On Hiring Consultants: Advice from a retiring Consultant

 The Economist

I was delighted when you commissioned me to prepare this report for you after our discussion at the club. As a newly appointed chief executive at a Fortune 500 company, a thrilling yet perilous adventure awaits you. I commend your wisdom in choosing to hire a management consultant to guide you on your way. 

I, naturally, would have been ideally positioned, given my many years of experience serving your company’s principal rival. Alas, the time comes in every man’s life when he must hang up his hat and retire to his home in the Bahamas. As my swan song, I have thrown together, as requested, a few thoughts on how to handle my kind. I hope you find the attached 120-page PowerPoint presentation useful. Below you will find a brief summary.

Be ready for the “bait and switch”: Do not be fooled by the eloquent veterans who will turn up to your office to plead for your business. The work will mostly be done by clever but pimply 20-somethings, armed with two-by-two matrix frameworks recycled from client to client. What they lack in wisdom will be made up for in long hours. You need not feel sorry for them. They are cocooned in a shell of fancy meals, lavish hotels and private drivers—at your expense.

At first you will find them to be of no use at all—detrimental, even—as they harry your management team with endless questions and urgent requests for data. Eventually, they will win you over with their brains and gumption—or be quietly replaced. Meanwhile, those grey-haired senior partners will pop by from time to time. Beware.

Watch out for “land and expand”: We consultants are masters of the clandestine sale. If you hire us for a two-month project, it will assuredly take 12. By the time it ends, our tentacles will have spread. Ask for a new company strategy, blink, and we will be cutting your costs, fixing your it systems and tinkering with your supply chain.

Like many other bosses, you may one day tire of our eye-watering rates and decide to poach the cleverest consultants for yourself. We will happily oblige. The most reliable missionary for the merits of consulting is one of our own. The more senior, the better. Hire them, but do not give them the cheque book.

Question everything: Every self-respecting consultant knows that big recommendations demand big numbers. As a rule, divide everything you see by two. Never trust a benchmark; I made up most of mine. And carefully read those endless notes at the bottom of charts. That is often where the dirtiest secrets are buried. Be doubly dubious of any consulting reports your underlings happen to commission, especially when they recommend a bigger budget for said underling.

Take none of the blame: As a freshly minted chief executive, you are undoubtedly brimming with ideas. Many of them are terrible. Some may prove catastrophic. Among the valuable services offered by management consultants is the human shield. Make sure your board knows it was they who recommended the disastrous new product line or the overpriced acquisition. You always had your doubts, but trusted their illustrious reputations. Equally, your consultants may, from time to time, stumble upon a good idea. You thought of it first.

Experiment with polygamy: Your consultants will do their utmost to woo you into exclusivity. There will be much talk of “long-term partnership”. Yet it is a one-sided monogamy they seek. Fidelity is not in a consultant’s nature. Chances are they are already advising your competitors, with only the thinnest of Chinese walls between teams.

Follow their example and hire their rivals, too. Ideally, sit them in adjacent rooms at your offices. Consultants are fiercely competitive, and nothing will better spur them on to even longer reports than seeing their nemeses wandering the halls of your company. If bored, invite representatives of two warring firms to a meeting and watch them tussle for your favour.

As I look back on my career, I am not too proud to admit that I have occasionally fleeced the odd firm. But I maintain that my profession is a noble one. “Impact”, after all, is our industry’s watchword. (Admittedly, I never was quite clear what it meant, but you cannot deny it sounds lofty.)

One final thought to conclude: there is never a problem too big or small for a consultant. That I can confirm from experience. Your bill, including expenses, is attached. Good luck. 

After Wirecard: is it time to audit the auditors?

The industry’s failure to spot holes in the accounts of several collapsed companies has led to clamour for reform writes Jonathan Ford and Tabby Kinder in The FT


At the end of 2003, the Italian dairy company Parmalat descended into bankruptcy in an eye-catchingly abrupt manner. A routine bank reconciliation revealed that €3.9bn of cash which Parmalat was supposed to have at Bank of America did not actually exist.

The scam that emerged duly blew apart one of Italy’s best-known entrepreneurial companies, and sent its founder, Calisto Tanzi, to prison for fraud. Dubbed Europe’s Enron, it humiliated two large auditing firms, Deloitte and Grant Thornton, and ended up costing the former $149m in damages. 

Yet it rested on an apparently simple deception: the reconciliation letter on which the auditors were relying had been forged. 

There were shades of Parmalat’s collapse again last week when, nearly two decades later, another fast-growing European entrepreneurial company blew up in strikingly similar circumstances. 

