An ICHW Interview with Dr. Jeffrey Pfeffer

The ICHW Director Cristina Banks and Dr. Jeffrey Pfeffer sat down and took a deep dive into why most businesses fail to improve work environment and employee health.

Cristina Banks: Can you briefly recount your career path from college graduation to where you are now at the Stanford Business School?

Jeffrey Pfeffer: I graduated from college a long time ago, when dinosaurs were roaming the earth. I went to work for the only real job I ever held, for the Research Analysis Corporation. The Research Analysis Corporation no longer exists, but in those days, it was comparable to Rand or the Center for Naval Analysis.  The job was a way to try to avoid the Vietnam War draft.  I worked on a project that did military manpower planning for the Assistant Secretary of Defense for Manpower. I was responsible for running a simulation model that estimated each month the number of people who needed to be drafted. So I did that job for a while and then we figured out that I had flat feet, so I wasn’t going in the Army.  I came back to Stanford and got my PhD in two years. Then, at the age of 25, I went to work (as) an assistant professor at the University of Illinois in the beautiful city of Urbana-Champaign, the Twin Cities. I was there for two years and then I came to the University of California at Berkeley in 1973 where I worked for six years, and got tenure at the University of California at Berkeley. In 1979, at the very young age [at the age of 32], I was hired as a full professor at Stanford Business School where I have been ever since. That’s the story of my career.  I have written about leadership, such as the article “The Ambiguity of Leadership,” which goes back to 1977, and more recently, Leadership BS – I have publications in the area of the sociology of science, organizational design, and of course power, so I’ve written about almost every topic. I have a very short attention span and am completely undisciplined. I’m already on to new topics. I’m done with this. I’m on to something else.

What is the basic message you want employers to understand from your book?  What’s the basic message?

The basic message is that we, the world, and certainly the United States, have a public health crisis that is partly the result of work environments.  For the last two years average lifespan in the US has gone down. Health care costs are a problem, not only in the US but around the world. So we truly have a public health crisis, and if you want to fix that public health crisis, a place, not the only place, but a place where focus needs to be directed, is the workplace because the workplace is a source of a lot of the health issues that we are facing today.

What have you seen in your world as a business professor and consultant to business that made you want to focus on healthy workplaces?

I have sat for years off and on, on the Stanford Committee for Faculty and Staff Human Resources, which acts as the Stanford Committee on Health Benefits. We are obsessed with the fact that the University spends, in round numbers, 200 million dollars a year on health insurance, and that we have a health and wellness program. And it occurred to me that the health and wellness program is an attempt to remediate rather than prevent health issues. This was not good. I sat for a few years on the Human Capital Leadership Council for Hewitt before it got merged with Aon, and I saw the heads of HR from major companies – that’s where I met Laszlo Bock when he was at Google and the head of the HR for Hewlett Packard.  Senior HR leaders were obsessed with health care costs. It struck me that we had addressed healthcare costs in terms of what’s wrong with how we’ve organized healthcare – which God knows is plenty – and what’s wrong and why aren’t people taking better care of themselves. We have addressed it at the very macro level, the organization of  hospitals and the overtreatment, and all this other stuff, which is all serious, but we had left out the fact that people spend eight hours of their day, if they’re lucky, and 20 hours a day if they are working in the Silicon Valley in the workplace. If you wanted to understand health and healthcare costs and to intervene in a meaningful way, you needed to look at where people were working, so that seems logical to me to be a place to focus.  

How did you pick the set of working conditions that you and Dr. Goh and Dr. Zenioschose to calculate the human costs?

