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The myth of shareholder ownership

The reason the pay debate goes nowhere is that it is predicated on the most stubborn and damaging myth in business: that shareholders own companies.

Once and for all: they don’t. According to two law professors writing in that revolutionary organ, Harvard Business Review, ‘the law provides a surprisingly clear answer: Shareholders do not own the corporation, which is an autonomous legal person.’ Directors’ fiduciary duty is to the company, not shareholders. Shareholders own shares, which give them rights to residual cash flows and to vote on resolutions and board elections at the AGM. They have no ownership of the company’s assets, which are owned by the company. They don’t even have an unqualified right to dividends–the most valuable company in the world, Apple, rich enough to buy the eurozone, has never paid a dividend in its life. Shareholders, says Charles Handy, our most eminent business philosopher, no more own companies than a punter on the 2.30 at Tadcaster owns the nag he is betting on.

This is not just a semantic difference. Although you’d never guess it from the acres of writing on the subject, high pay isn’t an aberration of the system but its predictable outcome–the logical creation of governance arrangements that assume that shareholders are the boss and it is the manager’s job to do their bidding.

Where did the myth come from? For once it is possible to pinpoint the source with some accuracy. Flashback to the end of the 1970s, when a growing feeling that shareholders were being short-changed by corporate managers who had grown fat and lazy in the long post-war boom was crystallised by Michael Jensen and William Meckling in a paper that despite its less than pulse-quickening title, ‘Theory of the Firm: Managerial Behaviour, Agency Costs and Ownership Structure’, remains the most quoted ever in the economic literature.

The authors cast managerial underperformance as a ‘principal-agent problem’. In their construct, shareholders are the firm’s ‘principals’ who hire managers to run the company on their behalf. The ‘agency problem’ arises because if they can get away with it managers will (like everyone else) put their own interests first. In other words, the incentives are misaligned. Ergo, the argument runs, the way to get managers to do their job is to realign the incentives by giving them significant amounts of stock-based compensation, turning executives into shareholders too.

There is one glaring snag in the theory. In law, directors and managers aren’t employed by shareholders at all but by the company as ‘autonomous legal person’. But that doesn’t square with the new (and wholly ideological) assertion that the company’s sole purpose is to maximise shareholder value. That can only be the case if shareholders actually own the company. To sidestep this inconvenient fact, the authors simply dismiss the company’s autonomous status as ‘legal fiction’–a ‘simple falsehood’, points out Gordon Pearson in his careful study, The Road to Cooperation, on which is based the entire edifice of governance that has stood ever since.

Ironically, Jensen and Meckling’s pro-shareholder remedies were eagerly seized on managers who correctly spotted in them a bonanza-in-the-making that would make their previous pickings look like small change. The theory expected them to be greedy; they complied in full, demanding ever greater incentives for their alignment in a perfect example of the self-fulfilling prophecy.

The full accounting for the era of ‘shareholder primacy’ has yet to be done. But we do know that, as Roger Martin has shown, shareholders have paradoxically done less well since the 1980s than in the previous 30 years when managers were supposedly feathering their own nests. A little reflection shows why. Doing exactly what the incentives told them to, a new breed of imperial CEOs used every means in their considerable power to jack up the share price (and thus their own salaries) in the short term. They bought back their own shares, did deals and financially reengineered their companies. They also cut spending on research (so innovation stalled), slashed the workforce and dumped pensions. The sufferer was the company, the true principal, looted by an unholy alliance of insider-managers, both corporate and financial, who hijacked the spoils. The effect of the Jensen/Meckling model has been the exact reverse of what was intended.

Now we can see why halting the CEO pay up escalator is impossible without disposing of the ownership myth. Present-day governance based on it is a recipe for increasing CEO pay whatever their performance. Calls to cut or even abolish bonuses are irrelevant, since boards will simply transfer the ‘incentive’ to another kind of pay. It’s the legally erroneous and counterproductive incentive to maximise returns to shareholders that’s the issue, making CEO pay rises not just, in J K Galbraith’s words, ‘a warm personal gesture from the individual to himself’ but one that is justified by the official version of how the company functions.

