Category: Building blocks

Increasing inequality is a problem – a challenge to the Panglossian Pinker

There is much to admire in the Stephen Pinker’s recently published Enlightenment Now.  Building on his success demonstrating in The Better Angels of our Nature that mankind is becoming progressively less violent, he sets out to challenge much of the pessimism that surrounds us.  It is a fashionable thesis, Pinker’s volume beat Hans Rosling’s Factfulness: Ten Reasons We’re Wrong About the World – and Why Things Are Better Than You Think to the bookstalls by less than two months.  It would appear that, whatever it may feel like, the world is not going to hell in a handcart.

Much of the thesis is backed up by solid data and robust argument.  This doesn’t mean that there aren’t plenty of lapses, but this the risk when a writer strays too far from their home turf and are ambitious in drawing on a wide range of sources from outside their own discipline.

One area where Pincker’s panglossian (or pollyannaish?) view of the world falls down is his discussion of inequality.  It is hardly original, but no less untrue, to observe that material inequality does not imply necessarily that some people are less happy than others.  But there is extensive evidence at a  linking health outcomes and many other proxies for happiness and wellbeing to prosperity.  He also slips into the trap of seeing a “lump” fallacy (as in “lump of labour fallacy” as first described by David Frederick Schloss in 1891, referring the idea that there is only a finite amount of work to spread among a population) in relation to material wealth.  At one level, he is absolutely correct – there is nothing to stop us all becoming wealthier together, even if unevenly.  But at another level, he is the subject of another fallacy, to the extent that inequality is measured solely in terms of the distribution of material wealth.  Material inequality is also a measure of inequality in the distribution of the potential power that people have over their own lives and over each other.

There is plenty of evidence around at present of the impact of increasing inequality in income on the distribution of wealth, particularly in relation to relatively scarce resources – witness the decline in home ownership in the UK and the increasing proportion of the population renting, on health outcomes – witness the correlation between life expectancy as you head out on the Central Line from  inner-London Tower Hamlets towards leafy suburban Essex, and on the impact on health of people working at lower income levels of inequality in job autonomy as documented, for example, in Jeffrey Pfeffer’s recent Dying for a Paycheck.

Should customers have come first in the GKN battle?

I don’t disagree with Michael Skapinker often, but his commentary on the successful bid by Melrose for GKN in today’s Financial Times “Customers should have come first in the GKN battle” had me getting out a metaphorical red ballpoint to mark his homework.

It was a shame.  He made such a good start, rehearsing points that he has made well in the past about shareholder value:

Whose interests should companies serve? For decades, the answer, particularly in the US and the UK, was shareholders’. Total stock market return, the argument went, was clear and measurable and it kept managers focused — until Jack Welch, former General Electric boss and one of shareholder value’s greatest champions, denounced it as “the dumbest idea in the world”.

That was in 2009. Mr Welch was not the only business chief to notice that the financial crisis had shredded the idea that if companies looked after shareholders, everything else would follow. Josef Ackermann, then-head of Deutsche Bank, said: “I no longer believe in the market’s self-healing power.”

A little later in his article, I also awarded him marks for citing the late Sumantra Ghoshal of London Business for arguing in 2005 that:

the people whose contribution should be recognised first were employees, who also took the biggest risks;

shareholders could sell their shares far more easily than most employees could find another job;

and employees’ “contributions of knowledge, skills and entrepreneurship are typically more important than the contributions of capital by shareholders, a pure commodity that is perhaps in excess supply”.

Not content with citing Sumantra Ghoshal with approval, Skapinker moved on later in the article, in the context of the intervention by the Tom Williams, chief operating officer of Airbus’s commercial aircraft division, about the need for long-term investment and strategic vision in the aircraft industry, to cite “the great” Peter Drucker for saying that

the purpose of business was to create a customer. Without that customer, there are no jobs for workers, no returns for shareholders and no strategic skills for nations.

All good stuff, and essentially consistent with Escondido Framework thinking, but Skapinker and others who were unhappy at the outcome of the bid seem to have missed the point about what was happening.

