Jeffrey Pfeffer is the Thomas D. Dee II professor of organisational behaviour at Stanford University’s Graduate School of Business, where he has taught since 1979. He is the author or co-author of 14 books, including Power: Why Some People Have It – and Others Don’t. His latest book is Leadership B.S: Fixing Workplaces and Careers One Truth at a Time. An influential management thinker, Pfeffer is in Australia as a Unilever distinguished visitor at the Australian Graduate School of Management at UNSW Business School. He spoke to Julian Lorkin for BusinessThink.
An edited transcript of the interview follows.
BusinessThink: It’s almost a cliché to moan about our workplace – the long hours, the poor ergonomics, the missed promotions and the sheer futility of wasting decades trying to stagger up the greasy corporate pole. Indeed, it’s a bit of a surprise after billions of dollars of research into workplaces and leadership that our workplaces are not working. One man who has spent many years studying these phenomena is professor Jeffrey Pfeffer. Jeffrey, there really seems to be a problem here, with low levels of employee engagement in many workplaces?
Jeffery Pfeffer: That is exactly correct. Around the world, the Gallop survey shows that only 13% of workers are engaged, 24% are actively disengaged, and active disengagement is defined as actively trying to sabotage your employer’s workplace. I think in many workplaces today the bosses care only about results and they do not care about the costs that are extracted on human beings as those results are produced. Just in the US, the excess deaths from exposure to workplace stresses – not environmental toxins but just the stress of the workplace – is probably costing 120,000 lives a year.
BT: I understand you have some other statistics, comparing the lower levels of the workforce with upper levels, particularly in the British civil service, where you’re much more likely to suffer heart disease if you’re on a menial front-desk job rather than running the organisation. That seems totally counterintuitive?
Pfeffer: Actually, it’s not counterintuitive. The research you’re talking about was done by Sir Michael Marmot many decades ago. The problem is that at the top of the organisation, you may have a lot to do but you have control over when and how you do it. At the bottom, they say it flows downhill; so it is all really hitting you and you have no control. One of the most stressful things is to have a lot of job demands, but to have no control over how and when you meet those demands.
BT: But these leaders are disconnected with what’s happening on the shop floor; they seem to have no real idea of what’s happening to those people who deal with the customers.
Pfeffer: That’s almost certainly correct in many instances, not in the best organisations but in many organisations. I think one reason why leaders are often disconnected is that we now have this idea of lateral mobility. It’s where we hire people from outside the organisation who come in, who don’t necessarily know very much about the company and what it’s doing, and they certainly don’t know much about the people they’re working with because they’re coming in as strangers.
BT: So is there any real evidence that leaders are displaying many of the traits we would hope to see, or are they simply going through the job as they’ve been taught to do?
Pfeffer: Well, I’ve written a new book about what’s wrong with leadership – Leadership B.S.: Fixing Workplaces and Careers One Truth at a Time – and one of the things I look at is how much money we have spent on leadership development and leadership education, and how many books and blogs and posts and TED talks there are, and how dismal most workplaces are. The evidence certainly suggests that the leadership industry has completely failed to improve; first of all the conditions of the workplace, but secondly, in many instances the careers of leaders, because leaders are also losing their jobs at an unacceptably high rate.
During the global financial crisis, many people got wiped out and banks certainly had many financial troubles, but in the meantime, the leaders left with really quite large packages. So there was Stan O’Neal, who took Merrill Lynch into oblivion, and he left with a package of about US$140 million. So let me suggest that Stan wasn’t looking after the workers, he wasn’t looking after the shareholders, he was looking after Stan.
BT: He may have done a very good job of looking after number one, his own individual interests, but many organisations realise this, don’t they? There are statistics that show very few organisations genuinely believe they’re developing leaders; it’s something like only 7% really believe in leadership at the top.
Pfeffer: I think organisations understand what difficulties they’re having in their leadership development activities – that they’re spending all this money but not having people to post for overseas assignments, to take one example; that they’re not doing a very good job of getting people ready so when vacancies occur they can promote from within. And so that’s another indicator of the extent to which this leadership development enterprise that we’ve been embarked on for so long, and spent so much money and time on, has really not produced very much.
