Accelerating globalisation and the widespread use of information technology have forced companies to adapt their management practices accordingly.
Joël de Rosnay predicted this development In his book, "Cybernetic Man", in which he portrayed a future civilisation compelled to adapt itself to the spider's web (i.e. the Internet) by breaking down the hierarchical pyramid structure in order to adopt a "neuronal" structure akin to that of the human brain, which thinks by "association", adopts particular functions for particular tasks and abandons those functions when the task is done. This was the prevailing organisational model prior to the industrial revolution, when landowners had no salaried employees and paid their workers by the job.
Nowadays, many of our companies are resorting to temporary labour for specific tasks, taking advantage of universal and cheap internet access to outsource those tasks. This trend is rendering obsolete a huge body of employment legislation on the basis of which our companies have, over the last century, built up a universally recognised set of guidelines.
This has created a dichotomy between companies that strictly apply European employment legislation and those who resort, marginally or on a massive scale, to task-oriented employees based in other countries and jurisdictions with different laws, thus distorting the competition.
As a shareholder, we have a crucial role to play, as these employment practices increase short-term profits but can be detrimental to a company's reputation.
After the Bangladesh disaster, shareholders joined forces to lobby US and European companies with regard to the practices employed by their subcontractors. Several major groups responded positively and have (at last!) adhered to the "Fire and Building Safety" agreement in order to implement practical measures to reinforce the safety of buildings in which millions of labourers work for textile companies that market their products in developed countries.
This shows how we as shareholders have a duty to act in order to induce companies to improve their global employment practices. It also shows that concerted action on the part of shareholders can yield positive results.
It's a pity that it took an event such as Bangladesh to spur shareholders into action… but this is what PhiTrust have been doing for years. So why not join us and help us make the world a better place?
Olivier de Guerre
Chairman of PhiTrust Active Investors