During the takeover battle, much was made of the heritage of GKN, whose origins lay in the founding of the Dowlais Ironworks in the village of Dowlais, Merthyr Tydfil, Wales, by Thomas Lewis and Isaac Wilkinson ion 1759. John Guest (whose name survives in the “G” of GKN – formerly Guest Keen and Nettlefold) was appointed manager of the works in 1767, and in 1786, he was succeeded by his son, Thomas Guest, who formed the Dowlais Iron Company.  However, the links to the multinational automotive and aerospace components company of 2018 are slight and accidental.

The company acquired by Melrose consists of four major divisions: GKN Aerospace (Aerostructures; Engine Products; Propulsion Systems); GKN Driveline (Driveshafts; Freight Services; Autostructures; Cylinder liners; Sheepbridge Stokes); GKN Land Systems Power Management; PowerTrain Systems & Services; Wheels and Structures; Stromag); and GKN Powder Metallurgy (Sinter Metals; Hoeganaes).  This is a collection of businesses that is the outcome of over a hundred years of acquisitions and disposals across the globe¹. At least at the parent company level, there is little to suggest the opportunity for much value creation from them all being part of the same corporate entity.

What business was GKN plc in?  The management of a portfolio of business units, primarily in manufacturing but some in services, spread across a range of different industries and technologies serving a variety of different types and classes of industrial customers, many but not all being OEMs.

Who were the customers of the corporate entity, as opposed to the subsidiaries (which are the entities that interface directly with the purchasers of goods and services, with their employees, and with suppliers)?  Perhaps the subsidiaries themselves, insofar that they derived value from the parent company and investment funds, in return for cash returned to the parent?  Perhaps the employees of the subsidiaries, at least in so far as they were beneficiaries of a corporately administered pension scheme (that, incidentally, Melrose committed to topping up with an extra £1 billion)?

Much has been made, including by Michael Skapinker in his article, of the 25% of the shares that were in the hands of hedge funds and other short term speculators who had only bought them very recently in the hope of a quick return.  Presumably they bought these shares from owners who were willing to sell at a lower price against the possibility that the Melrose bid failed and the share price under the existing management team would fall.

Melrose’s argument during the takeover battle was essentially that it is a management team with a record of successful managing corporate assets who would replace a management team that has been destroying value in its management of the GKN portfolio.  The commitments Melrose made along the way to the customers for the GKN subsidiaries’ goods and services and to their employers (in part evidenced by the promises relating to the pension scheme), suggest that they are not old fashioned asset strippers, selling off assets as part of strategy to wind down wealth creating business units.  Rather, they appear to understand the business that the GKN plc is currently in, which is managing a portfolio of businesses, adding value to those where it can, and selling those to which other companies can add more value.

If this is indeed the approach that Melrose takes, it will reflect a mindset in which the board thinks about the businesses within the portfolio as customers for the corporate centre, recognising that if there are other corporations that can provide individual business units with a better deal, let them go.  And that will make it easier to keep their customers in the capital markets, to whom they have spent the last few months marketing themselves, happy, loyal, and committed.

¹ Wikipedia history of GKN plc since 1966

It takes a village to maintain a dangerous financial system – and a corporate governance system too

Hillary Clinton popularised the African proverb “It takes a village to raise a child” when she adopted it as the title for her 1996 book. A lawyer representing victims of abuse by Catholic priests in Boston extended when interviewed in 2015 by observing that “If it takes a village to raise a child, it takes a village to abuse a child.” Anat Admati, George G.C. Parker Professor of Finance and Economics at the Graduate School of Business at Stanford University, translates this sentiment to the financial sector in her in chapter in Just Financial Markets? Finance in a Just Society, a collection of essays edited by Lisa Herzog, published by Oxford University Press[1].

Admati’s focus is on the banking system. Her thesis is that the failings in the system, illustrated by the 2008 crash, are a result of the failures of a wide range of players, not just those working within financial institutions, but a host of regulators, commentators and other stakeholders. Very powerfully, she comments on the contrast between the finance industry and other industries (eg aviation) where safety is paramount and all consequently all the stakeholders work together to design effective regulation and where the case for compliance is compelling. But, as she points out, even the most obvious case for regulation to drive safety may require disasters and egregious failures before regulation and compliance catch up with the need (eg in nuclear power and the motor industry).

