to reflect on how surveillance in the workplace is changing. The <a href="https://ico.org.uk/media/for-organisations/documents/1064/the_employment_practices_code.pdf">UK code</a> in this area broadly requires that any monitoring be fair to workers and that any adverse impacts – for example, on workers’ privacy, damage to trust, or demeaning workers – be mitigated. The rules may now need to be updated to reflect some of the latest forms of surveillance, and there is a role for researchers in looking into this as well. </p>
<p>Researchers have tended to look at workplace surveillance from the perspective of productivity where workers are viewed as resources, but we need to start thinking in terms of <a href="https://journals.sagepub.com/doi/10.1177/2053951717736335">data justice</a>. This has been described as “fairness in the way people are made visible, represented and treated as a result of their production of digital data”. </p>
<p>In a world where computers and smartphones are all around us, we need to negotiate our private spaces and our control over the data we produce online. Just like this has implications in our private lives for our relationship with Facebook or Google, the increases in workplace surveillance make it just as important at work.</p><img src="https://counter.theconversation.com/content/159604/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Evronia Azer does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Companies are using myriad ways to check up on employees at home, from keylogger software to webcam monitoring.Evronia Azer, Assistant Professor at the Centre for Business in Society, Coventry UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1563862021-03-25T12:33:58Z2021-03-25T12:33:58ZWhy corporate climate pledges of ‘net-zero’ emissions should trigger a healthy dose of skepticism<figure><img src="https://images.theconversation.com/files/391560/original/file-20210324-23-ef4x1c.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Some companies' net-zero plans include continuing to emit climate-warming greenhouse gases for decades.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/s-huge-oil-refinery-complex-continues-its-24-hour-news-photo/72319755">Christopher Furlong/Getty Images</a></span></figcaption></figure><p><a href="https://sciencebasedtargets.org/companies-taking-action">Hundreds of companies</a>, including major emitters like <a href="https://www.united.com/ual/en/us/fly/company/global-citizenship/environment/100-percent-green.html">United Airlines</a>, <a href="https://www.bp.com/en/global/corporate/news-and-insights/press-releases/bernard-looney-announces-new-ambition-for-bp.html">BP</a> and <a href="https://www.shell.com/media/news-and-media-releases/2021/shell-accelerates-drive-for-net-zero-emissions-with-customer-first-strategy.html">Shell</a>, have pledged to reduce their impact on climate change and reach net-zero carbon emissions by 2050. These plans sound ambitious, but what does it actually take to reach net-zero and, more importantly, will it be enough to slow climate change?</p>
<p>As <a href="https://vcresearch.berkeley.edu/faculty/matthew-potts">environmental policy</a> and <a href="https://www.climatecollege.unimelb.edu.au/profiles/oliver-miltenberger">economics researchers</a>, we study how companies make these net-zero pledges. Though the pledges make great press releases, net-zero is more complicated and potentially problematic than it may seem.</p>
<h2>What is ‘net-zero’ emissions?</h2>
<p>The gold standard for reaching net-zero emissions <a href="https://ghgprotocol.org/corporate-standard">looks like this</a>: A company identifies and reports all emissions it is responsible for creating, it reduces them as much as possible, and then – if it still has emissions it cannot reduce – it invests in projects that either prevent emissions elsewhere or pull carbon out of the air to reach a “net-zero” balance on paper.</p>
<p>The process <a href="https://www.carbontrust.com/news-and-events/insights/net-zero-an-ambition-in-need-of-a-definition">is complex and still largely unregulated and ill-defined</a>. As a result, companies have a lot of discretion over how they report their emissions. For example, <a href="https://www.riotinto.com/en/sustainability/climate-change">a multinational mining company</a> might count emissions from extracting and processing ore but not the emissions produced by transporting it.</p>
<p>Companies also have discretion over how much they rely on what are known as offsets – the projects they can fund to reduce emissions. The <a href="https://www.shell.com/promos/business-customers-promos/download-latest-scenario-sky/_jcr_content.stream/1530643931055/eca19f7fc0d20adbe830d3b0b27bcc9ef72198f5/shell-scenario-sky.pdf">oil giant Shell</a>, for example, projects that it will both achieve net-zero emissions by 2050 and continue to produce high levels of fossil fuel through that year and beyond. How? It proposes to offset the bulk of its fossil-fuel-related emissions through massive nature-based projects that capture and store carbon, such as forest and ocean restoration. In fact, Shell alone plans to <a href="https://www.reuters.com/article/us-shell-carbon-offsets-graphic-idUSKBN2AC1CR">deploy more of these offsets by 2030</a> than were available globally in 2019. </p>
<p>Environmentalists may welcome Shell’s newfound conservationist agenda, but what if other oil companies, the airline industries, the shipping sectors and the U.S. government all propose a similar solution? Is there enough land and ocean realistically available for offsets, and is simply restoring environments without fundamentally changing the business-as-usual paradigm really a solution to climate change?</p>
<p><iframe id="nG2Y7" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/nG2Y7/10/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>Concerns about voluntary carbon markets</h2>
<p>Outside of <a href="https://www.epa.gov/emissions-trading-resources/what-emissions-trading">compliance emissions markets</a>, which primarily focus on government regulation in the <a href="https://ec.europa.eu/clima/policies/ets_en">energy sector</a>, voluntary markets create most of the offsets that are used to reach net-zero. </p>
<p>Voluntary markets are organized and operated by a diverse range of groups where anyone can participate. Have you ever seen the option to offset your flight? That offset probably happens through a voluntary carbon market. The activities that produce the offsets include projects like <a href="https://climatetrust.org/forest-carbon-projects-faq/">forestry</a> and <a href="https://www.thebluecarboninitiative.org/">ocean management</a>, waste management, agricultural practices, fuel switching and renewable energy. As the name implies, they are voluntary and therefore largely unregulated. </p>
<p>Because of the wave of net-zero pledges and subsequent demand for offsets, voluntary carbon markets are under pressure to expand quickly. <a href="https://www.iif.com/tsvcm">A task force</a> launched by United Nations Special Envoy on Climate Action Mark Carney and involving several major companies released a <a href="https://www.iif.com/tsvcm/Main-Page/Publications/ID/4254/Taskforce-Establishes-Core-Carbon-Principles-Publishes-Roadmap-for-Scaling-Voluntary-Carbon-Markets">sweeping blueprint</a> at Davos 2021 that predicts voluntary carbon markets need to grow fifteenfold over the next decade. It suggests that the net-zero surge represents one of the largest commercial opportunities of our time – prompting keen interest from <a href="https://www.blackrock.com/corporate/investor-relations/blackrock-client-letter">investors</a> and <a href="https://www.uschamber.com/series/above-the-fold/update-the-chambers-approach-climate">big business</a>. It also identifies and proposes solutions to some persistent challenges and critiques of voluntary carbon offset markets.</p>
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<p>Some critics of the blueprint argue that it <a href="https://carbonplan-assets.s3.amazonaws.com/docs/Offset-Task-Force-Comment-Letter-01-05-2021.pdf">overlooks deeper problems</a> rooted in the overall reliance on and effectiveness of voluntary carbon markets as a solution.</p>
<p>Though there is historical <a href="https://features.propublica.org/brazil-carbon-offsets/inconvenient-truth-carbon-credits-dont-work-deforestation-redd-acre-cambodia/">evidence of misuse</a> and <a href="https://greenfinanceobservatory.org/wp-content/uploads/2021/01/Scaling-up-GFO-analysis-final4.pdf">plenty of criticism</a>, voluntary carbon markets are not inherently bad or useless in the pursuit of climate targets. In fact, quite the opposite. Some voluntary carbon market projects, in addition to <a href="https://www.edf.org/media/carbon-offsets-when-done-right-can-reduce-emissions-and-support-paris-agreement-edf-and-engie">mitigating climate change</a>, provide <a href="https://doi.org/10.1080/14693062.2020.1724070">other benefits</a>, such as improvements to biodiversity habitats, water quality, soil health and socioeconomic opportunities. </p>