It’s a complex combination of things. We started with some intuition. We wanted to have a set of working conditions where hopefully there would be, and in many cases there were and in some cases by the way there were not, sufficient numbers of existing epidemiological studies of the effects on health. Oversimplified, but oversimplified in a useful way, if you’re going to estimate the health effects of working conditions, you need fundamentally two pieces of data. Number one, data on what is the mortality and morbidity effects of a condition, and second, you need data on the prevalence of that condition’s existence in the world. Neither one of these pieces of information are necessarily easy to get. So we began with a bunch of health conditions, where there would be sufficient epidemiological studies, so we could do meta-analyses and come up with a reasonably decent estimate of the effect of these things and which we could tie it to, in this case, the general social survey where you could estimate prevalence.  There are workplace factors, things like race and gender discrimination, that have health consequences, both physical and psychological, and workplace bullying, which has enormous health consequences, that I talk about in the last chapter where I think estimating prevalence would be harder, and I’m not even sure the epidemiological literature is that extensive, though it is probably more extensive than when I began this project. If we don’t measure prevalence you’ll never (know). We know this from the quality movement, but in any event, that’s how we came up with the workplace elements we examined.  Ten seemed like enough and so that’s how we began. And we estimated that these 10 workplace conditions are responsible for approximately 120,000 excess deaths per year, which would make the workplace the fifth leading cause of death in the US.  (It is) conservatively estimated, because we do not look at spillover effects. So if you don’t have health insurance, your family probably doesn’t have health insurance. If you have work-family conflict, the work-family conflict is probably stressful to someone besides you, like the family members who are also experiencing the work-family conflict. If you are working too many hours per day that probably has effects on people’s health beside your own. So we did not look at spillover at all. We did this intentionally to be conservative, and it is. Every human resource executive I have talked to about this, when I give them the numbers, says that the number is way off; it’s much too low. They all believe it’s much worse than this.

And yet they still don’t act.

Of course not.  So, you know, I mean everybody is conflicted. If you are a benefits provider or, administrator, you know what percentage of people in every department at Stanford University are on anti-depressants. You know, and you could control for age, and you could control for gender, you could control for anything else you want, and you would know whether or not the workplace was healthy. This happened (in) Salesforce. There is a screenshot that all 26 thousand Salesforce employees saw last year in an all-hands meeting that showed exactly how much Salesforce’s prescriptions and medical care costs went up in one year, and the numbers are staggering. The benefits administrators know this. But, they, Glassdoor, the Great Place to Work Institute, they are all conflicted because they are selling to the people on whom they’ve got the goods and so they are not going to say, “By the way, in Banks Industries, controlling for everything else, you have the highest level of psychotropic drug use.”  But they know your health claims and they know particularly the drug claims, and drugs are an indicator. So this could be measured in a nanosecond, but the people who have the goods are all conflicted. You know Collective Health? Collective Health is an interesting organization. I am doing, a webinar for them and another event. Collective Health is adorable. So Collective Health was started by a doctor from Stanford, a graduate of the medical school, maybe also has an MBA, and a guy named Ali Diab. If you go to their website, you’ll see Ali’s story. Briefly put, Ali was an entrepreneur, sold his company to Google, was working for Google, and one day his intestines turned in on themselves, which has got a technical term which the doctors know and I don’t, and when your intestines turn in on themselves you get internal gangrene. So he had emergency surgery and for six months he was near death, and he still can’t eat normally, but it’s okay. He’s also very thin. And at the end of this, he’s a Google employee, so he gets from the Google health insurance administrator, the EOBs and a bill from the hospital. The bill was six figures and the first figure wasn’t a one, and they disallowed most of the claims. They said some of this stuff didn’t have prior approval – it’s emergency, but whatever – some of this stuff is experimental. Well, Ali took the bill, because he reported directly to Larry Page, and he showed him this, and Larry Page said this is ridiculous – and Larry Page, with Ali sitting in the office, picked up his phone, said to his assistant, get the CEO of the insurance company on the phone. Got the insurance company on the phone and said I’m looking at this bill. He said, you see, you have basically two choices. He said you can pay the bill, number one; (or) you are going to lose our business and I’m going to tell all my friends to basically cancel their contracts with you, and the guy said of course. And then Larry Page put the phone down, looked at Ali and he said I know what’s going to happen next. And Ali said yes. And Larry said you’re going to start a company so that you don’t have to know Larry Page in order to get your medical claims paid. And he said that’s right. And Larry said I’ll invest if you want. So that’s how Collective Health began, and that is basically a version of the story, not quite as dramatic as how I told it, is on the Collective Health webpage. It’s called Our Founder’s Story. So he has started Collective Health to basically fix the health insurance system, to manage things, to do things. They have built a healthy culture. There are three hundred and twenty-five of the smartest human beings in the world working for them.  People whom I have met through the Stanford Committee on Faculty and Staff Human Resources, the best people I have met, are all working there, including Andy Halpert who used to be the chief medical officer for California Blue Shield. He has Peter Thiel backing him. He is like on a mission from God to basically bring data and analysis and fix all of this, and they’re fabulous. And he’s a wonderful human being. He is busy, you know, he’s trying to grow the company and sell business to people.  He and his colleagues know the scandals, the conflicts of interest, the corruption in our medical care system. It’s just disgusting.  So but the point is that people know about this. But many people don’t want to (fix it). They’re making money from it! As somebody pointed out when we talked about Obamacare, your waste is my income. What looks like waste to you is my income, so you know every unnecessary test is somebody’s income. Every unnecessary piece of medical equipment is somebody’s profit. 