Her chapter provides a compelling account of the “wilful blindness” of principals, stakeholders, regulators and commentators on the financial system and suggests that even after the dangers inherent in the design, operation and lack of necessary regulation of the banking system were revealed in the crisis, the underlying problems remain unaddressed.

Her arguments are applicable far more widely. She has written an important paper about that should be read with an eye to how her observations can be applied to other industries and, indeed, beyond the commercial enterprises into public sector organisations and not for profit bodies.

[1]Chapter 13, It Takes a Village to Maintain a Dangerous Financial System. Abstract: I discuss the motivations and actions (or inaction) of individuals in the financial system, governments, central banks, academia and the media that collectively contribute to the persistence of a dangerous and distorted financial system and inadequate, poorly designed regulations. Reassurances that regulators are doing their best to protect the public are false. The underlying problem is a powerful mix of distorted incentives, ignorance, confusion, and lack of accountability. Willful blindness seems to play a role in flawed claims by the system’s enablers that obscure reality and muddle the policy debate.

Workforce – “not assets to be managed”

I owe thanks to Ali Webster, Assistant Director for Workforce at West London Mental Health Trust, for opening her presentation at a meeting yesterday with a compelling quotation from a 2015 King’s Fund paper on talent management[1]:

“Successful deployment of workforce talent is about rethinking your view of your employees. They are not assets to be managed but rather people with options who have chosen to invest their aspirations and motivations with your organisation for a while and who will expect a reasonable return on their investment in the form of personal growth and opportunities.”

This is Escondido Framework thinking. You do not own the people who work for you – even if the way that you treat them may leave them thinking of themselves as wage slaves. You have secured their services in a market transaction in which there are two parties, selling to each other and offering opportunities to each other. And both parties are making an investment in the relationship, with both “expect[ing] a reasonable return on their investment”.

[1] Sarah Massie, “Talent Management: Developing leadership not just leaders”. Kings Fund 2015

Is Capitalism Killing America?

I was stopped in my tracks this morning by an email from the Stanford Graduate School of Business with the subject line “Is Capitalism Killing America?”. It is not the sort of thing that the world’s top business school (at least that was how it was rated forty years ago when I was there) normally sends to its alumni.

The key feature in the email newsletter was an article with the subheading “Young & Rubicam Chairman Emeritus Peter Georgescu says it’s time to end the era of shareholder primacy[1] which reviews Georgescu’s new book Capitalists Arise! End Economic Inequality, Grow the Middle Class, Heal the Nation (Berrett-Koehler, 2017). Georgescu, a fellow Stanford GSB “alumn”, is looking to chief executives to think about how, and for whom, they run their companies.

Capitalism is an endangered economic system, Georgescu says. He cites by economist William Lazonick, who studied S&P 500 companies from 2003 to 2012 and discovered that they routinely spend 54% of their earnings buying back their own stock and 37% of their earnings on leaving just 9% of earnings for investment in their business and their people.

“Innovation is the only real driver of success in the 21st century, and who does the innovation? Our employees. How are we motivating them? We treat them like dirt. If I need you, I need you. If I don’t, you’re out of here. And I keep your wages flat for 40 years,” says Georgescu, who points out that growth in real wages has been stagnant since the mid-1970s.

Georgescu continues by noting that the lack of investment in business and their people feeds back into demand, undermining sales growth. With median household income in the US less than 1% higher today than in 1989: “There’s no middle class, and the upper middle class has very little money left to spend, so they can’t drive the economy. The only people driving the GDP are the top 20% of us”. 60% of American households are technically insolvent and adding to their debt loads each year. In addition, income inequality in the U.S. is reaching new peaks: The top layer of earners now claim a larger portion of the nation’s income than ever before — more even than the peak in 1927, just two years before the onset of the Great Depression.

Georgescu blames the ascendency of the doctrine of shareholder primacy.

“Today’s mantra is ‘maximize short-term shareholder value.’ Period,” he says. “The rules of the game have become cancerous. They’re killing us. They’re killing the corporation. They’re helping to kill the country……..