<p>However, there are real concerns about the ability of voluntary markets to legitimately deliver what they promise. Common concerns include <a href="https://news.berkeley.edu/2019/05/07/new-paper-states-cap-and-trade-program-is-falling-short-of-goals/">questions about the permanence of the projects</a> for storing carbon long term, verifying that offsets actually reduce emissions beyond a business-as-usual scenario and confirming that credits are not being used more than once. These and other challenges expose voluntary carbon markets to potential manipulation, greenwashing, unintended consequences and, regrettably, failure to achieve their purpose. </p>
<p><a href="http://voluntarycarbonmarket.org/">It’s getting better</a>, but over-reliance on this method for counterbalancing emissions does risk some entities’ using offsets as a <a href="https://www.nrdc.org/stories/should-you-buy-carbon-offsets">right to pollute</a>. </p>
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<h2>Can global ecology meet the demand?</h2>
<p>Voluntary carbon markets can improve landscapes and help make up for unavoidable emissions. However, they cannot accommodate all of the developed world’s net-zero targets. </p>
<p>Most of these initiatives have not yet started, yet emitters from developed countries are already seeking offsets outside their borders. This is raising concerns that wealthier companies may be placing the burden of their emissions onto poorer countries that can produce offsets cheaply, begging the notion of a newfound climate colonialism. Local communities may benefit from some environmental improvements or socioeconomic opportunities, but should economically developed polluters be forcing that decision? </p>
<p>Beyond ethics, in statistical terms, there is simply not enough ecological capacity to offset the world’s emissions.</p>
<p>Take the interest in using forests as offset solutions. There are around <a href="http://dx.doi.org/10.1038/nature14967">3 trillion trees</a> on Earth today with room for about <a href="http://doi.org/10.1126/science.aax0848">1 to 2.5 trillion more</a>. The <a href="https://trilliontreesinitiative.com/">Trillion Tree Initiative</a>, <a href="https://www.1t.org/">1T program</a>, <a href="https://trilliontrees.org/">Trillion Trees</a>, and the CEO of <a href="https://www.independent.co.uk/climate-change/news/reddit-yishan-wong-trees-b1803102.html">Reddit</a>, among others, aim to plant a trillion trees each. From just a few examples, there is already a paradoxical impasse. </p>
<p>Offsets can realistically do only so much for reaching climate targets. That is why the focus must turn toward reducing rather than offsetting global emissions. Voluntary carbon markets serve a critical role as innovation sandboxes for creative offset solutions, and they are mobilizing the private sector to act; however, they must be limited. </p>
<p>While some prominent organizations are pursuing net-zero, most <a href="https://climateactiontracker.org/">businesses and governments</a> have not yet pledged, let alone developed, clear and plausible road maps to meet targets in line with a 2050 net-zero global economy. </p>
<h2>The needed goal: A negative net</h2>
<p><a href="https://www.ipcc.ch/site/assets/uploads/sites/2/2019/06/SR15_Full_Report_Low_Res.pdf">The Intergovernmental Panel on Climate Change suggests</a> that the world can keep global warming in check if emissions are cut in half by 2030, compared to 2010 levels, and reach net-zero by midcentury. However, it also states a need for greenhouse gas removal beyond net-zero emissions targets. </p>
<p>The real act of climate cleanup begins at net-negative emissions for all greenhouse gases. Only then will their atmospheric concentrations finally begin shrinking. That feat will require more renewable energy, widespread infrastructure and transportation developments, improved land management and investments in carbon capturing activities and technologies.</p>
<p>While net-zero is a critical step toward addressing climate change, it must be achieved smartly. And, importantly, it can’t be the end goal.</p>
<p>[<em>Deep knowledge, daily.</em> <a href="https://theconversation.com/us/newsletters/the-daily-3?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=deepknowledge">Sign up for The Conversation’s newsletter</a>.]</p><img src="https://counter.theconversation.com/content/156386/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Matthew Potts is also a scientific advisor for Carbon Direct. </span></em></p><p class="fine-print"><em><span>Oliver Miltenberger does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>CEOs, including at oil companies and airlines, are relying on trees and oceans to capture and store carbon for them, but the numbers don’t add up.Oliver Miltenberger, Ph.D. Candidate in Environmental Economics, The University of MelbourneMatthew D. Potts, Professor, S.J. Hall Chair in Forest Economics, University of California, BerkeleyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1573832021-03-19T13:52:53Z2021-03-19T13:52:53ZDanone’s CEO has been ousted for being progressive – blame society not activist shareholders<figure><img src="https://images.theconversation.com/files/390395/original/file-20210318-21-p9ywue.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Mmmmmm. </span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/los-angeles-california-usa-12-june-1425790226">Il.studio</a></span></figcaption></figure><p>Danone’s chief executive and chairman, Emmanuel Faber, <a href="https://www.reuters.com/article/us-danone-management-idUSKBN2B60PN">is to step down</a> after activist shareholders called for his removal. In particular Artisan Partners and Bluebell Capital Partners, which together <a href="https://www.just-food.com/news/us-investor-artisan-partners-return-to-attack-on-danone_id145285.aspx#:%7E:text=In%20a%20letter%20to%20the,both%20currently%20held%20by%20Faber%2C">own less than 6%</a> of the Paris-based food giant, <a href="https://www.reuters.com/article/us-danone-m-a-bluebell-idUSKBN29N1VL">explicit requested</a> the board find a replacement.</p>
<p>They <a href="https://www.ft.com/content/2df158fb-357a-499a-b51c-025b4f1d5c97">blame Faber</a> for “a combination of poor operational record and questionable capital allocation choices”. <a href="https://www.ft.com/content/2df158fb-357a-499a-b51c-025b4f1d5c97">Bluebell</a> said that Faber’s Danone “did not manage to strike the right balance between shareholder value creation and sustainability”. </p>
<p>It was well known that for the chief executive of Danone, whose brands include Actimel, Alpro and Evian, the goal was to balance purpose with profit. “<a href="https://fortune.com/2020/07/07/for-danones-ceo-stakeholder-capitalism-is-a-fact/">Stakeholder Capitalism is a Fact</a>” was the title of a Fortune Magazine article published about him in July 2020. This was encapsulated in Danone’s logo, with a child looking up at a star next to the strapline, “One Planet. One Health”.</p>
<p>Unfortunately Danone’s share performance has been very weak compared to rivals Nestlé and Unilever. Danone is perceived to have cared more about people, the planet and social responsibility than its shareholders, and Faber is paying the price. If we measure a strategy’s success by the extent to which the shareholders accept it, “One Planet. One Health” has been a failure.</p>
<p>To many <a href="https://www.linkedin.com/search/results/content/?keywords=danone%20stakeholder%20capitalism%20&origin=CLUSTER_EXPANSION">it seems unfair</a> that old-fashioned capitalism, targeting short-term gains, has been defeated here by the idea of a new form of stakeholder capitalism in which companies pursue the interests of employees, society and future generations, at the expense of investors. They are partly right but partly wrong, and even insofar as they are right they are blaming the wrong people. Let me explain. </p>
<h2>Shareholders and the long term</h2>
<p>Doing what shareholders want is not incompatible with other stakeholders – rather, the opposite. Long-term shareholders are more long-termist than any other stakeholders in an organisation. Customers can take their business elsewhere; employees can change jobs when they do not share the company’s values. </p>
<p>Yes, there are so-called “short-term” shareholders. But they are not the majority of pension funds and mutual funds who hold most publicly traded shares and want to preserve the long-term value of a company. </p>
<p>Even institutions focused on short-term gains require stupid investors on the other side. If Artisan wants to hold Danone’s stock for just months, it will have to sell to someone. And if the stock has been inflated via a short-termist strategy, who will buy it?</p>
<p><strong>Food giants’ share performance</strong></p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/390404/original/file-20210318-13-1y0c67b.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/390404/original/file-20210318-13-1y0c67b.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=345&fit=crop&dpr=1 600w, https://images.theconversation.com/files/390404/original/file-20210318-13-1y0c67b.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=345&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/390404/original/file-20210318-13-1y0c67b.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=345&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/390404/original/file-20210318-13-1y0c67b.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=434&fit=crop&dpr=1 754w, https://images.theconversation.com/files/390404/original/file-20210318-13-1y0c67b.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=434&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/390404/original/file-20210318-13-1y0c67b.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=434&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Danone = blue, Nestlé = orange, Unilever = turquoise.</span>
