Impact de la crise sur les comportements managériaux
Conference and discussion with Jeffrey PFEFFER
(Professor of Organizational Behavior, Standford University)
Lauréat du Prix RH 2008 – Faits et Foutaises dans le management, Vuibert, 2008.
1. The causes of the current economic crisis.
According to Jeffrey Pfeffer, the current economic crisis is the result of widely held half-truths. He claims that the most dangerous half-truth is that about the “incentive-driven performance system” we believe in. It is based on the idea that the more people are paid, the better their performance will be. The economic crisis was clearly driven by this widespread belief. Indeed, people paid to loan money, attempted to make more and more loans, without thinking about whether people would pay off or not.
According to Jeffrey Pfeffer, the current economic crisis is the result of widely held half-truths. He claims that the most dangerous half-truth is that about the “incentive-driven performance system” we believe in. It is based on the idea that the more people are paid, the better their performance will be. The economic crisis was clearly driven by this widespread belief. Indeed, people paid to loan money, attempted to make more and more loans, without thinking about whether people would pay off or not.
2. Is the crisis an opportunity for change towards more pragmatism?
The US were affected by the crisis, more than the rest of the world. Even if it is too soon yet to tell what the effects of the crisis will be, Jeffrey Pfeffer thinks that it is an opportunity to rethink many things. As those who lost their jobs or their money and suffer the most from the crisis feel anger towards those who caused it, as they want CEOs to pay for their mistakes, the organizational practices based on the belief that incentives-driven performance may be questioned.
3. The election of Barack Obama: is it good news for more pragmatism?
Obama will probably manage to make the US recover from the crisis. Nevertheless, he will need a long time to rebuild trust. Though Jeffrey Pfeffer is not sure Barack Obama will have an impact on management practices, he states that Obama will certainly bring an element of pragmatism. Indeed, Obama has brought a lot of humility and intellectual curiosity to the White House, namely because he is the first President with an MBA. His philosophy is one very much of experience, and experimentation. Barack Obama indeed asks questions and learns from the answers. Moreover, a lot can be expected from him since he has understood that it is necessary to be surrounded with good people and since he has people around him who will not hesitate to balance him to make sure he is not too full of himself. Jeffrey Pfeffer adds that it is essential that Barack Obama would use and implement the research that has been made in social sciences.
4. American pragmatism vs. European and French ideology?
Jeffrey Pfeffer claims that the US used to be a very pragmatic country. About the European way to do things, he says, this is a great way as it takes into account the rise of the East: India and China in particular.
5. Evidence-based management: what does it imply for top-management teams? For HRM managers?
Evidence-based management shares a lot with Evidence-based medicine. Both are based on the idea that we need to work by the facts while understanding that knowledge evolves. Evidence-based management consists in keeping up with the evidences, keeping open to new things and learning how to learn.
Having a spirit of inquiry and challenging people’s ideas is thus the best way to do in management practices. But very few people act in such a way because they like to be told they are right. For instance, the people around CEOs keep telling them they are right in order to please them and will not criticize them. As a matter of fact, whereas it was established that excessive stock options to CEOs would lead to risky behaviors from them, nobody questioned this practice, which drove to the economic crisis.
Obama will probably manage to make the US recover from the crisis. Nevertheless, he will need a long time to rebuild trust. Though Jeffrey Pfeffer is not sure Barack Obama will have an impact on management practices, he states that Obama will certainly bring an element of pragmatism. Indeed, Obama has brought a lot of humility and intellectual curiosity to the White House, namely because he is the first President with an MBA. His philosophy is one very much of experience, and experimentation. Barack Obama indeed asks questions and learns from the answers. Moreover, a lot can be expected from him since he has understood that it is necessary to be surrounded with good people and since he has people around him who will not hesitate to balance him to make sure he is not too full of himself. Jeffrey Pfeffer adds that it is essential that Barack Obama would use and implement the research that has been made in social sciences.
4. American pragmatism vs. European and French ideology?
Jeffrey Pfeffer claims that the US used to be a very pragmatic country. About the European way to do things, he says, this is a great way as it takes into account the rise of the East: India and China in particular.
5. Evidence-based management: what does it imply for top-management teams? For HRM managers?
Evidence-based management shares a lot with Evidence-based medicine. Both are based on the idea that we need to work by the facts while understanding that knowledge evolves. Evidence-based management consists in keeping up with the evidences, keeping open to new things and learning how to learn.
Having a spirit of inquiry and challenging people’s ideas is thus the best way to do in management practices. But very few people act in such a way because they like to be told they are right. For instance, the people around CEOs keep telling them they are right in order to please them and will not criticize them. As a matter of fact, whereas it was established that excessive stock options to CEOs would lead to risky behaviors from them, nobody questioned this practice, which drove to the economic crisis.
6. How can managers improve their practices of management?
In large organizations, some advisers are hired to review evidences and gather data, meant to help managers to improve. But Jeffrey Pfeffer thinks that Evidence-based management is not about reading a lot but rather consists in asking good questions, in a way open to answer them, so that people around you may do so.
As a result, to be a good manager, one should not stick to the leadership literature, which tells people about how they have to act. One should rather learn how to think and especially how to think critically.
7. Is Evidence-Based Education making progress?
Business education should attempt to give people much more practical experience. That is actually what is beginning to be done in some business schools, such as the Graduate School of Business at Stanford University, where Jeffrey Pfeffer teaches his students about how to develop a critical thinking. He adds that it will probably take a long time for Evidence-based management to be recognized. It took over 200 years for Evidence-based medicine to be considered a standard…
Questions from the public:
Does Obama have leadership in him or is he managing with power?
There is no doubt that Barack Obama is managing with lots of power. He is very strategic as he has managed to be appreciated by those who used not to like him.
There is no doubt that Barack Obama is managing with lots of power. He is very strategic as he has managed to be appreciated by those who used not to like him.
Don’t you think that the major problem is due to the fact that management practices are the result of a short-term pressure?
It is probably not the biggest part of the problem. If you look at doctors (cf. Evidence-based medicine), they are concerned about short-term pressure, and yet, they do a good job.
Don’t you think that all major corporations give rise to people who praise their CEO’s ego rather than saying what they really think?
That is happening in small organizations as well.
What do you think about the coaching movement and the training sessions that are attended by more and more managers?
Most people go to training and coaching sessions for many other reasons than learning new things. They consider these sessions as ways for networking or for doing something different from their daily jobs. Moreover, coaches are meant to coach people about their interpersonal skills, such as how to get in touch with people or how to listen to them. The problem is that it does not help people improve their performance because people really learn something if they can practice and implement what they have learned. Otherwise, people will forget. As a matter of fact, back in their organization, people do not implement what they have learned. So, they cannot improve.
How does a manager influence the whole organization?
A manager cannot change a whole organization, but can change his part of it, especially if he is far away from the headquarters. To achieve that, he needs persistence and not to give up too soon, which is what most people do.
How to make diversity in company governance? How to bring in minorities? Could diversity bring more critical spirit in company governance?
In the US, lots of companies were founded by minorities. Moreover, there is no denying that women have risen up in large American corporations. But, this does not really guarantee that diversity exists in those corporations because many people ended up being acculturated. It is thus necessary that companies recognize the talent of anyone. Primary education may be a way to make things change, but this is surely not the only way.
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