Research Updates
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Written by: Becki Firm Pfeffer, Jeffrey. (1994) . Competitive Advantage Through People: Unleashing the Power of the Workforce. Boston, Massachusetts: Harvard Business School Press. This recent finding is a scholarly justification of the value of people and their contribution to the bottom line. Pfeffer's study researched the biggest stock growth in terms of return on investments from 1972 until 1992. These five stocks included Plenum Publishing, Circuit City (a video and appliance retailer), Tyson Foods (a poultry producer), Wal-Mart (a discount chain), and Southwest Airlines. Their percentage returns varied from 15,689% to 21,775%. His argument is that these specific organizations compiled over 15,000% in returns even though during this time period the related industries associated with these companies were characterized by fierce competition, substantial losses, widespread bankruptcy, and many substitute products or services. Pfeffer attributes the achievements to competitive success through people. "What these five successful firms tend to have in common is that for their sustained advantage, they rely not on technology, patents, or strategic position, but on how they manage their work force"(4). He also stresses that the basis of competitive success is changing. He believes that people and how they are managed is becoming more important because other sources of competitive success are less powerful. "As other sources of competitive success have become less important, what remains as a crucial, differentiating factor is the organization, its employees, and how they work"(14). Pfeffer believes that it's crucial not to dismiss the side of business that is sometimes referred to as the soft side of business. The side of the business he is referring to is an organization's culture, how people are managed, and the effects of a management style on their behavior and skills. "Achieving competitive success through people involves fundamentally altering how we think about the work force and the employment relationship. It means achieving success by working with people, not by replacing them or limiting the scope of activities. It entails seeing the work force as a source of strategic advantage, not just as a cost to be minimized or avoided. Firms that take this different perspective are often able to successfully outmaneuver and outperform their rivals"(16). Pfeffer also gives other numerous examples of achieving competitive success through people. These examples include Nordstrom, Lincoln Electric, and the New United Motor plant of the Toyota-GM joint venture. |