<span class="attribution"><a class="source" href="https://uk.tradingview.com/chart/UajHAaVc/">Trading View</a></span>
</figcaption>
</figure>
<p>It is worth reflecting on Nestlé here. In July 2018, activist shareholder Daniel Loeb from US investor Third Point Management sent an <a href="https://www.10xebitda.com/wp-content/uploads/2020/03/Third-Point-Nestl%C3%A9-Presentation-July-2018.pdf">angry letter</a> to Nestlé’s chief executive, Mark Schneider, following a similarly dismal share performance. </p>
<p>Schneider, a newcomer to the largest consumer goods company in the world, had implemented a strategy based on diversifying away from Nestlé’s traditional business of coffee and chocolate into health science. <a href="https://www.reuters.com/article/us-nestle-thirdpoint-loeb-analysis-idUSKBN1JS2P8">Third Point wanted</a> Nestlé to sell off certain businesses, while arguing that it should take on more debt to take advantage of low interest rates. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/390401/original/file-20210318-21-7upzuw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Nestle logo with an ice cream" src="https://images.theconversation.com/files/390401/original/file-20210318-21-7upzuw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/390401/original/file-20210318-21-7upzuw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/390401/original/file-20210318-21-7upzuw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/390401/original/file-20210318-21-7upzuw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/390401/original/file-20210318-21-7upzuw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/390401/original/file-20210318-21-7upzuw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/390401/original/file-20210318-21-7upzuw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Nestle’s CEO changed tack to avoid being wafered.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/logstor-denmark-august-23-2017-nestle-1034893138">ricochet64</a></span>
</figcaption>
</figure>
<p><a href="https://www.euronews.com/2019/02/21/hedge-fund-third-point-praises-nestle-chief-in-letter-to-investors">Schneider complied</a> with this supposedly short-termist plan, and the share price has risen 32% since July 2018. In contrast, Danone is down 2% over the period, while Unilever has only gone up 3%. Today everybody at Nestlé, <a href="https://www.flagstaffbusinessnews.com/employees-love-working-nestle-purina/">including customers and employees</a>, is extremely happy with the changes imposed by Third Point. Seen in this light, perhaps we should be congratulating Danone’s activist shareholders. </p>
<h2>Sustainability</h2>
<p>If you want to do more for other stakeholders, such as future generations, the underlying problem is the rules of governance. They <a href="https://www.begbies-traynorgroup.com/articles/director-advice/understanding-a-company-directors-fiduciary-duties-and-consequences-of-failing-these-duties">stipulate that</a> shareholders’ interests must be given top priority by company directors. I remember an executive summit in Copenhagen a couple of years ago where the chief executive of a top European company, replying to concerns about the firm’s environmental policy, candidly said that if he made it greener, “my profit margin would fall 3% per year, my stock price would fall 15%, and I would get fired”. </p>
<p>Stakeholder capitalism ultimately needs enforced by politicians, and politicians are chosen by people. If western democracies are mostly run by political parties fostering traditional capitalism, it is our fault – it is because most people do not want to be sustainable.</p>
<p>Danone is not the last company whose shareholders are going to rebel when the company does not create value for them. If we want a new form of capitalism, but expect executives to change the system without politicians changing national and international regulation, we have two choices.</p>
<p>The first is that companies cater to different shareholders: if you want to have a higher purpose than profit, appeal to investors who are willing to lose money to preserve society and the environment. </p>
<p>Incidentally, don’t kid yourself that you can rely instead on investment giants like Blackrock who run index funds that exclude companies that don’t meet criteria around sustainability, while <a href="https://www.cnbc.com/2020/07/17/stakeholder-capitalism-set-to-become-more-and-more-important-says-blackrocks-fink.html">claiming that</a> stakeholder capitalists will be the winners of the future. </p>
<p>These institutions manage other people’s money, and transfer the burden of sustainability to the ultimate holders of the shares. Shareholders in the new capitalism will be those willing to sacrifice personal financial gains for a social benefit. Are you one of them?</p>
<p>The second choice is to rely on innovative executives to come up with new business models that find a way to generate shareholder returns while being sustainable. This is not easy. Most business models that I see either impose the cost of sustainability on shareholders by achieving lower returns, or on suppliers by paying them less, or on customers in the form of higher prices. </p>
<p>Only a few create truly sustainable business models. For example <a href="https://www.vestergaard.com/">Vestergaard</a>, a Swiss-headquartered company, patented a product to provide clean water to rural populations in Africa which was financed by selling carbon credits. <a href="https://hbr.org/2014/10/capture-more-value">In such a model</a> customers, users, suppliers, owners and government authorities won. A chief executive running a business like that should be safe from being removed for caring too much about sustainability.</p><img src="https://counter.theconversation.com/content/157383/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Arturo Bris does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Emmanuel Faber was trying to pursue a form of stakeholder capitalism.Arturo Bris, Professor of Finance, International Institute for Management Development (IMD)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1565552021-03-18T18:13:04Z2021-03-18T18:13:04Z3 ways employers could help fight vaccine skepticism<figure><img src="https://images.theconversation.com/files/390228/original/file-20210317-13-gu5no6.jpg?ixlib=rb-1.1.0&rect=34%2C89%2C4580%2C2982&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Monterey Mushrooms, an agricultural employer in California, teamed up with its union and the local county to get its workers vaccinated. </span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/VirusOutbreakCalifornia/6b624dec0f084bc7a6cc33706b4f1cf5/photo?Query=vaccine%20AND%20employer&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=17&currentItemNo=13">AP Photo/Jeff Chiu</a></span></figcaption></figure><p>Ending the pandemic depends on achieving herd immunity, <a href="https://theconversation.com/how-many-people-need-to-get-a-covid-19-vaccine-in-order-to-stop-the-coronavirus-152071">estimated at 70%</a> or <a href="https://www.nytimes.com/2020/12/24/health/herd-immunity-covid-coronavirus.html">even 80% to 90%</a> of a population. With some <a href="https://www.npr.org/sections/coronavirus-live-updates/2021/03/12/976172586/little-difference-in-vaccine-hesitancy-among-white-and-black-americans-poll-find">30% of Americans telling pollsters</a> they have no interest in getting vaccinated, that’s cutting it a bit close. The <a href="https://doi.org/10.1038/s41591-020-1124-9">numbers are even worse</a> in many other countries. </p>
<p>In the fight against vaccine skepticism, <a href="http://www.doi.org/10.1177/1529100618760521">employers can play</a> a key role. This is not only because it’s an important precaution for the health and safety of their employees, but also because a recent survey shows people around the world, including in the U.S., <a href="https://www.edelman.com/trust/2021-trust-barometer">tend to trust</a> their employers more than governments or the media. Moreover, Republicans, <a href="http://maristpoll.marist.edu/wp-content/uploads/2021/03/NPR_PBS-NewsHour_Marist-Poll_USA-NOS-and-Tables_202103091124.pdf#page=3">who are more likely to say</a> they won’t get the vaccine, are also generally <a href="https://www.edelman.com/trust/2019-trust-barometer">much more trusting of business</a>, suggesting employers may be able to have more influence on them than journalists or health experts.</p>
<p>As <a href="https://scholar.google.com/citations?user=697eQncAAAAJ&hl=en&oi=ao">someone who studies how companies communicate</a> with their employees, I have three research-based tips that can make their efforts more effective. </p>
