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announcements

Data privacy: are human rights for sale?

How do you balance privacy and transparency? When they conflict, which should win?

See my post here on C&E Advisory’s website.

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commentary

How much is a human being worth?

Over recent months the government has declared that employees (including bosses) should be neither over-paid nor under-paid. That’s fine – but how do you judge what is too much or too little?

It turns out that at the top, the level of pay for CEOs currently bears no relationship to performance, as measured by return on capital invested. Yet pay at the top is typically set by a dedicated remuneration committee. The problem is that the members of the committee are part of the magic circle of top employees themselves – so of course they behave ethically and treat others just as they would like to be treated. The result is that top pay escalates without apparent limit.

For those companies that obey the law, at the bottom of the employee payscale there is the minimum or ‘living’ wage which will in practice define the pay of the lowest paid. (Actually there is a big space below that characterised by under-employment and zero hours contracts, but that is perhaps another story.) As far as employees go, there is a proposal for companies to publish the ratio of the pay of their highest paid individual to the average wage. Why the average? Because the average is higher than the lowest wage, which will usually be the minimum wage, and so yields a more comfortable ratio.

On the technical side, companies should simply be transparent about the ratio of the highest to the lowest paid. A number of organisations in the charitable sector already declare that. And companies should also publish the ratio of the rate of increase of the CEO to that of the rate of increase of the company’s return on capital – as well as their highest to lowest pay ratios.

But perhaps more importantly in relation to governance, not only should remuneration committees include employee members as has been suggested, but their remit should be extended to consider the pay of all employees. That would go some way to bring the full spectrum of employees face to face with the full spectrum of pay rates. Maybe that will increase the appetite for fairness.

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commentary

The press cannot regulate itself

The main mass circulation UK newspapers have set up IPSO to regulate themselves. Everyone else wants something independent of the newspapers to regulate the industry. The main alternative proposal is Impress, supported by Max Mosley and the Rowntree Trust.

The newspapers say that if anyone else controls them it could mean the end of press freedom – something crucial to a functioning democracy.

But they should not pretend that they can regulate themselves. The conflict of interest is obvious and fatal. It is to the credit of the Financial Times, Independent and Guardian that they will not join IPSO. However the Financial times and Guardian are trying to regulate themselves directly through a private complaints system. That doesn’t really help.

If the press want any kind of public respect, the onus is on them either to join Impress – or come up with something better.

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commentary

Where does everything come from?

And for that matter, where does everything go?

We live in a world with global supply chains and apparently bottomless consumption. The demands of the market are that companies get stuff and sell it – but they do not often remember where it came from and perhaps don’t much care where it goes. So to deliver accountability – and even transparency about what has happened in this global world – traceability is essential. This is a complex and difficult thing to do and to ask of companies. While some companies, such as airline manufacturers, do traceability naturally, others, such as the automobile industry, may have it thrust upon them.

Here is a short concept note on the need for a general traceability standard.

So that we can answer the question, where does everything come from?

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announcements

Quantitative Pleasing – how many is too much

The ICAEW have published my report on the perils of quantification and what can be done about it. Using the examples social and natural capital, it sets out guidelines for when and how quantification should be attempted – and what to do when it should not be done.

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commentary

The advantages of second sight

We all love a good Post Office,  I’m sure – but what happens when the Post Office goes bad?

A few days ago we learned that the continuing rumbles about the training for and the functioning of the Post Office’s key operational Horizon computer system, introduced in 2000, did have some foundation. Or at least I think so, but the Post Office will not release the report that it commissioned Second Sight to produce on the issue. That report apparently found failings with the Post Office and its handling of the affair. However while their report remains confidential, they are said to have issued a press release rebutting its findings. But at the time of writing at least one Post Office computer system did indeed seem to have failed: their website for press releases.

The issue is not mentioned on their social responsibility website. And there seems to be no mention of a whistleblower function there either. This all leaves those aggrieved by the affair in the cold. And overall it represents very poor social responsibility.

