Ebenezer Scrooge and the zero sum myth

Most management books promote the notion that enlightened management and engaged employees help the business succeed. There are, however, plenty of books that argue the opposite – that treating workers as a nuisance and a cost is the way to maximise profits. They are long established in Western culture, are widely read, and have had huge influence.

It transpires that those of us who write management books have a rival literature – 'serious' literature. I am increasingly convinced that the explanation for our reluctance to adopt the practices of good management lies deep in the cultural sub-conscious; in the ideas shaped by our commonly-shared fables and characters.

The grand-daddy of all of these is one Ebenezer Scrooge. To this day, his name is used by headline writers to describe a mean boss. Re-reading A Christmas Carol recently, it is remarkable to recall just how short it is; fewer than 100 pages, with only a couple of hundred words on the subject of management and business. But could it be that these few paragraphs had more impact upon the craft of management than the millions of words in all the leadership books and learned articles over the decades?

Dickens tells us directly that Scrooge is very rich. We are told also that he is very mean. These messages come clearly on about the third page (depending on the edition). The door of the counting house was kept open 'so that he might keep an eye upon his clerk', who inhabited a 'dismal little cell', with a 'very small fire'. Bob Cratchit resorts to attempting to warm his fingers by the light of a candle.

Dickens does not pause to comment on whether, if the productivity of the clerk mattered to the business, the capacity of his digits to function would be of commercial benefit to a profit-hungry boss. Still, it is not an unknown assumption by modern employers. In my own experience, I have worked at an office where the IT server had air conditioning, but the workers did not.

A mean boss is rich. Treating workers better adds to direct costs. Therefore being mean maximises profits. This is the 'story' – the myth of the zero sum game.

Unfortunately – or rather, fortunately – it is incorrect. Treating workers badly reduces short-term costs, but adds to operational risk. In some contexts, admittedly, the risk may be marginal; but in others it can be sufficient to imperil the entire organisation.

Let's take Scrooge, his counting house and his one employee, and carry out a people and business risk assessment (something that very few employers do to any comprehensive extent).

Just how advisable would it be for a Scrooge, under any economic circumstance, to treat such a diligent, incorruptible and effective worker quite so badly?

The most cursory risk assessment would rapidly conclude that Bob Cratchit was highly likely to seek employment elsewhere, and that there would be no guarantee at all of finding a replacement of similar calibre. His first duty was to his large family, including a disabled son, not to Scrooge. Only if unemployment were very high would such a people strategy be even feasible, never mind sensible.

Scrooge's mistakes are common, of course. Indeed, this little scene at the start of A Christmas Carol is a perfect microcosm of the priorities, structure and operating assumptions of the typical business.

In Scrooge's rigidity and myopia one can identify the genesis of the MBA: the pretence that employee welfare matters only to the employee and is a net cost to the business; the emphasis upon accountancy, rather than understanding the business; the ignorance of the links between employee engagement and business performance; the neglect of the risk of loss of talent through indifferent management and poor leadership.

Of course, Ebenezer Scrooge does undergo a moral conversion, with copious supernatural assistance. Unfortunately, the description of a kindly Victorian philanthropist in the last stages of the book simply confirms the myth of more kindly treatment of workers as an expression of mere generosity.

The implication is that all 'good' works of any employer must involve a cost, and that better pay and treatment must necessarily involve compromising the profit motive.

Dickens does not hint that, with a more engaged employee enjoying better prospects and adequate heating, Scrooge's business might actually benefit. It could even have expanded to become a thriving chain of businesses, held together by the enthusiasm and vision of the founder, encouraging his staff to serve customers and attract new ones.

Yet to this day, institutional investors seem guided more by the pre-conversion Scrooge than by management research. Whenever job cuts are announced, share prices rise, without the merest analysis as to whether the restructure will help the business. Ebenezer's myopic belief in the myth of the zero sum lives on.