‘Beyond the corporation – Humanity Working’ (Bodley Head 2011) by David Erdal is written so lucidly and with such passionate argument that it should leave you in a state of euphoria if you share his ideals. This will not be your typical short-lived, feelgood-factor though; it offers a deep-rooted yet heightened sense of awareness and it does not wear off.
I saw David Erdal in the flesh delivering a talk on ‘Employee Owned Organisations’ and he comes across as a very quietly spoken presenter of ideas of great and universal import. He appears humble and calm but underneath you sense a magma chamber of indignation that occasionally erupts in the book. Everything he says is well-conceived and pre-tested for any potential flaws, both theoretical and practical, all of which adds gravitas and power to his argument. He is the perfect counterpoint to ‘greedy bankers’ and ‘fat cat’ CEO’s. He is the epitome of that very rare and elusive beast – authentic leadership. This could, of course, be just an illusion but that is unlikely because Erdal provides a superb exposition of the real power of evidence-based thinking. If you thought you knew how to get the best out of your people you are going to have to think again. Compared to the case studies covered in Erdal’s book you have not even begun to scratch the surface of what it means to unleash the full force of human potential.
Erdal’s basic thesis is extremely simple and passes the first, common sense test with ease – employee owned organisations will perform better than equivalent companies driven purely by shareholder and senior executives’ interests. Erdal does not leave it at that though, unlike the vast majority of books on ‘people management’ he supports every step of his well-argued case with very convincing evidence. Along the way he dismantles much of conventional economic theory and management practice. At the same time he manages to coat every page with a warm layer of humanity – a very rare skill indeed. So this book will worry many vested interests – private equity asset strippers; investment bankers; anyone who makes large fees from M&A; CEO’s who pay lip service to the notion of managing human capital effectively and their HR directors who think their current practices get anywhere near to producing the best value from human capital.
But Erdal is not just a great thinker and writer, he has actually done it himself as Chairman of his previously family-owned business Tullis Russell, which he ‘handed over’ to his employees. He has actually experienced what it feels like to transform the way people think about their work and how to build trust in the most trying of circumstances, whilst never shying away from the really tough business decisions.
Erdal does have several bêtes noires and chief amongst these is the theory, ideology and doctrine of ‘capital market discipline’ which can rightly be blamed for much of the financial collapse of 2008. Only then does his ire slip into the occasional, fully understandable, but still relatively gentle rant. In Chapter 8 he analyses the causes of obscene and unjustifiable CEO salary rises over the last decade and sees much of capitalism’s present malaise rooted in that classic management debate – power – where it resides, its uses and abuses. This is at the heart of the thesis – power should reside with the collective, employee ownership of the enterprise with ‘ownership’ the core concept – more powerful than its close relative, cooperativism.
“..if employees are not owners – not even indirectly through trusts – then you cannot achieve the ownership effect by tricking them into feeling as if they are. There is good evidence that ownership itself is a vital part of the equation – ownership may be indirect, but it must be real.” (p.207)
Apart from the self-evident veracity of what Erdal has to say ‘Beyond the Corporation’ is also just a darned good read (and in pure readability terms his book ‘Local Heroes’ is even better). If you still feel compelled to skim you might miss the heart-rending anecdotes in Chapter 7 when even I felt a lump in my throat. In the hands of a lesser writer these would seem slightly tacky or mawkish but Erdal knows just how to tap into the power of their understated intensity without over-doing it.
Alternatively, Chapter 9 on the employment contract does cover ground already well known by students of labour history and employment rights, but then this is just a precursor to the ground-breaking theory in Chapter 10 – ‘Thinking it through’. This is the only occasion when I felt that the argument was less convincing when set against the context of the world we currently inhabit. However, as Erdal takes a very long-term, visionary view of what is possible it is entirely in-keeping and coherent with his philosophy.
This is a book about leadership, decision making and participation. It presents a very sophisticated paradigm for the most mature form of organisational management. Employee owned organisations already exist in significant numbers and Erdal’s book will help to push the world further in this direction but, at the end of the day, you either ‘get it’ or you don’t. If you get it you will never see the world in the same way again, especially if you have any concern for humanity and want to bring that concern to bear in your evidence-based, people management practice.
‘Beyond the corporation’ will not have the CEO’s of very large, global organisations quaking in their boots, just yet, and moving to employee ownership is not an easy ride when re-education is needed to make old, hardened attitudes soften and change. Any CEO or HR director should be struck though by one very disconcerting revelation – there is conclusive evidence here that employee commitment and productivity, in employee owned organisations, are bound to exceed any attempt at employee engagement and talent management that ‘progressive’ HR management fads, fashions and fixations might hope to achieve in more conventionally owned and managed enterprises. In fact, all HR Directors that have enrobed themselves in these gimmicks are suddenly going to find that their nakedness is now in full view – employee ownership and participation has offered an entirely new benchmark. David Erdal describes this movement as a ‘quiet revolution’ – it might be quiet but it’s definitely a revolution.