Stanford's Jeffrey Pfeffer Criticizes Companies For Killing Their Employees - Leadership

Two days ago, Jeffrey Pfeffer, Stanford Professor of Organizational Behavior, wrote this on Bloomberg Businessweek:

“It would be nice in 2013 to have human values and well-being play more of a role in decisions about business practices, including the choice of suppliers and how far companies will go in their decisions and management practices to save or make money. There must be some limits, some sanctions, some consequences for bad behavior—even if it is profitable behavior.”

He cites the ethical lapses at banks, such as HSBC (money laundering) and Bank of America(mortgage abuses), before focusing on a different imperative: access to healthcare.

“Companies that lay people off affect those individuals’ lifespans and their likelihood of suffering ill health: suicide, depression, and unhealthy behavior such as smoking and alcohol abuse have been linked to job loss and economic insecurity,” he claims.

Like Pfeffer, I want to protect individuals from organizational abuse. I’m troubled by karoshi, the Japanese phenomenon in which men are dying from overwork. But how much responsibility should an organization accept for an individual’s actions?

CEOs have to manage their psychological state, too. I’m reminded of how distraught former JetBlue CEO David Neeleman was when a mechanical malfunction forced Flight 292 to perform an emergency landing in 2005.

Pfeffer recommends that companies factor people, as well as financial, implications into their management decisions.

It starts with emotionally intelligent leaders, not a rigorous decision-making process. After Loudcloud escaped bankruptcy, CEO and co-founder Ben Horowitz restructured, laying off a third of the employees, transferring a third to new investor EDS, and keeping a third in a new company, OpsWare. He consoled those who weren’t so lucky, even helping them carry their belongings to their cars.

In February 2009, the casino industry was struggling, and Steve Wynnreduced the pay for all the employees at his two Las Vegas properties. He didn’t want anyone on unemployment or out of insurance.

In both examples, the leader considered the impact of his decision on the livelihood of his people.

Many blame business schools for failing to instill ethics into their graduates. While they’re partially responsible, the truth is that most CEOs aren’t MBAs.

Follow Drew on Twitter @drewhansen26

Drew Hansen, Contributor

I write about innovation, entrepreneurship, and leadership