The Age of Hyper-fans, Part 4: Lannisters Always Pay their Debts: Reputation & Solving (Gen-Z) Talent Problems
A criticism of the services company is that it is an organisation full of “bullshit jobs” and filled with the dreaded corporate creature called the “manager.”
There are no middle managers in hyper-fan universes. Heroes are either: small team members or solidary adventurers, leaders, or already rich. The Avengers are led sometimes by Iron Man and sometimes by Captain America, but they all do as they like. Vampires from Twilight are rich because they are vampires and thus — compounded interest. The Jedi Order from Star Wars is self-financed or financed by States. Geralt of Rivia from The Witcher is part of an ancient order (with similar ways of getting financed).
Fantasy worlds are convenient ways of solving the issue of “why these characters have the means to do what they do” (i.e., agency — see Part 2) — but nobody works for their money. A Game of Thrones depicts royalty. Harry Potter’s father is like nobility. Iron Man is the heir of a weapons empire. Batman also is an heir. Princess Leia is a princess. Even in The Lord of the Rings, Bilbo Baggins is from a rich family, Gandalf is an envoy from God, and Aragorn is a king.
When they do have a job, leaders must do everything themselves. Despite being Minister of Magic, Cornelius Fudge is personally involved in matters that are below his paygrade: arresting Hagrid in Harry Potter and the Chamber of Secrets and coming for the trial of a rogue Hippogriff in Harry Potter and the Prisoner of Azkaban. Both President Snow and President Coin personally interact with Katniss in The Hunger Games.
Middle managers, if they exist, are ridiculous by design, such as Undersecretary Dolores Umbridge in Harry Potter and the Order of the Phoenix.
Working your way up the ladder is uncool. Why?
The concept of Management, as argued brilliantly by Prof. Romain Laufer in a College de France lecture, is inherently related to big corporations. That is because large enterprises are somewhat like States and management is how they call their governance and legitimacy system. And employees “vote with their feet”.
Management is an inherently modern phenomenon. “To coordinate these larger organizations, owners needed to depend on others, which economists call ‘agents’ and the rest of us call ‘managers’”, writes Rita McGrath in HBS. In using the word agents, economists point to a reality of managers’ role: they are decision-makers expected to reflect the (largely unwritten) norms of an organisation. By their decisions, they influence the course of the corporation. It then follows that the more managers, the more complex decision-making processes become. In other words, large corporations can be slow.
Management is based on a set of rules and practices that are not clearly defined. This set is enriched and created as it goes; and unlike in legal systems, precedents are not binding nor even recorded precisely. Accountability and the application of rules is therefore inconsistent — which can result in unfair treatment of individuals across the organisation and opacity on why some decisions are made.
This is not a cynical choice on the part of companies. Transparent systems can be just as unfair as opaque systems. And indeed, what differentiates the public sector from the private sector is that the public sector tries hard to be transparent — there are grids, scales, hierarchical structures, rational systems of hiring (anonymous selection through exams). This extreme transparency means adaptation to change is impossible because flexibility needs exceptions and adaptability, while transparency requires stability and foreseeability.
Here is the conflict of our times: working-age individuals perceive a lack of agency, which in turns create calls for control. The first step to control being understanding; they ask for transparency. This call for transparency, in turns, favours inflexibility and a perceived arbitrariness. This only reinforces the lack of agency.
Salary transparency is a great example. Base salary disparity for an equal job is of course unacceptable. This has prompted a wave of legislation for salary transparency (New York in November 2022 for example).
The first studies on salary transparency have shown that although they do reduce inequities, they also reduce salaries overall, by affecting employees’ individual bargaining power. In other words, employers can just argue there is a scale.
In addition, pay transparency can affect productivity positively when it is perceived as fair, and negatively when perceived as unfair (gender or racial biases, for example, are, fortunately, widely considered unfair).
There exists however, salary discrepancies for the same job that some corporations are perfectly comfortable with. Paying differently based on the university the employee attended is a common practice. Scales based on diploma are transparent; are they fair? The notion of fairness in pay scales is a complicated one; whereas in our western society gender scales are unacceptable, they are still widely used in South Korea, for example.
Other ways to discriminate, for example based on astrological signs, do exist, even though they are in many ways absurd. But is that surprising given our obsession with dubious personality tests of all sorts?
Managers are free to establish the rules they want to a large degree. The consequence is often the creation of “super-rules” that govern promotions and salaries. While they can be changed, their rigidity means that employees often find it easier to leave.
This is what happened to the French School of Ski, an aggregation of ski professors, who had decided on strict tenure rules for salaries. New generations, upset, left to create the European School of Ski. In 1973 however, the European School of Ski introduced tenure rules in turn. The difference is that those rules gave a “fast-track” to those who had initially made the move from the French School of Ski.
In general, studies show that top performers tend to leave organisations where pay transparency has led to flattened scales that are less performance-based. One of the additional issues of talent management is that managers aren’t keen on letting employees move within organisations, another display of inflexibility that leads to turnover.
Attempts at transparency create senseless classifications and processes (for promotions or mobility) and slow decision making. In other words, attempts at fairness lead to unfairness — leading many employees, mostly in younger cohorts, to leave organisations.
Employees of large corporations, look at your payslips: it’s likely you will find some kind of internal ranking. Are you an ESTP, a Slytherin, a Beta+ (as per Brave New World), a Class 7 employee, or all those things? The plot thickens.
