The Thinker Interview: Jeffrey Pfeffer on Human Sustainability

 

Jeffrey Pfeffer, Thomas D. Dee II Professor of Organizational Behaviour, Sanford Graduate School of Business

Jeffrey Pfeffer, Thomas D. Dee II Professor of Organizational Behaviour, Stanford Graduate School of Business

 

Organization behavior expert and Stanford Professor Jeffrey Pfeffer on the poor state of human sustainability in organizations

In a career spanning more than four decades, there is one thing that Jeffrey Pfeffer has never done—mince words and sugarcoat advice. Pfeffer, the Thomas D. Dee II Professor of Organizational Behavior at the Stanford Graduate School of Business, is one of the most influential authorities in the field of organizational behavior today.

Over the years, through more than a dozen books written with his trademark candor and biting wit, he has helped many individuals confront and come to terms with uncomfortable truths about the organizational and business environment. Among his most successful books are The Knowing-Doing Gap (with his Stanford colleague Robert Sutton), Hard Facts: Dangerous Half-Truths & Total Nonsense (with Sutton again), and the more recent Power: Why Some People Have it and Others Don’t. While Hard Facts ruffled many feathers because it put the spotlight on evidence-based management and warned against fads masquerading as the “next big management idea”, his 2010 book Power dismissed the notion of the hierarchy-less office as pure bunkum. It went on to advise employees that to succeed in their careers, they must actively seek power for themselves.

More recently, Pfeffer has started focusing on an idea he likes to call ‘human sustainability’. In an Academy of Management Perspectives article, he rued the fact that while more and more organizations are focusing on their environmental impact, they pay little attention to the affect they have on their human and social environment. He focused in particular on the impact on employees—ranging from ill health and stress, to mortality. “…(T)his emphasis on the natural environment raises an interesting question: Why are polar bears or even milk jugs more important than people, not only in terms of research attention, but also as a focus of company initiatives?” he asked.

In this interview, Pfeffer elaborates on the idea of human sustainability, also the subject of his next book. Excerpts:

Q. By putting the spotlight on employees and the kind of conditions and environment they have to cope in, you have brought to the fore an issue that has long been ignored. What really prompted you to look at this direction? And how does it tie in with your past work?

A. It began when I wrote Competitive Advantage through People (1996) and then The Human Equation (1998). I have also given a lot of talks, read a lot of the literature on high-performance or high-commitment work practices and served for several years on the Human Capital Leadership Council for Hewitt (now Aon Hewitt), one of the big HR consulting firms. What struck me (was that) if you look at consulting firm research or academic research, there has been for decades a recognition that organizational performance would be enhanced if companies basically reorganized their management practices to engage the workforce and reduce work-family conflict—basically do things that would permit people to make decisions and exercise their gifts and skills, and provide training. After decades of research, and lots of reports coming out of the HR consulting firms, I did not see that any of this work was being implemented, very much, or in very many places. So if profits did not motivate companies to do the right thing, I began to think if there was some other way in which we might get companies’ attention. It occurred to me that maybe some of the management practices that would increase organizational performance might also be related to employee health. That’s what got me on this thing, kind of trying to think of a hook, or a lever, or some way of getting companies’ attention on this issue.

Q. We usually hear of sustainability in the context of the environment and you have put a human dimension on it. How do you define ‘human sustainability’?

A. I would define human sustainability, in a way, analogous to environmental sustainability, (which is really about whether) you are engaging in economic activities in a way that disrupts to the least extent possible the natural world. It’s exactly the same for human sustainability. When companies—and you can see this in China and certainly in the US—do not care about employees and the employees’ work environment, you have higher incidences of cardiovascular disease, health problems, workplace-related stress, psychiatric problems and workplace violence. To the extent that employees are being ‘used up’, both physically and psychologically, that does not strike me as a very sustainable practice. It’s more sustainable in a country that has more than a billion people like China, but it’s still not very sustainable, because China has a one-child policy so sooner or later they’ll run out of people too. Sustainability means just what it implies: are you engaging in work practices that do not disrupt, in this case, the social or human environment, and which do not basically kill people.