What did you find out about the relationship between these working conditions and health outcomes?

That there is huge relationship. That the workplace, in aggregate, is the 5th leading cause of death, worse than Alzheimer’s, worse than kidney disease, and that many of these working conditions, things like an absence of health insurance, work-family conflict, long work hours, an absence of job control, are as harmful to health as second-hand smoke, a known and regulated carcinogen.

Based on your research and observations from consulting, what in particular would you like to see change in the way business operates today?

I think it is a very simple change. So Bob Chapman, the CEO of Barry-Wehmiller has this wonderful quote from the Mayo Clinic, which is that your leader is more important to your health than your family doctor, which has got to be true. I think people need to understand that when human beings come to work for them and with them every day, those people have entrusted their lives and their wellbeing, both physical and psychological, to those people, and that leaders need to be much better stewards of the lives that are entrusted to them. Ironically, many organizations, including some of the most toxic, have decided that they want to be good stewards of the physical environment – God bless them for that, the physical environment is important – and that they’re going to be concerned about recycling and their carbon footprint, and energy usage, which is, I guess, a form of carbon footprint and everything else. “I’m going to put solar panels on the roof” and all this other stuff, which is all wonderful. But they need to have the same sense of stewardship with respect to the human beings who work for them as they do for the physical environment. And as soon as they get that mindset, it will all be fine because they will figure out how to get the measures and how to get the data and how to make improvements gradually step by step. And until they get that orientation, nothing is going to happen.

What do you think are the major impediments to accomplishing significant change in the way people work and the work experience, their work experience? Is it what you just said?

I think it’s what I just said, and what I just said, I think, has gotten worse over time. And it has gotten worse over time, I think, for two reasons. Number one, in the words of Robert Reich, we have moved from stakeholder capitalism to shareholder capitalism.  In the olden days 40, 50 years ago, I think CEOs thought that they had to balance the interests of shareholders and employees and customers and the community.  And now it is shareholders first, second and third. I think secondly is, other things being equal, if I didn’t know you, I would be less likely to care about you.  So the fact that job tenures have gone down, that people are working in these contract arrangements, that people are doing gigs makes a difference.  If we had worked together, or if you feel that your employees are going to be with you, you’re going to learn who they are even in a relatively big organization.  You can see the difference even at Stanford, because we have a long-tenured workforce, even though we are operated very much like a business.   My joke is the difference between us and Google is our margins are higher But there is a sense in which, you know, Persis Drell, our provost, has been here a long time, and people know each other. And it’s hard for me, if I know you, to say,  “it’s too bad that your husband dropped dead of a heart attack. Go take care of it on your own.”  So there is going to be more a sense of social obligation to the extent that we know people.  Or to the extent that the employment relationship has become externalized, to the extent that job tenures have gone down, it is going to be psychologically almost inevitable that people are going to have a different way of looking at the people who are working for them and with them.  One hedge fund manager who told me once,  when I asked him how can you be a hedge fund manager, he said I lay them off by the floor. He said, I don’t know them… So this all comes back to the nature of the connections or the absence thereof.  

Do you have any ideas for ways employers can be held accountable for the human cost?

