The Postal Strike and the Horsemen of the Economic Apocalypse

The twenty-four hour postal strike in the UK is the type of ‘little local difficulty’ large enough to require an immediate response from a new political leader. Even with his formidable energy, Gordon Brown could do without confronting an industrial dispute so soon into his leadership. There are echoes of the Airbus conflicts that captured the attention of Nicholas Sarcozy in the first week of his Presidency.

Why strike? Why now?

The strike, which began at 3 am on Friday June 29th 2007, involved some 130,000 members of the Communication Workers Union who have issued the following statement

The CWU’s Negotiating Team met with the Royal Mail’s Chief Executive Adam Crozier, and his Senior Management Team yesterday. The CWU reiterated to Royal Mail that it was prepared to reach an agreement that would move forward both the Union and Royal Mail’s position … The CWU impressed upon the company that there was no possibility of Royal Mail management successfully transforming the business unless both parties could reach an agreement that galvanises the workforce too. During the course of the meeting the Union set out its position and expressed its genuine concern about Royal Mail’s business plan and how it would result in a spiral of decline for the company, and the workforce … The CWU reminded Royal Mail that the Union was not alone in severely criticising Royal Mail’s business plan. A recent all-party Select Committee criticised Royal Mail’s leadership for lacking vision.

Chief Executive Adam Crozier, responded by rehashing all of his previous statements and refused to enter into meaningful negotiations with the Union.

The strike on Friday 29th June 2007, will go ahead.

Technology and jobs

The old debate about technology and jobs continues. Innovation accompanies creative destruction, like Horsemen of the Economic Apocalypse. Maybe ultimately the job losses are compensated elsewhere. Which is no consolation to threatened workers. The perceived grievances of Royal Mail workers are easy to identify. As with Airbus, competitive pressures have triggered plans to reduce costs which threaten jobs.

The Royal Mail leadership team

Royal Mail has a high profile leadership team within the UK business world. Chairman Allan Leighton has been persistently linked with stories of his intention to head a lucrative buy-out initiative. In an earlier post I noted:

Allan Leighton has an appetite for self-publicity, as inspection of the Royal Mail website reveals. He presents himself as a dynamic (and somewhat terrifying) leader. In public he attempts to soften the image by implying he is very much one of a team, operating closely with CEO Adam Crozier.

Their styles remind me of an earlier high-profile double act, Lord King and Colin Marshall at British Airways. The pugnacious King had also been confronted with an ailing BA facing vigorous competition. Like Leighton, King presided over job cuts on a similar scale, and had serious internal morale issues and Union conflicts. Colin Marshall, like Adam Crozier, had a more urbane style.

Since his arrival, the Royal Mail has cut 30,000 jobs, shut thousands of post offices, and moved away from record annual losses that had reached £1bn. The various changes have been forced through against considerable opposition internally and externally.

The changes have not resolved the fundamental problems of the corporation which remains in dire financial circumstances. It recently announced that the gap in its pension funds would be tackled by ending the corporation’s final wage pension scheme, another unwelcome move and one described as unilateral bullying by its Union leaders.

Amazon and The Economist on-line

In preparing this post, I held off from ordering a book from that well-known e-business Amazon. It could wait. Co-incidentally, Amazon could not wait for a better deal from The Royal Mail, and has recently switched a lucrative contract away. If the management’s resolve needed stiffening, that would have done the trick.

Yesterday, those nice people from The Economist sent me an email. It apologized for any inconvenience caused by today’s postal strike, pointing out that I am eligible as a subscriber to access their on-line version, if I can’t wait for the delayed delivery through the Royal Mail.

Globalization as economic apocalypse

Royal Mail employees, like the rest of us, are facing an economic apocalypse. The current wisdom of the tribe is that we are seeing consequences of globalization. My examples illustrate some of the threats and opportunities cropping up, as the horsemen of the apocalypse gallop about, and technological changes sweep the countryside.

Card-carrying optimists hold to the view that the human spirit, creativity and morally-grounded leadership will help us through the crisis.

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Dynamism means dangerous. Battle Royal at the Royal Mail

Allan Leighton, high profile leader of Royal Mail, seems likely to have his ambitious schemes blocked for turning round the company. He seems to be turning his attention to other challenges, while the Government is actively seeking his successor through a firm of headhunters. As a leader, Mr Leighton seems to be demonstrating the principle that dynamism means dangerous.

Update

The post is followed up with a report on events around the subsequent one-day strike in June 2007

The original post

Mr. Leighton is credited with turning round Royal Mail since becoming chairman in 2002. Since his arrival, the Royal Mail has cut 30,000 jobs, shut thousands of post offices, and moved away from record annual losses that had reached £1bn. The various changes have been forced through against considerable opposition internally and externally.

The changes have not resolved the fundamental problems of the corporation which remains in dire financial circumstances. It recently announced that the gap in its pension funds would be tackled by ending the corporation’s final wage pension scheme, another move described as unilateral bullying by its Union leaders.

Power to the workers – or another capitalist wheeze?
Further changes are likely to be needed. To achieve them, the Royal Mail board has been making the case for a share incentive scheme as a motivational lever. This was opposed by the Government. The scheme would have been difficult to implement for various reasons (How to assess share value when the company is technically still a bit of a financial basket case?). There was also ideological opposition from ‘old’ Labour MPs who saw the scheme not so much as akin to a shift towards the John Lewis partnership’s set up, as a shift toward privatization. Whatever, the scheme was turned down. At which point, the resourceful Mr. Leighton came up with the idea of phantom shares.

The Leighton-Crozier show

Allan Leighton has an appetite for self-publicity as inspection of the Royal Mail website reveals. He presents himself as a dynamic (and somewhat terrifying) leader. In public he attempts to soften the image by implying he is very much one of a team, operating closely with CEO Adam Crozier.

The styles of the two reminds me of an earlier high profile double act, Lord King and Colin Marshall at British Airways. The pugnacious King had also been confronted with an ailing BA facing vigorous competition. Like Leighton, King presided over job cuts on a similar scale, and had serious internal morale issues and Union conflicts. Colin Marshall, like Adam Crozier, had a more urbane style.

The rewards of forceful leadership

Royal Mail has a leader with ideas, and vision. So we might expect him to be appreciated by his masters, ultimately The Government. So what happens? He suffers the fate of many dynamic leaders. Robert Peston, the BBC’s Business Editor, claims that the Government has hired headhunters to find a successor to Allan Leighton

Dynamism means dangerous.

Suppose this is a game of three dimensional chess? Allen Leighton is leading the Government forces in a battle to implement its wishes. Those nasty forces resisting his attacks are led by the Union leaders. Leighton wants more help from the Government. He becomes powerful enough to be dangerous. What if he threatens to resign at the most telling moment to devote more time to other business interests? He has been associated with stories of his interest in acquiring Sainsbury’s for several years (and it seems the stories are coming to the boil again this month).

This is why it’s three dimensional chess.

As Chairman, Allan Leighton is not a full-time operational leader controlled by the Government. He has other and extensive business interests. At the time of writing, he has been the subject of increasing speculation that he has been active in takeover moves for the retailer Sainsburys, and would be interested in a major role in the acquired company.

Even in two dimensional Chess, according to the Nimzowitch principle, the threat is more dangerous than its execution. And that, I suggest, is why even a powerful leader is always battling on several fronts, which in a rather complex way why we get the leaders we deserve, in this case through the ballot box and then through the hired guns of our elected representatives.