Customer Reviews

Hidden Value: How Great Companies Achieve Extraordinary Results with Ordinary People

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In Strategy Safari, Professor Mintzberg and his coauthors describe that most people approach strategy from one of 10 different perspectives, mostly ignoring the others. That book argues that we would be better served to integrate these 10 perspectives into a combined one. In Hidden Value, Professors OReilly and Pfeffer succeed in combining four of those perspectives in a valuable synthesis. The four that are combined here are values, which people to attract and retain, determining which core competencies to build, and the role of senior management in strategy development and implementation.

At a time when there are many excellent books out on how to find and retain top talent, this book aims to do something different. "Hiring and retaining talent is great. Building a company that creates and uses talent is even better." So after you have read all about Topgrading and other useful methods, read this book next.

The book is unusual (especially for one from Stanford professors published by Harvard Business School Press) in that it uses a structure designed to allow you to learn more than frequently occurs with straight exposition (thesis, followed by examples to support the thesis, and then a conclusion).

To do this, the authors found 8 companies that exhibited people-centered values in different industries to succeed in different ways. You are invited to peruse detailed case histories to get a sense of how these companies work. Following the eight is an example of a company with many similar approaches that was not doing as well, Cypress Semiconductor. You are invited to think through what's different. Later on, you also do mini-studies of People Express and Levi Strauss to see where they vary from the model that you have developed from the cases.

But if you do want to know what the authors think about the cases, their conclusions are summarized at the end of every chapter. Chapter 10 also looks at the overall model they discern.

They see a process whereby each of the successes starts out with a focus on people that is primarily employee centered. This focus often comes from the founder or the current CEO. The company then looks for people who share that focus. At some point, common values begin to emerge among the leadership and the rest of the company. The company continues to focus on coalescing around those values by hiring people with those values, and teaching the values to new employees. Values are reinforced everyday through communications, information flows, training, and rewards and recognition. This creates an environment of mutual trust and respect. Then the company looks at the core competencies that make sense in light of the people, values, and market opportunities and develop those core competencies The company then looks for new strategies that build on the core competencies. Senior management follows at this point in leading from and to reinforce the values.

The payoffs in the case histories relate to superior performance in key valued-added areas (which differ by case), reduced turnover of people which decreases cost of employment and improves performance further, trust and information flows that encourage useful experimentation, and consistency of focus which allows improvement to be greater and on-going.

The point of the book is that the "what" to do is pretty simple, but few people have the commitment and patience to handle the "how" to do it.

"Hidden Value" purports to offer a new management book style and a "people-first" focus to organisational competitive advantage. This style involves a learn & do structure to 8 anecdotes, rather than the usual hypotheses, case study evidence and checklists often used by many US educators & consultants. Note `learn & do" has been practiced for decades by military and engineering schools (for both physical maneuvers/value-add as well an intellectual stratagems/ designs etc..).

The repetitive anecdotal structured (e.g. introduction; background; values, philosophy and spirit; people/system, and lesson learnt) chapters span success stories from: SouthWest Airlines; Cisco Systems; The Men's Warehouse; the SAS Institute; PSS World Medical; AES; New United Motor Manufacturing Inc; and Cypress Semiconductor.

Strengths include: the broad range of case studies from different sectors including a few non-US examples; and the extremely timely "life-balance" and "people matter" message.

Weaknesses include: repetition of text (perhaps 35% of book); content gaps & granularity problems (e.g. aligned individual/team motivation models missing); a passive observational feel; a superficiality of analysis; a lack of formal tools to carry out own "people-centric" analysis; an often colloquial cliché-filled style (dates quickly); inconsistencies in many financial table rankings and formatting; and a lack of labeling/scales on the most significant table in the book on p.239.

O'Reilly/Pfeffer suggest through this table (p.239), that exceptional performance from committed people requires the organization to use the HR levers of: values, culture and strategy alignment; hiring for fit; investing in people; widespread information sharing; team-based systems; and rewards and recognition.

Better alternatives include: "The Secrets of Software Success" by Hoch et al (100 global software companies success factors including people) (ISBN 1578511054 HBS Press 1999); and the superb "First to the Future- on Active Leadership" by Willi Railo (rigorous proven methods to coach & lead Olympic-standard people, applicable to all) (ISBN82-991169-5-3 Norbok A/S 1995).

Having recently reviewed "The Knowing-Doing Gap" also co-authored by Pfeffer, I was struck by great similarities in case studies/data from SouthWest Airlines; Cisco Systems; The Men's Warehouse; the SAS Institute; PSS World Medical; AES; and New United Motor Manufacturing Inc. (couldn't remember if Cypress Semiconductor was featured). To this reviewer, both books cover a similar subject-matter less-well, and perhaps would have better been written as one really good book.

This book tells the story of eight extremely successful companies that manage to bring out the best in their people. The stories are detailed descriptions of the company's backgrounds, strategies, systems and management practices. The stories are also larded with quotes from the company's CEO's, HR managers and employees. Following this approach the authors provide the readers the opportunity to form their own hypotheses about the companies' successes. But the authors also present their interpretations of the case studies.

What these studies show is how these high performing companies have achieved their success by aligning their values, strategies and people. This is something which is easy to understand but hard to do. It requires consistent articulation and implementation of the values and vision and a relentless attention to detail in ensuring that all policies and practices support the company's values. In order to be able to show this kind of consistency a real belief and commitment are needed and a willingness to persevere.

