Seven Practices of Successful Organizations
Seven Practices of Successful Organizations
Jeffrey Pfeffer
ffectively management of people can produce substantially enhanced economic performance. A plethora of terms have been used to describe such management practices: high commitment, high performance, high involvement, and so forth. I use these terms interchangeably, as they all tap similar ideas about how to obtain profits through people. I extract from the various studies, related literature, and personal observation and experience a set of seven dimensions that seem to characterize most if not all of the systems producing profits through people. • Employment security. • Selective hiring of new personnel. • Self-managed teams and decentralization of decision making as the basic principles of organizational design. • Comparatively high compensation contingent on organizational performance. • Extensive training. • Reduced status distinctions and barriers, including dress, language, office arrangements, and wage differences across levels. • Extensive sharing of financial and performance information throughout the organization.
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Reprinted by permission of Harvard Business School Press. Excerpt of THE HUMAN EQUATION: Building Profits by Putting People First by Jeffrey Pfeffer. Copyright © 1998 by the President and Fellows of Harvard College; All Rights Reserved.
96
CALIFORNIA MANAGEMENT REVIEW
VOL. 40, NO. 2
WINTER 1998
Seven Practices of Successful Organizations
This list is somewhat shorter than my earlier list of sixteen practices describing "what effective firms do with people,"' for two reasons. First, this list focuses on basic dimensions, some of which, such as compensation and reduction of status differences, have multiple components that were previously listed separately. Second, some of the items on the previous list have more to do with the ability to implement high-performance work practices—such as being able to take a long-term view and to realize the benefits of promoting from within—
Jeffrey Pfeffer
ffectively management of people can produce substantially enhanced economic performance. A plethora of terms have been used to describe such management practices: high commitment, high performance, high involvement, and so forth. I use these terms interchangeably, as they all tap similar ideas about how to obtain profits through people. I extract from the various studies, related literature, and personal observation and experience a set of seven dimensions that seem to characterize most if not all of the systems producing profits through people. • Employment security. • Selective hiring of new personnel. • Self-managed teams and decentralization of decision making as the basic principles of organizational design. • Comparatively high compensation contingent on organizational performance. • Extensive training. • Reduced status distinctions and barriers, including dress, language, office arrangements, and wage differences across levels. • Extensive sharing of financial and performance information throughout the organization.
E
Reprinted by permission of Harvard Business School Press. Excerpt of THE HUMAN EQUATION: Building Profits by Putting People First by Jeffrey Pfeffer. Copyright © 1998 by the President and Fellows of Harvard College; All Rights Reserved.
96
CALIFORNIA MANAGEMENT REVIEW
VOL. 40, NO. 2
WINTER 1998
Seven Practices of Successful Organizations
This list is somewhat shorter than my earlier list of sixteen practices describing "what effective firms do with people,"' for two reasons. First, this list focuses on basic dimensions, some of which, such as compensation and reduction of status differences, have multiple components that were previously listed separately. Second, some of the items on the previous list have more to do with the ability to implement high-performance work practices—such as being able to take a long-term view and to realize the benefits of promoting from within—