Philippa Kaur

A fascinating case study on the exercise of power within an organisation has just reached a conclusion in Britain. Dominic Raab resigned as the country’s deputy prime minister and justice secretary on April 21st, after an independent investigation into whether he is a workplace bully found that he had crossed a line. The civil servants who lodged complaints against him will feel justified. His supporters, and the man himself, contend that his departure sets an unhealthily low bar for being found guilty of bullying. Adam Tolley, the barrister who conducted the probe, found that Mr Raab had displayed “unreasonably and persistently aggressive conduct” while he held the job of foreign secretary. Mr Tolley also concluded that Mr Raab’s style at the ministry of justice was sometimes “intimidating” and “insulting”. Mr Raab may not have intended to upset but that is not enough to get him off the hook: the British government’s own website says that bullying is “behaviour that makes someone feel intimidated or offended”. The context of the Raab affair is unusual. Media interest is high, and the relationship between civil servants and British government ministers is a very particular one. But the question of what distinguishes someone who merely sets high standards, which is Mr Raab’s version of events, from someone who is a bully is of interest in workplaces everywhere. In a survey published in 2021 around 30% of American workers, for example, said they had direct experience of abusive conduct at work; in two-thirds of cases, the bully was someone above them in the food chain. It is hard to read the report and not feel an unexpected twinge of sympathy for Mr Raab. Unfashionable though it is to admit it, fear is a part of organisational life. Hierarchies hand managers the power and remit to weed out poor performers. Driven, demanding types are often the people who make it up the ladder. Mr Raab is definitely that. Mr Tolley describes an exacting boss: hard-working, impatient and direct. He interrupts when he is not getting a straight answer. He does not want to spend time rehearsing arguments that have already been aired. If he thinks work falls short of the required standard, he says so. Mr Raab shares many of the attributes of a desk light: he is bright, glares a lot and is not known for empathy. But he appears to be motivated principally by achieving better outcomes. The investigation found no evidence that Mr Raab shouted or swore at people, or that he targeted individual civil servants. Mr Tolley was unpersuaded by allegations from officials that he made threatening physical gestures, whether banging the table loudly or putting his hand out towards someone’s face to stop them talking. The “hand out” gesture was not as emphatic as alleged, writes the lawyer; the banging was unlikely “to cause alarm”. If Mr Raab is a bully, he is not nearly as aggressive as some media reporting had implied.Yet that twinge of sympathy passes, as twinges are wont to do. The number and consistency of complaints about Mr Raab is itself evidence that something was genuinely amiss. The civil servants who spoke out about him had worked for other ministers before; they were not greenhorns. Mr Tolley is persuaded that the complainants acted in good faith, despite protests from Mr Raab that he is the victim of “activist civil servants”. Mr Tolley’s most acute observation is to recognise that working life is not a series of discrete incidents, each bearing no relation to the other. Some of the complaints people had about Mr Raab might seem innocuous in isolation. A propensity to bang the table or interrupt people is discourteous but plenty of bosses do the same. Cutting people off in meetings would have mattered less if he was not also the sort of person to describe work he received as “utterly useless” and “woeful”. Bullying can be a one-off, but more often it is incremental: stresses accumulate, anxiety builds, atmospheres form. And even if you think Mr Raab has been unfairly labelled as a bully, it is hard to overlook another problem—his effectiveness as a manager. If enough people think you are a bad boss, you are a bad boss. If employees try to avoid you, the pool of talent available to you shrinks. Mr Tolley himself, who has done a scrupulously fair job, clearly found the deputy prime minister trying. He describes Mr Raab’s approach to the investigation as “somewhat absolutist”. That sounds suspiciously like British-lawyer-speak for “he is a complete nightmare”. ■Read more from Bartleby, our columnist on management and work:What makes a good office perk? (Apr 20th)How to be a superstar on Zoom (Apr 13th)The resistible lure of the family business (Apr 5th)Also: How the Bartleby column got its name More