After years of public questions about the reliability of its accounts, primarily from the FT, the German electronic payments giant, Wirecard, was forced to admit to a massive hole in its balance sheet. 

Rattled by the failure of an independent probe by KPMG to verify transactions underpinning “the lion’s share” of its reported profits between 2016 and 2018, and unable to publish its results due to issues eventually raised by its longstanding auditors EY, Wirecard finally capitulated. It announced that purported €1.9bn cash balances at banks in the Philippines probably did “not exist” and parted company with its chief executive Markus Braun. Evidence relied on by EY had been bogus. 

It remains unclear exactly how the crucial confirmation slipped through the cracks. According to one EY partner: “The general view internally is that confirming historic cash balances is auditing 101, and [that] ordinary auditing processes were followed, including third party verification, in which case the fraud was sophisticated in its use of false documents.” 

Others, however, take a less charitable view of such slip-ups, especially when, as with both Wirecard and Parmalat, they were preceded by so many questions about the reliability of the figures. 

“The integrity of the cash account [which records cash and should reconcile to all the other items in the accounts] is totally central to the whole system of double-entry bookkeeping,” says Karthik Ramanna, professor of business and public policy at Oxford’s Blavatnik School of Government. “If there is no integrity to the cash account, then the whole system is just a joke.” 

Shareholder support 

Wirecard’s collapse is the latest in a wave of accounting scandals that has swept through the corporate world, including UK outsourcing group Carillion and Abu Dhabi-based hospital group NMC Health, as well as alleged frauds at the mini-bond firm London Capital & Finance (LCF) and the café chain Patisserie Valerie. 

Many fear a further surge as the Covid-19 lockdown washes away those companies with weakened balance sheets or business models in the coming months. 

Questions about “softball” auditing have dogged many recent high-profile insolvencies. Carillion’s enthusiasm for buying companies with few tangible assets for high prices led it to build up £1.5bn of goodwill on its balance sheet. Despite vast losses at some of those subsidiaries, it had written down the value of just £134m of that goodwill when the whole edifice caved in. 

Similar questions hang over LCF, where close reading of the notes in the last accounts it published show how the estimated fair value of its liabilities far exceeded that of its assets in 2017, making it technically insolvent roughly 18 months before it collapsed taking with it more than £200m of savers’ cash. Yet EY gave the accounts a clean bill of health. 

Such cases have raised concerns about the independence of auditors, and their willingness to challenge the wishes of management at the client, who are often driven by their own desire for self-enrichment or survival. 

“It’s so important if you want to keep the relationship to have a rapport with the finance director,” says a financier who once worked at a Big Four auditing firm. “It is basically sometimes easier to swallow what you are told.” 

It is a problem that has deepened with the adoption of modern accounting standards. Over the past three decades, these have progressively dismantled the traditional system of historical cost accounting with its emphasis on the verifiability of evidence and using prudent judgment, replacing it with one based on the idea that the primary purpose of accounts is to present information that is “useful to users”. 

This process has allowed managers to pull forward anticipated profits and unrealised gains, and write them up as today’s surpluses. Many company bonus schemes depend on the delivery of the “right” accounting numbers. 

In theory, shareholders are supposed to provide a check on the influence of self-interested bosses. They choose the auditors and set the terms of the engagement. But in practice, investors tend not to assert themselves in the relationship. Scandals rarely lead to the ejection of auditors. 

So after UK telecoms group BT announced a £530m writedown in 2017 because of accounting misstatements at its Italian business, the auditors, PwC, were not sanctioned by investors. Far from it, the firm was reappointed with more than 75 per cent support. And when EY came up for re-election at Wirecard in the summer of 2018, despite rumblings about the numbers, it was voted back by more than 99 per cent. 

Tight budgets and timetables 

 It is not only an auditor’s desire for an easy life that can drain audits of that all important culture of challenge. There are practical issues too. Tight budgets and timetables limit the scope for investigation. 

Audit fees in Europe are far below those in the US. Audits of Russell 3000 index companies in the US cost 0.39 per cent of company turnover on average. Those in Europe average just 0.13 per cent, while for German companies it is a feeble 0.09 per cent. 

With fees low, auditing teams are often stretched thin, with only limited support from a partner out of a desire to limit costs and maximise the number of audits done. Audit is traditionally the junior partner in a big accountancy firm, with around four-fifths of the Big Four’s profits coming from the non-audit consultancy side. 

