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How might Brexit affect UK employment rights? In the European Financial Review

Friday, October 28th, 2016

Article originally published in the European Financial Review on October 22, 2016

The potential consequences of Brexit for UK employment rights was hotly debated during the referendum campaign. Some fear that a bonfire will be lit under workers’ rights if the UK leaves the European Union. This article, however, argues that the government is likely to adopt a more cautious approach.

The potential consequences of Brexit for UK employment rights was a prominent issue in the debate that preceded the referendum. Many employment entitlements are underpinned by European Directives that establish a basic floor of rights for all EU and EEA member countries. The Directives cover issues such as working time, parental leave, equal treatment and information and consultation. In the lead up to the referendum, the TUC warned that Brexit would put these rights at risk while Jeremy Corbyn predicted a “bonfire” of rights should the UK leave the EU.

There were good reasons to be concerned. Over the past 30 years both Conservative and Labour governments have regarded employment rights as potentially damaging to the UK’s economic performance and have sought to preserve the “flexibility” of the labour market. Consecutive Conservative Party general election manifestos have promised to “repatriate” powers over employment rights from Brussels to the UK, claiming that EU Directives impose unreasonable costs on business and damage competitiveness. In the run up to his EU membership negotiations in late 2015 it was anticipated that David Cameron would demand that the UK be granted opt-outs from Directives relating to working time and temporary agency workers. In the end these demands, which would have required substantial treaty changes, were never made, but no-one should doubt the genuine desire of many Conservative politicians to end EU influence on UK employment legislation.

Similarly, most employers are not clamouring for the repeal of Equality Act, which provides workers with a right to be treated equally, and it is doubtful that any government would perceive permitting employers to discriminate against large sections of UK society to be a vote winning reform.


So what might happen next? As with everything related to Brexit, much will depend on the nature of the UK’s future relationship with the EU. It is widely assumed that the UK government will seek to maintain access to the single market, but unless there is a substantial change in EU policy, access will be contingent on the UK continuing to adhere to EU social policy Directives. Given that the Directives are intended to prevent countries from gaining competitive advantages through social dumping, it is extremely unlikely that the UK could be part of the single market while having the freedom to completely ignore EU social policy.

Other scenarios, such as a UK-EU Free Trade Agreement (the so-called “Canada option”), would leave the UK with more freedom to make changes to employment rights and mean that future rulings of the European Court of Justice would not be binding on the UK. What might we expect to see then?

To continue reading log in to the European Financial Review here

Prof Sumon Bhaumik comments: ‘Inside the machine: how two Nobel winners taught us how companies tick’

Thursday, October 20th, 2016

Originally posted on The Conversation 17 October 2016

One of the most notable evolutions in economic theory is the change in how we look at companies. No longer do we see a black box which uses some process or technology to turn inputs into outputs. These days we think of a business as a nexus of contracts among different stakeholders – shareholders, creditors, managers, workers, customers, suppliers and so on.

This evolution has led us to look at corporate governance through the design of contracts between those stakeholders. Oliver Hart and Bengt Holmström have laid the foundation to enable us to do that. The 2016 Nobel prize in Economics went some way to acknowledging this contribution.

While contracts are commonplace, they are generally not simple. They might be designed at times when the objectives of stakeholders differ (the so-called “agency problem”). For example, shareholders may want to maximise a company’s profits, while managers may want to build an empire through mergers and acquisitions.

There is also something called “asymmetric information”, where the actions of one set of stakeholders are not visible to other stakeholders in the company. Everyone can read the financial statements, but shareholders cannot directly see how much effort the managers put in to drive profits.

Shareholders can, however, enter into a contract with a company’s leaders that would give the managers an incentive to work in the interest of the shareholders. Pay can be linked to observable measures of a company’s performance. Similarly, shares and stock options may be included. In the Nobel citation, Holmström, a Finnish professor working at the Massachusetts Institute of Technology, was credited with demonstrating how shareholders should design an optimal contract for a CEO whose actions they would not be able to fully monitor.

Contracts can also be incomplete. It is either not possible or too expensive to write contracts that take into account all possible future outcomes. It is precisely the incompleteness of contracts that provides a rationale for corporate governance. This follows from research carried out by Hart, a British professor working at Harvard.

Hart of the matter

Consider, for example, a simple executive pay scheme in a company where shareholders own the company but control lies with the management. The relationship offers both an agency problem and asymmetric information. As mentioned earlier, one option for shareholders would be to write a contract that links the compensation of the managers to an observable outcome such as revenue or profit.

But profits can be affected by factors out of a manager’s control, and a contract that takes into account all combinations of managerial effort and external factors is impractical. Managers generally act in groups and so it may also prove difficult to assign an outcome to one person. You can write contracts that penalise the group if a product fails or a plant proves inefficient, of course, but Holmström argued that uncertainty about the causes of such failures would mean that monitoring would be necessary and hence the associated costs are unavoidable.