It’s the same way they are held accountable for the environmental cost. You can see trends in the UK with their health, HSC, Health and Safety executive, which is putting out reports on lost workdays. UK isn’t quite ready because they have a conservative government to mandate a bunch of stuff, but there is a movement to say. So part of environmental regulation came about not just because we decided that people shouldn’t foul the physical environment, but because we came to understand that when I dump in the river, to use a technical term, it is, number one, more expensive to clean it up than it is to prevent it in the first place, and that’s true for air and water and land that the cleanup is much more expensive than the prevention, that’s number one; and number two, that I should not permit organizations to take their waste and impose the cost of their waste on innocent third parties or the larger society. If I happened to live down river from a steel mill, it didn’t seem quite fair that I have to pay to clean up the steel mill’s residue. And I think this is exactly the same thing here. The parallel is exact. When people are worked to death or when they are worked so that they can no longer be in the labor force. When they are physically and psychologically damaged to the point that they are no longer in the labor force, they have the workforce version of PTSD – which by the way they can get – then society is going to pick up the cost and so we are basically subsidizing bad actors and we need to stop that.

In your opinion is removing the bad stuff in organizations the same as promoting the good stuff or does promotion of worker health and well being require more than just removing the bad?

I don’t know the answer to that. The honest answer is, when people tell me about these health promotion programs, I say to them they seldom work, and they say why and I say because you cannot put a Band-Aid on a deep wound and expect it to work. If we stop doing the harm, maybe we wouldn’t need to do as much good, but certainly it is going to be very hard. I mean putting a nap pod into a workplace is not going to substitute for the fact that people aren’t getting enough sleep because they are working 24/7.

So what companies do you regard as leaders in conducting business in a manner that you think promotes worker health and well being?

A small list. Well, I don’t know all of them. I am sure there are billions, or at least thousands, but there aren’t enough. SAS Institute in Cary, North Carolina would be one. They’ve had a chief health officer for years. Think about that title. I like that title. And her job, by the way, is not as many chief health officers’ titles are now because this is a title that is spreading. Many chief health officers’ job is to cut down medical insurance costs. Her job is actually to make sure that the employees are healthy, which is interesting. Collective Health, which is not only a provider of benefits administration but also has built an extremely healthy culture. Patagonia, which is famous for their work environment. Barry Wehmiller with Bob Chapman would certainly be another. Zillow is certainly another. Believe it or not. Landmark Health is another. They provide health services to people who are kind of homebound. Davita, the kidney dialysis company, I think, has done a lot of good things in this domain, so there are a bunch. There are many. I’m sure there are many others. You know, there are companies that are trying to do it. Big tech?  Google?  Google at one point, Google is not quite as good as it was, but it is still better than many.  

If you could describe the ideal healthy workplace based on what you, based on your knowledge and expertise, what would it look like?

It would look like a place with number one, no micromanaging, where people had control over work and had autonomy. Industrial and organizational psychologists have been writing about job autonomy for 40 years, and people still apparently don’t believe in it. It would be a place where there would be various things to help people balance work and family, and people would be held accountable not only for having the policies but for actually encouraging people to use them. I talked to somebody a couple of weeks ago, he was complaining, and I said doesn’t your place have a gym, and he laughed. He said, you should come to the gym. I said why. He said because there’s nobody ever there. If you would actually use the gym, somebody would say to you why aren’t you working. It’s like the places that say, you know, we’re going to give you unlimited vacation; by the way if you take it, you’re gone. If you take any, you’re probably gone.  We’re going to have this very generous family leave, maternity leave, family leave policy, however, the expectation is and the norm is that if you use it you’re not really giving your soul to the company, which is what we want.   

You’re not a warrior.  That’s the way it’s been described.

That’s right. So, policies that are there and are actually used and encouraged and consistent with the culture, a policy that says, in the words of Jim Goodnight of the SAS Institute, if you’ve come to work in the morning, and you’ve worked hard all day, go home, because by five o’clock, you don’t have anything left. And he, by the way, leaves at five himself. You know, it’s so that you have reasonable work hours, good job autonomy, good control over your workplace, policies that would make it possible for you to accommodate work and family, and a culture of social support where people kind of take care of each other and feel responsible for each other. And that, of course, starts at the top, because if I don’t feel responsible for you, who the hell is going to feel responsible for you?

Certainly not gonna be your manager who is held to certain outcomes and deadlines and that’s the person who has to be convinced.

That’s correct.