Take the last audit of BHS under the ownership of Philip Green, who sold the failing UK retailer to a little known entrepreneur, Dominic Chappell, in 2015. The chain subsequently collapsed the following year. 

The PwC partner, Steve Denison, recorded only two hours of work auditing the financial statements. The number two, an auditor with just one year’s post-qualification experience, recorded 29.25 hours, and the more junior team members 114.6 hours. Mr Denison was later fined for misconduct and effectively banned by the audit regulator. 

According to Tim Bush, head of governance and financial analysis at the Pensions & Investment Research Consultants, a shareholder advisory group, this reliance on juniors tends to result in “box checking” rather than an investigative approach to audit processes. “Audit teams are less likely to have a feel for the company’s business model,” he says. 

This in turn can open the door to abuse. Scams often hinge on faith in some implausible business activity. Parmalat’s €3.9bn cash pile, for instance, was supposed to have come from selling milk powder to Cuba. But an analysis of the volumes claimed suggested that if the company’s numbers were accurate, each of the island’s inhabitants would have needed to be consuming 60 gallons a year. 

As the author Richard Brooks noted in his book The Bean Counters: “It shouldn’t have been difficult for a half-competent audit firm to spot.” 

No ‘golden age’ 

The academic Prem Sikka rejects the idea that auditing has gone downhill in the past few decades. “Go back into history and you will find there was never a golden age,” he says. 

He argues that most of the weaknesses are of longstanding vintage, and are down to a lack of accountability. “On the audit side, there is no transparency. You have no idea as a reader of accounts how much time the auditors spent on the task and whether that was reasonable,” says the professor of accounting at the University of Sheffield. 

While there are signs that the UK regulator is getting tougher, it is down to shareholders to provide stronger governance, Prof Sikka says. If they won’t do it, the government should consider setting up a state agency to commission audits of firms and set fees. “It wouldn’t have to be everyone. You could just do large companies and banks.” 

Britain has recently been through a comprehensive review of audit, including how it is regulated and competition in the market, plus a review by the businessman Donald Brydon of its purpose. This devoted many pages to establishing it as a distinct new profession and coming up with new statements to include in already groaning company reports. 

Far from creating new tasks, many observers think that audit should reconnect with its original purpose. This is to assure investors that companies’ capital is not being abused by over-optimistic or fraudulent managers. “At their heart, audits are about protecting capital, and thereby ensuring responsible stewardship of capital,” says Natasha Landell-Mills, head of stewardship at the asset manager Sarasin & Partners. 

Yet modern accounting practice has made audits more complicated while watering down the legal requirement to exercise the judgment needed to ensure the numbers are “true and fair”. Despite the endless mushrooming of numbers, it is no easier to know if the capital is really present and can thus justify the payment of dividends and bonuses. 

Michael Izza, chief executive of the Institute of Chartered Accountants in England and Wales says auditors need a “renewed focus on internal controls, going concern and fraud. The vast majority of business failures are not the fault of the auditor, but when audit quality is a contributory factor, the problem generally involves these three fundamental areas.” 

Mr Bush thinks a radical simplification is in order. “Without clarity there is never going to be proper accountability,” he says. “What we have is a recipe for weak auditing, and ever more Wirecards and Parmalats. In the extreme it facilitates Ponzi schemes. Stay on that route and it won’t be long before you come unstuck.”

Is your job pointless?

David Graeber in The Guardian

Copying and pasting emails. Inventing meaningless tasks for others. Just looking busy. Why do so many people feel their work is completely unnecessary?

 

Shoot me now: does your job do anyone any good? Illustration: Igor Bastidas


One day, the wall shelves in my office collapsed. This left books scattered all over the floor and a jagged, half-dislocated metal frame that once held the shelves in place dangling over my desk. I’m a professor of anthropology at a university. A carpenter appeared an hour later to inspect the damage, and announced gravely that, as there were books all over the floor, safety rules prevented him from entering the room or taking further action. I would have to stack the books and not touch anything else, whereupon he would return at the earliest available opportunity.

The carpenter never reappeared. Each day, someone in the anthropology department would call, often multiple times, to ask about the fate of the carpenter, who always turned out to have something extremely pressing to do. By the time a week was out, it had become apparent that there was one man employed by buildings and grounds whose entire job it was to apologise for the fact that the carpenter hadn’t come. He seemed a nice man. Still, it’s hard to imagine he was particularly happy with his work life.