“The cure can be found in the post–World War II economic expansion. From 1945 until the 1970s, the U.S economy was booming and America’s middle class was the largest market in the world. In those days, American capitalism said, ‘We’ll take care of five stakeholders,’. Then and now, the most important stakeholder is the customer. The second most important is the employee. If you don’t have happy employees, you’re not going to have happy customers. The third critical stakeholder is the company itself — it needs to be fed. Fourth come the communities in which you do business. Corporations were envisioned as good citizens — that’s why they got an enormous number of legal protections and tax breaks in the first place.

“If you serve all the other stakeholders well, the shareholders do fine,” he says. “If you take good care of your customers, pay your people well, invest in your own business, and you’re a good citizen, the shareholder does better. We need to get back to that today. Every company has got to do that.”

It’s refreshing to hear this from one of the grand old men of the commercial world in the United States. But in his critique of “shareholder value”, he fails to single out the principal beneficiaries, the chief executives and top management teams themselves (including our fellow business school alumni) who have exploited the system to cream off an ever increasing share of the rewards in salaries, bonuses and options, all the while failing to invest in productive assets, innovation, securing long term positions with customers and local communities, and in the people who work in the companies themselves.

[1] https://www.gsb.stanford.edu/insights/capitalism-killing-america?utm_source=Stanford+Business&utm_medium=email&utm_campaign=Stanford-Business-Issue-122-10-1-2017&utm_content=alumni

The Uber employment tribunal decision through the prism of the Escondido Framework

How does the Escondido Framework interpret the impact of the decision of an employment tribunal in London that Uber drivers are not self-employed?

The Escondido Framework describes an organisation as both the solution space that exists between the external interfaces, or markets, and the structure, systems and processes within the solution space that mean that it creates value above and beyond what would exist in the absence of the organisation.

The first consequence of the employment tribunal was to address as matter of law as opposed to economics what Uber buys and sells. Uber hitherto has maintained that it provides a platform that brings together drivers and passengers – ie it provides a service that facilitates the provision of rides by self employed drivers to would be passengers who log on to the platform – rather it provides a transport solution to passengers using drivers that it employs. The judgement challenges the first model by effectively establishing that framework of the contract between the Uber and its drivers means that are being treated as though they were employees rather than self employed at arms length by the company.

The Escondido Framework is helpful in understanding how a judgement by lawyers considering employment lawyer can apparently transform the relationship between an Uber driver and Uber. Uber describes a relationship with the driver that makes them a customer of the company – a self-employed person who pays 25% of the fare secured to Uber in recognition of his or her use of the Uber platform. The Employment Tribunal found that, because of the constraints on the driver under the contractual relationship with company, the Uber driver is a supplier of labour – “an employee” – a factor of production in the provision of a minicab service by Uber to passengers.

The Escondido Framework is essentially neutral between the parties to a transaction: each is a customer of the other and is subject to terms that agreed in a contract of one sort or another, either explicit or implicit. Uber has certainly created value in creating and operating the platform, and thereby has created an organisation that occupies a virtual space bounded by market interfaces with drivers and passengers. Other interfaces bounding Uber’s virtual space include: those with its other employees – programmers and software engineers for example[1]; with its investors; and, as illustrated by this dispute and others with city transport authorities that license taxis, with the political and legal interfaces.

Given the restrictions on drivers, meaning that they cannot simultaneously be attached to multiple platforms, and that the passenger, although able to make choices among available drivers and vehicle classes, has relatively little ability to discriminate between drivers (I see a considerable contrast between Uber and other internet platform businesses such as eBay in this regards) it is hard to see Uber as a company selling a platform to users as opposed to selling journeys to passengers with drivers as employed labour, or at the very least suppliers that allow it to provide those journeys. In this interpretation, Uber is a very conventional organisation providing taxi services, with a highly efficient and well developed set of systems and processes that has created a lot of value, and in Escondido Framework language “solution space”, between the market interfaces of supplier/labour and customer.

Visualising the organisation within the Escondido Framework, in its most simple form as a Reuleaux Tetrahedron, one interpretation of the employment tribunal decision for Uber is that the interface with the labour market has moved and changed in shape. Alternatively, the judgement could be interpreted as a movement of the interface with the regulatory and political market place that reduces the solution space by limiting the parts of the labour market interface that are available to Uber (ie the self employment part of the interface is no longer available to it).

