Jeffrey Pfeffer is the Thomas D. Dee II Professor of Organizational Behavior at the Graduate School of Business, Stanford University where he has taught since 1979. He is the author or co-author of thirteen books including The Human Equation: Building Profits by Putting People First, Managing with Power: Politics and Influence in Organizations, The Knowing-Doing Gap: How Smart Companies Turn Knowledge Into Action, Hidden Value: How Great Companies Achieve Extraordinary Results with Ordinary People, Hard Facts, Dangerous Half-Truths, and Total Nonsense: Profiting from Evidence-Based Management, and What Were They Thinking? Unconventional Wisdom About Management, a collection of 27 essays about management topics, as well as more than 120 articles and book chapters. His latest book, Power: Why Some People Have It — and Others Don’t, was published by HarperCollins (September, 2010).
Pfeffer received his B.S. and M.S. degrees from Carnegie-Mellon University and his Ph.D. from Stanford. He began his career at the business school at the University of Illinois and then taught at the University of California, Berkeley. Pfeffer has been a visiting professor at the Harvard Business School, Singapore Management University, London Business School, and a frequent visitor at IESE in Barcelona. Pfeffer has presented seminars in 34 countries throughout the world as well as doing consulting and providing executive education for numerous companies, associations, and universities in the United States. Moreover, he has won the Richard I. Irwin Award presented by the Academy of Management for scholarly contributions to management and numerous awards for articles and books.
Morris: Before discussing a few of your earlier books and then your latest, Power, a few general questions. First, so much has happened in the global business world during the last 3-5 years. In your opinion, what has been the single most significant change? How so.
Pfeffer: The single most significant change has been the globalization of labor markets. Product markets–trade in goods–have been globalizing for years. But now, with the reduction in communication expenses and the building of all sorts of IT infrastructure, essentially any job can be done almost anywhere. One of the fastest growing sectors in the Indian outsourcing industry is the outsourcing of (at the moment routine) legal work. Newswriting, the reading of digital X-rays and other digital diagnostic tests, research and development, clinical trials for pharmaceuticals–all have been increasingly placed in a global marketplace in which people are, and have to, competing with talented, and lower wage, individuals from all over the world.
The effect of this has been to seriously erode working conditions for many people in the advanced industrialized countries, particularly in the United States. As many people know, our job market problems began long before the latest recession. We have faced literally decades with no substantive increase in median wages, and job growth, except in health and government jobs such as education, has been stagnant for a while. People are now expected to travel more and to work at odd hours to coordinate with people all over the world. Simply put, companies have prospered, but for the most part, people have not.
Morris: As you know, even the most prestigious business schools such as Stanford, Harvard, Kellogg at Northwestern, Ross at Michigan, and Wharton at Pennsylvania have been severely attacked in recent years. In your opinion, which single area does there seem to be the greatest need for improvement and what specifically do you recommend?
Pfeffer: As Harvard Business School professor Rakesh Khurana has so persuasively argued, there needs to be a “professionalization” project in management. Professionals are committed to evidence-based practice, continuous learning and education, and working in the best interests of their clients and not being overly aggressive in their pursuit of self-interest. This is not what we tend to see in business schools. The degree is an “entry ticket” and the amount of critical thinking and mastery of the material that occurs is, in general, too low. As one student once told me, “this isn’t medicine. No one is going to die if we screw up.” But of course that isn’t completely true–the evidence is quite clear that layoffs, the result of mismanagement in some cases, actually do kill people.
Business school graduates from the best schools earn large salaries and frequently rise to positions of great power. It would be nice if they used that power to truly make the world a better place–which entails more than just maximizing their own organization’s profits and their own economic well-being.
There is a movement to have people sign ethical “oaths” which is well-intentioned but not likely to do much. We need to reexamine and reassess the purpose of the corporation, and go back to the idea that senior leadership has responsibilities not just to shareholders but also to customers and employees. In this regard, the Aspen Institute’s values surveys are instructive and informative.
How to make this change is beyond my “pay grade.” The issue is in part a collective action problem–it would be tough for one school, on its own, to chart a completely different course.