A bullshit job is so completely pointless, unnecessary, or pernicious that even the employee can't justify its existence

Everyone is familiar with the sort of jobs that don’t seem, to the outsider, really to do much of anything: HR consultants, communications coordinators, PR researchers, financial strategists, corporate lawyers or the sort of people who spend their time staffing committees that discuss the problem of unnecessary committees. What if these jobs really are useless, and those who hold them are actually aware of it? Could there be anything more demoralising than having to wake up in the morning five out of seven days of one’s adult life to perform a task that one believes does not need to be performed, is simply a waste of time or resources, or even makes the world worse? There are plenty of surveys about whether people are happy at work, but what about whether people feel their jobs have any good reason to exist? I decided to investigate this phenomenon by drawing on more than 250 testimonies from people around the world who felt they once had, or now have, what I call a bullshit job.

What is a bullshit job?

The defining feature is this: one so completely pointless that even the person who has to perform it every day cannot convince themselves there’s a good reason for them to be doing it. They may not be able to admit this to their co-workers – often, there are very good reasons not to do so – but they are convinced the job is pointless nonetheless.

Bullshit jobs are not just jobs that are useless; typically, there has to be some degree of pretence and fraud involved as well. The employee must feel obliged to pretend that there is, in fact, a good reason their job exists, even if, privately, they find such claims ridiculous.

When people speak of bullshit jobs, they are generally referring to employment that involves being paid to work for someone else, either on a waged or salaried basis (most would include paid consultancies). Obviously, there are many self-employed people who manage to get money from others by means of falsely pretending to provide them with some benefit or service (normally we call them grifters, scam artists, charlatans or frauds), just as there are self-employed people who get money off others by doing or threatening to do them harm (normally we refer to them as muggers, burglars, extortionists or thieves). In the first case, at least, we can definitely speak of bullshit, but not of bullshit jobs, because these aren’t “jobs”, properly speaking. A con job is an act, not a profession. People do sometimes speak of professional burglars, but this is just a way of saying that theft is the burglar’s primary source of income.

These considerations allow us to formulate what I think can serve as a final working definition of a bullshit job: a form of paid employment that is so completely pointless, unnecessary, or pernicious that even the employee cannot justify its existence, even though, as part of the conditions of employment, the employee feels obliged to pretend that this is not the case.

The five types of bullshit job

Flunkies

They are given some minor task to justify their existence, but this is really just a pretext: in reality, flunky jobs are those that exist only or primarily to make someone else look or feel important. A classic flunky is someone like Steve, who told me, “I just graduated, and my new ‘job’ basically consists of my boss forwarding emails to me with the message: ‘Steve refer to the below’, and I reply that the email is inconsequential or spam.”

In countries such as Brazil, some buildings still have elevator operators whose entire job is to push the button for you

Doormen are the most obvious example. They perform the same function in the houses of the very rich that electronic intercoms have performed for everyone else since at least the 1950s. In some countries, such as Brazil, some buildings still have uniformed elevator operators whose entire job is to push the button for you. Further examples are receptionists and front-desk personnel at places that obviously don’t need them. Other flunkies provide a badge of importance. These include cold callers, who make contact with potential clients on the understanding that the broker for whom they work is so busy making money that they need an assistant to make this call.

Goons

These are people whose jobs have an aggressive element but, crucially, who exist only because other people also employ people in these roles. The most obvious example of this are national armed forces. Countries need armies only because other countries have armies; if no one had an army, armies would not be needed. But the same can be said of most lobbyists, PR specialists, telemarketers and corporate lawyers.

Goons find their jobs objectionable not just because they feel they lack positive value, but also because they see them as essentially manipulative and aggressive. These include a lot of call-centre employees: “You’re making an active negative contribution to people’s day,” explained one anonymous testimony. “I called people up to hock them useless shit: specifically, access to their ‘credit score’ that they could obtain for free elsewhere, but that we were offering, with some mindless add-ons, for £6.99 a month.”

Duct-tapers

These employees’ jobs exist only because of a glitch or fault in the organisation; they are there to solve a problem that ought not to exist. The most obvious examples of duct-tapers are those whose job it is to undo the damage done by sloppy or incompetent superiors.

Many duct-taper jobs are the result of a glitch in the system that no one has bothered to correct – tasks that could easily be automated, for instance, but haven’t been either because no one has got around to it, or because the manager wants to maintain as many subordinates as possible, or because of some structural confusion.

Magda’s job required her to proofread research reports written by her company’s star researcher-statistician. “The man didn’t know the first thing about statistics, and he struggled to produce grammatically correct sentences. I’d reward myself with a cake if I found a coherent paragraph. I lost 12lb working in that company. My job was to convince him to undertake a major reworking of every report he produced. Of course, he would never agree to correct anything, so I would then have to take the report to the company directors. They were statistically illiterate, too, but, being the directors, they could drag things out even more.”

