The Human Equation: Building Profits by Putting People First [Hardcover]

Jeffrey Pfeffer (Author)

Book Description

Publication Date: January 30, 1998

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.

Editorial Reviews

Amazon.com Review

The lure of new and profitable markets has lead many companies to formulate strategies to capture these markets. This focus on strategy often leads to downsizing and the shedding of old businesses in favor of a "lean" economic model that stresses outsourcing. The strategy that leads to downsizing has its short-term rewards--a fatter bottom line and happy shareholders.

Jeffrey Pfeffer argues that much of this downsizing is nothing more than a throwback to 100-year-old employment practices. Instead of cutting costs as a means to increase profits, companies should focus more on building revenue by relying on solid people-management skills. Through dozens of examples, Pfeffer demonstrates that successful companies worry more about people and the competence in their organizations than they do about having the right strategy. Pfeffer contends that the strategy part is relatively easy--it's the day-to-day execution that's hard. Companies that understand the relationship between people and profits are the ones that usually win in the long run.

From Library Journal

Pfeffer (Competitive Advantage Through People, LJ 2/15/94) argues persuasively that organizations typically fail to consider their culture and capabilities, particularly when planning for change. He addresses a number of people issues, such as downsizing, hiring practices, compensation approaches, and alignment of management practice with stated values. Although the author favors a fundamental approach, he shores it up with anecdotal information, logic, and wit, noting, for example, that downsizing does not eliminate costs but could be radically counterproductive (i.e., no expenses, no enterprise). Further, he gives examples of organizations that, while decidedly low-tech, manage to produce profits often associated with high-tech enterprises. Pfeffer further points out how a number of organizations in typically low-margin sectors outperform their competitors through an alignment of values. Indeed, Pfeffer's examples emphasize doing the right thing the right way. This book should be required reading for those planning organizational change.?Steven Silkunas, SEPTA/FRONTIER, Lansdale, Pa.
Copyright 1997 Reed Business Information, Inc.

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Product Details

• Hardcover: 368 pages
• Publisher: Harvard Business Review Press; 1 edition (January 30, 1998)
• Language: English
• ISBN-10: 0875848419
• ISBN-13: 978-0875848419
• Product Dimensions: 8.5 x 1 x 11 inches
• Shipping Weight: 1.5 pounds (View shipping rates and policies)
• Average Customer Review: 4.2 out of 5 stars  See all reviews (13 customer reviews)
• Amazon Best Sellers Rank: #89,902 in Books (See Top 100 in Books)

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Most Helpful Customer Reviews

25 of 26 people found the following review helpful

5.0 out of 5 stars A company doesn't grow to greatness by shrinking... September 20, 2000

By Jim Carson

Format:Hardcover

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 sense of ownership as we'd like to believe because if the market has a violent downswing (as it did in early 2000), employees are almost incented to leave their underwater options.

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Pfeffer's book is an evolution of his previous ideas. What's also interesting in his analysis was seeing that long-term company success was *not* correlated to technology or industry.

Pfeffer's suggestions seem like common sense, but Pfeffer realizes they're not AND is aware of the need to quantify the information. The case studies and quantitative research are very helpful in supporting these ideas. In a few of the cases -- Lincoln Electric springs to mind -- it would be especially helpful to have a more recent examination, perhaps a follow-up.

13 of 14 people found the following review helpful

5.0 out of 5 stars Thank you Dr. Pfeffer April 11, 1999

By Kenneth Burns

Format:Hardcover|Amazon Verified Purchase

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

8 of 8 people found the following review helpful

5.0 out of 5 stars Insightful, logical, humane--and well written too! June 3, 1998

By Word Wrangler

Format:Hardcover

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.