The Post Office seems to be painting itself into an ever-tighter corner from which there will be no escape without a little humility and a good dose of transparency. Failing that, having had a first look into the future, I predict there will be legal battles over cover-ups in years to come.

 

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commentary

The limits to transparency

Is the end (of the internet) nigh?

The recent EU Court ruling that Google must remove harmful material from its search results is very sensible. This was based on finding Google responsible for its search results and that they were harmful to an individual. But the reaction to the judgement has been somewhat hysterical: will we ever be able to trust the internet again? Will anyone who wants to hide their past be able to deceive the rest of us? And so on.

The answers to these questions are ‘yes’ and ‘no’ – yes, we will be able to trust the internet. After all in how many cases will this sort of ruling apply? And we will also be able to trust the internet to do less harm. And no, this won’t apply to anyone at all, but only where a greater harm is caused by unfettered access to information than by its concealment.

So the principle that transparency should be the default assumption, unless it causes more harm than good still stands (as I argued some time ago in Corporate Truth).

The interesting questions are about how it will be done, if it is needed on any scale. First of all there is the question of the process for deciding the balance of harms. At the moment that process is the court system, which is likely to slow things down to altogether imperceptible. But no doubt internet companies and Information Commissioners will come up with something a little more streamlined – eventually.

Then there are the technical issues. If you are trying to monitor the data collected about a person, how can you find all of it? You can’t just type their name in the search box, as anyone who shares their name with anyone else on earth will have found. So the ruling is likely to stimulate some serious innovation in how the internet works – maybe we will have an internet of people before we have an internet of things.

So in the end the response to the ruling will benefit all of us, not just those with something that should be concealed.

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commentary

How transparent is it possible to be?

Vodafone is trying to put pressure on the government to allow it to disclose requests for wiretaps. Vodafone aims to follow in the footsteps of Google which has been issuing ‘transparency reports’ for a few years.

As the Guardian reports, UK regulations make even the disclosure of the existence of warrants an offence. The current Regulation of Investigatory Powers Act has cover-up built-in. Neither those requesting a warrant nor those subject to them (like Vodafone) are permitted to disclose even the existence of a request, let alone its contents.

Vodafone is to be commended for taking this stance. It is nice to hear about lobbying for the good. Their intention, apparently, is to include an analysis of information requests in their sustainability report. Crucially this would include disclosing whatever they legally can, and saying what it is that they cannot say. I would recommend going ahead with that: if the UK section turns out to say ‘nothing can be disclosed about government requests for information in the UK’ then we will at least know where the problem is…

However it is odd that there is currently no mention of this new approach on Vodafone’s website. Why is there no official announcement from Vodafone? Perhaps old habits die hard.

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commentary

How well do you know your government?

The role of the public sector is changing.  Activities that were once deemed to be a natural part of the function of the state, are now being carried out by the private sector.  Whether in health, education, transport or security, large parts of the job of the delivery of services paid for by the state are being delivered by private companies.

This matters from a transparency perspective because when an activity is conducted by the public sector, it is subject to freedom of information provisions and it is at least possible to find out what is going on.  But commercial confidentiality trumps transparency for both the private company and also from its state counterparty.  In the UK even direct requests by Members of Parliament for the costs of government contracts, for example, are typically refused on the grounds of commercial confidentiality.

How much does this matter? Take Serco, which employs more than 100,000 people worldwide. According to its website, they:

  • have a forward order book that stands at £19.1bn
  • operate traffic management systems covering more than 17,500kms of roads worldwide
  • manage 192,000 square miles of airspace in five countries
  • employ 5000 scientists
  • manage education authorities on behalf of local governments
  • provide defence support services worldwide
  • transport more than 275,000 passengers everyday on our driverless trains on London’s Docklands Light Railway.
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commentary

The Social Stock Exchange: making an impact by creating value?

The idea of increasing the flow of funds to social enterprises is a great idea. But how do we know that they really are social enterprises? Would Unilever count? What about Green & Black’s? See my Guardian blog here, which discusses some of the problems of knowing what to measure.