Denise Kingsmill: Money isn't everything

We must learn from the likes of John Lewis if the virtues of the common good are not to disappear from the public balance sheet.

by Denise Kingsmill
Last Updated: 09 May 2013

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One of the most depressing things about some parts of the financial sector is that people seem to think the main objective of being in it is to earn enough money to be able to leave it.' This was the observation of Mervyn King, the Governor of the Bank of England, in recent testimony to the influential Economic Affairs committee of the House of Lords. He was speaking of his desire to create a cadre of motivated, talented people who are committed to the satisfaction and interest to be found in public service.

'Come and work in the Bank of England: it's a calling, it's public service and it's fascinating,' he said. 'But if you want to earn salaries of getting on for £1m, you will not get that in public service. You get a different lifestyle altogether,' was his plea. I and other members of the committee found ourselves nodding in sympathy.

Certainly, my six years as a public servant in the middle of an otherwise commercial career were among the most intellectually challenging and personally satisfying of my working life, if not particularly well remunerated. During my time at the Competition Commission, I chaired 20 economic inquiries into almost every sector of the UK economy, supported by some of the cleverest people I have ever worked with, and always with the public interest in mind.

Some of our decisions, for example, refusing to allow the merger of LloydsTSB and Abbey National had a positive impact on the shape and competitiveness of the banking sector. Until, that is, the last Labour administration, which - misguidedly, in my view - chose to pass legislation to overturn this to enable the ill-fated takeover of HBOS (which in turn led to Lloyds having to be bailed out by the taxpayer).

However, both the Bank of England and the Competition Commission are high-profile, high-status examples of public service. What of the nurse on a geriatric ward or teachers in an inner city school? Are they sustained by a public service ethic and the satisfaction of helping others? Is this enough to enable them to put up with low wages? The answer is not clear-cut. Research suggests that while some public service roles are clearly vocational, there is also an expectation that there will be a better work-life balance, flexible schedules and part-time opportunities to compensate.

There is an overt trade-off, which also accounts for why public service has been so attractive to women who bear the brunt of family and child-rearing responsibilities. As a result, it is women who have suffered disproportionately from the cuts to the public sector. There is in the public sector a lot of what economists call 'donated labour', in other words, unpaid overtime, whether in the form of extra-curricular activities such as supervising school sports events or working late in a local government office.

Interestingly, in 2008, research from the Bristol Institute of Public Affairs found that when a public service is privatised, the willingness to work unpaid vanishes. People are prepared to work for low wages and also to donate labour for the public good but not to contribute to private profit. This was clearly demonstrated in the last Conservative government public sector reforms in the early 1990s, when many organisations such as hospitals were compelled to put out services such as cleaning to 'compulsory competitive tendering'. In practice, this meant companies recruiting workers to do their old jobs at lower wages. Socially motivated workers who had previously gone the extra mile to do a good job were no longer prepared to work as hard to contribute to the profits of anonymous management and shareholders, and standards inevitably declined.

Of course, people work for more than just money in both the public and private sectors. It is not just a case of self-interested rationalists in one and public-spirited altruists in the other. Being valued, having a good working environment and having personal responsibility for outcomes all contribute to job satisfaction in any employment. The creation of a genuine community of interest, rather than the hollow-sounding 'we are all in this together' Cameron mantra can be a highly motivating factor for people.

John Lewis, which is owned by an employee trust in which workers share in a direct way in the fruits of their labour, has bucked the recessionary trend on the high street. The community of interest in ensuring the success of the enterprise is based on financial incentives perceived to be fair and in direct relation to employees' contribution to this success. Royal Mail is looking at a similar structure as it tentatively approaches privatisation.

In the public sector, motivational value comes from a sense of working for the common good. But people do not want to feel exploited because of this and here too a fair share is essential. Increasingly, public sector jobs will migrate to the private sector as the Coalition seeks to slim down the public provision of services and privatise more and more. There will need to be more creativity around ownership models such as mutuals, co-operatives and John Lewis-style employee trusts to stimulate the kind of commitment and engagement found in public service.

Nevertheless, we will continue to need committed public servants even in a reduced state, and we must ensure that the public service ethos is enhanced, valued and given public recognition. It must not be swamped by the bonus culture of parts of the private sector. A £1m Governor of the Bank of England would be a step much too far.

- Baroness Kingsmill is a non-executive director on various British, European and US boards. Lady Kingsmill can be contacted on editorial@managementtoday.com

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