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Why are polar bears more important than people & money more important than both jeffrey pfeffer, global hr forum 2010.pdf, seoul, korea

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We measure economic health and progress too narrowly—focusing on the well-being of business (as reflected in the stock market) and economic output (as measured by GDP) but neglecting the well-being of …

We measure economic health and progress too narrowly—focusing on the well-being of business (as reflected in the stock market) and economic output (as measured by GDP) but neglecting the well-being of people. Research shows that organizational and societal-level decisions have profound effects on human mental and physical health and mortality. The absence of health insurance in the U.S. kills about 45,000 people a year. Long working hours and shift work, income inequality, absence of control over the pace and content of one’s job, and layoffs have empirically documented and substantial health and mortality effects—for instance, one study estimates that being laid off increases the death rate by 44%. Just as companies are going “green” with respect to their environmental sustainability practices—increasing both measures of their impact on the environment and efforts to mitigate environmental damage—so they should go “green” with respect to human sustainability, measuring their effects on health and well-being and assiduously working to mitigate adverse impact. We ought to care about the well-being of people as much as we do about polar bears.

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  • 1. WHY ARE POLAR BEARSWHY ARE POLAR BEARS MORE IMPORTANT THANMORE IMPORTANT THAN PEOPLE & MONEY MOREPEOPLE & MONEY MORE IMPORTANT THANIMPORTANT THAN BOTH?BOTH? Jeffrey PfefferJeffrey Pfeffer Graduate School of BusinessGraduate School of Business Stanford UniversityStanford University
  • 2. WE MEASURE ECONOMICWE MEASURE ECONOMIC PERFORMANCE NARROWLYPERFORMANCE NARROWLY Change in the gross domesticChange in the gross domestic product (GDP), corporate profits, andproduct (GDP), corporate profits, and most of all, the level of stock pricesmost of all, the level of stock prices (both for individual companies and(both for individual companies and the overall level of the market) arethe overall level of the market) are the focus of most discussion ofthe focus of most discussion of economic conditionseconomic conditions——with littlewith little attention to human wellattention to human well--beingbeing
  • 3. WE MEASURE ECONOMICWE MEASURE ECONOMIC PERFORMANCE NARROWLYPERFORMANCE NARROWLY In the U.S., we have had a joblessIn the U.S., we have had a jobless recovery, but also a largely joblessrecovery, but also a largely jobless ““boomboom”” that preceded the recessionthat preceded the recession Between 2000 & 2008Between 2000 & 2008 Manufacturing lost 3. 5 million jobsManufacturing lost 3. 5 million jobs Education and health services gainedEducation and health services gained almost 4 million jobs (mostlyalmost 4 million jobs (mostly government funded)government funded) Finance gained .5 millionFinance gained .5 million
  • 4. WE MEASURE ECONOMICWE MEASURE ECONOMIC PERFORMANCE NARROWLYPERFORMANCE NARROWLY ““Detroit Goes from Gloom toDetroit Goes from Gloom to Economic Bright SpotEconomic Bright Spot”” (NY Times,(NY Times, August 13, 2010August 13, 2010)) Measured by company profitsMeasured by company profits Not by wages, which have been reduced,Not by wages, which have been reduced, particularly for new employeesparticularly for new employees Not by employment, which has been cutNot by employment, which has been cut More than 330,000 jobs lost byMore than 330,000 jobs lost by automakers and their suppliers just inautomakers and their suppliers just in 20082008 Number of Big 3 assembly plants fellNumber of Big 3 assembly plants fell from 66 to40 since 2000from 66 to40 since 2000
  • 5. WE MEASURE ECONOMICWE MEASURE ECONOMIC PERFORMANCE NARROWLYPERFORMANCE NARROWLY ““Detroit Goes from Gloom toDetroit Goes from Gloom to Economic Bright SpotEconomic Bright Spot”” (NY Times,(NY Times, August 13, 2010August 13, 2010)) Not theNot the citycity of Detroit, which has lostof Detroit, which has lost population steadily over the past severalpopulation steadily over the past several decades, is beset with home foreclosuresdecades, is beset with home foreclosures and a depressed real estate market, andand a depressed real estate market, and is such a distressed area thatis such a distressed area that FortuneFortune hashas run special articles and placed reportersrun special articles and placed reporters in Detroit to monitor the cityin Detroit to monitor the city
