A recently released book by Pankaj Mishra tells a story about the Oklahoma bomber, Timothy McVeigh, and the man who planted the bomb at the World Trade Centre, Ramzi Ahmed Yousef. They later shared adjoining prison cells.
The book is titled The Age of Anger: A History of the Present. On the face of it, the two men were on different paths. McVeigh was an Iraq War veteran, a drifter who had done poorly at school and couldn't hold down a job. Yousef was from Pakistan, had studied in Britain and, before becoming a terrorist, was a skilful computer engineer who had worked for the Kuwait government.
An article in the London Review of Books observes that if Yousef had embraced life in the United States instead of trying to blow it up, he could have walked into jobs that McVeigh would have loved but was unqualified to get. McVeigh was superfluous to his world in a way that Yousef was not, but they were like each other in that their anger gave them purpose.
One of the things that insightful human-resources practitioners know better than most is that engagement in work can provide people with meaning and purpose, as well as the means to put a meal on the table and live a fulfilling life. On the other hand, the wrong job or no job can lead to sustained anger, and mould a person into perfect fodder for extremist and terrorist causes.
Against that backdrop, Misha describes a global civil war in which "gun-owning truck drivers in Louisiana have more in common with Trishul-wielding Hindus in India, bearded Islamists in Pakistan, and nationalists and populists everywhere".
In 2004, MIT professor of management Thomas A. Kochan wrote a paper that appeared in the Asia-Pacific Journal of Human Resource Management. He noted in the article that US chief executives' pay relative to the average workers' in the 1960s was on a ratio of 40:1. By the 1970s, the ratio was 400:1.
Kochan's reference to the explosive relativity of chief executives' remuneration to workers' pay led him to conclude: "HR professionals lost any semblance of credibility as a steward of the social contract because most HR professionals had lost their ability to seriously challenge or offer an independent perspective ... to the CEO or other top executives."
In a book of the same name, Jean-Jacques Rousseau is credited with coining the term The Social Contract. It crystalises an idea that is regarded as helping to fuel the French Revolution. That was a time when the average Parisian was having trouble getting enough bread to put on the table for his family, a situation not assisted by an unhelpful solution: "Let them eat cake."
Last year, the Australian Council of Superannuation Investors' chief executive, Louise Davidson, noted that chief executives' pay was up 12.4 per cent for those running ASX 100 companies, and bonuses were up 18 per cent.
Davidson was speaking when Australia chief executives were earning 78 times more than the average worker, and when the Reserve Bank governor was expressing concern about persistent low-wage growth for the average worker – with 2 per cent becoming the norm – and its potential to affect adversely Australia's economic growth.
Davidson did not mince her words: "At a time when public trust in business is at a low ebb and wages growth is weak, board decisions to pay large bonuses just for hitting budget targets, rather than exceptional performance, are especially tone-deaf. This may be a sign that boards have lost sight of the link between a company's social licence and the expectations of communities and investors."
At a time when wages growth is weak, decisions to pay large bonuses just for hitting budget targets are especially tone-deaf.Australian Council of Superannuation Investors chief Louise Davidson
"Social licence"! Nearly three centuries have passed but we haven't really moved so far from Rousseau's phrase, nor the conditions that gave rise to it. The word licence here is a metaphor. Companies don't apply for one, but it is a term closely connected with an organisation's brand and reputation, and is an indicator of how quickly they can be lost in a sea of community anger.
The issue of executive remuneration is pertinent to the work of a group of specialist HR practitioners. For that reason, the HR Institute took an active role in the Productivity Commission's inquiry into executive remuneration in 2009, conducted in the wake of the global financial crisis. I spoke to the two-strikes rule at the commission and supported the practice, but at a higher threshold than 25 per cent. Since it became an amendment to the Corporations Act, it has rightly struck fear into boards at many an ASX-listed annual general meeting.
The financial crisis's flashpoint was in the US, where the world watched as executives came to Washington seeking government bailouts for their ailing cash-strapped companies. They were crying poor as they disembarked from their private jets. The optics were not good.
If you are someone who has lost your job and your home, as millions had, you might get a sense of where anger fits in to this picture. The dominant mood was that, if the wider society and a company's employees were suffering pain, the company's executives needed also to feel it, and in many instances that was not apparent.
The HR function cannot be expected to be the solution to this issue, but it has a legitimate part to play. The contribution that the institute's board has played since then is to initiate a robust professionalisation of HR through certification.
We are now prepared to say to business leaders who employ the institute's certified HR practitioners:
"These professionals have the capability to work with you as skilled business partners to boost the engagement and productivity of your people, as well as the profitability and sustainability of your enterprise.
"In addition, they will bring an independence of mind to your business with respect to community expectations, and they will challenge you if you propose to play fast and loose with the assumptions you bring and the demands that you make on your employees, your customers or your suppliers."
Peter Wilson is chairman of the Australian Human Resources Institute. This is an edited extract of his speech at the institute's national convention last week.