Once the ownership issue is resolved, everything else falls into place. When it is recognised–and the 2006 Companies Act could hardly be clearer–that directors’ duty is not to shareholders but to ‘promote the success of the company for the benefit of its members as a whole, and in so doing have regard for… the long term’, then long-neglected issues of internal fairness and morality come bursting in from the cold, bringing an icy blast of reality with them. For example, Peter Drucker told Forbes magazine back in 1997 that top pay of more than 20 times the average hourly wage could only damage company morale. Few top executives, he added, ‘can even imagine the hatred, contempt, and even fury that has been created – not primarily among blue-collar workers who never had an exalted opinion of the “bosses” – but among their middle management and professional people.’

Since then that multiple has soared to 145 times, and much more in the US. That is the reason for the ‘hatred, contempt and fury’ that has spilled into the open these last few days and so surprised RBS’s Hampton and Hester. One excellent reason for putting employee representatives on remuneration committees is to make sure they won’t forget it again.

In a recent article the FT’s Martin Wolf observed that the chief failing of that ‘brilliant social invention’, the limited liability company, was that ‘it is not effectively owned. This makes it vulnerable to looting’. Exactly. He confessed that he was unable to come up with a remedy. But the answer is staring us in the face. Ownership is a red herring. Instead of trying to make it work, all we have to do is amend the governance codes to reflect the reality incorporated in the 2006 Companies Act rather than the myth generated by a 1976 article in the Journal of Financial Economics–the company is the principal, not shareholders.

Well, do something

On Thursday Ed Milliband wrote about capitalism in the FT, and Dave and Boris gave speeches about it. FT deputy editor Philip Stephens penned a thoughtful piece on the morphing of financial crisis into a global political one as politicians flunk the challenge of thorough-going financial reform; Lex noted laconically that over the last decade Goldman Sachs, that day announcing a 58 per cent fall in earnings, had paid employees twice what it had made in net profits (doubling their amounts in the process). Meanwhile, The Guardian’s Zoe Williams wrote about supermarket profits (and therefore top pay) being indirectly subsidised by state benefits to cashiers and shelf-stackers to supplement poverty wages. Murdoch paid out hundreds of thousands of £to settle 18 phone-hacking cases. And Kodak filed for protection from bankruptcy.

Just another day in the life of post-crunch capitalism. It’s all here: the out-of-control pay, the toxic imbrication of politics and business, the overweening overconfidence and fallibility of top bosses, the headlong march of globalisation – and the infuriating inability of politicians to see to the nub of the issue.

As the FT’s Stephens notes, all ‘the talk of “responsible” capitalism, of rebalancing economies and constraining the rewards of the super-rich, falls short of anything resembling a grand plan. The ambition is to make do and mend.’ None of the parties has a clue about the symbiotic relationship between markets and organisations, which means that they have little useful to say about the public and private sectors either. Ironically, Labour has been the worst custodian the public sector ever had, imposing on it the crudest kind of private-sector performance management, while Cameron’s claim that only Conservatives – ‘those who get the free market’ – are equipped to make capitalism fairer is just risible. As in domesticating the the feral rich by appointing a previous Murdoch editor as press secretary, Dave?

From robber barons to Tea Party, capitalists have always been capitalism’s worst enemy, which has relied on contrarians, humanists, trade unions and others to soften the most abrasive edges and prevent itself from auto-destructing. They are still getting it wrong. As John Kay acutely observed in the same week, we constantly overestimate the advantages, and longevity, of large companies, and the merits of scale and centralisation generally. The big question now is whether not just the banks but any number of other global industries have become just too big either to fail or to be reined in. Having increasingly turned ‘political decisions over to the highest bidding lobby [and allowed] big money to bypass regulatory control’ (Harvard’s Jeffrey Sachs, in another telling piece in the FT last week), does the polity retain the wit or will to act on these insights, firstly to prohibit any further industry concentration and second, preferably, to start breaking existing ones up?

Attempts to deal with the other manifestations of capitalism are equally namby-pamby. Yet the outlines of a new settlement are perfectly clear. Corporate governance needs wholesale reform. As Tony Hilton pointed out in a brutally logical piece in the Evening Standard, executive pay is now so complex that no one can understand or properly compare it. So amend governance codes to make flat rates of pay – no bonuses or side deals – a norm with which companies are obliged to comply or explain why not. Of course the workforce should be represented on remuneration committees. People who work for a company have far more at stake than most shareholders, who are no more ‘owners’ of, or even investors in, firms than racecourse punters are owners of the horses they bet on. The average holding time for a US equity is 22 seconds, according to SocGen; 70 per cent of UK equities are held abroad or by short-term traders. The secondary market provides no extra capital for companies. To expect the majority of shareholders to give a toss about executive pay a) is as pointless as pushing on string, and b) there’s no justification for it anyway.

