The one about Tesco
As has been widely reported [*1], Tesco was done last week for contravening the UK “groceries code”. Widespread evidence of “payments delayed to disguise missed targets, and suppliers left waiting for million-pound payments for up to two years. Sometimes there were arbitrary or unfair deductions from payments too.” [*2]
Whilst there are some interesting areas to be explored—
1 How tough is this “groceries code”? Notwithstanding the misdemeanours reported, has Tesco still, in fact, got off lightly (after the fashion of Google which has got off extremely likely regarding its tax payments)?
2 How many other high street retailers do the same? It seems inconceivable that, even though Tesco might be the most egregious player, all the others don’t commit these malpractices in one way or another, from time to time, as well.
[“Only last summer, nearly a third of the suppliers of the biggest supermarkets [*3] reported that the big chains rarely if ever observed the terms of the groceries code that was introduced in 2010.” [*2]]
—putting these aside, I want to talk about two other issues.
The psychopathic corporation
As discussed elsewhere on this site, Joel Bakan, in his book, The corporation, asserts that corporations are mostly psychopathic in that they, legally, “can neither recognize nor act upon moral reasons to refrain from harming others.”
The corporation is
deliberately programmed, indeed legally compelled, to externalize costs without regard for the harm it may cause to people, communities, and the natural environment. Every cost it can unload onto someone else is a benefit to itself, a direct route to profit. [pp 72-73]
This is, of course exactly what Tesco was up to. As Bakan shows, it is the duty of management to make money and any compromise is a dereliction of that duty.
And, of course, for the psychopathic corporation the benefits of breaking the law far outweigh the trivial costs of punishment (if it ever gets as far as prosecution).
And, whilst Bakan does distinguish between the often decent people who work for corporations and the structure and imperatives that direct their actions, you can’t guarantee it. One junior employee at Tesco’s Cirencester branch claimed that it was alright for the company to behave in the ways for which it has been criticised on the grounds that other businesses do it. When I suggested that it followed from this point of view that men who sexually abuse small children can be exonerated on the basis that other men have done the same thing before them, she chose to become offended, but not apparently by her own moral vacuity.
Tesco CEO Dave Lewis said he was “sorry” for past mistakes as he announced that the retail giant will improve its payment terms to agency suppliers from 45 to 14 days.
We are recovering from big, bad decisions,” he said…
Acknowledging well-publicised “mistakes” that led to the accounting scandal, he revealed he wanted to build stronger, longer term relationships with suppliers and move away from historic “short term marginal cost negotiations that perhaps [sic] characterised the past”. …
“I want to make an apology for the way we behaved in the past,” he said, stressing the team at the helm of the behemoth were not involved in historical blunders. …
He had also focused on service at the shop floor, asking colleagues to do something each day to improve customers’ experience of Tesco and help “rebuild the brand”.
“We will do the right thing for the customer every day that I sit in this job,” he said. … [*4]
Note the “perhaps”: some residual denial and lack of transparency here, surely. Note also that a statement of wanting to make an apology is not, in itself, an apology. An apology goes, “I apologise for the way we have behaved in the past”.
“Lewis made many references to the need for Tesco to put its customers back at the heart of the business” [*4]. Why all the attention towards customers? It wasn’t the customers they were screwing. Well, it probably is that, too, but that’s for another day.
Lewis said the company’s own internal review had identified 69 cases that could face a potential challenge under the code. Those 69 cases are the unintended consequences of making some poor choices against the wrong metric given the circumstances.
Tesco now needed to draw a line under its past mistakes and move on by doing things better, he added. [*5]
This is pure fantasy. To suggest that the 69 cases—whatever they are—are solely or at all “unintended consequences” beggars belief. That no manager was aware of the real reason for doing what they did either points to complete ignorance throughout the organisation or to a culture of cover up and deceit.
Try this internal Tesco email, detailing methods for buyers to meet financial targets: ‘Not paying back money owed.’ [*6]
“Poor choices”, and “wrong metric”. Calling a can of beans a banana doesn’t make it one. The choices were immoral, dishonest and, if not illegal, certainly contrary to the “code of practice” the corporation claimed it had signed up to. Not “poor”. At least Lewis has inadvertently, presumably, admitted that these were choices and his staff could have chosen to do something different, but didn’t.
Note, in a separate development,
Tesco could face a £500m fine for the accounting scandal at the retailer, analysts have warned.
The Serious Fraud Office may announce the findings of its investigation into the £326m black hole in the company’s accounts as early as this week, according to Mike Dennis, an analyst at Cantor Fitzgerald.
Tesco suspended four executives after the chief executive, Dave Lewis, revealed in September 2014 that a shortfall had been found in the retailer’s accounts relating to payments from suppliers. …
Dennis said the SFO could fine Tesco more than £350m and force it to repay hundreds of millions of pounds to suppliers that it claimed in what has been called “arbitrary unjustified cash payments”.
He said the scope of the alleged fraud at Tesco might be far greater than has been revealed so far. … [*7]
All this rather casts a rather gloomy light on the other factor I want to discuss
Why dealing with people’s behaviour won’t work
Tesco now needed to… move on by doing things better, he [Lewis] added. [*5]
Nope, that won’t work.
If you want someone to change their behaviour—for example, to “do things better”—focussing on their behaviour is the least productive approach to take.
