Safety culture may hold a key to making post-industrial capitalism work.
The wreckage of industrial capitalism lies all around us. The most successful (in dollar terms) part of our economy is finance, which increasingly consists of betting on short-term price movements rather than investing in the long-term growth of companies. “Capital investment” too often consists of buying other companies, not longer term infrastructure building. “Vulture capitalists” bleed and discard successful companies, leaving the employees whose skills created company value with nothing.
As the U.S. labor force is gradually whittled down, with layoff after layoff, so is the collective buying power of the U.S. consumer. The fault lines between skilled and unskilled labor, between those who earn their income from labor and those who earn their income from money, between those who believe they can move up in social standing and those increasingly convinced they can’t, are widening dangerously.
Too much discussion of “the economy” tends to proceed as though it were divisible from society at large. Of course it isn’t – neither is the form of government we choose.
Both economy and government are ways we as a people choose to organize ourselves so we can earn livings and nurture the coming generation. When those forms fail to accomplish or even support one or both of those goals, societies change them.
But to what? An efficient economy should make the best use of every input – and that includes its citizens. An economy – such as we’re experiencing now – that can’t find a way to utilize a growing segment of the population, especially the younger segment, has no future. A business culture that sees human beings as fundamentally unprofitable and disposable can’t make society prosperous.
American business over recent decades has prided itself on cutting costs by cutting labor. It tends to view people as a drag on the bottom line – an expense to be minimized wherever possible – except in the executive suite, of course.
That myopic view misses valuing workers as company assets – a mistake made far less often by high-tech companies which know they depend on employees’ cutting edge skills to innovate and thrive.
The same dependence exists in high-tech companies whose profitability depends on painstaking control of low-probability risks with enormous consequences – the airplane that crashes, the nuclear plant that melts down.
This is where safety culture comes in. Safety culture is anathema to the hierarchical management paradigm developed in the industrial revolution. Safety culture requires each person to be an educated and thinking member of the workplace team, sharing responsibility for identifying risks and devising better ways of doing things.
Management’s job is to maximize constructive team input, not minimize it. “Shut up and go back to work” is an internally contradictory statement.
The word “culture” is the vital point – this is an all-encompassing mind-set, and for industries facing high-tech risks, it’s required of everyone in the workplace, CEO to clean-up crew. It isn’t locked in a desk at the end of the workday. It certainly does not mean never taking risks. It does mean continually evolving awareness of the risks being taken.
And it’s definitely not the classic cliché of labor and capital battling over industrial wealth in a zero-sum game. Safety culture inherently recognizes that neither will thrive, long term, without recognizing and valuing each other.
Now, industries most likely to recognize the value of their human capital are those which must invest extensively in training and education. Nuclear power is one example in which employees’ deep knowledge of a power plant and its technology can make multi-million – or in a crisis, multi-billion – dollar differences to an operator’s bottom line.
But consistently valuing employees as assets is a long-term management practice at odds with short-term profit demands. Even in industries where the value of skilled workers is well understood, pressure from the financial side to plump up that bottom line can be irresistible. Experienced people with knowledge and skills are invited to retire, or laid off, for short-term profits – and sometimes, quickly brought back as consultants.
When replacing an employee means losing tens or hundreds of thousands of dollars in investment, the business benefit of having that employee stay and work productively should be obvious. But too often businesses neglect to internalize those costs, and end up making decisions destructive to both human beings and the bottom line.
If market capitalism is to propel the U.S. economy in the 21st century, it has to benefit more than a tiny slice of the super-rich. A stable social system doesn’t have to benefit everyone equally, but it does have to allow enough people to gain enough benefits that the dispossessed don’t form a large enough minority to destabilize it.
The last 30 years of income trends are pointing us dangerously in the opposite direction – a very few super-rich, a very large number losing ground.
Adding people to the asset base of companies – instead of the loss column – is a first step toward making capitalism and its free markets a living path to the future instead of a failed relic of the past.
The energy sector, where investments have to be made for decades into the future and high technology frames huge new opportunities and risks, can lead in showing how to value human assets, and why it makes eminent business sense to do so.
Will the energy sector step up to the plate?