Author: ken

Who Will Watch the Watchdogs?

Many corporate board members survive damage to their reputations without any penalty, according to The Wall Street Journal.  “A surprising number of embattled CEOs, forced out for poor performance or legal problems, find a warm reception from outside corporate boards on which they sit.”

Why?  Information about their ethical or legal problems could lead their colleagues on other boards to worry about their ethical standards, their integrity, or – at the very least – their judgment.  You might think that other board members would be concerned that the reputation of their own boards could be tainted by the public failings of such colleagues.

But “many governance watchers and veteran directors say boards rarely accept a resignation after a member loses a CEO spot—no matter the reason.”

Eleanor Bloxham, president of Corporate Governance Alliance, says “It’s part of the ‘not giving up on your friends’ kind of thing. (See, “Staying on Boards After Humble Exit.”)

They have significant bonds with each other.  Many board members are drawn from similar backgrounds.  Moreover, they often maintain outside relationships through other corporate boards as well as country clubs, charities, and national associations.  As Michael Useem, professor at Wharton, noted in his classic study of interlocking boards, The Inner Circle (1986), board members collectively form a kind of national community, with strong mutual interests and identities.

In addition, the small group environment of most corporate boards fosters “groupthink.”  Board members have a chairman, often also CEO, they have selected and want to support.  They receive limited information about the corporation.  Operating in secrecy, they are prone to the unconscious motives of maintaining cohesiveness and preserving their established business identities and their common sense of self-esteem.

As a result, they will often collude in ignoring disturbing information, in accepting excuses, stifling criticism.  Or – sometimes worse — they will overreact to crises and search for outside saviors when they are forced to face the fact that the CEO they chose is not performing to expectation.  Given the pressure to maintain inner cohesion, it is easy for them to discount information about each other – until it is too late.

But it is their job to monitor standards of performance as well as adherence to ethical principles.  If they don’t do it, no one else will.  No one else can.  And if they collude in ignoring or discounting information about each other, it is inevitable that they will let standards slip and slide.  It just won’t seem so important.

Technically board members are there to serve shareholders and protect their interests.  Technically they are elected.  But the reality is that they thoroughly control the process of their own selection and, as The Wall Street Journal article suggests, they can be virtually immune to “failure.”

There is growing interest today among boards in evaluating their own performance.  That’s not the same as accountability, but it is a step in the right direction.

 

 

 

 

What Does It Take to Do Both?

Bill Keller recently weighed in on something many of us worry about:  will the intellectual development of our children be stimulated or stunted by Facebook?

As editor of The New York Times, he is in the thick of the new media.  As the Times uses them all, he can hardly be against them.  But he correctly notes that all new means for communicating and storing information have collateral effects.  The invention of the printing press meant then that people had little need to memorize texts.  More recently, GPS devices have come to mean we don’t have to think how to get where we are going or remember how we got there.  Can having so many friends on Facebook, he worries, prevent relationships from deepening?

He cites Robert Bjork at U.C.L.A., an expert in memory and learning, who had noted that students who use the Excel spreadsheet often don’t pick up patterns in the data they process.  “Unless there is some actual problem solving and decision making, very little learning happen.”  He puts it succinctly:  “We are not recording devices.”  (See, “The Twitter Trap.”)

That’s an important point.  If we don’t struggle to solve problems or make difficult decisions, do we really possess the information we have access to.  If we don’t reflect on the knowledge we have, do we actually have it?  Can we own our thoughts without engaging and questioning them?

The problem isn’t the technology.  Facebook can be a reasonable way for friends to keep in touch.  Twitter gets news out quickly.  But all the social media can reinforce and amplify many of our more troubling urges:  the craving for distraction, the pressure to follow the crowd, the wish to feel important, to know something without having bothered to check it out.  And we can all too easily stay in that place of impulse, reaction, easy certainty and superficial self-importance.

So the solution is not in controlling our children’s access to social media.  Even if we tried to stop them, we would only succeed in making them seem more attractive and inevitable.  We have to make sure that other experiences are provided, activities that involve more prolonged and sustained thinking – conversations, follow up reflections, doubts, discussions, debates, puzzles, questions.

We have to engage with them about their experience of the world, the meanings they detect, the doubts they have about what hey are told, the events that puzzle them.  If we can succeed in prying them away from the devices that more easily capture their attention, we can offer the possibility of thinking together.

 

 

 

 

Why Nothing Will Be Done

The great advantage of democracy is that it gives a voice to those who can speak.  But what if your voice is too weak to be heard?

That is the dilemma of the unemployed, according to Robert Reich the former Secretary of Labor under President Clinton. “The unemployed are politically invisible,” he writes on his blog. “They don’t make major campaign donations. They don’t lobby Congress. There’s no National Association of Unemployed People.” (See, “Recovery stalling: Why Washington won’t act.”)

He lists the groups that have been particularly hard hit: “women who had been public employees, single mothers, minorities, young people trying to enter the labor force, and middle-aged men who have been out of work for longer than six months.”

He starts with public employees, mostly women, fired as local communities slash school budgets and cut social services.  Towns and cities struggling to live within their means, without raising taxes, cause voters increasingly to view them as liabilities.

Unmarried mothers are having a particularly difficult time getting back their jobs because their work was heavily concentrated in the retail, restaurant and hotel sectors, particularly hard hit by the recession. People don’t have the extra cash to keep them busy.  Blacks continue to suffer from the effects of discrimination and poor education.  Often the last hired, they are the first fired.

As for young people entering the job market, Reich notes, “Employers with a pick of applicants see no reason to hire someone without a track record, particularly those without much education. Unemployment among high school dropouts is hovering around 30%.”