The intricate timber roof-tiles were assembled in Delhi, the bright stone walls sourced from Rajasthan. But the man who opened the door of Apple’s gleaming new Mumbai outlet on April 18th had been flown in from California. Tim Cook, Apple’s boss, dispensed high-fives and namastes as he opened that shop and, two days later, an equally ritzy outlet in Delhi, the first Apple stores in India.Listen to this story. Enjoy more audio and podcasts on More

Among the commodities that are key to decarbonisation, lithium is in the driving seat. Dubbed “white gold”, the metal is needed to produce nearly all types of batteries powering electric vehicles (evs). A single pack typically includes ten kilograms of the stuff. In the past two years turbocharged ev sales worldwide helped boost prices twelve-fold, prodding miners to invest, carmakers to sign supply deals and governments to label it a strategic material. Most commodity prices stalled this winter, but lithium continued to ride high. The rally has since gone into reverse. Prices for Chinese lithium carbonate, one of the two main forms of refined lithium, have more than halved this year (see chart). One reason is slowing demand for evs in China, the biggest market for them. Another is that carmakers such as Ford and Volkswagen, eager to enter a race dominated by Tesla and Chinese rivals, signed battery-supply deals at high prices last year. They are now reviewing the terms, further dampening appetite.Global supply of mined lithium is rising fast, meanwhile. After growing by 1% in 2022, to 575,000 tonnes, it could jump by nearly a fifth this year as big mines come online in Australia and Chile, says Tom Price of Liberum, an investment bank. The sudden price slide has hit the valuations of sqm and Albemarle, the world’s largest miners of the metal. But the big miners are unlikely to suffer too much. Lithium is still expensive. Benchmark Minerals, a consultancy, estimates that carbonate prices are four times what they were, on average, between 2016 and 2021, when many big projects were commissioned (mines take about five years to build). Prices have yet to reach a floor but they are unlikely to fall far enough to bury big miners’ profits. Prices below $22,000 a tonne, far lower than today’s levels, would cause many of China’s domestic mines to shut down, lowering supply. And even as the refined product has become cheaper, the price of spodumene, a feedstock used to transform lithium ores, remains high, squeezing processors’ margins. They too may be forced to slash production, supporting prices of the refined stuff. And there are signs demand will revive. In April the chief of the China Passenger Car Association said he expected sales of evs in the country to rise by 30% this year. JPMorgan Chase, a bank, reckons a rebound will tip the lithium market into a deficit in 2023 and 2024. ev sales elsewhere remain healthy. The price of lithium hydroxide, a refined form of lithium used in more expensive, longer-range batteries, which are preferred outside China, has held up better than that of carbonate. It will help that hydroxide cannot be stored for ever. In the longer run rising demand for lithium for energy storage, supported by green policies in America, Europe and China, could make the market even tighter. This explains why big miners are still moving forward with new projects, such as Albemarle’s $1.3bn lithium hydroxide plant in South Carolina. A slump in the share price of rivals could allow them to grow bigger. In March Albemarle offered to buy Liontown Resources, an Australian producer, for $3.7bn. Insiders expect more deal activity. Carmakers, for their part, are anxious to secure more lithium. In April General Motors said it would invest in a startup that proposes to extract metal from previously ignored deposits, the latest in a series of recent bets on lithium ventures. A recovery in prices would disappoint carmakers. Lithium-ion battery prices have plummeted over the past decade or so, yet last year soaring metal prices helped to push up battery costs by 7%. The recent fall in lithium prices should again mean cheaper batteries, but it typically takes months for lower prices to translate into cheaper cars, by which point prices may be rising again. After a multi-year tear, white gold is taking a pause. Enjoy the pit stop while it lasts. ■To stay on top of the biggest stories in business and technology, sign up to the Bottom Line, our weekly subscriber-only newsletter. More

Drive through any city in South-East Asia and Japan’s commercial presence is visible everywhere: vehicles made by Toyota, Honda and Nissan clog the roads, the result of decades of market dominance in the region. If Fast Retailing, the parent company behind Uniqlo, a clothing retailer, has its way, the drivers of those vehicles will soon be wearing Japanese clothes, too.Listen to this story. Enjoy more audio and podcasts on More