  • 6. EVERTHING IS AEVERTHING IS A ““MARKETMARKET”” Houses are no longer a place to live,Houses are no longer a place to live, but a way of speculating on thebut a way of speculating on the direction of real estate pricesdirection of real estate prices Child care, which was once a concernChild care, which was once a concern of new parents, is now a business toof new parents, is now a business to be traded on the New York stockbe traded on the New York stock exchangeexchange
  • 7. OUR LANGUAGE REFLECTSOUR LANGUAGE REFLECTS OUR VALUESOUR VALUES ““Human capital,Human capital,”” ““human resources,human resources,”” not peoplenot people——steel is asteel is a ““resource,resource,”” people are not (Dennispeople are not (Dennis BakkeBakke, co, co-- founder of AES)founder of AES) ““Social capital,Social capital,”” not friendship ornot friendship or social supportsocial support ““Costs,Costs,”” ““compensable units,compensable units,”” ““reimbursement,reimbursement,”” ““efficiency,efficiency,”” notnot health in our hospitals and doctorhealth in our hospitals and doctor’’ss officesoffices
  • 8. EVEN WHEN COMPANIES DOEVEN WHEN COMPANIES DO FOCUS ON SOCIALFOCUS ON SOCIAL RESPONSIBILITY, ATTENTION ISRESPONSIBILITY, ATTENTION IS MOSTLY ON THE PHYSICAL,MOSTLY ON THE PHYSICAL, NOT THE SOCIAL,NOT THE SOCIAL, ENVIRONMENTENVIRONMENT
  • 9. SO, COMPANIES ARE GOINGSO, COMPANIES ARE GOING ““GREENGREEN””, FOR EXAMPLE, FOR EXAMPLE…… ““These days most forwardThese days most forward--thinkingthinking corporations are trying to go greencorporations are trying to go green”” ((FortuneFortune, April 12, 2010, p. 101), April 12, 2010, p. 101) Businesses have appointedBusinesses have appointed ““ecoeco-- managersmanagers”” to increase energy efficiencyto increase energy efficiency and oversee efforts to become moreand oversee efforts to become more environmentally consciousenvironmentally conscious Companies increasingly track and publiclyCompanies increasingly track and publicly report carbon emissions from theirreport carbon emissions from their activitiesactivities
  • 10. BECAUSE OF THE MANYBECAUSE OF THE MANY ADVANTAGESADVANTAGES Cost savings (e.g., from reducedCost savings (e.g., from reduced energy and material use)energy and material use) Consumer image/brand buildingConsumer image/brand building Employee and potential employeeEmployee and potential employee recruiting and retention advantagesrecruiting and retention advantages (branding for the workforce)(branding for the workforce) The evidence suggests that profitsThe evidence suggests that profits and beingand being ““greengreen”” are not in conflictare not in conflict and are frequently positively relatedand are frequently positively related Nick Bloom reports that better managedNick Bloom reports that better managed firms are less energy intensivefirms are less energy intensive
  • 11. BUT THERE IS LESS CONCERNBUT THERE IS LESS CONCERN WITH HUMAN SUSTAINABILITYWITH HUMAN SUSTAINABILITY WalWal--Mart, committed to environmentalMart, committed to environmental sustainability, pays less than othersustainability, pays less than other retailers and has employees that makeretailers and has employees that make greater use of public health and welfaregreater use of public health and welfare programsprograms British Petroleum (British Petroleum (““beyond petroleumbeyond petroleum””)) paid a record $87 million fine for safetypaid a record $87 million fine for safety violations at its Texas, City, Texas refineryviolations at its Texas, City, Texas refinery (following an explosion that killed 15(following an explosion that killed 15 employees), and was recently assessed aemployees), and was recently assessed a fine of more than $200 million since it hadfine of more than $200 million since it had not fixed the problemsnot fixed the problems
  • 12. BUT THERE IS LESS CONCERNBUT THERE IS LESS CONCERN WITH HUMAN SUSTAINABILITYWITH HUMAN SUSTAINABILITY Company reporting on social responsibilityCompany reporting on social responsibility (CSR) typically focuses largely on(CSR) typically focuses largely on environmental complianceenvironmental compliance ““The study and reporting of human rightsThe study and reporting of human rights and labor issues linked to sustainabilityand labor issues linked to sustainability risks are far less advanced thanrisks are far less advanced than environmental and governance onesenvironmental and governance ones”” (Dr.(Dr. LarryLarry BeefermanBeeferman, Director, Pensions and, Director, Pensions and Capital Stewardship Project, Harvard LawCapital Stewardship Project, Harvard Law School).School).