Box-tickers

These employees exist only or primarily to allow an organisation to be able to claim it is doing something that, in fact, it is not doing. The most miserable thing about box-ticking jobs is that the employee is usually aware that not only does the box-ticking exercise do nothing towards accomplishing its ostensible purpose, but also it undermines it, because it diverts time and resources away from the purpose itself.

We’re all familiar with box-ticking as a form of government. If a government’s employees are caught doing something very bad – taking bribes, for instance, or shooting citizens at traffic lights – the first reaction is invariably to create a “fact-finding commission” to get to the bottom of things. This serves two functions. First of all, it’s a way of insisting that, aside from a small group of miscreants, no one had any idea that any of this was happening (this, of course, is rarely true); second, it’s a way of implying that once all the facts are in, someone will definitely do something about it (this usually isn’t true, either).


I had one responsibility: watching an inbox of forms asking for tech help, and pasting them into a different form

Local government has been described as little more than an endless sequence of box-ticking rituals revolving around monthly “target figures”. There are all sorts of ways that private companies employ people to be able to tell themselves they are doing something that they aren’t really doing. Many large corporations, for instance, maintain their own in-house magazines or even television channels, the ostensible purpose of which is to keep employees up to date on interesting news and developments, but which, in fact, exist for almost no reason other than to allow executives to experience that warm and pleasant feeling that comes when you see a favourable story about yourself in the media.

Taskmasters

These fall into two groups. Type one comprises those whose role consists entirely of assigning work to others. This job can be considered bullshit if the taskmaster believes there is no need for their intervention, and that if they were not there, underlings would be perfectly capable of carrying on by themselves.

Whereas the first variety of taskmaster is merely useless, the second variety does actual harm. These are taskmasters whose primary role is to create bullshit tasks for others to do, to supervise bullshit, or even to create entirely new bullshit jobs.

A taskmaster may spend at least 75% of their time allocating tasks and monitoring if the underling is doing them, even though they have absolutely no reason to believe the underlings in question would behave any differently if they weren’t there.

“Strategic mission statements” (or, even worse, “strategic vision documents”) instil a particular terror in academics. These are the primary means by which corporate management techniques – setting up quantifiable methods for assessing performance, forcing teachers and scholars to spend more and more of their time assessing and justifying what they do, and less and less time actually doing it – are insinuated into academic life.

I should add that there is really only one class of people who not only deny their jobs are pointless, but also express outright hostility to the very idea that our economy is rife with bullshit jobs. These are – predictably enough – business owners and others in charge of hiring and firing. No one, they insist, would ever spend company money on an employee who wasn’t needed. All the people who are convinced their jobs are worthless must be deluded, or self-important, or simply don’t understand their real function, which is fully visible only to those above. One might be tempted to conclude from this response that this is one class of people who genuinely don’t realise their own jobs are bullshit. 

Do you have a bullshit job?

These holders of bullshit jobs testify to the misery that can ensue when the only challenge you can overcome in your work is the challenge of coming to terms with the fact that you are not, in fact, presented with any challenges; when the only way you can exercise your powers is in coming up with creative ways to cover up the fact that you cannot exercise your powers; of managing the fact that you have, completely against your choosing, been turned into a parasite and a fraud. All wanted to remain anonymous:

Guarding an empty room

“I worked as a museum guard for a global security company in a museum where one exhibition room was left unused. My job was to guard that empty room, ensuring no museum guests touched the, well, nothing in the room and ensure nobody set any fires. To keep my mind sharp and attention undivided, I was forbidden any form of mental stimulation, like books, phones, etc. As nobody was ever there, I sat still and twiddled my thumbs for seven and a half hours, waiting for the fire alarm to sound. If it did, I was to calmly stand up and walk out. That was it.”

Copying and pasting

“I was given one responsibility: watching an inbox that received emails in a certain form from employees asking for tech help, and copy and paste it into a different form. Not only was this a textbook example of an automatable job, it actually used to be automated. There was some disagreement between managers that led to a standardisation that nullified the automation.”

Looking busy

“I was hired as a temp but not assigned any duties. I was told it was very important that I stay busy, but I wasn’t to play games or surf the web. My primary function seemed to be occupying a chair and contributing to the decorum of the office. At first, this seemed pretty easy, but I quickly discovered that looking busy when you aren’t is one of the least pleasant office activities imaginable. In fact, after two days, it was clear that this was going to be the worst job I had ever had. I installed Lynx, a text-only web browser that basically looks like a DOS [disk-operating system] window. No images, just monospaced text on an endless black background. My absentminded browsing of the internet now appeared to be the work of a skilled technician, the web browser a terminal into which diligently typed commands signalled my endless productivity.”