Morris: Here’s a hypothetical situation. You have been invited to spend a weekend at Camp David meeting one-on-one with President Obama. Just the two of you. He has asked you to come prepared to evaluate his performance thus far and then share whatever recommendations you may have with regard to what should be his highest priorities as a leader and manager, going forward. What would be your response?
Pfeffer: I would give Obama a “C.” He gets an “A” for understanding this country’s profound problems in education, health care, infrastructure, and economic competitiveness, and for surrounding himself with extremely skilled and knowledgeable people who know what to do. He probably gets an “F,” ironically, in his ability to sell these ideas to the American public and to be angry enough, conniving enough, and frankly mean enough to get them implemented and understood.
We now live in an era of the permanent campaign–all marketing and messaging all the time. We clearly live in an era where the “truth” doesn’t matter much–people tell lies about things ranging from the likelihood of “death panels” to the effects of the stimulus on saving this economy from a true calamity. In such a context, Obama himself needs to be “selling” all the time, as does his team, and also be more forceful in advocating their views. He needs to project that he and his ideas will win. And I don’t think he has yet done that.
Morris: Here’s a question I have been wanting to ask you for years. When I began to read your earliest book, Managing with Power (1992), my initial reaction was that your insights and assertions are counterintuitive. Then it dawned on me that, instead, you were challenging convention wisdom. And I think you have continued to do that in every other book you have written since then. Is that an accurate assessment?
Pfeffer: Yes. That’s because conventional wisdom is often wrong. And that’s because few people bother to actually consult the social science research that actually helps us understand human behavior. To paraphrase the late management thinker and writer, Peter Drucker, thinking is hard work, which is why so few people (including actually senior managers) do it. Once there is some “conventional,” seemingly-reasonable story, people just accept it and don’t ask, “is this actually true? Is it consistent with the data?” And this extends to the highest reaches of organizational life.
Morris: According to recent Gallup research of more than 20 million workers, 29% of employees in the U.S. are actively and productively engaged, 54% are passively engaged, and 17% are actively disengaged. Whatever the exact percentages may be, I am curious to know how someone can “manage with power” when about 70% (on average) of those in a given workforce are doing only what they must do to keep a job or doing whatever they can to create problems.
Pfeffer: An interesting question. My work on power has, at its core, amazingly little to do with organizational performance or conditions. I think people need to recognize that their success and the success of the company in which they work are undoubtedly positively correlated, but the correlation is not that high. Consider the many financial industry executives who walked away with many millions as their organizations failed–I think the expression is “failing upward.” People also need to understand that their “technical” job performance is correlated with their career success, but again, many other factors such as educational credentials, length of service, and yes, political skills, also contribute to success. So people need to understand business and technical issues but they also need to master organizational dynamics.
So, it is possible to rise up the corporate ranks and to build a successful career even in companies with disengaged, unmotivated work-forces. Many executives have done so, and probably will continue to.
Morris: Today, decision-makers have more and better sources of knowledge and much easier access to them now than they did when The Knowing-Doing Gap was published in 2000, a book you wrote with Robert I. Sutton. Presumably it is much more difficult now to close (if not eliminate) that gap now than it was a decade ago. What do you think?
Pfeffer: I don’t think eliminating the knowing-doing gap depends on the amount of knowledge around. It depends much more on people’s attitudes and intentions–do they actually want to turn knowledge into action, or just go through the motions of acting as if they are busy or are accomplishing something.
Morris: One man’s opinion, many students now enrolled in a college or university are being prepared for jobs that will not exist when they graduate. If that’s true, and I believe it is, there will be a “doing-knowing gap”: the knowledge they have gained through formal education will be if little (if any) practical value when they seek employment. Your own thoughts about this?
Pfeffer: People need to be ready to have truly “global” careers. Just as companies now face world-wide competition, so, too, do people. Therefore, individuals need to get out in the world more (some large percentage of Americans don’t even have a passport) and work in different countries.