The outcome is indisputable. The solution space available to Uber is smaller, with a consequence that the latitude in terms of strategy available to its management is reduced, along with the amount of economic available for capture by the management and any other interested parties being reduced.

But assessing which of the market interfaces has changed to reduce the size of the solution space is more complex. Is it that the consequence of the legal judgement is that drivers will no longer be willing – as a consequence of the protection of rights arising from the employment tribunal decision – to work on the mix terms that they would previously have accepted? If so, this would represent a change in the position and shape of the market interface. Or is it that the market interface – which is collection of points representing an acceptable mix of terms of “employment” to drivers (payment, sick pay, holiday pay, employer imposed restrictions on availability, ability to take other work, ability to turn down rides, access to tips from passengers, discretion about routes to take, condition of the car that they driver must maintain etc) has not changed, but that the movement of the interface with the political and regulatory world (the market for political influence, which in Uber’s case may well have been influenced by other aspects of the company’s conduct), has moved in way that has removed some of these points from being available (see illustration below)

Impact of new regulation to reduce solution space
Impact of new regulation to reduce solution space

[1] Subsequent to this post some very interesting issues arose surrounding the way that Uber has positioned itself against this market interface, giving rise to repeated charges of sexism and sexual discrimination

Three Faces of Power, Kenneth E Boulding 1989

The great thing about Amazon is how easy and inexpensive it is to track down potentially interesting texts referenced in footnotes. The outlay of 1p plus £2.70 post and packaging secured the arrival of a copy of Kenneth E Boulding’s “Three Faces of Power”. This arrived virtually in mint condition other than a barcode and a stamps indicating that it been discarded from the library of the Ecole Superieur de Commerce de Paris – and certainly with little evidence that it received much attention from the ESCP’s students.

Published in 1989, it addresses – albeit from a different angle – the three currencies that have since the early 1980s been among the core elements of the Escondido Framework. The publisher’s blurb on the back cover claims that Boulding’s “creative analysis lays the groundwork for important future debates about power.” I have been scratching around for this sort of stuff – albeit as hobbyist rather than academic  – since leaving Stanford in the summer of 1980. The fact that it has taken me so long to come across this work and that it, in turn, appears to have sunk almost without trace, reminds me of T S Eliot’s lament:

                                                   “And what there is to conquer

By strength and submission, has already been discovered

Once or twice, or several times, by men whom one cannot hope

To emulate—but there is no competition—

There is only the fight to recover what has been lost

And found and lost again and again”

(from East Coker, No 2 of The Four Quartets, T S Eliot)

Boulding divides power into three major categories: “threat power”, destructive in nature and applied particularly to political life; “economic power”, resting largely on the power to produce and exchange items, and on the constantly changing distribution of property ownership; and “integrative power”, based on such relationships as legitimacy, respect, affection, community and identity. These three categories do not map directly onto the three currencies within the Escondido Framework, but Boulding himself accepts that they are what mathematicians call “fuzzy sets”. However, there is a rough approximation for “threat power” to the approach to transacting using the “force” currency. It is easy to see how Boulding’s “economic power” maps onto the approach transacting using the “cash” currency. Unsurprisingly, his “integrative power most closely relates to the “influence” currency of the Escondido Framework.

Paul Polman, CEO of Unilever, on sustainability, purpose and living by his values

In the late 1980s, the buying and merchandising team I led at high street retail chain WHSmith launched a substantial new range of environmentally responsible stationery. It resonated with the personal values of the team, in short we believed that it was the right thing to do. We also argued that it would be good for the company and provide us with an edge over competitors, since it would be attractive to a significant number of our customers, would help us with staff recruitment since we believed that smart young people wanted to work for an environmentally responsible company, and would help enhance the wider reputation of the company with marketing benefits spilling over into other product categories and win sympathy for us in other ways, even to the extent, for example, of creating a benign audience in local authority planning decisions.

This weekend’s FT contains a profile of Paul Polman, chief executive at Unilever for the past seven years, who has taken an even bolder and more extensive approach to environmental responsibility. His leadership reflects an explicitly understanding of the diversity of market dimensions and that companies need to consider, a sense of that the purpose of the company reflects long term sustainability – of the company and the environment in which it operates.

