The Human Equation: Building Profits by Putting People First

by Jeffrey Pfeffer

Book Overview

Why is common sense so uncommon when it comes to managing people? How is it that so many seemingly intelligent organizations implement harmful management practices and ideas? In his provocative new book, The Human Equation , bestselling author Jeffrey Pfeffer examines why much of the current conventional wisdom is wrong and asks us to re-think the way managers link people with organizational performance. Pfeffer masterfully builds a powerful business case for managing people effectively--not just because it makes for good corporate policy, but because it results in outstanding performance and profits. Challenging current thinking and practice, Pfeffer: reveals the costs of downsizing and provides alternatives; identifies troubling trends in compensation, and suggests better practices; explains why even the smartest managers sometimes manage people unwisely; demonstrates how market-based forces can fail to create good people management practices, creating a need for positive public policy; and provides practical guidelines for implementing high-performance management practices. Filled with information and ideas, The Human Equation provides much-needed guidance for managing people more wisely and more profitably.

• Format: Hardcover
• Language: English
• ISBN: 0875848419
• ISBN13: 9780875848419
• Release Date: January 1998
• Publisher: Harvard Business Review Press
• Length: 368 Pages
• Weight: 1.65 lbs.
• Dimensions: 1.3" x 6.4" x 9.5"

Customer Reviews

People and organization success

The Human Equation (1998) is an exceptional book. In the first chapter Pfeffer shows that conventional wisdom about the sources of organization success are not correct. In particular he disproves the ideas:- that it is essential to work in the right sector, - that the size of the organization is crucial, - that it is necessary to have an international precense, - that downsizing is indispensible, and - that it is necessary to have a technological lead. Then the author clearly and impressively presents the enormous amount of evidence of the last decade showing the strong association between how organization treat people and how they score on financial and operational performance indicators. Pfeffer describes the following seven HR practices that demonstrable correlate with organization success. He names these practices High Performance Work Practices. They are: 1. Employment security2. Selective hiring of new personnel3. Self-managed teams and decentralization of decision making as the basic principles of organization design4. Comparatively high compensation contingent on organizational performance5. Extensive training6. Reduces status distinctions and barriers, including dress, languag, office arrangements, and wage differences across levels7. Extensive sharing of financial and performance information throughout the organizationThis list contains some elements that may seem counterintuitive to some. For instance: how can it be that high wages contribute to financial performance? Don't they just keep the profits low? And how can you afford to be selective in this hard labour market? And how can companies afford to invest much in training of personnel? Aren't employees so mobile and disloyal that you run the risk of training them for your competitor? Speaking about this, how can you in this time of employability of employment security? And it is wise to have an open information policy? If you'd do that, wouldn't you weaken your position by feeding your competitor with valuable information? If you read this book you will find crystal-clear answers to these questions. The conclusion is that the seven practices do indeed work.

A company doesn't grow to greatness by shrinking...

The premise of Pfeffer's book is that companies' success is directly correlated to the quality of people and their management. This seems like common sense. After all, many companies proclaim "people are our biggest asset." In practice, however, it's uncommon sense: companies often lack the deep conviction necessary to follow through. It's much easier to take a "tough love" approach to "management," cut training and lay off 10% of the workforce than it is to focus on the long-term people issue.Based on his research, Pfeffer offers several HR practices that are common in effective organizations. Among them:* Maintain a sense of employment security. Psychologically speaking, people will work more effectively when they can focus on doing their job rather than worrying about keeping it. Similarly, if employees are your company's hugest asset, then it behooves you to ensure they're not working for your competition. This is common sense. More companies practice uncommon sense and get sucked into the peformance death-spiral. For example, we frequently read where a new CEO is brought in and his first action is to initiate layoffs. (Apple Computer is an often-cited case study of this.) With their sense of security threatened, the remaining employees will become less motivated. Profits begin to sag, so the company reacts by cutting training. Employees may have more accidents, and customer service is affected. The spiral continues until it or the company broken.* Hire selectively - a recurring theme is that to avoid layoffs, you need to be operating efficiently enough not to *have* extra employees. In a perfect world, we would have a large number of applicants, screen them based on corporate fit and their attitude, then filter them out through several rounds of screening. Senior staff should become involved in the latter part of the process to emphasize the importance of hiring. After hiring, we need to evaluate the success of our hiring practices and adjust them as necessary. This follows the axiom "that which gets measured, gets done." This common sense approach is used by highly successful companies such as Southwest Airlines and Cisco. Companies exhibiting "uncommon sense" may get so desperate to fill the position that they go against their own guidelines. Having made this mistake before, I am very much aware that a bad hire is far worse than no hire.* Facilitate ownership and responsibility through decentralized decision making. Assuming you hire the "best and brightest," you should trust them to use their brains. This provides a sense of ownership, challenge, and supports the organization's organic development. We all hope to have the equivalent of the "Post-It" note developed internally by folks taking initiative. Pfeffer had an interesting comment from Bill Gurley about the effectiveness of stock options. Specifically, they're not really as much a sens

Thank you Dr. Pfeffer

This sequel should have been first. The prof's book: Competitive Advantage through People gave tactical initiatives to create a motivated and productive workforce. But like so many people in industry who want to implement the type of intiatives discussed in that book, I found myself needing substantive validation on why should our firm engage in these behaviors. THIS BOOK SAYS WHY!! We all know instinctively that many of the tactics outlined in Competive Advantage are the right things to do, yet we are all faced with needing tangible explanations for why we should engage in these behaviors. The Human Equation can help develop the business case for that explanation.Thanks Dr. Pfeffer

A 'must-read' for every executive!

Using hard data and perceptiveness, Pfeffer cuts through today's conventional 'wisdoms' to reawaken us to the human core of organization. In this age of downsizing, outsourcing, and quarterly-bound thinking, the author convincingly argues for putting people at the heart of strategy. While on target for the 21st Century, this book is in the spirit and best tradition of such pioneers as Douglas McGregor, Abe Maslow, Frederick Herzberg, Chris Argyris, and many more. Indeed, in these times it is radical to argue for putting people first and assert that, to paraphrase Pfeffer, profits are achieved through people. A 'must-read' for every executive!

Insightful, logical, humane--and well written too!

Peffer, along with Alfie Kohn and a few others (like W. Edwards Deming, Peter Senge, and Douglas McGregor), is a paragon of sanity, clarity of thought and analysis, and uncommon common sense, in a world of business increasingly driven by bizarre fads, inappropriately mechanistic models, unreal economic assumptions, macho narcissists, callow market analysts, and assorted other narrow thinkers. In a book that is a logical extension of his previous work (Competitive Advantage Through People, which I also recommend), he not only compellingly and objectively demonstrates why putting people (the work force) at the center of company strategy is the key to long-term success (rather than the short-term, cost-cutting downsizing approach), but also he provides the guidance for operationalizing this approach. Unlike most business books, which often seem to consist of little more than unsupported personal opinion and empty platitudes, this is a work of scholarship, substance, and practicality. The writing is clear, the examples are enlightening and interesting. I highly recommend this book, and all of Pfeffer's other books as well.