  • 13. HUMAN HEALTH IS ONEHUMAN HEALTH IS ONE PLAUSIBLE MEASURE OF SOCIALPLAUSIBLE MEASURE OF SOCIAL SUSTAINABILITYSUSTAINABILITY Health (both physical and mental)Health (both physical and mental) and mortality are importantand mortality are important indicators of institutional functioningindicators of institutional functioning ““Health functions as a kind of socialHealth functions as a kind of social accountant. If health suffers, it tells usaccountant. If health suffers, it tells us that human needs are not being metthat human needs are not being met”” (Sir Michael Marmot, 2004)(Sir Michael Marmot, 2004) Richmond, CA, is in the process ofRichmond, CA, is in the process of implementing a plan to make the healthimplementing a plan to make the health of its residents a top priorityof its residents a top priority
  • 14. ORGANIZATIONAL POLICIES ANDORGANIZATIONAL POLICIES AND PRACTICES AFFECT HEALTHPRACTICES AFFECT HEALTH Decisions about health insurance affectDecisions about health insurance affect health, mortality, and the risk ofhealth, mortality, and the risk of bankruptcybankruptcy ““Literally hundreds of studies haveLiterally hundreds of studies have documented the fact that the uninsured havedocumented the fact that the uninsured have worse health outcomes than the insuredworse health outcomes than the insured”” (Levy(Levy and Meltzer, 2001)and Meltzer, 2001) Uninsured adults are less likely to useUninsured adults are less likely to use preventive servicespreventive services Lack of health insurance is associated withLack of health insurance is associated with approximately 45,000 excess deaths annuallyapproximately 45,000 excess deaths annually in the U.S., more people than die from kidneyin the U.S., more people than die from kidney diseasedisease
  • 15. ORGANIZATIONAL POLICIES ANDORGANIZATIONAL POLICIES AND PRACTICES AFFECT HEALTHPRACTICES AFFECT HEALTH Work stress and job design (absenceWork stress and job design (absence of autonomy/control) affects healthof autonomy/control) affects health Employees with high job strain (highEmployees with high job strain (high work demands coupled with low control)work demands coupled with low control) had a more than 2had a more than 2--fold increase infold increase in cardiovascular mortality riskcardiovascular mortality risk In a study of British civil servants, menIn a study of British civil servants, men in the lowest job ranks had 1.5 timesin the lowest job ranks had 1.5 times the risk of developing heart diseasethe risk of developing heart disease compared to men in the highest grade.compared to men in the highest grade. Differences in the psychosocial workDifferences in the psychosocial work environment explained the differenceenvironment explained the difference
  • 16. ORGANIZATIONAL POLICIES ANDORGANIZATIONAL POLICIES AND PRACTICES AFFECT HEALTHPRACTICES AFFECT HEALTH Work hours affect healthWork hours affect health A study in California found a positiveA study in California found a positive association between hours worked perassociation between hours worked per week and hypertensionweek and hypertension The National Institute for OccupationalThe National Institute for Occupational Safety and Health has published a reportSafety and Health has published a report summarizing numerous studies relatingsummarizing numerous studies relating work hours and shift work to cardiowork hours and shift work to cardio-- vascular disease, other illnesses, injuries,vascular disease, other illnesses, injuries, and poor health behaviors such asand poor health behaviors such as smoking and not exercisingsmoking and not exercising