Organisations are not really to blame for these developments. They are simply confronted with contradictory requests. And contradictory requests, these days, come from all sides.
In his lecture, Romain Laufer mentions that the idea of the enterprise is an organisation whereby an entrepreneur decides to achieve a goal (e.g., sell chickens or apps), and the organisation provides the means for this purpose. It is first and foremost a personal goal, not a political one.
However, he mentions that The Prince, Machiavel’s lecture in Political Science, now applies to the modern large corporation. In other words, large corporations have become political entities. The most obvious manifestation of this is the growth of the stakeholder view of organisations — meaning, organisations are accountable to their shareholders, but should also consider their employees, neighbours, and society in general.
To communicate with stakeholders, companies need free speech, which it did not always have. In a landmark decision, the Supreme Court of the US, in the 1886 Santa Clara Co. v. Southern Pacific Railroad Case, decided that “The court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of opinion that it does.” By this moderately argued reasoning, it entails that rights such as the First Amendment (free speech) apply to corporations. This was confirmed in a number of later cases. Thus, corporations have free speech. To speak, one needs a voice: there enters marketing (Prof. Romain Laufer, again).
The condition for management to work is that employees need to, broadly, adhere to its principles (and indeed, in the absence of written norms, they can only be principles). The problem is that now that companies have a voice, they speak a lot.
And mistakes have a cost — while this is hard to estimate and may be biased, poor communication costs c.65m$ a year for a large corporation. Reputation is priceless — which is why Lannisters insist they always pay their debts (of all kinds).
These are great days for PR, which is merging with marketing. This convergence stems from the stakeholder enterprise view: if the enterprise should care about other things than sales, how is speaking to sell different from speaking for other things?
Consequently, 80% of respondents of a survey said their PR function had increased in the past two years (post-covid), and two thirds expected the responsibilities of PR to increase further. This, however, was not correlated with an expected increase in headcount, perhaps another sign that Generative AI will not replace PR professionals and might just save them from burnout instead.
And now that corporations are political entities, they are expected to voice political statements. In another survey, 73% of CCOs reported that social issues had “shifted their communications plan”. More than half also increased internal communications — a trend that surely is correlated to employee benefits. Indeed, communicating on employee benefits leads to “a healthier and more productive workforce”.
The rise of environmental, social, and corporate governance (“ESG”) is a logical step of stakeholder management. It is an important one. But it is hard to speak about broader society debates when your fundamental reason for existence is to sell. In this context, it is no wonder that greenwashing is on the rise and increasingly a reason for litigation.
Corporations care about investors and investors’ clients care about societal issues. Therefore, the staggering growth of ESG investing makes perfect sense. However, this is another way that banks are, by definition, on the grill. Since retail investors (as seen in Part 3) don’t vote, the aggregation of retail investors in mutual funds managed by an asset manager is essential. But large corporations typically deemed “ESG-unfriendly” are also these banks’ clients.
Because organisations tend to be bigger, corporation-to-corporation communication increasingly look like the affairs of States.
This applies to the relationship between shareholders and listed corporations, too. Large Asset Managers are huge corporations and sometimes hold as much as 20% of listed companies, which gives them a tremendous decision-making power. (This is a result of years of consolidation, in line with banks.)
How do these State-like communications processes materialise? Neutrality and flexibility between allied States, Machiavelli argues, is useless. The key is clear and trustworthy commitments, even if they put you sometimes on the losing side. Being harsh on your clients may be good for consumer business, but it’s bad for large businesses. In a world where large business wins and being part of an index may move your share price, this matters a great deal.
In other words, (large) shareholders are friendly to (large) corporations who are friendly to their (large) clients. Blackrock may need a loan — these loans are provided by banks. Blackrock also owns shares in the banks, and in the bank’s clients. The bank clients’ successes create value for Blackrock, and for the bank — who can then loan to Blackrock. There is no incentive to change this cycle apart from small, step-by-step, not too encompassing requests.
This may change. Under pressure to do so, BlackRock has introduced, for the first time in 2022, a tool to involve their clients in the voting process. Asset managers like BlackRock vote on behalf of their clients — a process referred to as “proxy voting”. To these means, Blackrock has launched “Voting Choice”, an offering for clients to indicate voting instruction. In 2023, a series of pilot projects will be implemented by various other asset managers to integrate retail investors in their voting processes.
With pressure from both employees and retail shareholders, real change may occur. After all, what is an organisation, but the sum of its members?
Parts 1 to 4 attempted to understand our obsession with fitting in: in factions, houses, castes, districts (in fiction), in astrological types, MBTI types (in real life) and other groups.
This paper has argued this comes from an increasingly processed society, driven by companies getting bigger. More precisely, companies’ attempts to solve an increasing feeling of lack of agency in their employees and stakeholders results in even more process, thereby increasing the problem instead of solving it.
The ways of working and methods of large corporations are so ingrained in our mores that they are replayed, again and again, in contemporary content. Every entity is a select group, every selection mechanism a process with some kind of placement test.
Offering content universes where placements tests enable consumers to fit in groups is an elegant proposition to people who have been taught that they must put themselves in explainable groups. Illustrating the destruction of these groups when they are too inflexible is also an appealing narrative for those who are fed up with processes.
In turn, identifying with a group and its related community means we identify more closely with the content universes that are proposed to us. This fuels engagement and create hyper-fans.
From this, we move on to Part 5, which will start by the embodiment of our immersion into content universes — illustrated by the growth of Role Playing Games (“RPGs”) — and its consequences for media companies.