Beyond that, we need economic policies in the U.S. that produce jobs, first of all, but good jobs, second of all. Believe it or not, Germany, a country characterized by high wages, strong unions, a social safety net, and so forth is the second largest exporter (after China) in the world. The idea that the only way to succeed is by eliminating vacations, sick days, worker protections, and so forth is simply belied by the competitiveness rankings produced by the Economist magazine’s intelligence unit and by the World Economic Forum.
So while individuals have a responsibility to prepare themselves for the future, so, too, do the government and other institutions in society.
Morris: For those who have not as yet read Hidden Value, here are two separate but related questions. First, how specifically do “great companies achieve extraordinary results with ordinary people”?
Pfeffer: By doing what I and many other organizational scholars have written about for literally decades: building “people-centered” organizational cultures and implementing high-performance management practices. Such practices include recruiting people for their fit with the organization’s culture and values, investing in their training and development, rewarding them on the basis of the company’s performance (e.g., through profit sharing or stock ownership), letting them use their skills and knowledge by decentralizing decision making, sometimes to self-managed teams, filling jobs by internal promotion (which sends people a signal that internal skill is valued), sharing information widely, so that people understand what is going on, and building a more egalitarian, team-oriented culture so that the front line people, who often know the most, have the ability to implement their knowledge.
Morris: Here’s the follow-up question: Why don’t more companies “achieve extraordinary results with ordinary people”?
Pfeffer: Because they are obsessed with costs rather than revenues, with the short-term rather than the long-term, and because they have succumbed to conventional wisdom about the sources of business success.
Morris: What are the dominant characteristics of “evidence-based management” and how does it differ most significantly from other management styles?
Pfeffer: Evidence-based management entails, first of all, a commitment to fact-based decision making. Lots of decisions are based on people’s beliefs or ideas, what they think they have learned from experience, or by casually benchmarking what other companies seem to be doing. Second, it entails running experiments and learning from them. Today, if the CEO thinks it’s a good idea, it’s done everywhere; if the CEO thinks it’s a bad idea, it’s done nowhere. We ought to be more agnostic and open to learning things that we didn’t expect–and the only way to do that is to try things and be open-minded about how well they are working. And third, evidence-based management involves reading and learning–just like doctors do–and to do so not just in school but afterward, as well.
Morris: As you explain, there are three themes that unify many of the ideas you examine in What Were They Thinking? They are “(1) the importance of considering feedback effects – the ideas that actions often have unintended consequences; (2) the naïve, overly simplistic, almost mechanical models of people and organizations that seem to dominant both discourse and practice; and (3) the tendency to overcomplicate what are often reasonably straightforward choices and insights.” For those who have not as yet read the book, please provide an example of each of the three themes.
Pfeffer: Circuit City, the now-defunct electronics retailer, decided it was in a competitive business and needed to cut its costs. So it got rid of its 3,500 or so highest paid store level personnel–which, in a partly commissioned-based business, meant the people who knew how to sell. The feedback effect was predictable–Circuit City entered a death spiral in which, freed not only of costs but of people who could do anything, revenues fell, it lost market share, and it closed down.
Many companies believe incentives, financial incentives, are the answer to every problem or issue. But people are motivated by much more than money. In particular, people like to feel good about themselves and maintain their self-esteem. If companies spent more time working on people’s feelings of self-worth, they wouldn’t have to try, often unsuccessfully, to bribe people to do work.
And for the third point, I like to remind people of what the late Peter Drucker once said: there is no business without a customer. Take care of your customers, and you will have a successful business. Don’t, and you won’t. The airlines need to figure this out–soon.
Morris: Your comments about corporate strategy remind me of Thomas Edison’s observation that “vision without execution is hallucination.” How do you explain the fact that there is precious little evidence that strategic planning has any effect on corporate performance?
Pfeffer: Because great strategy, not executed, can’t possibly have any effect on performance because it doesn’t actually affect anything. It’s like planning for a successful surgery to remove a tumor. If no one picks up the knife and actually operates effectively, the diseases will persist.
Morris: Presumably you agree with Michael Porter: “The essence of strategy is choosing what not to do. ”
Pfeffer: Yes. Part of strategy is figuring out what you’re good at, figuring out what you’re not good at, and then getting yourself in position to succeed by doing mostly what you have a competitive advantage doing.