<p><iframe id="Gdd4k" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/Gdd4k/3/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>1. Building trust with transparency</h2>
<p>Although many workers say they trust their employers more than some other institutions, trust erosion has been a prominent global issue. Just 61% of participants in the survey referenced above, conducted by public relations consultancy Edelman, said they trust businesses to do the right thing. </p>
<p>That’s why it’s essential for companies to communicate with employees in a way that builds more trust. And research has shown that <a href="https://instituteforpr.org/cultivating-employee-trust-authenticity-transparency-engagement">transparency has been consistently linked</a> to employee relationship with their employer.</p>
<p>By that I mean focus on giving employees the facts – while dispelling some of the myths – and being clear about where it all comes from. There are many ways to disseminate the information, such as through email, flyers, corporate newsletters and social media, but inviting in local health experts is another good way to transparently lay out the facts while also helping skeptical employees get their questions and concerns addressed. </p>
<p>The <a href="https://www.edelman.com/trust/2021-trust-barometer">2021 Trust Barometer survey</a> showed that people trust scientists and people in their local community more than national leaders. Scientists scored even higher than employees’ own CEOs.</p>
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<h2>2. It’s a two-way street</h2>
<p>That brings me to another important point: Employers will be more effective if they treat employees as partners in the internal vaccination program. And that means listening as much as talking. </p>
<p><a href="https://doi.org/10.1177/2329488420914066">Research has found</a> that companies that are pursuing a major change – such as a merger, layoff or rebranding – are more likely to win high employee acceptance if they engage in two-way communication that emphasizes listening, feedback, reciprocity, openness and trust. When employees feel their voices are being heard and taken seriously by their organization, they feel empowered and more involved, making them more likely to buy in to the organization’s decisions.</p>
<p>Besides inviting health experts for Q&A’s, employers could also host staff listening sessions such as virtual town halls to gather feedback and address even basic questions, like when people are eligible to get the vaccine, whether it will cost anything and what that means for a return to the office. It also can help address unique concerns and issues of different groups, especially those who <a href="http://www.doi.org/10.1007/s10900-020-00958-x">surveys show</a> have more hesitancy about taking a vaccine. </p>
<h2>3. Empathy works</h2>
<p>Businesses that emphasize empathy, compassion and genuine care for employees’ well-being have <a href="https://www.forbes.com/sites/jackkelly/2020/05/06/airbnb-lays-off-25-of-its-employees-ceo-brian-chesky-gives-a-master-class-in-empathy-and-compassion/?sh=79b7f105ee30">won applause</a> from employees during the COVID-19 pandemic.</p>
<p>My own recent study – which is currently under review – examined leaders’ use of motivating language during the pandemic. I found that supervisors who gave clear directions, showed empathy for how the pandemic affected workers’ personal lives and communicated support were most effective in fostering employee trust in leadership and the organization. While understandably trust that isn’t there can’t be built overnight, it’s never too late to do more. </p>
<p><a href="https://doi.org/10.1016/j.pubrev.2020.101927">I found similar results in past research</a>: CEOs perceived as exhibiting genuine care for their employees engender more support for company-wide initiatives. </p>
<p>[<em>Insight, in your inbox each day.</em> <a href="https://theconversation.com/us/newsletters/the-daily-3?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=insight">You can get it with The Conversation’s email newsletter</a>.]</p>
<p>Beyond the language being used, companies can show they care in other ways – actions speak louder than words, after all. For example, some companies, such as <a href="https://newscenter.dollargeneral.com/covid-19/dollar-general-removes-barriers-for-frontline-workers-to-get-vaccine.htm">Dollar General</a>, <a href="https://apnews.com/article/business-pandemics-public-health-products-and-services-media-58e454e87aafc72fe9ecdc98c5347b9c">Instacart</a> and <a href="https://www.businessinsider.com/publix-to-offer-gift-cards-to-workers-who-get-vaccinated-2021-2">Publix</a>, have offered paid leave time or cash incentive bonuses to encourage their employees to get vaccinated.</p>
<p>The U.S. and the world face one of the greatest health crises in history. Ultimately, I believe, it’s a collective responsibility of everyone – governments, individuals, companies – to help turn the tide against the pandemic. </p>
<p>And if companies needed one more reason, <a href="https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/true-gen-generation-z-and-its-implications-for-companies">surveys</a> and <a href="https://www.forbes.com/sites/nathanpeart/2020/04/07/as-millennials-and-gen-z-become-more-brand-conscious-how-will-professional-services-adapt/?sh=1dec19404148">reporting show</a> younger generations increasingly expect companies to be socially responsible. And <a href="https://www.doi.org/10.1177/2329488420907121">recent research</a> found that companies who engage in social advocacy tend to enjoy stronger brand loyalty. </p>
<p>In other words, it’s good not only for society but for companies’ bottom lines, too.</p><img src="https://counter.theconversation.com/content/156555/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rita Men does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Surveys suggest people trust companies more than government and the media, showing they have an important role in helping end the pandemic.Rita Men, Associate Professor of Public Relations, University of FloridaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1563262021-03-02T16:01:07Z2021-03-02T16:01:07ZWomen in boardrooms: after ten years of equality drives, it’s time for quotas<figure><img src="https://images.theconversation.com/files/387239/original/file-20210302-17-pf3l9n.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/portrait-female-business-executive-sitting-alone-144904978">Sirtravelalot</a></span></figcaption></figure><p>The push to more fairly represent women in UK boardrooms is making good progress, according to the <a href="https://ftsewomenleaders.com/targets-progress/">final report</a> of the independent Hampton-Alexander review. The boards of the UK’s largest 350 listed companies were at least 33% female on average by the end of 2020, in line with the review’s headline target.</p>
<iframe id="noa-web-audio-player" style="border: none" src="https://embed-player.newsoveraudio.com/v4?key=x84olp&id=https://theconversation.com/women-in-boardrooms-theres-been-a-jump-forward-but-the-job-is-only-half-done-156326&bgColor=F5F5F5&color=D8352A&playColor=D8352A" width="100%" height="110px"></iframe>
<p>When the review was started in 2016 by former GlaxoSmithKline chair Philip Hampton and the late Helen Alexander, former president of business association the CBI, only 25% in the FTSE 100 and FTSE 350 boardrooms were female. And when the drive towards gender balance began in 2011 with former Labour minister Mervyn Davies’ <a href="https://ftsewomenleaders.com/2011-2015-the-davies-review/">predecessor review</a>, the figure was around 12% for the FTSE 100. </p>
<p>Hampton-Alexander has achieved this considerable success by getting businesses and other stakeholders to cooperate voluntarily. This has eclipsed efforts by most other <a href="https://ftsewomenleaders.com/">European nations</a>, many of whom resorted to quotas and punitive sanctions such as delisting or fines of companies or directors.</p>
<p>Continental initiatives tended to apply their targets of 30% to 40% female board membership to only 40 to 60 of the largest companies. Not only was the UK review’s group of 350 target companies much larger, it also went beyond board representation to set a 33% figure for women’s “leadership roles”. This had risen from 24% in 2017 to 30% by the end of 2020. </p>
<p>The UK review benefited from clear targets, transparent reporting, publishing relevant data and encouraging voluntary codes by executive search companies, investment companies and the Financial Reporting Council. The most severe sanction on non-compliant companies has been “naming and shaming”. So is it time for UK companies to congratulate themselves and start teaching other European countries how to do better? Not quite. </p>
<h2>Women and company performance</h2>
<p>The headline figure of 33% of women on company boards and in senior positions looks good. But if Bill Gates walks into a small bar in Nebraska, “the average person” is a millionaire. </p>
<p>Digging deeper into the data, 37% of FTSE 350 companies have not even hit the 33% target for women on boards and around 70% have not hit the 33% target for leadership positions. </p>