Sitting in the right place

“I work in a college dormitory during the summer. I have worked at this job for three years, and at this point it is still unclear to me what my actual duties are. Primarily, it seems that my job consists of physically occupying space at the front desk. While engaged in this, I am free to ‘pursue my own projects’, which I take to mean mainly creating rubber band balls out of rubber bands I find in the cabinets. When I am not busy with this, I might be checking the office email account (I have basically no training or administrative power, of course, so all I can do is forward these emails to my boss), moving packages from the door, where they get dropped off, to the package room, answering phone calls (again, I know nothing and rarely answer a question to the caller’s satisfaction), or finding ketchup packets from 2005 in the desk drawers. For these duties, I am paid $14 an hour.”

The final offer made to junior doctors was too generous – they should stop striking and get on with it

Mary Dejevsky in The Independent

You know things have reached a pretty pass in any dispute when the combatants start to invoke the spirit of deceased politicians. But when two men who have reached the top of their political trees also start invoking their own mothers – as Jeremy Corbyn and David Cameron did at Prime Minister’s Questions – well, the possibility of any agreement looks remote indeed.

Yes, after a merciful, but all too brief, period of remission, we are back in the heat of the junior doctors’ dispute. The Labour leader accused the Government of showing bad faith and “misrepresenting” statistics (about hospital deaths at weekends); the Prime Minister returned to his mantra about people not getting sick only on weekdays. Whatever else the Government may be ready to compromise on, it appears not to be a “seven-day NHS”.

And quite right, too.

“Our” NHS is not run for the benefit of the staff, however long they have spent in training, however mountainous their student loans, however arduous and responsible their work. A great many people would probably like to work only Monday to Friday, 9 to 5, especially if highly-paid overtime for additional hours comes virtually guaranteed. But this is not the reality for most people, and there is no reason, when so much in this country now functions 24/7 – with the staff on rotas and little, if any, overtime paid – why it should still be such a struggle to get the emergency services to do the same. Yet it is here the overtime culture has proved most resilient.

There will be those – and I admit to being among them – who saw the final offer to the junior doctors as too generous. By preserving a system of overtime, for Saturdays after 5pm and all Sundays, it leaves in place the idea that doctors can expect to work something like traditional office or factory hours with additional rewards for anything else. Those expectations need to be scotched.

Junior doctors, and their many vocal supporters, have tried to turn the contested statistics about weekend fatalities to their advantage, suggesting that a “cut-price” seven-day NHS would simply raise death rates around the week. Anyone who visits hospitals on weekdays and at weekends, however, will be familiar with the glaring disparity in staffing – at every level, and what sometimes appears to be a surfeit of employees, especially in the least skilled jobs, during standard working hours. There is surely money to be saved here, that could offset the cost of more staff at weekends.

Nor can the junior doctors’ dispute be seen in isolation. Their new contract is just one part – if a large part – of reform of the NHS that is yet to come. If next in line are to be the consultants, for whom the junior doctors are often deputising at nights and weekends, you can understand why the Government might be keen to hold the line.

What occasioned the latest sword-crossing in the Commons was the announcement by the British Medical Association earlier this week that the junior doctors would hold three more days of strikes, and would fight the Health Secretary’s imposition of the new contract through the courts. In the first instance, this means seeking a judicial review.

On precisely what legal grounds the BMA intends to fight is not yet clear. For all the perception that the English judiciary has become more politically engaged in recent years, it is hard to see a judge ruling that an elected government is not within its rights to set the terms of a contract for public sector employees, particular when in line with a manifesto commitment. Going to court is only going to inject more poison into this already toxic dispute.

It is beyond time that the BMA called it a day and recognised that the junior doctors have won as much as they are going to – more than they could have expected at the outset and more, indeed, than may be wise for the future health of the NHS. The BMA’s continued insistence a “safe” seven-day NHS is somehow beyond the country’s means is defeatism of the first order, and really not junior doctors’ call to make. It is the stated policy of an elected government.

That said, the extent to which this dispute has become politicised has made it infinitely harder to resolve. Jeremy Hunt has not just been defending his government’s policy of a seven-day NHS, he has been engaged directly in negotiating the small print of a new contract. This has enabled junior doctors, and the BMA on their behalf, to cast the project as a heartless Tory plot.