His responses to his FT interviewers speak for themselves:

“P&G started in 1837, Nestlé in 1857. These companies have been around for so long because they are in tune with society. They are very responsible companies, despite the challenges that they sometimes deal with, all the criticism they get”

When Polman became chief executive of Unilever …. he said that he only wanted investors who shared his view that Unilever needed to shepherd the Earth’s future as carefully as it did its own revenues and profits…..“Unilever has been around for 100-plus years. We want to be around for several hundred more years. So if you buy into this long-term value-creation model, which is equitable, which is shared, which is sustainable, then come and invest with us. If you don’t buy into this, I respect you as a human being but don’t put your money in our company.”

The FT article explains that Sustainable Living Plan adopted by Unilever has not met all its targets, pushing back the date for halving its products’ environmental impact from 2020 to 2030 but it has reduced the waste associated with the disposal of its products by 29 per cent, with the aim of hitting 50 per cent by 2020.  It is not without its critics, but a report from Oxfam report on the company’s practices in Vietnam identified “a number of critical challenges in translating the company’s policy commitments into practice”, the charity’s latest Behind the Brands ranking, which looks at the top 10 food companies’ record on small farmers, women’s rights, the use of land and water and greenhouse emissions, put Unilever in first place, ahead of other leading consumer products companies.

The outcome has been good for the company’s relationships with investors. In the FT’s words: “while he told short-term shareholders to shove off, he delivered good returns to those who stayed. Unilever’s total shareholder return during Polman’s tenure has been 203 per cent, ahead of his old employer Nestlé and well ahead of P&G………. The company has also succeeded in attracting more long-term shareholders………before Polman’s reign, 60 per cent of the company’s top 10 shareholders had been there for five years or more. Today, 70 per cent have held their shares for more than seven years.”

It is also clear from the FT article that Polman has also adopted this approach to environmental sustainability because of its alignment with his personal beliefs, and that his belief that the wider purpose of the company (which he likes to an NGO) is a further illustration of his own belief that he should live his personal values in his corporate career. The Saïd Business School’s Colin Mayer, author of The Firm Commitment, tells the FT “He has demonstrated immense courage and vision in promoting a concept of the purpose and function of business that initially met with considerable resistance, bordering on hostility, from several quarters.”

Highlights from October 2016 Harvard Business Review

My two picks from the latest Harvard Business Review relate to two Escondido Framework themes: the way that executive teams have been the beneficiaries of the misunderstanding by shareholders (or, rather, their representatives on remuneration committees) of what motivates them and how the relevant market relationships work; and the need to think about employees as customers.

An article titled “Compensation, the case against long-term incentive plans” reviews the work of Alexander Pepper, set out in his book “The Economic Psychology of of Incentives: New Design Principles for Executive Pay (Palgrave Macmillan 2015). Pepper documents how pay for performance incentives, and Long Term Incentive Plans in particular, fail to work as proponents expected. The four reasons are summarised as follows:

  • Executive are more risk-averse than financial theory suggests
  • Executives discount heavily for time
  • Executives care more about relative pay
  • Pay packages undervalue intrinsic motivation

HBR’s review of Pepper’s work, in its Idea Watch section, comes not long after news broke in London on 22nd August that Woodford Investment Management was to scrap all staff bonuses, based on the belief that ‘bonuses are largely ineffective in influencing the right behaviours.’

The second article of interest is an article by Cheryl Bachelder, CEO of fast food franchise Popeyes: “How I did it…… The CEO of Popeyes on treating franchisees as the most important customers”. It’s not so much the lesson expressed in the article’s title that excites me, but an extract in the middle of the text that takes the message a stage further, recognising staff as customers:

At one point in my career, I was touring restaurants to talk to team members about the importance of serving guests well. I met a young man who was not excited about my “lesson”. He asked who I was. “I’m Cheryl,” I said. “Well Cheryl,” he said, “there’s no place for me to hang up my coat in this restaurant, and until you think I’m important enough to have a hook where I can hang up my coat, I can’t get excited about your new guest experience program.” It was a crucial reminder that we are in service to others – they are not in service to us.