The other necessary element of governance reform is equally evident. It is stated unequivocally in Roger Martin’s important ‘Fixing the Game’, which shows how an ideological fixation on shareholder value has, paradoxically, ‘reduced shareholder value, created misplaced and ill-advised incentives, generated inauthenticity in our executives, and introduced parasitic market players. The moral authority of business diminishes with each passing year, as customers, employees, and average citizens grow increasingly appalled by the behavior of business and the seeming greed of its leaders. At the same time, the period between market meltdowns is shrinking.’

As Martin points out, giving executives stock options is tantamount to encouraging sportsmen to punt big on the result of the game they’re playing in. The incentive to use any means to get a result (in the case lever the stock price upwards) is irresistible – that’s what CEOs are supposed to do. The only way to kick the habit is to destroy the expectations market by outlawing stock options and prohibiting earning guidance to the City and Wall Street. And, by the way, ban pension funds and public investment vehicles from investing in hedge funds whose fees aren’t adjustable downwards when they fail to deliver the promised rewards (lastest calculations are that over the last decade hedge funds consumed all the returns they created).

Break up the oligopolies (making barriers to entry, and therefore eventually profits, much lower); alter corporate governance to dethrone shareholders and prevent companies being looted by managers in cahoots with short-term traders (thus benefiting shareholders in the long run); ban CEOs betting on games whose outcomes they can easily manipulate. These are the minimum actions needed to bring capitalism back under control and return it to its proper role – servant, not master.

From accountability to responsibility

‘Accountability’. Tough and businesslike, the word features in almost every political or business speech these days. It’s the stuff of modern management, something that no organisation can do without, like goals and values. But, like synergy, it’s one of the mythical beasts of management – constantly evoked and assumed, but hard to pin down and even harder to identify in the flesh.

How can that be, when conventional performance management is built on the concept of making people accountable for what they do? Police, teachers, nurses and most ordinary workers in the private sector are subject to a whole bureaucracy of accountability, backed up at the centre by a superordinate regulatory regime, ensuring that they make their numbers or standards or show the reason why.

But accountability is a charade.

Yes, of course people subject to such a regime are obliged to account for what they do. But all too often, as Vanguard chairman John Seddon points out, they are accountable not to purpose or the customer, but to arbitrary and abstract targets set by the centre. This is accountability as managers in the Soviet Union would have understood it: ‘The accountability bureaucracy serves the hierarchy, not the work,’ writes Seddon. ‘While the bureaucracy is telling politicians that services are improving, in truth the only thing that is improving is the ability of the bureaucracy to produce the numbers politicians want to see.’

Far from being a virtue, this kind of mechanistic accountability is the reverse, encouraging people to obey the form while absolving them of responsibility for attending to the substance of work. It’s the ‘I was only obeying orders’ excuse disguised as management jargon. Yet the stealthy substitution of accountability for responsibility comes at a heavy price. The removal of responsibility is the route to the tick-box, by-the-numbers services that is now prevalent throughout the public sector: education as exam passes, medicine without care, policing as arrests and detections rather than peaceful communities.

Making people accountable is beside the point when they are being forced to do the wrong thing. In fact it’s worse than that. Upwards accountability of this kind prevents learning and stamps on innovation – sometimes actually prohibiting it, as in the daft but surprisingly common situation where improving service delivery involves flouting statutory regulations.

Meanwhile, by the time it reaches the top, accountability ceases to have any practical purchase at all.

Who, after all, is accountable for the shambles of the Rural Payments Agency, whose new IT system for implementing Europe’s Single Farm Payment has so far cost a staggering £850m, including temps to clear backlogs and EU fines, instead of the £32m originally estimated? Who’s accountable for the billions wasted on the national programme for IT in the NHS? Who’s accountable for the disastrously failed ‘reforms’ of HMRC and DWP, or the fact that emergency readmissions to hospital have gone up by three-quarters in the last year? Who will take the can for the disaster-in-waiting that is the Universal Credit, dependent on another giant top-down IT system, or for continuing to mandate shared-service projects when there is no evidence that they work? Who is accountable for putting in place systems that oblige staff to do the wrong thing by people they should be responsible to, making service worse and more expensive?