The most senior non-politicians – the chief executive of NHS England, Simon Stevens, and the medical director, Sir Bruce Keogh – have both been conspicuously absent from the fray. This may be because, if heads had to roll, the Health Secretary is deemed more dispensable than either of them. But here, perhaps, also lies the key to change. For 10 years or more – most recently in the Conservatives’ 2010 election manifesto – proposals have been mooted to separate the NHS from politics by placing it under an independent board. Policy, such as the creation of seven-day service, and the overall NHS budget would be set by central government, leaving the rest to professionals. Each time, however, a consensus evolved to the effect that the NHS was so integral a part of national life and the sums of money allocated so vast, that there had to be direct political accountability. The scandal at Mid-Staffs augmented that view.

But the downside of the argument is again before us. Junior doctors and a Conservative government at loggerheads; there is talk of relations blighted for a generation. One solution might be for the Government to return to its election manifesto of 2010 and divest itself of managerial responsibility for the NHS. If junior doctors can cast that as a victory, so be it. But there is no reason why the sort of hands-off arrangement that is considered good for the BBC and – increasingly – for schools should not be good for the NHS, too.

A mutiny by World Bank staff when prescribed a dose of its own restructuring medicine

The recommendations of the World Bank/IMF are presented to us, the people of the South, as scientific, objective, necessary, fair, and in the best interests of the countries where they are to be implemented. This is why the rebellion episode by the bank staff to its restructuring is so significant

PETER RONALD DESOUZA in The Hindu

In the Financial Times of October 8, the columnist Shawn Donnan, reported that the World Bank was facing an internal “‘mutiny.” Yes, the word mutiny was used. The professional staff were apparently angry about several issues, a deep discontent, because of which the rebellion had been brewing over many days. The key issue was the restructuring exercise being undertaken by the President, Jim Yong Kim, to save, through both the elimination of benefits to staff on mission and also through possible lay-offs, the sum of $400 million. The restructuring exercise, staff felt, was deeply flawed both procedurally and substantively. The columnist reported some members saying that this “thing [restructuring] is affecting everything.” “We can’t do business. We don’t have the budget. It’s a mess, ...” Another staff member complained that “nickel and diming” on travel budgets was causing travelling staff to have to pay for their own breakfasts. “It’s really small beer,” she said. “Has anyone ever thought about the impact of these changes on staff morale?”

Resistance against restructuring

To assuage their feelings, before the semi-annual meeting of the Bank and International Monetary Fund (IMF) with Finance Ministers and Central Bankers of member countries, President Jim Yong Kim had to hurriedly convene a “town hall” meeting with the staff to discuss their concerns. The issues that was fuelling their anger were: (i) the cost-cutting exercise which meant that items of expenditure that they had been accustomed to, such as a paid for breakfast, were being withdrawn, (ii) the secrecy and opacity of the whole exercise i.e., appointment of consultants, payment of bonus to the senior management, hiring of new senior managers, etc, (iii) the award of a “scarce skills premium” of $94,000 as bonus, over and above his salary of $3,79,000, to the Chief Financial Officer who was carrying out the exercise, and (iv) to the appointment and payment of the huge sum of $12.5 million to external consultants such as McKinsey, Deloitte, and Booz Allen for advice on how to restructure a development Bank, as reported in the Economic Times of October 15, 2014.

For those of us from the Global South, who not only receive but also have to follow the advice of the Bretton Woods twins, on how to “restructure” our economies and change our policies, this episode has four very interesting lessons. The recommendations of the World Bank/IMF are presented to us, the people of the South, as scientific, objective, necessary, fair, and in the best interests of the countries where they are to be implemented. The World Bank is the repository of the most authoritative knowledge on development. It annually publishes the flagship World Development Report (WDR), the first of which in 1978 was titled “Prospects for Growth and Alleviation of Poverty.” Every year since 1978, it flags important themes for development with the 2013 WDR being on “Jobs” and restructuring required to align them with the new economy. The 2015 WDR is on “Mind and Culture” and the World Bank website reports the central argument as being “that policy design that takes into account psychological and cultural factors will achieve development goals faster.” This is scholarly knowledge and is used by many university classrooms as part of required reading. This is what positions the World Bank as a premier knowledge institution on development. Then why is the rebellion episode so significant? There are four aspects of that which merit discussion.