  • 17. ORGANIZATIONAL POLICIES ANDORGANIZATIONAL POLICIES AND PRACTICES AFFECT HEALTHPRACTICES AFFECT HEALTH Vacations and leaves affect healthVacations and leaves affect health Women who took maternity leave wereWomen who took maternity leave were nearly four times less likely to have a Cnearly four times less likely to have a C-- sectionsection Data from the Framingham heart studyData from the Framingham heart study found that women who took a vacationfound that women who took a vacation once every six years or less were almostonce every six years or less were almost 8 times more likely to develop cardio8 times more likely to develop cardio-- vascular disease compared to those whovascular disease compared to those who took 2 vacations a yeartook 2 vacations a year
  • 18. ORGANIZATIONAL POLICIES ANDORGANIZATIONAL POLICIES AND PRACTICES AFFECT HEALTHPRACTICES AFFECT HEALTH WorkWork--family conflict affects healthfamily conflict affects health A study of 2,700 employed adults foundA study of 2,700 employed adults found that employees who reportedthat employees who reported experiencing workexperiencing work--family conflict oftenfamily conflict often were between 2 and 30 times morewere between 2 and 30 times more likely to experience a clinicallylikely to experience a clinically significant mental health problem (mood,significant mental health problem (mood, substance abuse, anxiety)substance abuse, anxiety) Higher levels of workHigher levels of work--family conflict arefamily conflict are associated with more absenteeism andassociated with more absenteeism and sickness in the workplacesickness in the workplace
  • 19. ORGANIZATIONAL POLICIES ANDORGANIZATIONAL POLICIES AND PRACTICES AFFECT HEALTHPRACTICES AFFECT HEALTH Inequalities, including those createdInequalities, including those created inside organizations (such as wageinside organizations (such as wage inequality), affect healthinequality), affect health One study claimed that, in the UnitedOne study claimed that, in the United States,States, ““the loss of life from incomethe loss of life from income inequality is comparable to theinequality is comparable to the combined loss of life from lung cancer,combined loss of life from lung cancer, diabetes, motor vehicle crashes, HIVdiabetes, motor vehicle crashes, HIV infection, suicide, and homicide ininfection, suicide, and homicide in 1995.1995.””
  • 20. ORGANIZATIONAL POLICIES ANDORGANIZATIONAL POLICIES AND PRACTICES AFFECT HEALTHPRACTICES AFFECT HEALTH Layoffs and economic insecurity affectLayoffs and economic insecurity affect healthhealth Unemployed people were twice as likely to beUnemployed people were twice as likely to be depresseddepressed Sickness absence was more than 2 timesSickness absence was more than 2 times higher among those who remained employedhigher among those who remained employed after downsizingafter downsizing ““Among respondents with no history of violentAmong respondents with no history of violent behavior at first interview, those laid off beforebehavior at first interview, those laid off before the second interview were 6 times more likelythe second interview were 6 times more likely to report such behavior than were similarto report such behavior than were similar persons who remained employed.persons who remained employed.””