You could judge the performance of managers against that of their peers to decide compensation (a supermarket CEO might cheer that sales are up 10%; shareholders less so if other stores are up 12%). But this approach would still only work if you can successfully remove the influence of common external factors affecting how managers perform.

In this case, where simple contracts may not be easy to design or enforce, we need a mechanism – corporate governance – that ensures that the interests of non-managerial stakeholders are not undermined. Hart views corporate governance as a mechanism to allocate rights to control a company’s non-human assets among the stakeholders.

Credit due

An interesting implication of this perspective on corporate governance is a rationale for debt. Suppose the shareholders of a firm are mainly interested in short-term profits, while managers prefer grandiose empire building that brings private perks and benefits. Any contract that attempts to address this conflict is likely to be incomplete, unable to account for every influence over the company’s future profits.

This opens up the possibility of a significant dispute between the shareholders and the managers about the latter’s compensation. Managers might claim low profits came despite their best efforts, rather than because of their poor efforts or judgement.

How can debt help in this case? A debt contract can enable the creditor to enforce liquidation of a firm if it cannot meet its repayment obligations. If the firm performs well and can meet these obligations, control over the assets of the company remains with the managers. If, on the other hand, the company performs poorly and cannot repay the creditors then it can be liquidated. At the time of liquidation, after the creditors have been repaid, the residual (or remaining) rights over the company’s assets are with the shareholders – the managers have no rights over these assets any more.

In other words, where contracts between shareholders and managers are incomplete, debt taken on for whatever reason can force an alignment of objectives. In the words of Hart and Sanford J Grossman: “managers can avoid losing their positions only by being more productive.” Productive managers are precisely what shareholders want. A company’s capital structure can, therefore, be used to both discipline managers and give outsiders (creditors) an incentive to enforce the discipline. Hart and Grossman also examined how control is exerted in work on voting rights.

Holmström and Hart do not provide all the answers to resolve the problems associated with weak corporate governance. They do, however, induce us to think about a firm as a microcosm of the society in which we live, where stakeholders with different objectives compete for power and control. Their work has helped us to move away from one-size-fit-all rules about things such as financial structure and pay and has led us to focus on making contracts and mechanisms that work. That is a transforming contribution to corporate governance research.

Author: , Chair in Finance, Sheffield University Management School

See clearly with Professor Michelle Ryan’s research into the Glass Cliff at SUMS

Wednesday, November 6th, 2013

Professor Michelle Ryan is a highly-regarded figure in the world of social and organisational psychology.Ryan Michelle

Her research into the ‘Glass Cliff’ concept led to international press coverage and inclusion in numerous significant and influential research journals. As such, Sheffield University Management School and the Institute of Work Psychology are delighted that Prof Ryan will be visiting the school on 20 November, to deliver a seminar concerning her research.

Titled ‘Uncovering the Glass Cliff: Examining the Precariousness of Women’s leadership Positions’, Prof Ryan will discuss and examine what happens when women (and other minority groups) take on leadership roles. Extending the metaphor of the Glass Ceiling, the Glass Cliff describes the phenomenon whereby individuals belonging to particular groups are more likely to be found in leadership positions that are associated with a greater risk of failure and criticism.

This seminar is of interest to academics and students from many disciplines, ranging from organisational psychology, to women’s issues and sociology. You are able to book a place for the event on our Management Gateway:

Following in the footsteps of Professor Sabine Sonnentag, who discussed proactive work behaviour at the school in October, Prof Ryan’s visit underpins Sheffield University Management School’s high-standard of distinguished academic speakers attending this year’s programme of research seminars.

Michelle Ryan is Professor of Social and Organisational Psychology and Associate Dean (Research and Knowledge Transfer) at the University of Exeter

To book onto the event, click here.

Demonstration of SCEnAT on cloud the Supply Chain Environmental Analysis Tool

Thursday, March 14th, 2013

The advancement in cloud services now offers Universities and research groups access to an unparalleled level of technological power. The University of Sheffield will play host to this event to demonstrate the Supply Chain Environmental Analysis Tool (SCEnAT), an innovative application powered by Windows Azure. The event will also celebrate the launch of the Microsoft and Janet document pack.

Professor Lenny Koh Director of The University of Sheffield Logistics and Supply Chain Management (LSCM) Research Centre will speak about SCEnAT and its benefits to users. Carlos Oliveira, Managing Director of Shaping Cloud will discuss the development of the tool and benefits of utilising the technology. Mark McManus, Cloud Services Business Manager at Microsoft will talk about the Windows Azure platform and discuss the benefits to Universities and research groups. Tony Lewis of Janet will conclude the event by discussing the exclusive contractual amendments and due diligence available to research and education institutions in the form of the Janet Cloud Services for Education Agreement.