Morris: Now please focus on your most recent book, Power: Why Some People Have It — and Others Don’t. Your concept views power in two separate but related dimensions: what it is and what it makes possible. Is that an accurate assessment?
Morris: Why do you reject the “just world hypothesis”?
Pfeffer: I don’t. People clearly want to believe that the world is a just and fair place. It provides them a sense of control and makes them psychologically comfortable. But believing that the world is a just and fair place causes people to not do enough to take care of themselves and to be unprepared for when it isn’t so nice. So, people need to understand their tendencies to see the world as just and fair and then be realistic about the actual conditions in which they find themselves.
Morris: What is “self-handicapping” and why is it counter-productive?
Pfeffer: One way to feel good about oneself is to not fail. The easiest way to not fail is to not try in the first place. So, I see lots of people give up before they start. That way they don’t have to face uncomfortable failures. They can sort of “remain on the sideline while the game is going on.” While this may make people feel good about themselves, it won’t get them any power or success. As any successful salesperson will tell you, if you haven’t been rejected, you haven’t tried enough with enough people.
Morris: Why do you advise your reader to “always place the ideas and examples in this book in context”?
Pfeffer: The principles I outline are quite general and have been shown to hold across time and across cultural contexts. But the specific way in which you would implement, for instance, building a social network would differ somewhat depending on whether you are in China or the U.S., to take one example.
Morris: What is the relationship between job performance and career outcomes?
Pfeffer: Small to nonexistent. Career success depends on people’s educational credentials, their length of service (job tenure), unfortunately it is still the case on their race, gender, and similarity to those in power, and of course, on their political skills. Job performance matters, but less than most people think.
Morris: How specifically can a person become “memorable”?
Pfeffer: Do things that are somewhat unexpected. Dress, or talk, in ways hat draw attention. And mostly, don’t follow all the “rule for behavior” so closely.
Morris: What is “the above average effect” and why is it significant?
Pfeffer: People, to maintain their self-esteem, tend to believe they are above average on all positive qualities—height, income, intelligence, sense of humor, negotiating ability, you name it. The problem is that if we are going to really build our skills, we need to know which skills are most deficient. So, I advise people to find confidantes to tell them the truth. And then act on that knowledge to build the abilities they need to be more successful.
Morris: Here are two separate but related questions. First, what are the most common barriers to obtaining influence?
Pfeffer: People themselves. We give up and don’t try. We don’t take sufficient chances or risks. We aren’t resilient in the face of failure. We follow the “rules” too much and don’t push the envelope.
Morris: Which attributes are needed to overcome those barriers?
Pfeffer: Ambition, so you have a drive to succeed, and persistence and resilience, so you keep going in the face of setbacks.
Morris: What is “departmental power”? How can it be achieved and then sustained?
Pfeffer: Various units in companies have more, or less, power. Part of that depends on what the most critical issues are facing the company. In electric utilities, as financing and regulatory issues become more important, lawyers and MBAs rose in power while engineers fell. But part of it also depends on the department speaking with one voice and forcefully advocating its interests. The rise of finance at the Ford Motor company, nicely detailed in David Halberstam’s book, The Reckoning, is a good illustration of this principle in action.
Morris: As I read the material in Chapter 3 and especially your discussion of various forms of departmental power, I thought about the great teams that Warren Bennis and Patricia Ward Biederman discuss in their book, Organizing Genius. The animators who created some of Disney’s greatest feature films, for example, and those who were involved in the Manhattan Project. Here’s my question: To what extent (if any) must members of a team subordinate their power as individuals to the group’s power?
Pfeffer: It depends on what their objectives are. If you are interested in group success, probably a lot. If you are mostly concerned about your individual success, much less.
Morris: Why do so many people feel uncomfortable asking for help from others?
Pfeffer: First of all, they think it makes them feel weak. Second, they are afraid of rejection–that self-enhancement thing. And third, they underestimate the extent to which their requests will bring compliance.
Morris: I share your high regard for Teresa Amabile and her work, notably on patterns of behavior in the workplace. You cite one of her papers, published in 1983, and suggest that it’s title (Brilliant but Cruel) “says it all.” Please explain.
