(How to Change the World) Jeffrey Pfeffer is the Thomas D. Dee II Professor of Organizational Behavior at the Graduate School of Business, Stanford University. He is the author or co-author of twelve books.Dr. 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, and he has been a visiting professor at the Harvard Business School, Singapore Management University, London Business School, and IESE in Barcelona.
Pfeffer currently serves on the board of directors of Audible Magic and SonoSite (SONO) and writes a monthly column on management issues entitled “The Human Factor” for the 650,000 circulation Time-Warner business magazine, Business 2.0
This interview is based on his latest book:What Were They Thinking?: Unconventional Wisdom About Management
- Question: Why do companies do stupid things?Answer: First, they ignore feedback effects. There has recently been a lot of interest, and apparent surprise, that programmers in India now cost a lot and their wages have been rising rapidly. Did people forget supply and demand? If everyone moves work to India, what did companies think would happen? Or, to take another example, when companies cut their retirement benefits, and people can not afford to retire, guess what, they won’t.
Second, companies often ignore the interdependence or connections between actions in one part and those in another. So, even as some departments are trying to cut the costs of benefits, others are worried about recruiting and retaining enough qualified people. Maybe the parts should work together.
Third, many companies presume that incentives are the answer to everything, and have a very mechanistic model of human behavior. That is also incorrect.
- Question: What can companies do to get smarter?
Answer: Companies learn just like people learn—by trying new things and seeing what happens. That requires, first, a tolerance for failure, since by definition, learning means doing things you aren’t very good at.
Second, it requires structured self-reflection—after-action or after-event reviews so that instead of having one year of experience repeated 20 times, people and companies actually accumulate learning over time.
- Question: How do you stop the misdeeds (for example, Enron) in organizations?
Answer: What is interesting is that there are few social sanctions—as contrasted with legal or financial ones—for bad behavior. Executives who have served jail time are back on TV and are still celebreties. More to the point, they aren’t shunned by their colleagues.
The prevailing mood seems to be, as long as people retain enough wealth, they can buy their way back by donating time and money. If we are serious about enforcing norms, then there have to be real sanctions. In the military academies, violations of important norms are met with expulsion or social ostracism—eating alone, for instance. Not so, not yet, for the most part in the corporate world.
- Question: How do you get a company to behave in a truthful manner?
