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The Human Equation: Building Profits by Putting People First Hardcover – January 30, 1998
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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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- 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 security
2. Selective hiring of new personnel
3. Self-managed teams and decentralization of decision making as the basic principles of organization design
4. Comparatively high compensation contingent on organizational performance
5. Extensive training
6. Reduces status distinctions and barriers, including dress, languag, office arrangements, and wage differences across levels
7. Extensive sharing of financial and performance information throughout the organization
This 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.
Thanks Dr. Pfeffer
This book highlights the importance of respecting employees in an organization. By treating employees as a strategic asset, a firm can make lucrative profits. The book can be divided into the following parts.
¡P Wrong sources of organizational success that firms
¡P Seven practices of successful organizations
¡P Reasons why smart organizations sometimes do dumb
things and the suggested solutions
¡P How conventional wisdom about employment contract,
compensation method, and unions is wrong
¡P The role of public policy in making profits through
- Good points:
1. Good insights provided:
The author provides his opinions about why and how putting people first can bring great returns to organizations with different detailed examples such as Lincoln Electric. This can make me understand the importance of employees to organizations.
2. Lots of evidence provided:
This book explains why putting people first can help companies make great profits by providing lots of examples, which include companies in different industries. Some examples are explained in a more detailed way such as Albert Dunlap.
3. Clear illustration of the concepts:
The main message of each chapter is clearly delivered.
Also, as the main theme of this book is about ¡§building profits by putting people first¡¨, the author has provided a diagram called ¡§Downward Performance Spiral¡¨ to illustrate the relationship between organization¡¦s poor treatment of its¡¦ employees and its¡¦ corresponding performance. Besides, he provided a diagram about how ¡§People-based strategy¡¨ can make sustained profits to organizations. All these diagrams can increase my understanding about these concepts.
4. Comprehensive information provided:
The author not only states what are the wrong sources of organizational success that firms commonly use, he also provides what and how organizations can do to make lucrative profits.
- Bad points:
1. Not interesting enough:
The author has repeated the main theme of this book ¡V ¡§building profits by putting people first¡¨ many times in different chapters. Although this can remind readers about the main theme of this book, readers may feel too bored.
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The underlying message is that "do you see people as labour costs to be reduced or...Read more