You've got to ask a question that gets back to an old cliché: Do you walk the talk? It's easy for a company to say, "We invest in people. We believe in training. We believe in mutual commitments between the managers and the workforce. We believe in sharing information widely with our people."
Many organizations say those things -- but in their heart of hearts, they don't believe them. Most managers, if they're being honest with themselves, will admit it: When they look at their people, they see costs, they see salaries, they see benefits, they see overhead. Very few companies look at their people and see assets.
In part, it's because of the financial-reporting systems that we've got. The fact is, your salary is an expense. If I buy a computer to replace you, I can capitalize the computer and then depreciate its useful life over many years. If I hire you, I take on an expense.
But there are other things that companies can measure. Whole Foods Market Inc. and AES, for instance, not only do employee surveys; they also take them seriously. I know of managers at Hewlett- Packard who were fired because they received such poor reviews from their employees.
Everybody knows what to do, but nobody does it. For example, a lot of companies confuse talk with action. They believe that, because they've said it, it's actually happened. One of my students did a research project on the internship program at a large Wall Street securities company. Under the program, the firm hired interns right out of college; then, after a few years, the interns would go back to business school. But the program was catastrophic. The firm treated the interns like dog doo, and that had two bad consequences. First, the interns didn't go back to work for the firm after business school, so the two or three years that the firm had invested in them were wasted. Second, and even worse, when the interns arrived at Harvard, Stanford, Chicago, or Northwestern, they would tell all of the other business-school students that the firm was horse manure -- which made its recruiting difficult, to say the least. At some level, people at the firm understood these problems. So the senior leadership asked my student, who had interned there, to help the firm fix its program.
After she had done a bunch of interviews, she told them, "You have a model that says you're going to treat people with respect and dignity. Let me tell you the 30 things -- and that's a low number -- that you do to your interns that violate your model."
When the top people at the firm heard her report, they said, "This can't be. The core values of this firm are respect for the individual, treating the individual with dignity, and teamwork. We believe in these values." In effect, they were saying, "Because we believe it, it must be happening." These were not bad people. They just thought that their wishes had become reality.
There's another reason why companies don't do what they know they should: They fall prey to the power of precedents. They do something once, and then they get trapped by their own history: This is the way we do it because this is the way we've always done it. They substitute memory ("We did it this way before") for thinking ("Is this a sensible way to do it?").
Not long ago, I went to a large, fancy San Francisco law firm -- where they treat their associates like dog doo and where the turnover is very high. I asked the managing partner about the turnover rate. He said, "A few years ago, it was 25%, and we're now up to 30%." I asked him how the firm had responded to that trend. He said, "We increased our recruiting." So I asked him, "What kind of doctor would you be if your patient was bleeding faster and faster, and your only response was to increase the speed of the transfusion?"
But what this law firm knew how to do was recruit. Over the preceding five years, it had created 162 partners -- and it had lost 163 people in the same period It preferred undertaking lavish recruitment efforts to dealing with the root causes of the turnover. People do what they know how to do. This law firm knows how to recruit -- so it steps up recruiting. But what it hasn't thought about for five seconds is how to solve the underlying problem.
Where do you start? You start with a philosophy, and the rest follows from that. If you believe in training and developing people, you don't necessarily need a huge training budget. You begin by imparting knowledge in various ways -- by holding meetings, by talking to people, by coaching them, by mentoring them. If you believe in reciprocal commitments, you start by building those commitments with the people you work with. If you believe in information sharing, you share information with the people you have the most contact with. In other words, you begin in your immediate sphere of influence. You start with your own behavior.
You can reach Jeffrey Pfeffer by email (Pfeffer_Jeffrey@gsb.stanford.edu) or visit his home page (http://wesley.stanford.edu/pfeffer).
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