The first is the resistance against the restructuring medicine. This is the same medicine used by the World Bank against the rest of the world. The restructuring exercise, which has eliminated jobs within the public sector, whether this be in government or in the support services required by any public institution, such as of subordinate administrative staff, has produced an underclass of workers, who, although they are still needed, have been deprived of the welfare and security benefits that the permanent staff enjoys and were benefits that had been won by a long history of working class struggles. So, when security guards, drivers, mess workers, sweepers, the class IV workers, have now to live lives filled with anxiety about illness, unemployment, etc., because they work for labour contractors who do not provide any such benefits, the anger of the World Bank professional staff who, because of the restructuring, have to pay for their “breakfast” is a little difficult to understand. The restructuring exercise of economies in the global south has produced an underclass whose livelihood insecurity has increased exponentially. The mutiny at the World Bank appears somewhat paradoxical. Not only is the exercise personally dishonest, given the rebellion when the policy is applied at home, but it is also intellectually dishonest when read against the 2015 WDR. Is this the modern performance of the “mutiny on the bounty”?

Control by the few

The second aspect is the process adopted in the internal restructuring. The Reuters and FT reports tell us that the common complaint of the staff is that the many aspects of the restructuring exercise, initiated by the president, were non-transparent. There was an opacity to the process. For example, questions such as the following needed to be asked. What was the method followed to give the CFO a “scarce skills premium” of $94,000 over and above his salary? Was the work done outside the normal duty of the CFO? How did the president decide on who qualifies for a “scarce skills premium” and how many persons have qualified for this bonus? These were questions asked at the town hall meeting. If the “scarce skills premium” was based on sound management principles, why did the CFO agree to forego the bonus after the uproar? These are good questions and lead one to wonder if countries have the same option of protesting? Did Greece and Portugal and Ireland and Argentina have the protest option? The interesting lesson from this episode is that restructuring produces pain and distress to the many while it rewards the few especially those tasked with implementing it. These few have access to political and intellectual power. They control the methods adopted of public justification which produces a discourse that the restructuring is necessary and will benefit the whole. The few get rewarded while the many pay the price in the restructuring in many countries of the global south.

Neo-liberal triumph

The third aspect is the use of consultants. This is the most disappointing and alarming aspect of the episode. For an institution such as the World Bank, whose main rationale is that it is a knowledge institution about how to promote development, to now implicitly declare that it does not have the knowledge required to restructure itself is a severe admission of the weakness of its knowledge base and skill sets. How does it then prepare a road map to restructure economies when restructuring an institution is infinitely easier than restructuring the economy of a country? Restructuring an institution can draw on the interdisciplinary knowledge of the WDR 2015 such as best practice, graduated approaches, evidenced-based policies, results-based management, measuring and monitoring, etc. (all the keywords of the World Bank itself), to achieve the result of a better, leaner, more efficient, and fair institution. But the decision to hire outside consultants, paying a whopping fee of $12.5 million, shows that the World Bank does not either believe in its own capability, or worse doesn’t have this capability. What is alarming is the message that development thinking will, from now on, be done and propagated by the big global consultancies. Is the World Bank announcing that henceforth even its development knowledge will be outsourced? As reported in the Economic Times, one of the protesters said, “What do they know about development and the complexities of what we do?” Indeed, what do they know? But if we see the economic policy institutions of many countries, we will see a seamless movement of personnel between global consultancies and central banks. Our own development thinking has been outsourced to neo-liberal knowledge institutions, such as global consultancies, ratings agencies and investment banks. We can see this takeover of knowledge production in the area of economic policy, the triumph of the neo-liberal frame, even in India. Look at the key players of our economic policymaking. The World Bank has now given its stamp of approval to this trend. The recolonisation of the Indian mind and the policy discourse is near complete.

The fourth aspect of this troubling episode is the use of words to legitimise the action. In the last few months of the Indian public debate, we have come to see the power of words and the social power the purveyors of these words acquire. The word makes the world. Tagore argued for this philosophical position that language constructs reality, that we see the beauty of the world through our language, and that outside language there is no beauty. Controlling the word, the Bank decides to reward its CFO with a large bonus, while it is reducing the financial package of its other employees; it deploys the justification for this decision as a “scare skills premium.” The CFO gets the additional money because he has scarce skills. The investment Bank fraternity has to be rewarded with huge bonuses because they have scarce skills. Wall Street is built on this justification. This is capitalism’s masterstroke of controlling perception, controlling the public discourse by controlling words. We accept the differentials because we are made to believe it is a “scarce skills premium” to be paid for our own good. Sometimes a typographical error brings out the truth much better. By mistake I typed it as “scare skills premium.” It is.