Q. Now that we have human sustainability in the picture, how do we need to rethink a concept like the triple bottomline that every company is talking about now?

A. We need measures of employee well-being. I have a dear friend who’s just been promoted to chairman of the board of a non-profit modeled after the Financial Accounting Standards Board (FASB), called the Sustainability Accountability Standards Board (SASB). If you look at the measures that they want companies to adopt, this goes back to the quality movement, and everybody in management will tell you, that what you inspect, you get. As soon as I begin measuring and inspecting, my carbon footprint and the size of that footprint, now I will pay attention to it. Companies, for the most part, do not measure employee well-being. They may do an annual survey of employee engagement which most of them don’t pay much attention to, but they are not measuring employees’ physical and mental health, and particularly, they are not tying those measurements to what they are doing inside their organizations. Look at the discussion in the US about healthcare—it’s always done in terms of cost. Look at companies, and they are for the most part, talking only about dollars. To the extent that they are talking about anything else, it’s, you know, a carbon thing or something (like that). We need to have measures and attention to human well-being. To use the words of a friend of mine who teaches at IESE in Barcelona, ‘Why should we care more about polar bears than we do about human beings?’ We need to measure human well-being. We need to have standards for that, and we need to compare organizations to each other and to themselves over time and we should see if companies are doing things to make their employees healthier as oppose to less healthy.

Q. What are the different dimensions of human sustainability and how would you measure and quantify them?

A. Interestingly enough, since I’m doing a lot of work on this I can tell you this: there is a single-item question. It’s called Self-Reported Health Status (SRHS). It basically asks people how healthy they are. (It) turns out to be in some studies more correlated with their prospective subsequent mortality than even physiological measures. So it’s actually quite easy to measure. You ask people basically, ‘How are you doing?’ or ‘Is your work-related stress interfering with your health? Is it interfering with your ability to live your life?’ You ask them about their physical health, psychological health, and how much stress they’re experiencing.

The problem with many companies’ wellness programs is they assume that your individual decisions about smoking, drinking, overeating and substance abuse or any other individual issues that you have, that this is somehow your individual responsibility. While they will provide you perhaps with some incentives, or dietary and nutrition counseling, or a once-a-year cholesterol measure, what companies have failed to recognize is that a lot of the individually unhealthful behaviors such as overeating, not exercising, drinking and smoking are directly related to workplace stress, and the stress that comes from economic insecurity, including the threats of layoffs and relatively high unemployment rates. While it is true that individuals have some responsibility for their own choices, those choices are not made in a vacuum. There is actually a very large epidemiological literature that suggests that people who are laid off, or who face the threat of unemployment, or who have been unemployed are much more likely to engage in individually unhealthful behaviors, controlling for everything else, than people who have not faced those kinds of stresses.

Q. Has the situation with regard to human sustainability worsened in recent years?

A. There’s an article in Health Affairs which talks about the fact that at least for the less educated groups in the US, mortality is up and life expectancy is down, so they are clearly worse off. Overall, I think it’s a mixed thing, but the US has now more uninsured people than ever before, this is prior of course to the passage of the Affordable Care Act. This is from the Kaiser Foundation’s studies—a smaller percentage of employers are offering healthcare coverage than before, and healthcare coverage is related to health and mortality and morbidity. Certainly the levels of job satisfaction according to the Conference Board are lower, and if you go to virtually any of the major human capital consulting firms’ websites, you will see that the levels of employee engagement are pretty low and are probably not as good as they used to be. To the extent that there are indirect indicators, they suggest that things at least in the US are probably worse than they were. I think this is less true in places like Northern Europe, which have, I think, very humane policies mandated by the government towards the workforce. There was an article in The New York Times, which spoke about all the suicides occurring in Greece because of the severe economic stresses that that country is under. Economic insecurity and economic turmoil lead to a variety of forms of unhealthy individual behaviors and bad health outcomes. So yes, I think things are probably worse.