This book shows how high performing companies consciously turn a lot of the conventional management wisdom upside down. For instance:

1. Contrary to what many people now think, recruiting, selecting and retaining unique talent is NOT the prime source of competitive advantage. Although these activities are important, the examples of these extraordinary companies show that it is much more important to build a culture and work system that enables all people to use their talents and develop their talents. A byproduct of this will be that your company will also be better at attracting and retaining people.

2. Values first instead of strategies. The conventional view puts competitive strategy on top and derives from that what structure is needed, what competencies and behaviors are needed and so on. The companies described here work differently. Although they do have competitive strategies these are secondary to their set of guiding values and to the alignment of these values with their management practices. In other words: they have a values-based view of strategy.

3. Respectful and trusting way of dealing with people. Many companies monitor, check and try to control employee behavior. The hidden value companies work differently. In the spirit of Douglas McGregor's book The Human Side of Enterprise, they seem to understand that if you begin by designing systems to protect against the small unmotivated minority, you end up alienating the motivated majority. So they put their people first by treating them respectfully, involving them and trusting them.

Lessons like the ones presented in this book can be found in several other books by for instance Jeffrey Pfeffer himself, David Maister and Jim Collins. What makes this book different and interesting to me is the presentation in the form of detailed case descriptions.

One of the greatest challenges facing organizations today is attracting and then keeping "the best and the brightest" people they can. Then, there is another great challenge to develop their talents and skills. Here is one of the best books I have read thus far which addresses the second challenge directly...and indirectly, addresses the first challenge as well (pun intended). O'Reilly and Pfeffer organize their material within a series of chapters, each of which (presented as a case history) focuses on eight exemplary companies (e.g. Cisco Systems, The Men's Wearhouse, and Southwest Airlines). The authors utilize a basic format (introduction, background, values, philosophy and spirit, etc.) which enables their reader to draw relevant comparisons and contrasts. They also summarize key points at the end of each chapter.

After extensive involvement with several of the exemplary companies, I can personally attest that organizations such as they which effectively develop the "hidden value" in their employees achieve at least three highly desirable (indeed imperative) objectives: they create a workplace environment in which people at all levels are much happier as well as much more productive; as a result, they have less attrition of their "best and brightest"; and finally, they are much more successful when competing for the "human capital" they need. To their credit, O'Reilly and Pfeffer do not promise to offer all manner of "secrets" to simplify the process of attracting and developing talent. Everything they suggest is common sense and much of it is obvious. The "hidden value" of their book is revealed only as you correlate all the ideas and experiences it provides within the context of your past and current circumstances.

If you agree that an organization should be value-driven and that values are driven by people, almost everything O'Reilly and Pfeffer share can be of substantial assistance. But I presume to conclude with three caveats. First, what they recommend is relatively simple to explain but will be immensely difficult (if not impossible) to implement without a firm commitment, sufficient time, and (yes) patience. Second, given the wealth of information provided, beware of massive adoption of what may have been effective elsewhere. Rather, select only what is most appropriate to your organization's needs when formulating a model. Finally, keep in mind that all of the eight exemplary companies have changed, some quite significantly, since the period during which this book was written. So must yours in months and years to come.

In a McKinsey & Company's study, "The War for Talent," McKinsey found that of 200 executives interviewed 58 responded that values and culture were absolutely essential in their decision to join, stay with, or leave an organization. The authors believe that by establishing the right value system and culture, companies can make all their employees perform as if they were in the top 10% of their field. The authors further state that companies must find new ways to tap the knowledge, experience, energy, and talents of employees.

Studying several companies that the authors believed had successfully leveraged their "hidden talent," the authors summarized these 6 essential practices:
· These companies place values and culture first
· They make those values real
· They hire people that will appreciate and espouse the company's values
· They invest in people
· They share information widely
· They reward and recognize those who adhere to the company's values.

A key way to have an organization tap this hidden talent is to achieve the status of being a people-centered organization. The authors see successful people-centered organizations have 3 basic themes that are common:
· Each has a well-articulated set of values that are widely shared and act as the foundation for its management practices.
· Each has a remarkable degree of alignment and consistency in the people-centered practices that express its core values
· Each has senior management whose primary roles are to ensure that the values are maintained and constantly made real to all employees in the organization.

I am really enjoying this book, and gaining great insight and ideas on what to implement within my own future business. It really does pay to provide creative incentives for employees, in my opinion. A recommended read for anyone starting their own business.

I fully agree with the premise of the authors, namely that focusing on employee satisfaction is key to achieving business success. The problem is that you could easily bankrupt a business before it got started if you implemented all of the insanely expensive employee centered policies in this book. Knowing where to draw the line is crucial to survival.

Like so many business books, "Hidden Value" is second hand wisdom, a description by (tenured) academics describing how entrepreneurs ran successful businesses. This is fine for academic pursuits. But if you are putting your life savings (and most likely a few other things you would rather not lose) at risk in a business, "Hidden Value" is far from the last word on the subject.

Charles O'Reilly puts out an interesting idea of how to get the most out of people with various management strategies. I worked in a human resources department for a little while and his ideas were among the more useful that I applied. The book is very well written and does a good job of holding your interest. Highly recommend.

Only on Chapter 5. Reading about the excellent practices of these companies makes me want to strive for the best for my employees, also!

This book is merely a compilation of case studies. There are few -- if any -- check lists, tables, charts, bullet points, or step-by-step methodologies to help you implement the concepts within your own company or organization. In fact, THERE ARE ONLY 21 PAGES not dedicated exclusively to either a case study and/or an analysis of the various case studies presented within the book. Save your money and purchase "The HR Scorecard", "The Talent Solution", or "Aligning Pay and Results" instead. Very disappointing...