Aprice tag of $10.8bn would look hefty for most acquisitions of smallish and newish companies. But for Merck, a drugs giant known as msd outside America, the money it is spending to buy Prometheus Biosciences, a biotech firm based in California, is relatively small change. In the world of big pharma such deals have the potential to generate enormous returns. Listen to this story. Enjoy more audio and podcasts on More

When companies tighten their belts, they look first to discretionary spending. Meta got rid of free laundry for its workers last year. In January Google announced a round of lay-offs that included 27 in-house massage therapists. Salesforce, another tech firm, has axed its contract with a Californian “wellness retreat”, where employees would have done God-knows-what with each other. The chopping of such benefits has been christened the “perkcession”. But just as perks get cut in bad times, so they return in the good. Eventually you can expect to read articles about a “perkcovery”. What makes a good perk? Listen to this story. Enjoy more audio and podcasts on More

Each earnings season comes with new buzzwords. As companies ready their scripts for the most recent quarter, one phrase in particular is sure to end up on many bosses’ lips—generative artificial intelligence (ai). Ever since Chatgpt, an artificially intelligent conversationalist, began dazzling the world, bosses have been salivating over the potential for generative ai to turbocharge productivity. Zurich, an insurer, is now using a customised version of Chatgpt to simplify lengthy claims documents. Mattel, a toymaker, is designing new playthings using dall-e, another tool that conjures images based on text prompts. Absci, a biotech company, is using the new wonder to assist with the development of therapeutic antibodies. Plenty of other firms are dipping their toes in this unfamiliar water.The toolmakers of the knowledge economy have more fully embraced the innovation frenzy. Microsoft has announced a string of product updates that will allow desk jockeys to offload tasks from drafting emails and summarising documents to writing computer code. “Like working in dog years”, is how Eric Boyd, head of ai for the tech giant’s cloud-computing division, describes the company’s hectic release schedule. Google, a rival, is likewise souping up its suite of tools, as are Adobe, Salesforce and Bloomberg, makers of software for creative types, salesmen and financial whizzes, respectively. Startups like Harvey, a Chatgpt-like legal assistant, and Jasper, a writing aid, are emerging thick and fast.Despite all the experimentation, companies remain uncertain about how to make use of ai’s newfound powers. Most, according to Mr Boyd, either underestimate or overestimate the technology’s capabilities. Efforts are being made to determine which jobs are the strongest candidates for reinvention. A study published last month by Openai, the outfit behind Chatgpt and dall-e, looked at the share of tasks within an occupation that could be accelerated by at least half using the new technology. Topping the list were occupations involving copious amounts of routine writing, number crunching or computer programming—think paralegals, financial analysts and web designers.It is unlikely that firms will soon dispense with such jobs entirely. Generative ai may do a good job of producing first drafts but relies on humans to give instructions and appraise results. Microsoft, tellingly, has labelled its new suite of tools “co-pilots”. In “Impromptu”, a recent book by Reid Hoffman, co-founder of LinkedIn, a social network for professionals, the author counsels users to treat Chatgpt and others “like an undergraduate research assistant”. (The book was written with the assistance of a bot.)What’s more, as coders, salesmen and other white-collar types become more productive, there is little evidence yet that companies will want fewer of them, argues Michael Chui of McKinsey, a consultancy. Software may eventually eat the world, as one venture capitalist predicted, but so far it has only nibbled at the edges. And most companies will surely choose more sales over fewer salesmen. Yet various hurdles lie ahead for businesses looking to make use of generative ai. For a start, many firms will need to rethink the role of junior staff as apprentices to be trained, rather than workhorses to be whipped. Getting the best out of generative ai may also prove tough for firms with clunky old it systems and scattered datasets. On the plus side, large language models like the ones powering Chatgpt are better at working with unstructured datasets than earlier types of ai, says Roy Singh of Bain, a consultancy that has inked a partnership with Openai.Other reservations could still slow adoption. Companies have a much higher bar than consumers when it comes to embracing new technology, notes Will Grannis, chief technologist for Google’s cloud-computing division. One concern is shielding confidential or sensitive