Q. We are all well aware of the dangers of ignoring human sustainability issues, but most of it is really from the perspective of the individual. What are the dangers of ignoring these issues from the organizational perspective?

A. At the moment, at least in the US, and I suspect this is probably true in China as well, from the individual organization’s point of view there actually are no dangers, because as long as there is a reserve army of the unemployed, as long as there is an adequate workforce, as long as I can replace my workforce, as long as there is sufficiently high unemployment rate and a sufficiently large number of people with the skills I need available in the workforce, there is no real cost. The costs are really paid by society. In the US, when people become unhealthy, they either die, which of course costs nobody anything, or they leave the workforce, and once they leave the workforce, they become the responsibility of the state. Forty years ago, if I polluted either the air or the water, what was the cost to me? Nothing. Those costs were externalized, to use an economics term. Other people had to clean up the water, other people suffered from the air pollution and I, as a company, paid no price. So one of the things that physical environmental regulation did, was it said that if you were going to pollute the physical environment, either that was going to be proscribed or else the cost would be borne at least partly by you, which would give you an incentive to figure out how to engage in less air, water and other forms of pollution. Basically cut if off at the source. Prevention is always cheaper than remedy. It’s the same thing for human sustainability and human health as well. Until companies have to pay for the social costs they’re incurring or imposing on people in terms of their physical and mental health, there’s really no reason for companies to change their behavior.

Q. Is there a tradeoff between achieving the typical organizational goals of, say, efficiency, quality, low-cost, scale, etc., and employee well-being? Is it an ‘either or’ or can the two be achieved together?

A. Literature suggest that healthier employees, of course, are more productive, which wouldn’t surprise you. But many of the practices that cause economic insecurity and stress are not actually economically efficient either. I think this is a win-win situation not an ‘either or’.

Q. Have you actually seen anyone do that? Typically the companies that are successful, like Walmart for instance, are probably the worst offenders on this account.

A. It is (one of the worst offenders). Walmart is definitely one of them. Companies which are on rankings like the Great Places to Work list and the Fortune Best Places to Work list, I think do a pretty good job at this, places like the SAS Institute, Patagonia and Google. The SAS Institute has had onsite healthcare for decades, and has offered generous health insurance and family-friendly work policies. So there are companies that have done this, but there aren’t, unfortunately, very many of them.

Q. What are the possible solutions to this problem?

A. If the organizations want to address this problem, it’s actually quite simple. If you have a problem with your production quality or with sales, you basically do the same thing: first of all, you have measurements which permit you to see if the problem exists, and then you try to use, to the best of your ability, those measurements to figure out the source of the problem and how to fix it.

Q. One of the things you also talk about is rethinking job design in this context.

A. You certainly should offer more autonomy and flexibility and there’ve been lots of studies that suggest that that’s a good thing to do. One of the biggest predictors of health problems is absence of control over your work environment. So you have people changing your deadlines all the time, making capricious demands on you,… you don’t understand what you need to do in order to be successful because it changes all the time. To the extent you give people clarity about what they need to do, why they need to do it, and you offer them a predictable and controllable environment, they will be better off and the company will be better off as well.

Q. On a lighter note, we live in a world of quick-fixes. Is there a ‘Pfeffer Formula’ for dealing with human sustainability problems?

A. There is a very simple formula: to the extent that people actually take this seriously, they will address it. One of the things that distresses me is that we have all these discussions, and human well-being is never a part of the calculation. There’s lots of discussion about should we expand or contract Medicare and Medicaid in the US, and that is a discussion talked about only in dollar terms, even though there is enormous amounts of research that shows how access to those specific programs affect people’s lifespans. So yes, I have a quick-fix, and the quick-fix is that when you discuss any issue of performance, you add human well-being to the dollars.