<p>Detractors might also say that finding a few hundred qualified women to achieve 33% representation on FTSE boards over ten years is the low-hanging fruit. Perhaps we need to judge the initiative against the original reason for which it was set up, namely to increase the talent pool of influential females in business with a view to increasing company performance and achieving equality in senior appointments. </p>
<p>When it comes to company performance, <a href="https://journals.aom.org/doi/10.5465/amj.2013.0319">the impact</a> of female board members turns out to be extremely difficult to pin down, partly because the average size of the board is quite small at around ten. Hence, you are trying to measure the impact on profitability caused by the addition of about three women. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/387240/original/file-20210302-13-hopfct.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Executives around the boardroom table" src="https://images.theconversation.com/files/387240/original/file-20210302-13-hopfct.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/387240/original/file-20210302-13-hopfct.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/387240/original/file-20210302-13-hopfct.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/387240/original/file-20210302-13-hopfct.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/387240/original/file-20210302-13-hopfct.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/387240/original/file-20210302-13-hopfct.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/387240/original/file-20210302-13-hopfct.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">It’s hard to show that more women = better performance.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/business-young-senior-people-group-working-1032709384">fizkes</a></span>
</figcaption>
</figure>
<p>Even then, given the many possible influences on company profits, the evidence suggests it is very unlikely you would expect to see a strong positive effect from this change <a href="https://academic.oup.com/qje/article-abstract/127/1/137/1832366?redirectedFrom=fulltext">even across</a> many companies and over many years. Even where you have a positive correlation between profits and female board representation, it might be because of highly profitable companies appointing more women, rather than more women making companies more profitable. </p>
<p>The case for more women in executive positions is therefore one of diversity and fairness and a presumption that “women do no harm” to the bottom line. </p>
<h2>Senior appointments</h2>
<p>Senior appointments are another matter. Greater visibility of women in top positions may well open up promotion pipelines and encourage other women’s aspirations to success in business, but there is not strong evidence that this has fully delivered yet. </p>
<p>Only 14% of full-time executives on FTSE 100 boards are women, so much of the rise will be part-time positions. Only 23% of women are “senior independent directors”, 11% are chairpersons of the board, and only 8% are full-time chief executives. The figures are broadly similar for the next 250 largest UK companies. </p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/387241/original/file-20210302-21-41geqa.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Female conductor waves wand" src="https://images.theconversation.com/files/387241/original/file-20210302-21-41geqa.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/387241/original/file-20210302-21-41geqa.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=805&fit=crop&dpr=1 600w, https://images.theconversation.com/files/387241/original/file-20210302-21-41geqa.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=805&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/387241/original/file-20210302-21-41geqa.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=805&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/387241/original/file-20210302-21-41geqa.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1011&fit=crop&dpr=1 754w, https://images.theconversation.com/files/387241/original/file-20210302-21-41geqa.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1011&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/387241/original/file-20210302-21-41geqa.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1011&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Unbiased manoeuvres in the dark.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/orchestra-conductor-music-conducting-hands-baton-1045383370">Alenavlad</a></span>
</figcaption>
</figure>
<p>Women’s failure to secure more influential full-time roles may be because those making the appointments are unconsciously biased. This is difficult to prove, but there is some good evidence that it happens. For example, when <a href="https://www.aeaweb.org/articles?id=10.1257%2Faer.90.4.715&source=post_page-----deda93da109b----------------------">musicians audition</a> behind a screen, more women get selected for orchestras. </p>
<p>Similarly, the number of applicants who get called for job interviews <a href="https://www.aeaweb.org/articles?id=10.1257/0002828042002561">is much lower</a> among those with names associated with ethnic minorities than with white applicants, even though both sets of CVs are constructed to be equivalent and both are sent to the same firms. </p>
<p>The Hampton-Alexander review also did not examine if (the few) women and (many) men who successfully climb the executive greasy pole are treated equally when they reach the top. <a href="https://dash.harvard.edu/handle/1/25525846">In a study</a> of top earners in Swedish firms, 30% of male executives achieve chief executive positions compared with 12% of females. Also, male executives earn 27% more than female executives. </p>
<p>Hardly any of these huge differences can be explained by personal attributes such as educational attainment, past employment experience, marital status or number of children, or the type of firm or sector. Could this be explained by unconscious bias?</p>
<h2>What now</h2>
<p>The underlying findings and shortcomings in the Hampton-Alexander review demonstrate that it needs to continue, reinforced by continued government backing. It’s time to impose 33% quotas on straggler firms – including financial penalties on existing directors. </p>
<p>Achieving a “critical mass” of women in “influential positions” is still required. The female pipeline is now established, but the flow needs speeding up. New targets are needed so that more women are in executive director positions and the various other senior positions I mentioned. The work of the review could be combined with that of the <a href="https://diversityuk.org/recommendations-parker-review-published/#:%7E:text=The%20Parker%20Review%20Committee,%20led%20by%20Sir%20John,their%20employee%20base%20and%20the%20communities%20they%20serve.">Parker Review</a>, which is targeting at least one BAME member on FTSE 100 boards by 2021 (and by 2024 on FTSE 350 boards).</p>
<p>A caveat. The debate around Hampton-Alexander is largely about improving the careers of women in well-paid positions. Any further work must not detract from government policies that affect most women, such as parental leave, childcare provision, domestic violence, schooling, <a href="https://www.ifs.org.uk/uploads/publications/wps/wp201606.pdf">university</a> and career choices in business, government and other areas of the private sector. Finally, the impact of COVID-19 on <a href="https://api.includere.co/uploads/Stanford%20Research-How%20working%20from%20home%20works%20out%20-%20June%202020.pdf">flexible working</a>, a major driver of women’s advancement, needs investigation.</p><img src="https://counter.theconversation.com/content/156326/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Keith Cuthbertson does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Female representation on FTSE 100 boards has risen from 12% to over 33% in a decade.Keith Cuthbertson, Professor of Finance, City, University of LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1536622021-01-20T15:23:46Z2021-01-20T15:23:46ZCorporation tax: ‘race to bottom’ may be ending after 40 years – here’s why it never made sense<p>It may seem scarcely believable to younger generations that in 1981 the statutory rate of corporation tax in the UK was 52%. Certainly, generous tax reliefs meant that the tax base was relatively narrow and the effective rate was therefore rather lower, but it’s still an eye-watering number compared to nowadays. By 1997, at the beginning of the New Labour era, the rate had fallen to 31% and <a href="https://www.gov.uk/corporation-tax">it is now 19%</a>. </p>
<p>The story is similar elsewhere. In the US the rate in 1980 was 46%, but had fallen to 34% by the late 1980s. It stayed at around this level until 2018, when it was <a href="https://tradingeconomics.com/united-states/corporate-tax-rate">reduced to 21%</a> by the Trump administration. </p>