Pfeffer: The individual attributes of warmth and competence are often perceived to be negatively correlated. That doesn’t mean they actually are, but that’s how people perceive the world. So, cruel people, those who gave negative book reviews, for instance, were seen as less likeable but as more intelligent.
Morris: How can one’s resources be a source of one’s power?
Pfeffer: Simply put, resources provide you the ability to exchange those with others–to activate the norm of reciprocity. So, you can do favors for me, and in return, I will need to return those favors by helping you out.
Morris: What does a “brokerage role” require so that one can become centrally involved in social networks?
Pfeffer: Brokerage means just what it implies–to stand between two groups that otherwise are not in contact. Venture capitalists, for instance, stand between those with money to invest who need interesting technologies and ideas and those with technologies and ideas who need money. They make money by putting the two groups together, and taking a fee in the process.
Morris: If perception is realty, what are the most effective strategies for building the reputation one desires? How important, for example, is “image”? Must those who aspire to be great leaders possess “charisma”?
Pfeffer: Charisma is different than “image.” John Browne, the former CEO of BP (formerly British Petroleum), I am not sure had charisma but he did have a reputation for being brilliant and hard working.
As in any branding strategy, you need to figure out what is the image you want to project. Then behave accordingly. And above all, cultivate the media and those who will help you burnish your reputation.
Morris: Jack Dempsey once observed, “Champions get up when they can’t.” Is that (in effect) the core message in Chapter 9, “Overcoming Opposition and Setbacks.”?
Pfeffer: Yes. Everyone faces defeats, setbacks, reversals of fortune. But just like water wearing away rock, persistence triumphs. Resilience is one of the most important qualities I would look at in trying to predict who is going to be ultimately successful.
Morris: What is the total “cost of power”? Is it possible to have or obtain power without paying that cost? Do you agree with Woody Allen’s observation (cited on Page 227), “Eighty percent of success is showing up”? Please explain.
Pfeffer: The price of power is the constant scrutiny and surveillance that come with it, and the hard work and constant effort required. Nothing comes without trade-offs. Do you want to spend time with people who like, or with people who might be useful to you? Do you really want to put in the long hours and constant attention required to be successful in your quest for power? Do you really want to be under the microscope on a daily basis, with people commenting on the car you drive, where you live, where you go on vacation, and so forth? There is no way to avoid the price of power. It’s up to you to decide if it is worth it, and to change course when it isn’t.
Morris: You urge your reader, “Seek power as if your life depends on it. Because it does.” How so?
Pfeffer: Research by Sir Michael Marmot shows that people who have more control over the conditions of their work live longer, and healthier, lives.
Morris: Which question had you hoped to be asked during this interview – but weren’t – and what is your response to it?
Tags: Academy of Management, Aspen Institute, building "people-centered" organizational cultures and implementing high-performance management practices, Carnegie Mellon University, Circuit City, David Halberstam, Graduate School of Business at Stanford University, Hard Facts [comma] Dangerous Half-Truths [comma] and Total Nonsense: Profiting from Evidence-Based Management, Harvard, Harvard Business School, Hidden Value, Hidden Value: How Great Companies Achieve Extraordinary Results with Ordinary People, IESE, Jack Dempsey, Jeffrey Pfeffer, Kellogg at Northwestern, London Business School, Managing with Power, Managing with Power: Politics and Influence in Organizations, Organizing Genius, Patricia Ward Biederman, Peter Drucker, Power: Why Some People Have It and Others Don't, Rakesh Khurana, Ross at Michigan, Singapore Management University, Sir Michael Marmot, Stanford, Teresa Amabile, The "knowing-doing gap", the globalization of labor markets, The Human Equation: Building Profits by Putting People First, The Knowing-Doing Gap: How Smart Companies Turn Knowledge into Action, The Reckoning, University of California at Berkeley, University of Illinois, Warren Bennis, Wharton at Pennsylvania, What Were They Thinking?, “Champions get up when they can’t”, “departmental power”, “evidence-based management”, “Seek power as if your life depends on it. Because it does”, “self-handicapping”