Just as bogus accountability removes responsibility for doing the right thing from where it should be – with those with those who deliver the service – it also dissolves relationships and replaces them with transactions. Responsibility to a customer or client necessarily requires a relationship. If there is no relationship, there is no knowledge either, so customers have to be fitted into standardised categories where they become transactions to be processed as accounting numbers.

‘What we’ve done in administration in the public sector over the last 15 to 20 years is turn public agencies into deliverers of transactionalised services,’ reflects Vanguard’s Richard Davis. ‘When we do that the issues that come to the fore are standardisation and efficiency, and the more we standardise the less we understand what matters to people and the more we miss the plot.

‘One of the things that’s beginning to interest us is a move from looking at services as commodities, as they’ve become, to relationships, which is what they used to be. In many services, certainly the police and health, a lot of things go wrong because we don’t know people and have no relationship with them. It sounds terribly expensive until you understand the harm that’s being done because we don’t understand, and the cost that’s being incurred as a result of doing the wrong things’.

The costs are both personal and systemic, as in the project examples above. Because the relationship with service users is fractured and impersonal, the system has no way of understanding what the real need is. So it provides services that don’t solve problems, creating knock-on failure demand as people come back again and again, and driving costs up.

Relationships are to responsibility what transactions are to accountability. It’s lunacy for ‘reform’ to proceed in lurches as one set of management ideas and prejudices enshrined in law turns out to be wrong and is then succeeded by a completely different one. We’re about to do the same thing yet again with Andrew Lansley’s NHS reorganisation. We need to return responsibility for improving services to those who deliver them, allowing them to experiment and innovate for users and clients, not the hierarchy – and, incidentally, releasing armies of specifiers, inspectors and regulators for more gainful employment.

Today’s accountability is junk management. Like other kinds of junk it belongs in the bin.

Avoiding the management tax

Here’s a thought to start 2012 with. Despite the universally positive assumptions, management is first of all a cost. In a chapter from his latest book, ‘What Matters Now’ (I shall be reviewing it for Management Today), Gary Hamel describes management as a ‘tax’ that in any large organisation will account for at least one-third of payroll. In addition, there’ll be thousands of senior people in staff roles in IT, finance and HR, all of whose mission is to keep the organisation from collapsing under its own weight. From memory, GE once calculated that admin and management ate up fully 40 per cent of revenues – a figure that in less ‘efficient’ companies will of course be very much higher.

Several thoughts stem from this. The first is that, ironically for a discipline that sets such (erroneous) store by it, traditional management does not benefit from economies of scale, if anything the reverse: the bigger the organisation, the more managers it needs to manage other managers. The one bit of scale it does get is a negative one. As Hamel notes, ‘The most powerful managers in most organisations are the ones furthest away from frontline realities. All too often, decisions made on an Olympian peak turn out to be unworkable on the ground… Give someone monarch-like authority, and sooner or later there will be a royal screw-up.’

Throw in the bureaucratic friction engendered by multilayered management (whence Peter Drucker’s lament that ‘So much of management consists of making it difficult for people to work’), and it is clear that management has an awful lot of work to do before it creates any net value at all. What does the management tax actually buy? Chiefly control and coordination. But like compliance, its mirror image on the employee side, control is an overrated and depreciating asset in conditions where discretionary effort and initiative are key, and coordination by the centre, as it is usually done, is both basic and expensive.

So what’s the answer?

One part of it is to distribute management differently.

Hamel has two examples. One is the extraordinary Morning Star, a US tomato processor, of all things, which has revenues of $700m and a full-time staff of 40, who manage themselves. That is, the company is not managerless but the reverse: everyone is a manager. No one can tell anyone else to do something; everyone has to do whatever needs to be done. Management is democratised. Similarly at the better known but equally remarkable WL Gore, where there are few formal titles except CEO – Terri Kelly, who was elected by the entire workforce – but the founding values are so fervently internalised that everyone is in effect a trustee; everyone holds everyone else to account for both performance and cleaving to the values. (It may be no coincidence, incidentally, that both Morning Star and Gore are private companies, able to pursue their unconventional path without worrying about quarterly income statements or the prying eyes of Wall Street.)