<p>Meanwhile, the OECD average <a href="https://www.oecd.org/tax/tax-policy/corporate-tax-statistics-database-first-edition.pdf">rate fell</a> from 28.6% to 21.4% in the two decades leading up to 2018. Numerous countries, including France and Belgium, cut their corporation tax rates in 2020 and France, the Netherlands and Sweden <a href="https://taxfoundation.org/publications/corporate-tax-rates-around-the-world/#Scheduled">were reported</a> in December to be planning further cuts in the near future. </p>
<p><strong>Average corporation tax rate by region</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/379754/original/file-20210120-21-1kubsa6.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Graph showing changes in corporation tax rates over time" src="https://images.theconversation.com/files/379754/original/file-20210120-21-1kubsa6.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/379754/original/file-20210120-21-1kubsa6.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=365&fit=crop&dpr=1 600w, https://images.theconversation.com/files/379754/original/file-20210120-21-1kubsa6.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=365&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/379754/original/file-20210120-21-1kubsa6.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=365&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/379754/original/file-20210120-21-1kubsa6.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=459&fit=crop&dpr=1 754w, https://images.theconversation.com/files/379754/original/file-20210120-21-1kubsa6.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=459&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/379754/original/file-20210120-21-1kubsa6.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=459&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://taxfoundation.org/publications/corporate-tax-rates-around-the-world/">Tax Foundation</a></span>
</figcaption>
</figure>
<p>But the corporate tax climate may now be changing. In the UK, the Conservative government <a href="https://www.gov.uk/government/publications/corporation-tax-to-17-in-2020/corporation-tax-to-17-in-2020">had originally planned</a> to further reduce corporation tax to 17% in 2020. But this was shelved, and it is <a href="https://www.ft.com/content/ef8d075a-17b4-45cd-bda3-aab5e59062dc">now reported that</a> the chancellor of the exchequer, Rishi Sunak, is proposing to increase corporation tax in the budget – a move which promises to be very unpopular with businesses.</p>
<p>In the US, incoming president Joe Biden <a href="https://taxfoundation.org/joe-biden-tax-plan-2020/">has proposed</a> raising the rate to 28% as part of his overall package of tax reforms. This would reverse his predecessor’s 2018 reduction, although doubts have been expressed over whether he will be able to carry it out. But, after decades of global corporation tax cuts, why are we seeing signs of a shift?</p>
<h2>Flawed foundations</h2>
<p>The rationale for cutting the corporate tax rate rested on a set of assumptions that have come to look highly debatable. Governments were threatened that if the rate were too high, global companies would relocate to a country with a more favourable tax regime, thereby depriving the first country of both tax revenue and economic activity. The evidence that they actually do so is mixed. For example, Accountancy Age <a href="http://www.accountancyage.com/aa/news/2038007/22-companies-left-uk-tax-purposes">reported that</a> only 22 companies left the UK for tax reasons between 2007 and 2011. </p>
<p>At the same time, companies which move their head offices for tax purposes do not necessarily move their underlying economic activity. When Starbucks decided to move its European headquarters from Amsterdam to London in 2014, for instance, it obviously wasn’t moving the coffee shops through which it trades. It was <a href="http://www.theguardian.com/business/2014/apr/16/starbucks-hq-relocation-uk-generate-negligible-tax-revenue">reported that</a> Starbucks’ move would create only a few jobs in the City of London (albeit well-paid ones), and therefore not much tax revenue. </p>
<p>This suggests that when companies do move offices to be more economically active elsewhere, “<a href="https://www.foxbusiness.com/features/talent-trumps-tax-incentives-in-corporate-relocations">talent trumps tax incentives</a>”. More than likely, taxation is of much less importance than factors such as the quality of the labour force and infrastructure.</p>
<p>A second argument for low rates has been that companies pass on higher taxation to their employees and/or customers, rather than reducing returns to their shareholders. In other words, there’s no point in raising business taxes because it will not come out of company profits as intended. </p>
<p>It is <a href="https://iea.org.uk/wp-content/uploads/2016/07/upldbook227pdf.pdf">sometimes pointed out</a> that in the UK, for example, this is unavoidable because the Companies Act 2008 section 172 obliges directors to act solely in the interests of shareholders. For this reason, directors must supposedly reduce their tax liabilities by any legal means, including passing them on to whoever they can. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/379738/original/file-20210120-17-8n7a2z.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Director addressing staff in a boardroom meeting" src="https://images.theconversation.com/files/379738/original/file-20210120-17-8n7a2z.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/379738/original/file-20210120-17-8n7a2z.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/379738/original/file-20210120-17-8n7a2z.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/379738/original/file-20210120-17-8n7a2z.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/379738/original/file-20210120-17-8n7a2z.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/379738/original/file-20210120-17-8n7a2z.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/379738/original/file-20210120-17-8n7a2z.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">‘Don’t blame me, blame the Companies Act section 172.’</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/black-female-boss-leading-corporate-multiracial-1022439985">fizkes</a></span>
</figcaption>
</figure>
<p>However, this interpretation of the section is incorrect. It is actually much more nuanced, obliging directors to have regard to a number of factors. These include the long-term consequences of the decision, the interests of the employees, the need to foster good relations with suppliers, customers and other parties and the desirability of maintaining a good reputation.</p>
<p>In any case, the reality about what happens to corporation tax liabilities appears to be different. <a href="https://www.jstor.org/stable/44015332">According to</a> the American tax analyst Professor Edward Kleinbard, the US government estimates that capital – in other words the company – bears between 75% and 95% of the economic cost of corporation tax. He <a href="https://www.taxjustice.net/2016/02/25/the-great-tax-incidence-hoax/">makes the point that</a> “if labour bore 80% of the burden of the corporate income tax, corporations wouldn’t care about it at all”. </p>
<p>There is also empirical evidence that shareholders behave as if they bear the economic cost. In April 2011 the tax pressure group US Uncut and the satirical stunt specialists Yes Men <a href="https://post.thing.net/node/3386">issued a</a> hoax press release purporting to be from General Electric stating that it would be making a US$3.2 billion tax “refund” as contrition for past abuses. The release, which was widely circulated before being exposed, briefly saw General Electric’s shares fall by around US$3.5 billion – roughly the amount of the hoax refund.</p>
<p>In short, the “race to the bottom” on corporation tax was never built on very strong foundations. It is no coincidence that the arguments supporting rate reductions have started to lose traction. During the good times, people are not too concerned about how the cake is divided up, the argument being “let’s just bake a bigger cake”. </p>
<p>In times of crisis, arguments about fairness and equality tend to become much more important. Even for politicians on the right and centre such as Sunak and Biden, the COVID crisis and the ensuing shock to the economy have created much more political leeway to raise rates than previously. It will be interesting to see what happens in practice in the coming weeks – and whether other major economies decide to move in the same direction.</p><img src="https://counter.theconversation.com/content/153662/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Malcolm James is affiliated with the Labour Party. </span></em></p>Rate rises appear to be coming back into fashion amid speculation that Rishi Sunak and the Biden administration are changing tack.Malcolm James, Head of Accounting, Economics and Finance, Cardiff Metropolitan UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1517462020-12-16T13:14:29Z2020-12-16T13:14:29ZCompanies accused of crimes get more digital privacy rights than people under new Trump policy<figure><img src="https://images.theconversation.com/files/375213/original/file-20201215-13-1f179vt.jpg?ixlib=rb-1.1.0&rect=535%2C82%2C4956%2C4034&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">In the U.S., the internet never forgets. </span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/man-typing-at-his-laptop-computer-at-night-royalty-free-image/1175885065">Westend61/Getty Images</a></span></figcaption></figure><p>Corporations <a href="https://www.npr.org/2014/07/28/335288388/when-did-companies-become-people-excavating-the-legal-evolution">increasingly receive the same rights</a> as people. Now, it seems, they have privileges even people don’t.</p>