  • 21. ORGANIZATIONAL POLICIES ANDORGANIZATIONAL POLICIES AND PRACTICES AFFECT HEALTHPRACTICES AFFECT HEALTH Layoffs and economic insecurity affectLayoffs and economic insecurity affect healthhealth One study found that unemployed people wereOne study found that unemployed people were 2 times as likely to commit suicide2 times as likely to commit suicide A study in Sweden found that overall mortalityA study in Sweden found that overall mortality among men increased by 44% during the firstamong men increased by 44% during the first four years following job lossfour years following job loss ““Losing a job because of an establishmentLosing a job because of an establishment closure increased the odds of fair or poorclosure increased the odds of fair or poor health by 54% and among respondents withhealth by 54% and among respondents with no preexisting health conditions, it increasedno preexisting health conditions, it increased the odds of a new likely health condition bythe odds of a new likely health condition by 83%.83%.””
  • 22. WHY THE EMPHASIS ON THEWHY THE EMPHASIS ON THE ENVIRONMENT OVER PEOPLEENVIRONMENT OVER PEOPLE WHENWHEN…… Employers are concerned aboutEmployers are concerned about health and absence costs, and somehealth and absence costs, and some have implemented various health andhave implemented various health and wellness programs and incentiveswellness programs and incentives Numerous employers have employeeNumerous employers have employee engagement initiativesengagement initiatives
  • 23. THERE ARE EMPLOYERTHERE ARE EMPLOYER ADVANTAGES TO EMPLOYEEADVANTAGES TO EMPLOYEE HEALTHHEALTH Cost advantages arising fromCost advantages arising from reduced turnover and lower absencesreduced turnover and lower absences and health care costsand health care costs Employee and customerEmployee and customer ““brandingbranding”” and brandand brand--buildingbuilding The evidence suggests thatThe evidence suggests that companies that are the best placescompanies that are the best places to work outperform othersto work outperform others——therethere may be no trademay be no trade--off between humanoff between human sustainability and profitabilitysustainability and profitability
  • 24. FORTUNEFORTUNE 100 BEST PLACES TO100 BEST PLACES TO WORKWORK——SHAREHOLDERSHAREHOLDER RETURN 1998RETURN 1998--20072007 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% "100 Best" Reset Annually "100 Best" Buy & Hold S & P 500 Annual Return
  • 25. MOST OF THE ARGUMENTS ABOUTMOST OF THE ARGUMENTS ABOUT HUMAN SUSTAINABILTIY ARE THEHUMAN SUSTAINABILTIY ARE THE SAME AS ENV. SUSTAINABILITYSAME AS ENV. SUSTAINABILITY Distrust/opposition to governmentDistrust/opposition to government regulationregulation Concerns about costsConcerns about costs Claims that competitiveness will beClaims that competitiveness will be compromised/erodedcompromised/eroded Arguments about the validity of theArguments about the validity of the ““sciencescience”” that underlies reformsthat underlies reforms Issue is the externalities imposed byIssue is the externalities imposed by company activities (in both domains)company activities (in both domains)
  • 26. SAME ARGUMENTS,SAME ARGUMENTS, DIFFERENT OUTCOMESDIFFERENT OUTCOMES In the case of environmentalIn the case of environmental pollution and environmentalpollution and environmental sustainability, the argument issustainability, the argument is largely overlargely over Environmental impact statementsEnvironmental impact statements Clean air and water lawsClean air and water laws ““GreenGreen”” expectationsexpectations In the case of human sustainability,In the case of human sustainability, the discussion has yet to really beginthe discussion has yet to really begin
  • 27. WHATWHAT’’S THE DIFFERENCE?S THE DIFFERENCE? The level of choice and perceivedThe level of choice and perceived control (e.g., snail darters and polarcontrol (e.g., snail darters and polar bears require more protection)?bears require more protection)? E.g., the clean water act precludesE.g., the clean water act precludes power plants killing too many fishpower plants killing too many fish Public visibility and measurementPublic visibility and measurement that highlights the issue?that highlights the issue? Legitimacy of intervening?Legitimacy of intervening? OrOr……??