But we don’t have to go so far afield for lessons in management tax avoidance. Remember that ‘management’ in the abstract, without purpose, is meaningless – just cost. It only exists to get something done. If the information needed to coordinate and process the work can be carried in the work itself, and people are empowered to act on it, they no longer need management to tell them what to do. This is what happens in the best just-in-time manufacturing arrangements and the equivalent service designs, where measurement is closely connected to the purpose as defined by the end-user. In this case control comes free (because it’s in the work), so some of the manager’s previous role is redundant. And once the benevolent circle is launched more drops away: since workers are now doing an understandable, customer-related job that they are in control of, there is no need for anyone to manage morale or absenteeism or culture. In fact, in organisations that were particularly hierarchical in the past (the police, for example), working like this will often leave some central and functional managers twiddling their thumbs.

God knows, the public sector has no monopoly of poor management. But in the area of management excess it has no equal. It seems to have no concept of management as cost. When a university decrees that multi-page staff appraisals should be carried out twice a year (then anonymised so even if they were ever seen again they couldn’t possibly be used), it seems not to realise that it is subjecting itself to at least two levels of tax: the direct cost of employing HR people to draw up procedures and forms. and the opportunity cost of not doing stuff that would be much more useful. Some people (count me in) would argue that appraisal itself (‘a reminder of who owns you,’ as one cynic put it), taken for granted as it is, is another management exercise that can be gainfully dispensed with if the work is set up to provide instant feedback from the best source, the customer.

Now consider a classic example of this kind of management illiteracy from the mouth of the Prime Minister himself. In this week’s announcment of a new initiative to raise standards of care in the NHS, David Cameron proudly promised a new Care Quality Forum, a ‘patient-led inspection regime’, and hourly ward-rounds by nurses to check on patients in their beds. It’s hard to know where to begin with this. Leave aside that Cameron has no way of knowing if ward rounds are the answer to the specific problem – he may be right, but he also may not. More importantly, the grotesque oxymoron of care-less healthcare now prevalent in the UK is not an accident but the wholly predictable result of ministers’ own ‘targets and terror’ regime, which effectively ensures that nothing not targeted gets seen to. Targets are already an enormously costly bureaucratic burden; to compound it with an additional new regulatory body, with all the direct and indirect costs it entails, simply doubles the management tax level at a time when the NHS is supposed to be cutting costs.

Care is the very heart of nursing purpose, the value that should be self-enforced above all other. If the answer is more management, it’s the wrong question, full stop. In management less is more and more always less. To adapt Peter Drucker, ‘There is nothing so useless – and uselessly costly – as doing efficiently that which should not be done at all.’

Get happy

Imagine working in a company where you help choose the department head, and if you don’t like your manager you can choose a new one. Salaries and company finances are open-book. You are trusted to the point that the projects you work on are pre-approved so the solutions you come up with actually matter. You know you can alter the usual procedures if it’s better for customers – and you won’t get punished for an honest mistake.

Yeah, right – what planet do you think we live on?, might sneer anyone who’s done an MBA. Dream on, those on the receiving end would sigh wistfully.

Yet the funny thing is that companies set up in this New Age fashion conform much more closely to the hard evidence of ‘what works’ than conventional top-down, short-back-and-sides rivals. Companies that figure in ‘best places to work’ lists, using practices like the above, are consistently more profitable than ‘normal’ counterparts; getting employees more engaged is the single sure-fire thing any company can do to boost performance (see my piece on the extraordinary failure of people management here).

For a concrete example of how and why such practices work, look no further than training company Happy, which does all the things in the first paragraph, plus many more. Happy trains 20,000 people a year, and picks up awards for customer service, work life balance and being a great place to work with a regularity that must depress rivals. Generously, founder Henry Stewart (previously a journalist, and it shows) has written a provocative and welcome book about how it’s done, self-explanatorily entitled ‘The Happy Manifesto’.

Stewart’s book has a foreword by LBS’ Professor Julian Birkinshaw. The combo is particularly felicitous because Birkinshaw has himself published a fascinating research report on ‘employee-centred management’ – and the two complement each other perfectly, Birkinshaw’s paper setting out the research findings, Stewart illustrating them with practical examples.

They’re a great double act, and I’m sure they won’t mind my saying that reading them together is even better than reading them apart. Time after time, lightbulbs go off as the issues raised by Birkinshaw are faced, and faced down, by Happy. Here are three of the brightest, at least for me.