data, a worry that has led companies from JPMorgan Chase, a bank, to Northrop Grumman, a defence contractor, to ban staff from using Chatgpt at work. Zurich does not allow customers’ personal information to be fed into its tool. A bigger concern is reliability. Chatgpt-like tools can spit out plausible but incorrect information, a process euphemistically dubbed “hallucination”. That may not be a problem when dreaming up promotional material, but it is a fatal flaw elsewhere. “You can’t approximate the design of an aeroplane wing,” notes Mike Haley, head of research for Autodesk, a maker of engineering software. Humans err, too. The difference is that generative-ai tools, for now, neither explain their thinking nor confess their level of confidence. That makes them hard to trust if the stakes are high.Productivity to the peopleBosses could also find their appetite for generative ai spoiled by growing worries over the risks the technology poses to society, particularly as it gets cleverer (see Science section). Some fret about a barrage of ai-generated scams, misinformation and computer viruses. Such concerns are spurring governments to action. America’s Commerce Department is seeking comments from the public on how it should approach the technology. The European Union is amending a planned bill on ai to encompass recent advances. Italy has, for now, banned Chatgpt.A final fear is that rolling out clever ai could undermine the morale of staff, if they worry for their futures. Yet so far employees appear to be among the new technology’s most enthusiastic supporters. Of 12,000 workers surveyed in January by Fishbowl, a workplace-network app, 43% had used tools like Chatgpt for work-related tasks—a large majority without their bosses knowing. Such enthusiasm suggests few tears shed for the loss of menial tasks to ai. “No one goes to law school to spend time trawling through documents”, says Winston Weinberg, Harvey’s co-founder. That may be enough to encourage firms to continue experimenting. With productivity growth in rich countries languishing for two decades, that would be no bad thing. ■ More

“WHOEVER SAID don’t question things? We say question everything.” So began the television commercial that EY aired in 2021 during the Super Bowl, a sports extravaganza known as much for its pricey ads as for the American football they interrupt. On April 11th, under a little too much questioning from its American branch, the professional-services giant decided to pause indefinitely plans for a separation of its audit and advisory businesses. A big sticking point was the division of the tax practice, coveted by both the auditors and the advisers. Plans to publicly list the advisory business and load it with debt to pay off audit partners also looked cleverer when the deal was conceived in 2021 amid low interest rates and frothy share prices.This suspension is a huge blow to EY’s global bosses, who underestimated just what an uphill climb “Project Everest”, the unfortunately codenamed break-up project, would prove. To EY’s split-averse professional-services rivals in the so-called “big four”, Deloitte, KPMG and PwC, it looks like vindication. Joe Ucuzoglu, Deloitte’s global chief, insists the “multidisciplinary model” is the “foundation” of his firm’s success. Bill Thomas, his opposite number at KPMG, says his firm’s decision in the early 2000s to list its advisory arm (since regrown) was “not the right thing”. Bob Moritz, who leads PwC, insists keeping the businesses together is central to his firm’s ability to recruit and retain talent. Yet the case against turning the big four into a biggish eight is far from open and shut. That is because the commercial logic of the split is in many ways getting more compelling—for EY itself, which is still leaving open the possibility of such an outcome one day, and for its three peers. At stake is the future of one of the business world’s most critical oligopolies.The big four are the heavyweight champions of professional services. They dominate the market for audits—checking the books for 493 of the companies in America’s S&P 500 index and a big proportion of European blue chips. They also offer clients a one-stop shop for advice on issues from dealmaking to digitisation. As of last year they together employed 1.4m people and generated $190bn in fees, up from $134bn in 2017 (see chart 1). KPMG, the smallest of the big four, generates three times the revenue of McKinsey, the high priest of strategy consulting.The driving force behind the big four’s growth in recent years has been the rapid expansion of their advisory businesses, which now account for half their combined revenues (see chart 2). In the early 2000s EY, KPMG and PwC all spun off or sold their consulting arms in response to new conflict-of-interest regulations, which barred them from selling advice to audit clients. (Deloitte planned