If it works at all, it will take considerable more time and resources than other routes which I suggest below. Usually, it won’t work, because those seeking the change are ill equipped to inculcate it in others and, as Machiavelli observed in The prince,
It ought to be remembered that there is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new. [chapter 6]
In the Tesco code of business conduct, 2015, [*8], Mr Lewis wrote:
Over the last year, it has become clearer than ever that we need to change the way we work with our suppliers [p3]
So, prior to “the last year” it was also clear, but they did nothing? (OK, this period was before Lewis’s assumption of the role of CEO, but even so…) Under the heading, Doing the right thing, Dave Lewis wrote:
Our Code of Business Conduct is designed to help and protect us as we go about our work for Tesco…
I would have thought a code of conduct should be designed, in the first place, to “help and protect” the customers, suppliers, and other stake holders in the communities in which Tesco operates. Only then, when these groups are protected, should it turn its attention to staff.
it is important that each of us understands the rules that we must follow and the conduct that is expected of us in order to do a great job [sic] for customers and help Tesco to play a valuable role [sic] in society. The Code describes our most important legal obligations and the policies that must guide our conduct,
so, clearly, “us” means Lewis and his staff. He continued,
Wherever we work and whatever our role, the Code is there to help keep us safe and protect the reputation of our business… .
Again, this is wholly self-serving. It is, indeed the opposite of service, which puts the needs of customers, suppliers and the rest of us ahead of the need of the supplying individual or organisation.
If that is Lewis’s attitude, and the attitude he expects his management to inculcate into the rest of the staff, they are starting from a very difficult position—if their intention is to “do things better” in any way that is of value to anyone other than Tesco. But, maybe, that is indeed what Lewis means by “doing things better”. Doing things better for Tesco.
But let’s give the benefit of the doubt. Why is trying to change people’s behaviour unnecessarily difficult? Simply because each action, each behaviour of a person is driven by their feelings and emotions and by their thoughts and beliefs.
If Lewis, or anyone else, wants someone else to change their behaviour, they have to work with that person on their feelings and emotions and on their thoughts and beliefs. This is the behaviour cycle. The complex interaction of all these things (feelings and emotions, and thoughts and beliefs) might be called “attitude” so, this boils down to:
Lewis needs to help his colleagues to change their attitude. To change from an attitude that their past behaviour is acceptable to one which recognises it isn’t. If they change their attitude, they will see the possibility of behaving differently.
Clearly, if someone doesn’t change their attitude that certain behaviours are acceptable, they will revert to those behaviours more or less quickly. Noone can do anything else: it isn’t possible consistently to operate against one’s beliefs and feelings for a prolonged period of time (whether the beliefs and feelings are malign or benign is irrelevant).
One of the flaws in the thinking of those who run corporations is the failure to understand the distinction between purpose and outcomes. Thus Lewis would like us to believe that all the handwringing about putting the customer first indicates the turning over of a new leaf—putting the customer first would be the new purpose of his business.
In fact, on Tesco’s past form, there is no reason not to believe he is only making putting the customer first an outcome of carrying on the same old same old: carrying on “the same old same old” being actions design to achieve the same old purpose (maximising return for shareholders).
In other words, it is only an appearance of putting the customer first, and will only be carried out to the extent that it doesn’t conflict with the real purpose. And Lewis and his managers can do no other all the time they have a primitive view of how best to maximise profits for shareholders.
Where’s the evidence that Mr Lewis has a different attitude to his predecessors? (I agree that it’s helpful that he was recruited to his current job from Unilever rather than having marinated in the usual Tesco custom and practice for a quarter century.)
Bakan asserts that corporations can and sometimes do act in the public interest, but only when that coincides with their interests or because they feel the public relations value of acting in the public interest is greater than the cost of not doing so.
A psychopathic corporation obviously needs a number of people in positions of influence with a psychopathic turn of mind.
Clearly, if a particular organisation has no such people within it, it would find it extremely hard to behave in the ways described by Joel Bakan, as they would be anathema to everyone from top to bottom. As I said above, it isn’t possible consistently to operate against one’s beliefs and feelings for a prolonged period of time.
If I were Mr Lewis and wanted to show my grasp of the situation, and therefore of the approach needed to sort it out, I’d start with my immediate reports and see who else needs suspending. I’d then read Bakan’s book and wonder how I was going to depart from the orthodoxy and still keep my job.
Men seldom if ever rise to great place from small beginnings without using fraud or force, unless, indeed, they be given, or take by inheritance, the place to which some other has already come. Force, however, will never suffice by itself to effect this end, while fraud often will… (Machiavelli, The discourses, II 13)
[*1] Tesco delayed payments to suppliers to boost profits, watchdog finds (Sarah Butler, news item, the Guardian, 26 January 2016)
[*2] The Guardian view on Tesco: every little (bit of scrutiny) helps (editorial, the Guardian, 26 January 2016)
[*3] Tesco suppliers say retailer worst at following grocery code of practice (Sarah Butler, news item, the Guardian, 22 June 2015)
[*4] Tesco boss Dave Lewis: We’re sorry for our mistakes… (Sara Spary, news item, Marketing magazine, 6 October 2015)
[*5] Dave Lewis apology for Tesco ‘bad choices’ (news item, Talking retail, 6 October 2015)
[*6] Warning signs were there for Tesco—what on earth was it doing? (Nils Pratley, opinion piece, the Guardian, 26 January 2016). A somewhat naive question, I would have thought.
[*7] Tesco could be fined £500m over accounting scandal, say analysts (Graham Ruddick, news item, the Guardian, 25 January 2016)
[*8] Tesco code of business conduct, p3
> The ‘psychopathic corporation’
> The behaviour cycle
> Purpose and outcomes
> The corporation: the pathological pursuit of profit and power (Joel Bakan, Constable, new edition 2005)
> The prince (Niccolò Machiavelli, c 1513, translated by WK Marriott)
© 2016 Jeremy Marchant . updated 10 february 2016 . image: Free images
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