The saddest story, though, is that older workers face the toughest obstacles:  “Employers assume they aren’t as qualified or reliable as those who are younger and have been working more recently. According to research by the Urban Institute, once you’re laid off, your chance of finding another job within a year is 36% if you’re under the age of 34. But your odds drop the older you get. If you’re jobless and in your 50s, your chance of landing another job within the year is only 24%. Over 62, you’ve got only an 18% chance.”

Reich concludes: “You couldn’t find a collection of people with less political clout.”

But though these are plausible reasons to explain why each of these groups has such a hard time in the job market, I can’t help but think that there is an underlying common prejudice:  If you have lost your job, people tend to think, it must be your fault.  This is part of an even larger tendency:  If possible, blame the victim.

That’s the easiest way we all have to dispose of troubling and intractable problems.   If we can think that people create the difficulties they face, it’s not our problem.

 

The Erosion of Male Advantage in the Workplace

It has generally been thought that men get better as they age.  They become more relaxed and confident.  Less driven to prove themselves, they are able to be more generous and wiser.  And as the awkwardness and angularity of youth softens, they even become more attractive.

But if there was any truth to this, recently evidence suggests these benefits no longer count.  Time is not on their side.

Last summer, Hanna Rosin in The Atlantic chronicled the erosion of men’s status in the workplace:  “Three-quarters of the 8 million jobs lost had belonged to men.”  More startling was the underlying trend.  More women than men are now employed, and “women are also starting to dominate middle management.”

“According to the Bureau of Labor Statistics, women now hold 51.4 percent of managerial and professional jobs—up from 26.1 percent in 1980. They make up 54 percent of all accountants and hold about half of all banking and insurance jobs. About a third of America’s physicians are now women, as are 45 percent of associates in law firms—and both those percentages are rising fast.”  (See “The End of Men.”)

Rosin offered the explanation that our “white-collar economy” values intellect as much as brawn but also “requires communication skills and social intelligence, areas in which women, according to many studies, have a slight edge.”  In other words, men may get better as they age but woman are better from the start with in the skills that increasingly matter.

Last month, Newsweek zeroed in on the plight of older men:  “From the financial meltdown in late 2007 that led to the recession up to now, the rolls of all unemployed white professional men have more than doubled.”

Calling such men BWMs (Beached White Males), the reporter noted that older white men are losing jobs faster than any other group, including teenage girls.  He cited the professional-finance blog Calculated Risk:  if these men “lose their job, they are toast.”  (See, “Dead Suit Walking.”)

Just last week, The New York Times commented on how senior men are increasingly being eased out of their jobs.  “’All the rules have changed,’ said a longtime New York executive recruiter…. ‘In a market that’s become extremely lean and mean, these individuals who have tended to be the senior statesmen of their day are sometimes the first to go.’”  (See, “Easing Out the Gray.”)

To be sure, only 3% of Fortune 500 CEOs are women, but that is increasingly seen as a problem.  Rosin noted that not only are the ones who make it to the top now seen as celebrities, but also “last year, they out-earned their male counterparts by 43 percent, on average, and received bigger raises.”

The demands of evolutionary struggle gave men an advantage for their greater size and strength, but it has been a long time since those differences mattered so much.  Our consciousness awareness and social values are just now catching up.

 

 

 

 

The Economy

Projecting feelings into forests and clouds is a great way to evoke moods, but it’s startling to see economist routinely doing this to the economy.  When poets do this to nature, we call it the “pathetic fallacy,” but what should we call it when economists do it to economic data?

The economist, Robert Samuelson, writing in Newsweek, noted many signs of the recovery:  spending is up, the trade imbalance is improving, and the housing market is slowly recovering.  But the problem he noted is that “the pervasive post-crisis gloom prevents us from acknowledging it.”

He summarizes the big picture:  “There is a curious role reversal. Foolish optimism led to the financial crisis and recession by assuming things would work out for the best. Now, reflexive pessimism weakens growth by ignoring good news or believing it can’t last.” (See, “Stuck in a Post-Crisis Gloom.”)

Samuels does not seem to be talking about something so simple as “consumer confidence,” our rough estimates about the future that leads us to spend on major items like cars or even washing machines.  It is plausible that consumers are cautious that way.  But this is more like the broad generalizations and snappy judgments that stock analysts make for public consumption about the behavior of markets.  The Wall Street Journal, for example, commented on yesterday’s stock markets: “Investor optimism was sparked by the G-8 saying the global economic situation is improving and the recovery is getting broader. The comments came as investors digested some mixed economic data.”  I marvel at the precision and certainty with which such sweeping assessments can be made – and I doubt it.

As a psychoanalyst, I am often trying to get people to acknowledge the role that unconscious assumptions play in their perceptions or the importance of emotions in their thinking.  But this is a case where emotions and influences are too easily attributed to masses of relatively sophisticated people.

I am not saying that economic decisions are not made in the basis of irrational factors.  Not at all.  But I am saying that it is not easy to know the real motivations behind people’s actions.  And it is all too tempting to believe what you want to believe or succumb to the clichés of conventional wisdom.  The poet who sees nature mourning the death of his love is indulging his emotions to offer his readers a deeper experience.  What are the economic analysts up to?

Two things, I think.  They are positioning themselves as experts, insiders who understand an arcane and complex subject.  In part, that’s how they make a living.  They get a lot of self-importance and visibility from the roles they assume.

But I also think they are indirectly expressing their own moral judgments under the guise of sophisticated analysis.  Samuelson judges the “foolish optimism” that underlay the credit bubble, for example, the home-owners, say, who bought houses they could not afford with 0% down.  But what about the predatory mortgage companies who encouraged them?  Or the banks who profited while helping us all believe the bubble could only continue?

His Olympian detachment not only must help to make him feel superior but also persuade others to think he knows too much to make any such foolish mistake himself.