JOURNAL OF ORGANIZATIONAL BEHAVIOR, VOL. 15,575-578 (1994)

Book Reviews

Competitive Advantage T0rougb People Unleashing the Power of the Work Force Jeffrey Pfeffer, Harvard Business School Press, Boston, 1994.

Pfeffer argues that because of accelerating rates of change, the work force should be seen as one of the critical factors in developing and maintaining competitive advantage, joining traditional factors such as scale, scope, technology, and protected markets. The basic, longstanding principles of the quality movement can create this advantage in the work force. Unfortunately, effectively managing people is undervalued because there are systemic factors in American businesses and institutions, reflecting entrenched views, which inhibit changes to quality practices.

Pfeffer describes 16 interrelated practices characteristic of companies achieving success through their management of workers, practices which show a remarkable consistency over time. Very few firms will do all of these things, but picking out only a few aspects piecemeal is not effective. Some of the factors, ‘Symbolic Egalitarianism’, and ‘Incentive Pay’, are hardly new, although they may be revived periodically as fads. Individual factors work better in combinations. ‘Wage Compression’ can result in higher overall performance because people have less of an incentive to waste time on gaming the system. This facilitates ‘Cross-utilization and Cross-training’, which in turn is based on ‘Training and Skill Development’.

While these practices often produce excellent outcomes, they are not widely adopted. Companies often will opt for a new machine, rather than develop the more enduring advantage of a committed work force. Despite the increasing importance of a motivated work force in improving performance, there is a trend in North America to the use of part-time and contract employees. Temporary workers are a short-term expediency, buffering fluctuating demand and costing less because these workers are not eligible for benefits. The disadvantages, a lack of motivation and reduced productivity, are more subtle. Any benefits of training, if attempted, are lost when the worker leaves.

Measuring the effectiveness of these factors is difficult because they are interactive and difficult to correlate to a specific problem. The spread of commitment-building practices, although increasing, remains limited, and those practices that are implemented are the easier, less effective ones. The best practices, requiring structural changes, take time to develop. When commitment-maximizing practices are introduced, there is often backsliding and a low survival rate because the American system works against participa- tive management. Pfeffer describes the underlying reasons, internal and external, that make implementation so hard for American companies.

One barrier is the heroes American business chooses as role models. The choice is derived from an acceptance of the ideologies implicit in models such as agency theory and transaction cost analysis, theories Pfeffer criticizes as counter-productive to the full utilization of human resources because they promote conflict and mistrust. Long- standing features of American management practices leave a legacy that needs to be recognized before high-commitment practices can survive. Current trends to decentralize authority and increase employee involvement conflict with Taylor’s ideology of deskilling employees to emphasize managerial prerogatives. In the absence of a strong labour movement, and with pro-business governments, business managed people by acquiring power over them. Historically, production moved from the craft system, to putting out, to inside contracting in factories, to factory employees. Ironically, since the 1970s, there has been a resurgence of contracting. Taylorism survives, contributing to an emo-

0 1994 by John Wiley &Sons, Ltd.

576 BOOK REVIEWS

tionally-charged battle of resistance between managers and workers, a battle with no winners. Managers have to learn to give up some of their powers.

Pfeffer sees the U.S. legal system as another barrier to building commitment, creating a prisoners’ dilemma choice of options for management an labour, ’... a situation in which the best joint outcome is mutual cooperation, but the best individual outcome . . . is to try to exploit the situation and not cooperate’ (p. 140). The U.S. is the only major industrial country where business firms can dismiss employees at will, without good cause, breeding distrust, and an explosion of litigation.

Labour organizations could play a more positive role, although it is difficult to assess the effects of unions separately from the actions of management given the widespread belief ‘that good managers who know how to manage their people don’t get unions’ (p. 168). Beyond raising wages to allow for more selective hiring, and reducing turnover dramatically, Pfeffer argues that unions can balance the pressure for short-term results by the shareholders, with a long-term developmental perspective, to the betterment of the organization.

Pfeffer recommends the quality movement as the best chance for dealing with these fundamental barriers because it has a social and political base, rather than a technical one. Unlike Deming, Pfeffer is not endorsing specific practices so much as the general approach. It changes underlying assumptions of external control to develop worker motivation, to help overcome the difficulties of implementation. ‘By changing the lan- guage of management, the quality movement tends to direct attention toward process, constancy, customers, teamwork, and problem prevention. This change moves us away from the scapegoating, finger pointing, and control orientation that is otherwise too typical and tends to destroy employee motivation and initiative’ (p. 217).

The quality movement is effective, but because it challenges underlying assumptions and practices it is difficult to introduce and sustain. To begin the process, Pfeffer gives a diagnostic framework to find internal consistencies or incompatibilities in company practices. Often, organizations are only ready to try new ways when the situation is desperate. Pfeffer suggests ways to help people perceive a need to do things differently, such as tying it to a new strategy to deal with the competitive environment. He recom- mends starting with an experimental, highly visible project with immediate impact. The changes should be made to gain commitment in order to ensure persistence. The atmosphere is experimental. ‘It is . . . unlikely that everything can be planned completely at the outset, and successful organizations seem to be those that are open to change, innovation, and learning as the process progresses’ (p. 239). A quality program is not a novelty, most of all it needs persistence.

Pfeffer is writing in a genre crowded with cheery, upbeat ‘how-to’ books. He takes a different approach, explaining the underlying reasons why developing a committed work force is so hard, given U.S. institutions and business history, and by developing the reasons behind the case for the quality movement. A synthesis of research studies and best practices, the book’s easily accessible presentation never compromises Pfeffer’s scholarship.

BARBARA AUSTIN Brock University St. Catharines, Canada L25 3Al

International Review of Industrial and Organizational Psychology, Vol. 9 Cary L. Cooper and Ivan T. Robertson (Eds), John Wiley & Sons, Chichester, England, 1994.

This annual volume is a collection of nine articles covering a wide range of topics in I/O psychology. As the editors note, this particular collection contains topics with a long history in I/O psychology, while others, such as strategic management, are relati- vely new. The lack of a central or unifying theme in this volume, as with previous volumes, is intentional. Additionally, the contributors to this volume are truly internatio- nal, representing seven different countries. Therefore, the topics in the collection might