The advanced cloud technology used to build the tool has been recognised by Microsoft who have featured a case study about the tool on their own website.

This event is being supported by the University of Sheffield, Microsoft, Janet and Shaping Cloud.

To register:

To register your place and for more information visit:

PhD Scholarships at the University of Sheffield Management School

Tuesday, January 8th, 2013

The Management School at the University of Sheffield is a dynamic, research-led multidisciplinary School, one of only 58 Triple Crown Accredited Schools in the world. The school is pleased to be able to offer three scholarship awards for PhD study for entry in September 2013 as follows:

Two  ESRC White Rose PhD Scholarships

Further information on eligibility can be found at

Further funding information can be found at

Further general information can be found at


One fully funded PhD scholarship

This studentship is funded the Faculty of Social Sciences

Further information can be found at

Applications are invited to conduct doctoral research that fits within the remits of the Management School’s research centres and groups, as outlined below:


Centre for Regional Economic and Enterprise Development (CREED)

The Centre for Regional Economic and Enterprise Development is a Research Centre in the Management School at the University of Sheffield and its focus is the increasingly important areas of regional development and entrepreneurship. The Centre is a recognised leader in these areas of research and education.

See the Centre for Regional Economic & Enterprise Development (CREED)


Centre for Energy, Environment and Sustainability (CEES)

The Centre for Energy, Environment and Sustainability (CEES) is a leading centre in multi-disciplinary research, and the development and deployment of innovative ways to advance the understanding of energy, environment and sustainability for a low carbon future. CEES also act as a nucleus, feeding into the University of Sheffield cross cutting energy and environment themes and centres: Science-led Project Sunshine and Engineering-led AMRC, NAMRC, KROTO and Siemens Wind. In addition, CEES acts as the integrated platform to link research at Sheffield with the Centre for Low Carbon Futures (CLCF).  See the CEES website

Institute of Work Psychology (IWP)

Founded in 1994 by the Management School and the University’s Department of Psychology, the Institute of Work Psychology is world-renowned.  Its emphasis is on the developing and testing of theory about the effects of work on employee well-being and performance. Moreover, it has strong links to other disciplines including human resource management and health.  See Institute of Work Psychology (IWP)


Logistics & Supply Chain Management Group (LSCM)

The Logistics and Supply Chain Management (LSCM) Research Centre focuses on research, development and application of leading edge work on logistics and supply chain management, nationally and internationally. The LSCM Research Centre comprises of members and partners institutions/centres/universities from both national and international countries. The LSCM Research Centre is linked with a core mirror group at the South East European Research Centre (SEERC), 3 consortia, and 25 international partners and member institutions partnersSee the LSCM website


Work, Organisation and Employment Relations Research Centre (WOERRC)

The Centre’s major themes are as follows: employment relations, work organisation, health organisation, and work and the labour market. In each area, there is a focus on the nature of work, relationships with various stakeholders, and the policy context. For further information see:


Finance and Accounting Management

The FAM research group conducts research on finance, corporate governance and management accounting that is rigorous and relevant to contemporary accounting and finance issues and debates. For further information see:


International Business, Strategy and Marketing

This research group focuses on four research areas: emerging markets and multinationals; risk and strategy practice; knowledge, evolution and transmission of knowledge, and marketing in emerging countries. Researchers in the IBSM group collaborate with UK and overseas research institutions in the USA, Netherlands, Ireland, Turkey, China and many other emerging countries. For further information see:


 Please make sure you have applied formally to the University before applying for a scholarship.  We must have a full application including references, proposal and transcripts from previous study before we can consider you for a scholarship.

Guidance on how to write a research proposal, details of our entry requirements and information on how to apply can be found here

The deadline for submitting an application is 12 noon on 1 February 2013.

Once you have applied formally to the University, you can apply for the Scholarship via the University Scholarship form

If you have any questions please email

ESRC event: Walking the tightrope

Thursday, October 11th, 2012

The Management School is pleased to announce further success at the ESRC Festival of Social Sciences.

Date: 8 November 2012
Time: 9am-5pm
Venue: The Edge, The University of Sheffield, Endcliffe
To register: Click here to register your free place at the seminar

This one-day symposium explores how to create effective people, teams and organisations by drawing on the shared expertise and experience of a group of exceptional performers from the worlds of sport, medicine, specialist security and business.