  • 28. THE OBSTACLES TO CREATINGTHE OBSTACLES TO CREATING SOCIAL RESPONSIBILITY ANDSOCIAL RESPONSIBILITY AND INFORMED CITIZENSHIPINFORMED CITIZENSHIP
  • 29. ONE PROBLEM: EDUCATIONONE PROBLEM: EDUCATION According to the Aspen InstituteAccording to the Aspen Institute (2001), while in business school(2001), while in business school students come to place morestudents come to place more emphasis on shareholders and lessemphasis on shareholders and less on customers, quality, andon customers, quality, and employeesemployees According to the Aspen InstituteAccording to the Aspen Institute (2008), business school students(2008), business school students report beingreport being lessless able to deal withable to deal with ethical conflicts the longer they areethical conflicts the longer they are in schoolin school
  • 30. ONE PROBLEM: EDUCATIONONE PROBLEM: EDUCATION McCabe and Trevino report thatMcCabe and Trevino report that business school studentsbusiness school students (undergraduate and graduate) cheat(undergraduate and graduate) cheat more than students in other majorsmore than students in other majors High school and college cheating isHigh school and college cheating is widespread (Center for Academicwidespread (Center for Academic Integrity)Integrity) There are few consequences forThere are few consequences for those caught cheatingthose caught cheating——even in eliteeven in elite institutionsinstitutions
  • 31. ANOTHER PROBLEM:ANOTHER PROBLEM: INVISIBILITYINVISIBILITY Companies do not report on theCompanies do not report on the (physical and mental) health status(physical and mental) health status of their workforce, and companyof their workforce, and company effects on employee welleffects on employee well--beingbeing Little attention paid to theLittle attention paid to the consequences for people and theirconsequences for people and their wellwell--being of employer actions bybeing of employer actions by the mediathe media
  • 32. A THIRD PROBLEM:A THIRD PROBLEM: NO OVERSIGHTNO OVERSIGHT In the U.S., there are fewer federalIn the U.S., there are fewer federal government employees overseeinggovernment employees overseeing wage and hour compliance, workwage and hour compliance, work place safety, and mine safety thanplace safety, and mine safety than there were more than 25 years agothere were more than 25 years ago States, facing their own budgetStates, facing their own budget crises, have also cut work placecrises, have also cut work place monitoringmonitoring
  • 33. A FOURTH PROBLEM:A FOURTH PROBLEM: EMPLOYEES HAVE LOST POWEREMPLOYEES HAVE LOST POWER Employee organizations (unions) nowEmployee organizations (unions) now cover fewer workers in virtually everycover fewer workers in virtually every industrialized country, with the decline inindustrialized country, with the decline in the U.S. (and the U.K.) particularlythe U.S. (and the U.K.) particularly dramatic (less than 10% of the privatedramatic (less than 10% of the private sector work force is unionized)sector work force is unionized) Even though, according to the ILO (U.N.),Even though, according to the ILO (U.N.), the ability of employees to organize is athe ability of employees to organize is a fundamental human rightfundamental human right
  • 34. EMPLOYEES HAVE LOSTEMPLOYEES HAVE LOST POWERPOWER Companies span continents, employeeCompanies span continents, employee organizations (and even nationorganizations (and even nation--states)states) dondon’’tt With the advance of telecommunicationsWith the advance of telecommunications and computing technology, virtually alland computing technology, virtually all work can now be outsourcedwork can now be outsourced——put intoput into competition around the world (e.g., legalcompetition around the world (e.g., legal services as one of the fastest growingservices as one of the fastest growing segments of Indian outsourcing; readingsegments of Indian outsourcing; reading digital medical images remotely)digital medical images remotely)
  • 35. WHATWHAT’’S TO BE DONE?S TO BE DONE? InformationInformation——repeated and displayedrepeated and displayed in a vivid fashionin a vivid fashion Infectious social actionInfectious social action——TheThe Dragonfly EffectDragonfly Effect by Jenniferby Jennifer AakerAaker and Andy Smithand Andy Smith InterventionIntervention We can not wait forWe can not wait for ““enlightenedenlightened corporate selfcorporate self--interestinterest”” to solve theto solve the problemproblem