<p>Case in point: The Labor Department <a href="https://int.nyt.com/data/documenttools/labor-department-memo-on-announcing-violations/f6fa97e7c3989622/full.pdf">recently urged</a> regulators to stop issuing press releases about companies that may have violated laws on discrimination, worker safety or minimum wage requirements. The concern is that doing so could cause <a href="https://www.nytimes.com/2020/10/23/business/economy/labor-department-memo.html?referringSource=articleShare">reputational damage</a> from mere accusations, even if the case is eventually dismissed. </p>
<p>In a nutshell, the Labor Department’s action guarantees privacy rights to corporations under investigation. Unfortunately, this reasonable precaution is not afforded regular Americans. </p>
<p>And as we know from our work on <a href="https://scholar.google.com/citations?user=ElyL7y0AAAAJ&hl=en&oi=ao">criminal justice</a> and <a href="https://www.slu.edu/arts-and-sciences/sociology-anthropology/faculty/chiarello-liz.php">surveillance</a>, an arrest without a conviction or an allegation of wrongdoing can become a scarlet letter that scares off employers and landlords as people look for a new job or home. </p>
<h2>A flood of data</h2>
<p>Citizens typically know little about the amount or kind of data collected on them, including data concerning arrests and criminal complaints, which are <a href="https://slate.com/technology/2020/06/criminal-justice-records-online-digital-punishment.html">particularly problematic</a> when made public on the internet.</p>
<p>Many people <a href="https://arresttrends.vera.org/">arrested for a crime</a> are eventually released without charges, but that doesn’t stop U.S. criminal justice agencies from <a href="https://contexts.org/articles/digital-punishments-tangled-web/">releasing floods of preconviction data</a> on innocent people. These data – once stored in paper files deep in the recesses of local courthouses – are now available to anyone with access to the internet. A <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3718644">recent study found</a> that over 10 million arrests, 4.5 million mugshots and 14.7 million criminal court proceedings are digitally released before a criminal conviction each year, regardless of whether the person is ultimately found guilty or innocent. </p>
<p>The release of these records has spurred a <a href="https://slate.com/technology/2019/03/mug-shot-economy-cuomo-proposal.html">cottage industry</a> in collecting these data and disseminating them – for a fee – to interested parties like landlords, employers and nosy neighbors. Public accusations operate as a type of tantalizing clickbait on the internet, elevating websites that report arrests and criminal charges to the top of a <a href="https://www.sfchronicle.com/opinion/openforum/article/Mug-shots-don-t-belong-on-search-engines-15395798.php">person’s search results</a>. </p>
<p>This hamstrings innocent people trying to get their lives back on track.</p>
<h2>The American internet never forgets</h2>
<p>There is a cascade of consequences for people publicly marked as criminal well before their day in court. </p>
<p>They face <a href="https://www.themarshallproject.org/2017/06/03/mugged">tarnished reputations</a> paired with diminished housing, employment and even dating prospects. The information these websites purvey is not only enduring but often inaccurate. Arrest records are rife with <a href="https://themarkup.org/locked-out/2020/10/06/zombie-criminal-records-housing-background-checks">data errors</a>, including mismatched identities and outdated information, particularly because of <a href="https://www.nytimes.com/2020/05/28/business/renters-background-checks.html">automated data aggregation systems</a>. </p>
<p>Those who are harmed also lack recourse. Once the government makes an accusation public through statements, social media posts or website archives, it is ensconced in the public record and available for companies to use and share for profit. Unlike many European citizens whose countries have <a href="https://nyupress.org/9781479881703/ctrl-z/">countered these potential harms</a> by adopting a “<a href="https://gdpr.eu/right-to-be-forgotten/">right to be forgotten</a>” – which allows for outdated search results to be delinked from a persons’ name – American citizens lack basic internet privacy and reputational rights.</p>
<p>And <a href="https://www.doi.org/10.1111/j.1745-9125.2007.00089.x">research shows</a> that publicly exposing individuals results in more crime – rather than serving as a deterrent – as people who have been marked by public accusation are shut out of stable employment, housing and social life. </p>
<h2>‘Digital punishment’</h2>
<p>The Labor Department’s move to shield innocent corporations reveals that government officials are aware of the harms wrought by “<a href="https://global.oup.com/academic/product/digital-punishment-9780190872007?cc=us&lang=en&">digital punishment</a>.” By that we mean the stigmatizing impact of government records as they are shared and archived on the internet, even if a company or person is later found to be legally innocent of a public accusation. </p>
<p>[<em>Deep knowledge, daily.</em> <a href="https://theconversation.com/us/newsletters/the-daily-3?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=deepknowledge">Sign up for The Conversation’s newsletter</a>.]</p>
<p>The government <a href="https://www.nytimes.com/2020/10/23/business/economy/labor-department-memo.html">gets one thing right</a>: Digital punishment removes the presumption of innocence, the bedrock of the American legal system. But it is not corporations that need protection. Companies can easily defend themselves from accusations of wrongdoing, and there’s <a href="https://pubs.aeaweb.org/doi/pdfplus/10.1257/aer.20180501">more evidence</a> that the threat of public exposure serves as an important deterrent to corporations behaving badly. </p>
<p>People marked as criminals <a href="https://press.uchicago.edu/ucp/books/book/chicago/M/bo5485761.html">endure significant hardships</a>, especially at the local level, where <a href="https://washingtonmonthly.com/magazine/januaryfebruary-2017/all-criminal-justice-reform-is-local/">where most criminal justice in the U.S. unfolds</a>. Whatever the Biden administration does regarding the Labor Department policy, it would be most beneficial if its Justice Department discouraged local police and courts from publicizing accusations, arrests and other unsubstantiated information about individuals. </p>
<p>Corporations can withstand digital punishment; people cannot.</p><img src="https://counter.theconversation.com/content/151746/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Elizabeth Chiarello receives funding from the National Science Foundation.</span></em></p><p class="fine-print"><em><span>Sarah Esther Lageson does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A recent Labor Department memo urges agencies to avoid releasing press releases accusing companies of violating laws, to protect the companies’ reputations. People are denied the same protections.Sarah Esther Lageson, Assistant Professor of Sociology and Criminal Justice, Rutgers University - NewarkElizabeth Chiarello, Associate Professor of Sociology, Saint Louis UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1518232020-12-10T13:36:05Z2020-12-10T13:36:05ZWhy shielding businesses from coronavirus liability is a bad idea<figure><img src="https://images.theconversation.com/files/374021/original/file-20201209-19-155zhxy.jpg?ixlib=rb-1.1.0&rect=80%2C8%2C5910%2C3979&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Posting signs like this are often enough to avoid liability. </span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/VirusOutbreakColorado/c1ea3e674d8c4e6c80331c642984dd85/photo?Query=coronavirus%20mask%20sign&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=686&currentItemNo=1">AP Photo/David Zalubowski</a></span></figcaption></figure><p>Congress <a href="https://www.nytimes.com/2020/12/08/us/politics/congress-coronavirus-stimulus.html">may be close to a deal</a> on another coronavirus bailout, but Senate Republican demands for liability protections for businesses <a href="https://www.crainsnewyork.com/politics/mcconnell-says-relief-talks-should-drop-liability-state-aid">remain a major obstacle</a>. </p>
<p>Senate Majority Leader Mitch McConnell <a href="https://www.nytimes.com/2020/04/28/business/businesses-coronavirus-liability.html">has long warned of an “avalanche”</a> of lawsuits that will stymie economic recovery efforts if Congress does not grant companies sweeping immunity from civil liability for failure to adequately protect workers and customers from infection. </p>