Speakers include:

  • Andy McCann, Sam Brearey, Andy Halliday, – from the World of Elite Sport
  • Mark Stacey – Consultant Anaesthetist, NHS
  • Dr Paul Thomas – BBC Business Doctor, Leadership and Research Fellow in Complexity in Practice
  • Keri Jones – HR Advisor
  • Dr Ute Stephan – Expert in leadership from the Institute of Work Psychology at the University of Sheffield
  • Neil Francombe and Steve Eaton – Specialist forces and firearms command

Who should attend?
This event is aimed at local and national businesses.

Further information

The Festival of Social Science is run by the Economic and Social Research Council and takes place from 3-10 November 2012. With events from some of the country’s leading social scientists, the Festival celebrates the very best of British social science research and how it influences our social, economic and political lives – both now and in the future. This year’s Festival of Social Science has over 180 creative and exciting events across the UK to encourage businesses, charities, government agencies, schools and college students to discuss, discover and debate topical social science issues. Press releases detailing some of the varied events and a full list of the programme are available at the Festival website. You can now follow updates from the Festival on twitter using #esrcfestival

ESRC event: Cyberbullying in the workplace

Friday, October 5th, 2012

The Management School is pleased to announce the Institute of Work Psychology has successfully secured funding for an ESRC event as part of the Festival of Social Sciences.

Date: 7 November 2012
Time: 5-8pm
Venue: Showroom 5, Showroom Workstation, 15 Paternoster Row, Sheffield, S1 2BX
To register: Click here to register your free place at the seminar

This seminar forms part of the Economic and Social Research Council’s (ESRC) Festival of Social Science.  Dr Christine Sprigg, Dr Carolyn Axtell and Sam Farley (all at the Institute of Work Psychology (IWP), Management School) and Dr Iain Coyne (at the Institute of Work, Health & Organisations (I-WHO), University of Nottingham), will outline the findings of their recent research in this seminar entitled ‘Punched from the screen: Cyberbullying in the workplace.’

The study, one of the first on workplace cyberbullying in the UK, explores the prevalence, impact and frequency of cyberbullying amongst 320 university staff members.

Who should attend?
This event is aimed at local and national businesses.

Further information:

The Festival of Social Science is run by the Economic and Social Research Council and takes place from 3-10 November 2012. With events from some of the country’s leading social scientists, the Festival celebrates the very best of British social science research and how it influences our social, economic and political lives – both now and in the future. This year’s Festival of Social Science has over 180 creative and exciting events across the UK to encourage businesses, charities, government agencies, schools and college students to discuss, discover and debate topical social science issues. Press releases detailing some of the varied events and a full list of the programme are available at the Festival website. You can now follow updates from the Festival on twitter using #esrcfestival

Management School to hold international summer school for entrepreneurship research

Thursday, September 6th, 2012

As part of the INPERE network, Dr. Ute Stephan was awarded EUR 26,000 funding from the EU Erasmus program to hold an international summer-school titled “Toward policy relevant entrepreneurship research from a psychological perspective: Advanced research methods” from July 7 to 19, 2013 in Rotterdam, The Netherlands. The funding includes 4 scholarships for University of Sheffield PhD or Masters Students to attend the summer school as well as one teaching bursary.

This funding follows on from a successful, international conference on “Advances in the Psychology of Entrepreneurship” which Ute organised together with Dr Marjan Gorgievski, Erasmus University Rotterdam, earlier this year in Sheffield (


CREED awarded SURE grant

Wednesday, April 25th, 2012
CREED, via Dr. Tim Vorley, has secured a SURE award looking at the knowledge spillover effects of the AMRC on Sheffield. This is part of a wider funded project that CREED is undertaking on the economic impacts of the AMRC.
Tim Vorley, in addition, has won at least £40k to undertake a piece of behavioural economics research on student decision making funded by the Higher Education Academy. This work is being conducted with Professor Jenny Roberts from Economics and a consultancy called CFE.

Congratulations to Tim and his colleagues Dr. Nick Williams and Dr. Peter Rodgers on these significant achievements.

For more information about CREED please see:

SURE grant awarded to Management School academics

Wednesday, April 25th, 2012
Dr. Sunil Sahadev and Dr. Daragh O’Reilly have been awarded a Sheffield University Research Environment (SURE) grant to help map the development of marketing management paedagogy over the past 40+ years. This will involve conducting a longitudinal text-mining analysis of Kotler’s textbook “Marketing Management”. At the Management School, we involve our undergraduate students in our research where possible as it is mutually beneficial and productive for all concerned. As part of the SURE scheme one of our undergraduate students, Adam Haley, currently completing his second year of BA Business Management, will be working with Sunil and Daragh on this project over the summer.Daragh was previously awarded a SURE grant in 2010. This resulted in his journal article entitled “Mapping the arts marketing literature” (published in “Arts Marketing”) being recently chosen as a Highly Commended Award Winner at the Literati Network Awards for Excellence 2012.

Congratulations to Daragh and Sunil!