Date: 2024-12-26 Page is: DBtxt003.php txt00023692
QUALITY OF LIFE
MEANINGFULNESS
What Makes Work Meaningful Or Meaningless
MEANINGFULNESS
What Makes Work Meaningful Or Meaningless
Open PDF ... MITSMR-57417-What-Makes-Work-Meaningful-Or-Meaningless.pdf
Peter Burgess COMMENTARY
This article touches on some of the issues that are important for a coherent comprehensive framework of management metrics along the lines being pursued by the TrueValueMetrics initative.
Many years ago, 'work' was the essential foundation for economic survival for most people. Work was hard and long, and wages were low. Living was not much fun for most people ... it was a matter of survival.
Over the years, technology has enabled a massive improvement in labor productivity and there has been an impressive improvement in wages and the living conditions for many people ... but globally not all by any means.
In the period post WWII from 1945 to around 1970 ... about 25 years or one generation ... wages improved more or less at the same rate as productivity, especially in the 'West'. Quality of life for a lot of people improved substantially during this time, especially for educated white folk in the United States.
The good times were disrupted in the 1970s mainly as a result of the Arab Oil Boycott and the subsequent establishment of OPEC (The Organization of Petroleum Exporting Countries) which was and is a cartel of countries that came to control international prices for oil. In 1973 the price of crude oil increased from around $3.50 a barrel to around $13.50 a barrel, and by 1980 exceeded $30.00 a barrel. This changed the economics of almost every company and country in the world, and especially the energy intensive economy of the United States. There was nothing that either government or companies could do as long as the OPEC cartel had control of crude oil prices.
I wrote during the 1970s that the establishment of OPEC was the biggest economic event of all time ... and I have no reason to change that assessment based on subsequent events.
On reflection though, I have become convinced that the success of the OPEC cartel was enabled in part by the behavior of the multinational oil companies ('Big Oil'), the countries of the UK and the Netherlands with emerging offshore oil fields, many small independent US oil producers as well as the US financial community that became the financial backers of the hugely expanded energy trade denominated in US dollars (thanks to Walter Wriston of CitiBank). All these actors stayed on the sidelines while OPEC was in formation and have gained huge benefit from the way the global economy was forced to change. Ordinary people, the consumers of energy, have experienced very much higher prices for everything while not getting anything like an equivalent higher wage for their work.
Industry in the 'West' started a massive change in the 1970s ... especially industries that were very energy intensive. All these industries need massive cost savings in order to remain profitable, and this coincided with the industrial modernization in a lot of countries where wage rates were very low compared to Europe and North America, especially in Asia. There was a massive outsourcing of production from high wage countries like the USA to low wage countries, together with a lot of essential technology.
The economic progress of Japan was impressive starting post WWII and a cause for some international concern as the future was expected to become a Japanese century, but it was modest compared to the economic progress of China starting from very little in the 1970s to a juggernaut fifty years later. While the population of the USA is around 370 million, the population of China is around 1.4 billion ... almost 4 times as big.
Getting back to the article and the 'Meaningful' or 'Meaningless' characteristic of work, it is apparent to me that this is more decorative than substantive in terms of impact on society and the enviro-socio-economic system as a whole. Certainly we should pay attention to the impact opon 'me' and 'my family' but as well there must be attention paid to the impact on society as a whole as well as the impact on the environment. What this article highlights for me is the need for a coherent and comprehensive set of management metrics that are as rigorous and reliable as the financial metrics of the company but about social impact and environmenal impact as well. The metrics should work from the perspective of the imdividual person, the family, the company, the community and indeed every possible perspecive at every possible level and manner of aggregation.
I find ESG a distraction more than anything else. E for Environment is OK and S for Society is OK but G for Governance is wrong and should be another E for Economic performance. Governance is not about performance but about structure and operational behavior while my E-S-E set are all metrics or measurement. Mostly when there is better environmental performance there is poorer economic eprformance and mush the same goes for social impact degrading profit performance. Investors are scared of changing the conversation about corporate performnance and the metrics because when environment and society take their place alongside economic performance they know that big valuation changes are going to happen.
These are critical times ... and management metrics need to be fit-for-purpose for this modern era.
Peter Burgess