<p><a href="https://press.uchicago.edu/ucp/books/book/chicago/O/bo35855002.html">My research</a> on the role of civil lawsuits in reducing foodborne illness outbreaks suggests that fears of excessive litigation are unwarranted. What’s more, the modest liability exposure that does exist is important to ensuring businesses take reasonable coronavirus precautions as they resume normal operations.</p>
<h2>How not to be careless</h2>
<p>As a general matter, businesses are subject to civil liability for <a href="https://injury.findlaw.com/accident-injury-law/proving-fault-what-is-negligence.html">carelessness</a> that causes injury to others. The law defines carelessness as a failure to exercise “reasonable care.”</p>
<p>In applying this standard, courts consider several factors: </p>
<ul>
<li>Did the business take available <a href="https://www.law.cornell.edu/wex/negligence">cost-effective precautions</a> to prevent injury? </li>
<li>Did the business comply with <a href="https://www.nolo.com/dictionary/negligence-per-se-term.html">laws or regulations</a> designed to protect public health and safety? </li>
<li>Did the business conform to <a href="http://www.kohlerlaw.com/CustomasProofofNegligence">industry standards</a> for health and safety? </li>
<li>Did the business exercise <a href="https://www.lawnow.org/the-reasonable-person/">common sense</a>? </li>
</ul>
<p>If the answer to one or more of the questions is no, then a court may conclude that the business was careless and is subject to liability for damages to customers who suffered harm. </p>
<p>In the context of the current pandemic, I believe that reasonable care sets a clear standard for business owners. Invest in cost-effective precautions like ensuring employees wear masks and provide for social distancing. Follow the latest guidance of health officials and all health and safety regulations. Keep up with what other similar businesses are doing to prevent infection. Use common sense.</p>
<p>Law-abiding, thoughtful <a href="https://www.nytimes.com/2020/04/26/business/coronavirus-states-businesses-reopen.html">business owners</a> – those who care about the safety of their employees and their patrons – are likely to exercise reasonable care to prevent COVID-19 transmission with or without the threat of a lawsuit.</p>
<p>For example, the owner of a nail salon in Georgia back in April <a href="https://www.nytimes.com/2020/04/28/opinion/coronavirus-reopening-georgia.html">described her plans for reopening</a>. The salon will accept patrons by appointment only, conduct pre-screening telephone interviews for signs of illness and limit the number of people in the salon at any one time. They’ll take temperatures before allowing people to enter, require hand-washing, equip employees and patrons with masks and gloves, and sanitize all work areas between appointments.</p>
<p><a href="https://www.nytimes.com/2020/04/26/business/coronavirus-states-businesses-reopen.html">Conscientious business owners</a> like this have no reason to fear a lawsuit alleging they failed to take reasonable precautions. </p>
<p>Predictions of <a href="https://www.washingtonpost.com/business/2020/04/24/liability-shield-white-house-coronavirus/">“frivolous” lawsuits</a> appear to be generating unnecessary anxiety among business groups. But they shouldn’t. Personal injury lawyers representing victims work on a <a href="https://law.freeadvice.com/litigation/litigation/lawyer_contingency_fee.htm">contingency fee</a> basis. This means that they earn fees only when they bring cases with a strong enough chance of winning to reach a favorable settlement or a judgment.</p>
<p>Lawyers have no incentive to bring sure losers, and they risk being <a href="https://www.cga.ct.gov/PS98/rpt%5Colr%5Chtm/98-R-0916.htm">disciplined</a> for professional misconduct if they do so. For these reasons, <a href="https://www.library.ca.gov/Content/pdf/crb/reports/FrivolousActionFilingsReport.pdf">frivolous lawsuits are rare</a> and highly unlikely in the context of COVID-19 transmission claims against businesses.</p>
<h2>Exaggerated fears</h2>
<p>The best available data does not support dire warnings about excessive litigation. As of Dec. 7, <a href="https://www.huntonak.com/en/covid-19-tracker.html">6,571 civil lawsuits have been filed</a> related to COVID-19. Only 37 of these are personal injury claims by business patrons for COVID-19 exposure, and an additional 116 are claims by employees against companies for inadequate protection from infection in the workplace, personal injury or wrongful death.</p>
<p>Most of the claims involved other issues, such as 1,372 insurance disputes over business losses and 1,184 claims for alleged civil rights violations.</p>
<p>If there is any reason to fear excessive litigation, these numbers suggest that the real threat is from lawsuits filed by business owners against their insurance companies and individuals protesting public health measures designed to prevent another economic shutdown – not from personal injury claims. </p>
<p>Even for business owners who fail to take reasonable precautions, the prospect of a personal injury claim is still remote.</p>
<p>To successfully sue a business for COVID-19 transmission, a patron would have to prove that he or she contracted COVID-19 from the business and not from some other source. However, most people infected with COVID-19 currently have no reliable way of <a href="https://www.eff.org/deeplinks/2020/04/challenge-proximity-apps-covid-19-contact-tracing">identifying the source</a> of their infection. The <a href="https://annals.org/aim/fullarticle/2762808/incubation-period-coronavirus-disease-2019-covid-19-from-publicly-reported">gap of three to 11 days</a> between infection and illness, the difficulty of <a href="https://news.fiu.edu/2020/tracking-the-path-of-an-outbreak">recalling all of one’s contacts</a> during that interval and <a href="https://www.nytimes.com/2020/04/06/opinion/coronavirus-testing.html">limited testing</a> for the virus present formidable obstacles to establishing causation.</p>
<p>Moreover, a business would not be liable to patrons who knowingly and voluntarily assumed the risk of infection. Patrons of crowded stores or businesses where many customers and employees are not wearing masks, for example, would not have viable legal claims even if they can prove carelessness and causation.</p>
<p>As for claims by employees against careless businesses, most of these will be covered by <a href="https://www.forbes.com/sites/aaroncolby/2020/05/13/the-workplace-and-covid-19-workers-compensation-to-the-rescue/#7dcf4bcb6295">workers’ compensation</a>, which precludes employees from filing negligence claims for workplace injuries.</p>
<p>[<em>The Conversation’s science, health and technology editors pick their favorite stories.</em> <a href="https://theconversation.com/us/newsletters/science-editors-picks-71/?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=science-favorite">Weekly on Wednesdays</a>.]</p>
<h2>Sending a strong signal</h2>
<p>Because of these considerable challenges, viable legal claims related to COVID-19 are likely to be extremely rare. </p>
<p>Yet even a small number of personal injury lawsuits act as a nudge, encouraging the entire business community to adopt reasonable precautions. This is one of the lessons of civil litigation arising out of foodborne illness outbreaks.</p>
<p>As I document in my 2019 book, “<a href="https://press.uchicago.edu/ucp/books/book/chicago/O/bo35855002.html">Outbreak: Foodborne Illness and the Struggle for Food Safety</a>,” a handful of high-profile lawsuits against food companies have encouraged businesses at every link along the supply chain to improve their safety practices. That’s what happened after lawsuits against <a href="https://www.foodsafetynews.com/2017/12/jack-in-the-box-e-coli-outbreak-25th-anniversary/">Jack in the Box</a> over contaminated hamburgers in 1993 and <a href="https://www.foodsafetynews.com/2009/09/meaningful-outbreak-7-dole-spinach-e-coli-outbreak/">Dole</a> over <em>E. coli</em> in baby spinach in 2006.</p>
<p>Similarly, the prospect of liability for COVID-19 transmission is likely to encourage business owners to invest in cost-effective precautions, follow the advice of public health authorities, adopt industry safety standards and use common sense.</p>
<p>I believe shielding business owners from this liability is one kind of immunity that will not help end the current crisis.</p>
<p><em>This is an updated version of an <a href="https://theconversation.com/business-liability-shield-is-holding-up-another-coronavirus-bailout-a-legal-scholar-explains-why-immunity-is-unnecessary-and-even-harmful-145611">article most recently published</a> on Sept. 8, 2020.</em></p><img src="https://counter.theconversation.com/content/151823/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Timothy D. Lytton is a member of the American Association for Justice.</span></em></p>Congress and the White House are trying to wrap up negotiations on a nearly $1 trillion coronavirus bailout, but Senate Republican demands for a liability shield has been a key obstacle.Timothy D. Lytton, Distinguished University Professor & Professor of Law, Georgia State UniversityLicensed as Creative Commons – attribution, no derivatives.