Timeless themes in Galsworthy’s “Strife” (1909)

My mother in law and I have resolved the problem of the deadweight loss of Christmas (Joel Waldfogel, American Economic Review, December 1993) by giving each other a night out at the theatre, accompanied by her daughter/my wife. Whether last night’s trip to see “Strife” at the Chichester Festival Theatre was her gift to me or mine to her doesn’t matter, it was a great production and my first exposure to John Galsworthy’s insightful exposure of the fallacy of mindless short term focus on shareholder value, the importance of recognising the constraints on the firm of public opinion, and the pressures on the trade union to serve its long term interest over the pressures of the interested parties in the immediate dispute. Furthermore, themes on hand around corporate governance, the tension between external directors and a dominant shareholder chairman, and on the other (in the context of the current junior doctors’ dispute and the tensions within the British Medical Association) between the professional leadership of the trade union and the intransigent leader of the local workers’ committee, have a resonance in 2016 every bit as powerful as they may have had when the play was first performed in 1909.

Wikipedia provides a useful synopsis:

The action takes place on 7 February at the Trenartha Tin Plate Works, on the borders of England and Wales. For several months there has been a strike at the factory.

Act I

The directors, concerned about the damage to the company, hold a board meeting at the home of the manager of the works. Simon Harness, representing the trade union that has withdrawn support for the strike, tells them he will make the men withdraw their excessive demands, and the directors should agree to the union’s demands. David Roberts, leader of the Men’s Committee, tells them he wants the strike to continue until their demands are met, although the men are starving. It is a confrontation between the elderly company chairman John Anthony and Roberts, and neither gives way.

After the meeting, Enid Underwood, daughter of John Anthony and wife of the manager, talks to her father: she is aware of the suffering of the families. Roberts’ wife Annie used to be her maid. She is also worried about the strain of the affair on her father. Henry Tench, company secretary, tells Anthony he may be outvoted by the Board.

Act II, Scene I

Enid visits the Roberts’ cottage, and talks to Annie Roberts, who has a heart condition. When David Roberts comes in, Enid tells him there must be a compromise, and that he should have more pity on his wife; he does not change his position, and he is unmoved by his wife’s concern for the families of the strikers.

Act II, Scene II

In an open space near the factory, a platform has been improvised and Harness, in a speech to the strikers, says they have been ill-advised and they should cut their demands, instead of starving; they should support the Union, who will support them. There are short speeches from two men, who have contrasting opinions. Roberts goes to the platform and, in a long speech, says that the fight is against Capital, “a white-faced, stony-hearted monster”. “Ye have got it on its knees; are ye to give up at the last minute to save your miserable bodies pain?”

When news is brought that his wife has died, Roberts leaves and the meeting peters out.

Act III

In the home of the manager, Enid talks with Edgar Anthony; he is the chairman’s son and one of the directors. She is less sympathetic now towards the men, and, concerned about their father, says Edgar should support him. However Edgar’s sympathies are with the men. They receive the news that Mrs Roberts has died.

The directors’ meeting, already bad-tempered, is affected by the news. Edgar says he would rather resign than go on starving women; the other directors react badly to an opinion put so frankly. John Anthony makes a long speech: insisting they should not give in to the men, he says “There is only one way of treating ‘men’ — with the iron hand. This half-and-half business… has brought all this upon us…. Yield one demand, and they will make it six….”

He puts to the board the motion that the dispute should be placed in the hands of Harness. All the directors are in favour; Anthony alone is not in favour, and he resigns. The Men’s Committee, including Roberts, and Harness come in to receive the result. Roberts repeats his resistance, but on being told the outcome, realizes that he and Anthony have both been thrown over. The agreement is what had been proposed before the strike began.

Missing from the synopsis are some of the more subtle themes in Galsworthy’s text, including the recognition by Harness of the reality facing the company (that it will not survive if the strike continues and the men’s jobs are on the line) irrespective of Roberts’ concern for a wider struggle against “Capital”, John Anthony’s arguments about the primacy of the bottom line and his duty not to compromise, and the concern of the majority of the directors of the company for public opinion (and their personal reputations).