BT: We have the problem of workers who are just disconnected from the job they are doing or who are actively trying to disadvantage the company they are working for; and we’ve got leaders who seem to be living in their own individual bubble and have no real connect to the company. What can we do about it? As you say, part of the problem seems to be the disconnect of pay. So would a simple solution be to cap CEO salaries?
Pfeffer: Capping CEO salaries would probably solve some problems but not others. As we know, attempts to cap CEO pay have been notoriously unsuccessful because some people liken it to pushing on a balloon – when you try to hold it in one place, it just appears somewhere else. And leaders and CEOs have become extremely sophisticated at getting around these caps. The British government tried to cap bankers’ pay and it didn’t work very well because they would just take [the money in] another way – in perks, or deferred compensation, or retirement benefits, or pensions, or houses, or aeroplanes, or a variety of other ways. So I don’t think it’s a bad idea but it’s [not] going to solve the problem.
To use a relatively radical idea, it strikes me that part of the problem is we’ve given too much power to single individuals who are not elected. It’s interesting to me that in politics, for all the other faults of democracy and voting and everything else, the assumption is that autocracy is bad and that democracy is good. Inside of companies, it’s exactly the reverse. You have very autocratic dictatorial leaders who pick their own successors, who are chosen by handpicked boards, and so one of the answers I think to the problems of leadership and all the excessive pay and everything else is if you actually had leaders who were elected.
BT: Surely you would then end up with leaders who would just try to curry favours and be friends with everybody on the shop floor as opposed to those who are going to make the hard decisions and start firing people.
Pfeffer: Maybe not. If they tried to curry favours with the shop floor, at least they would go out and meet the people on the shop floor, [and] they would know the people in the organisation, which would be ahead of where we are at the moment.
BT: It seems we have a huge disconnect with the leaders and with what people actually believe is happening within an organisation. How do you get inspirational leaders? I’m talking about those people you meet very rarely, so it’s like one person in 50 or 100, which is generally a person in which everyone in the organisation believes and will look up to and thinks they’re a good person; they know what’s going on, they listen and they run the organisation well. How do you get those people?
Pfeffer: I think you get them by doing a much better job of selecting the qualities that we claim we want. When you go and talk to people, or you read the leadership literature, or you hear the talk, we [say] we want people who are modest and authentic and trustworthy and who tell the truth. But when you look at who are selected for these roles, [it’s] almost on the opposite side of these characteristics. So you get very good storytellers who are not necessarily very good leaders, but they are extremely effective at presenting themselves and telling their story and having a good résumé and having a very nice self-presentation.
BT: How about if when we recruit, we look at all these different KPIs and then we have [candidates] in place for a trial period, just like when we hire someone junior and they have their six-month trial period to see if they work out and we can get rid of them without any problems if they don’t. We could do the same for the CEO – give them three or six months to see if they’re an effective leader, and if they’re not, get another one.
Pfeffer: You would pay a big price for that because leaders are able to negotiate a much bigger pay package than the people on the front lines. And to the extent that there’s a lot of leader turnover, such as the trial period and everything else, they would want their money up front. It would turn out to be quite costly. There are no easy answers, but I think one of the answers that people really ought to work hard on is doing the same level of due diligence on leaders that we do for investments.
BT: If you were in place as a new leader of an organisation you knew very little about, what are some practical steps you could take to engage with your workforce and be the best manager you could be?
Pfeffer: The first thing you need to do is have a lot of conversations inside the organisation to figure out what we’re about and how we would know if we were doing better. If we continue doing what we are doing then the results are only going to continue to be the same or worse.
What I find depressing is that virtually every measure of workplace wellbeing, be it engagement or satisfaction or trust in leaders, has been moving in the wrong direction. So if we want to change that, we have first of all to acknowledge where we are, and figure out what to do about it. If we just close our eyes and pretend everything is just peachy fine, then nothing is going to change.