First, since the elements of helping people perform well are well established, muses Birkinshaw, why are most companies so bad at it? One reason is that the trusting, open management required is a minority sport – an ‘unnatural’ activity that goes against the grain of control and risk-aversion that managers at business school and their previous employer. Happy’s solution – ‘our most radical concept’ – is… to select managers who like and are good at managing. Wow. Let that sink in a minute. Many people are comfortable with left-brain management activities like strategy and decision-making, far fewer with supporting and coaching behaviour. So split the roles and hand people management to those who do it best. In addition, give people a say in who manages them. Poor management, points out Stewart, ‘undermines morale, creates stress, reduces productivity and causes companies to lose some of their best people. It is a massive problem, but there is a simple solution: let people choose their managers. If they don’t like the one they’ve got now, let them decide who they want instead.’ Done, problem solved.

Second, it’s a truism that front-line staff know more about what customers want (and are getting) than managers. But all too often companies block good customer service, and innovation generally, with rule books that force people to do things that they know are not in customers’ interests. (As Peter Drucker once lamented, ‘So much of management consists of making it difficult for people to work’.) Instead, Happy as far as possible eliminates rules. How? By making an incredibly important distinction: between rules and systems. ‘There is a crucial difference between the two. A rule has to be obeyed. In response to a rule you are expected to suspend your judgement. A system is the best way we have found so far to do something. But, if any member of staff can think of a better way in the situation they are in, they are encouraged and expected to adapt the system.’

In many organisations, the response to a mistake is to create a rule. Rules never get taken away, only added, so we end up with ever more and more dispiriting restrictions on the use of common sense, both at work and outside it. This dynamic explains why an author has to have a CRB check before he or she can give a reading at a school, or a neighbour can’t look after a child for a morning without registering as a child minder. Of course, you can’t just get rid of rules and throw people back entirely on their own resources. But the minute you start thinking in terms of systems you have terms of reference within which to exercise judgement, as well as guidelines for deciding whether rules are necessary (is the incident natural variation, or noise, in which case it’s pointless to make a rule; or is it a signal of a change or malfunction in the system that does require a reaction?).

Third, another reason why good people management is so rare is that in times of crisis like the present the default reaction is to is to pull control back to the centre, so that the manager is on top of everything. But this is often exactly the wrong thing to do, since it is people at the front end who are best positioned to respond to fast-changing circumstances. Happy’s answer, and more generally to pre-empt the automatic assumption that the manager knows best, is to institutionalise trust in the shape of pre-approval – making clear to a group or individual that they will have authority to implement their project or proposal, without prior management sign-off. As Stewart admits, this scares many mangers witless. ‘But think for a moment. What effect would this have on how seriously people took the task? We find it instantly removes any play-acting and politics. Suddenly it’s for real.’ Moreover, at implementation time they have an investment in making it work – and they can’t blame management interference if it doesn’t work.

Any of these practical insights is worth the price of the book on its own. But there are more on almost every page. Some of them have policy implications. For instance, whoever came up with the notion that making it easier to sack people would make them or the company more productive has only to turn to Stewart’s hierarchy of management needs on page 52 to understand why it is the stupidest idea in the world. Or page 106 to twig the real point of flexible working: ‘Flexible working is not what you approve of, but about the member of staff and what they need. It is not about you. It is about them’. The section on recruitment is particularly illuminating, or more accurately inspiring. Why do so many businesspeople complain that qualifications fail to prepare people for the world of work – yet continue to insist on the same irrelevant qualifications, Stewart asks. If more companies followed Happy’s practice of ‘recruiting for attitude, training for skills’, the UK unemployment figures would look much rosier – particularly among the angry and disaffected young.

In his foreword to the book, Birkinshaw notes that companies such as Happy are ‘more important for the economy than the immediate value they create for their customers and employees’. Their significance as alternative role models to the dreary (and ineffective) norm is immense. It can’t be emphasized enough that the management philosophy represented by Happy is not some fluffy attempt at do-gooding, but the reverse. It’s the rest of the world that’s out of line. Notes Stewart: ‘It would be nice to say that we do this out of a belief in democracy in the workplace, but this isn’t the real reason. We do it because it is more effective.’ Why not both? He rightly calls his book a manifesto, a call to arms. I hope he’s sent it to Dave and Ed.