“Putting People First for Organizational Success” By: Jeffrey Pfeffer & John F. Veiga
Overview • About the Authors • Statistical Evidence • The FORTUNE List • The Apple Story • Seven Practices of Successful Organizations • Four Hindrances to Success • Summary
Jeffrey Pfeffer Thomas D. Dee II Professor of Organizational Behavior at Stanford University since 1979 BS, MS, Carnegie-Mellon University in 1968 PhD, Stanford Univ. in 1972 10 Books Over 100 Articles Fellow of Academy of Management John F. Veiga Management Dept. Chair & Professor of Management at University of Connecticut BS, MA, Gannon University in 1968 DBA, Kent State Univ. in 1971 Board of Trustees Distinguished Professor Academy of Management Hall of Fame Inductee in 2000 The Authors
Proof is in the Pudding • Award-winning study from the Academy of Management Executive ------------------- 7.05% decrease in turnover $27,044 more in sales $18,641 more in market value $3,814 more in profits Per Employee!
FORTUNE • Best Companies to Work For 2001 • Edward Jones • Container Store • SAS Institute • TDIndustries • Synovus Financial Corporation
Seven Practices of Successful Organizations • Employment Security • Selective Hiring • Self-Managed Teams and Decentralization • Comparatively High Compensation • Extensive Training • Reduction of Status Differences • Sharing Information
Employment Security • Southwest Airlines – Herb Kelleher, CEO “Our most important tools for building employee partnership are job security and a stimulating work environment…Certainly there were times when we could have made substantially more profits in the short-term if we had furloughed people, but we didn’t. We were looking at our company’s longer-term interests…As it turns out, providing job security imposes additional discipline, because if your goal is to avoid layoffs, then you hire very sparingly. So our commitment to job security has actually helped us keep our labor force smaller and more productive than our competitors.”
Selective Hiring • Enterprise Rent-A-Car “We’ll pick you up.”
Self-Managed Teams andDecentralization as BasicElements of OrganizationalDesign • Whole Foods Markets Everyone who works at Whole Foods Markets is a team member: This reflects our philosophy that we are all partners in the shared mission of giving our customers the very best in products and services. We invest in and believe in the collective wisdom of our team members. The stores are organized into self-managing work teams that are responsible and accountable for their own performance.
Comparatively High Compensation Contingent on Organizational Performance • Pathmark Grocery • Store managers received a 40%-50% raise in 1972
Extensive Training • The Men’s Wearhouse • Suits University • Suits High • Selling Accessories U “I guarantee it.”
Reduction of Status Differences • Symbolic • Titles • Physical Space • Dress • Substantive • Reduction of wage inequality
Sharing Information • Springfield Remanufacturing Corporation “Open-Book Management” SRC
Four Hindrances to Success • Managers are enslaved by short-term pressures. • Organizations tend to destroy competence. • Managers don’t delegate enough. • Perverse norms about what constitutes good management.
Implications and Summary • Implementing and seeing results from these practices takes time and patience. • Key to success lies in the manager’s perspective. • You CAN do it better!
Sources • John A. Byrne, “After Enron: The Ideal Corporation,” BusinessWeek online, August 26, 2002. • Robert Levering and Milton Moskowitz, “The Best in the Worst of Times,” Fortune, February 2002. • M.A. Huselid, “The Impact of Human Resource Management Practices on Turnover, Productivity, and Corporate Financial Performance,” Academy of Management Journal 38 (1995): 647. • Veiga, J.F., Fox, K., Yanouzas, J., and Eddleston, K. 1999. “Toward Greater Understanding in the Workplace,” Academy of Management Executive, 13 (2), 81-87.