but then abandoned a spin-off.) With little room to expand in audits, however, the giants were soon lured back into the fast-growing business of advice.The rebundling has in many ways paid off. The opportunity to dabble in different service lines has helped the big four entice the bright-eyed young things their businesses rely on. A career in bean-counting looks more appealing when it comes with the opportunity to work on big acquisitions or advise governments on important matters, observes Laura Empson of Bayes Business School in London and formerly of the board of KPMG’s British branch.The big four’s breadth has helped them win over clients, too. Expertise in areas like tax and valuations have helped KPMG and the others solidify their position as the auditors-of-choice for large companies, says Mr Thomas. Widely recognised audit brands, meanwhile, have given a reputational leg-up to the firms’ advisory arms.Mr Moritz argues that the multidisciplinary model has also helped PwC and the other professional-services giants adapt to the digital era. Software and data now underpin nearly all the services the firms offer. The auditors benefit from the technological know-how of the advisors, while the advisors benefit from the counter-cyclical nature of audit work, which can fund investments even during downturns.All that helps explain why some have balked at the idea of a separation. That the firms operate franchise-like structures, with independent partnerships in each country, also makes big shifts in direction like a break up tough to pull off—as EY discovered in America.Yet the case for staying conjoined is steadily weakening as the big four’s businesses shift ever more towards consulting. Auditor-independence rules have turned from an inconvenience into a drag; a particular bugbear of EY’s is its inability to team up with software firms it audits, like Salesforce, to help them roll out their technology to clients. Newish requirements in Europe and elsewhere for companies to rotate their auditors, typically every ten years, have increased clashes between audit and advisory partners over who will serve big customers. Meanwhile, audit has been steadily losing its internal clout, says Ms Empson. Sarah Rapson, deputy head of the FRC, Britain’s audit overseer, worries that the firms are no longer fostering the “culture of scepticism and challenge” that auditing relies on.The problems are on display in a string of much publicised audit snafus. On March 31st APAS, Germany’s accounting watchdog, barred EY’s German branch from taking on new publicly listed audit clients for two years over its failure to spot mischief at Wirecard, a fintech darling turned German fraud of the century. Last year KPMG was fined £14m ($18m) by the FRC for feeding misleading information into a review of two of the firm’s audits. In 2020 Deloitte was fined £15m ($19m) by the FRC for audit failings, too.Those audit flubs have tarnished the consultants by association. They could also led to greater pressure from regulators to invest more in auditing, particularly around fraud detection. At the same time, the advisers are getting increasingly capital-hungry—they are looking to expand into managed services, running functions like compliance, payroll and cybersecurity on behalf of clients, and need new technology to do it. An advisory spin-off would leave the auditors flush with cash while freeing the consultants to pump themselves up with fresh equity from outside their partnerships. Staying together may no longer be good for the clients, either. The increasingly specialist skills offered by the big four to their customers leaves fewer opportunities for junior staff to dabble in different tasks. Few chief executives are eager to receive cybersecurity advice from a fresh-faced chartered accountant.You can go your own wayMr Ucuzoglu of Deloitte warns that auditor-advisor break-ups have “never once played out as intended”. True, the consulting business KPMG listed two decades ago, under the name BearingPoint, went bankrupt in 2009. And the sale of EY’s and PwC’s old advisory businesses to, respectively, Capgemini and IBM, two IT-focused consultancies, resulted in their own messy culture clashes.As EY reels from its graceless tumble down its Everest, it and its three rivals will certainly think twice before embarking on a similar expedition. Still, in the long run the break-up logic is unlikely to go away. Out in the distance they see Accenture, the publicly listed consulting giant that emerged from the rubble of Arthur Andersen, the collapse of which in the early 2000s turned what was the “big five” into the big four. The firm has thrived as a standalone enterprise, now raking in $62bn a year in sales, more than any of the big four. Since listing in 2001 its market value has climbed 20-fold, to $185bn. Such a prize may prove too tantalising to resist. ■ More