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March 16, 2018

Editor's Choice: Dying for a Paycheck: How Modern Management Harms Employee Health and Company Performance—and What We Can Do About It

By: Dylan Schleicher @ 2:24 PM – Filed under: Big Ideas & New Perspectives, Current Events & Public Affairs, Innovation & Creativity, Leadership & Strategy, Management & Workplace Culture, Personal Development & Human Behavior

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Dying for a Paycheck: How Modern Management Harms Employee Health and Company Performance—and What We Can Do About It by Jeffrey Pfeffer, Harper Business, 272 pages, Hardcover, March 2018, ISBN 9780062800923

Jeffrey Pfeffer is not one to pull punches. The Knowing-Doing Gap, written with his colleague and fellow soldier of candor, Bob Sutton, is about how organizations suffer not from a lack of knowledge, but from a failure to act on the knowledge available to them. (It is also one of The 100 Best Business Books of All Time). His book Power is an unflinching look at how people gain and wield influence in the world, and his last book, Leadership BS, was a simple and straightforward indictment of how the leadership industry has failed, and why so much of the activity within the industry is harmful. And that is just a slice of the writing he’s put into print in his campaign for better business practices.

His new book, Dying for a Paycheck (coming out next week from Harper Business), is about how toxic workplaces and management practices are undermining the health of employees and literally killing people:

 

Nearly half of employees reported missing time at work from work-related stress, 61 percent said that workplace stress had made them physically sick, and 7 percent said they had been hospitalized because of workplace stress and its physiological effects.

 

Pfeffer lays out the links between stress and health, and the clear evidence that the workplace is the primary source of that stress in most people’s lives. With the analytical help of fellow professors Joel Goh and Stefanos Zenios to gather and parse the data, he concludes that toxic workplaces “may be responsible for 120 thousand excess deaths per year—which would make workplaces the fifth leading cause of death.” He believes that’s a very conservative estimate, and when you dive into the data and analysis offered, I think you’ll agree. Sadly, most workplace trends—economic insecurity, longer hours, technology that keeps us tethered to work even when we’re away, and the rise of the gig economy—suggest that workplace stressors are only increasing.

Pfeffer opens the book discussing the sustainability reporting movement, questioning why those requirements aren’t extended to the health of employees. Companies have become used to documenting the environmental impact of their actions, even to using those numbers as marketing fodder, but what about their internal work environment? What about the impact of the company’s existence on the human lives most affected by it on a daily basis, those of its employees? Pfeffer ponders why:

 

If you go to the website where automobile manufacturer General Motors presents its sustainability bona fides, you can learn that GM is number one in clean energy patents, is among the top five in the world of solar arrays hosted, has eleven landfill-free sites, and operated in twenty-six sites certified by the Wildlife Habitat Council. What you won’t learn is the number of jobs the company has cut over the past decade, what GM has done to reduce wages and benefits for new and experienced employees, and how the company manages its office and plant work environments in ways that affect people’s well-being. Nor does General Motors in its sustainability reporting present data on the aggregate physical and mental health of its current or former workforce.

 

As we know from Amy Goldstein’s Janesville, just the layoffs alone can devastate communities economically. Its effects on individual’s health are equally devastating. One study found that “people facing employment instability suffered health effects as large as the effects of smoking,” and “the studies of layoffs on the increased risk of death paint a very consistent picture supported by a great deal of evidence: layoffs kill people.” And it is not just those who are laid off that suffer the consequences. It affects the health of those in their household, and even their former coworkers who survived the layoffs, who in addition to the worry that comes with wondering if they’re next on the chopping block, are left with ever higher job demands:

 

As extensively documented, most companies take out more workers than work. Consequently, those employees who still have their jobs find that they must do much more work to compensate for the reduced number of people now expected to get about the same tasks accomplished. Burnout and job stress typically increase following lay-offs, resulting in adverse health consequences for those remaining employees.

 

Even the managers responsible for implementing the layoffs experience more health problems. And there is ample evidence that layoffs actually harm the companies doing them. They drive down workplace morale, and almost never address the root problem, which most often “is not excessive costs but instead insufficient revenues.” They are also costly simply in financial terms; they more frequently have a negative effect on stock price than not, and they cost the company money in unemployment insurance and other payouts to those laid off. That it costs money to lay people off is evidenced by the fact that Kimberly Clark, the maker of Huggies and Kleenex, announced that they would be using the savings from the recent tax cut to pay for a restructuring that would cut between 5,000 and 5,500 jobs, or roughly 12 or 13 percent of the company's employees—which is, of course, the exact opposite of the intended result.

And in cases of people being literally killed at work, workplace homicides are so common in America that the Centers for Disease Control declared them a serious public health problem in 1992. It happened to be a year that job losses and unemployment peaked at 7.8 percent after a recession. And “Suicides in the workplace increased 28 percent just between 2007 and 2008 as the recession was beginning.”

 

The simple fact that as a society we are apparently profoundly concerned about the physical environment and largely indifferent to what companies do to the social environment, to the human beings that work for them, has important implications for understanding the contemporary world. … With no measurement, no reporting, no requirements for considering the consequences of creating social pollution, as distinguished from environmental pollution, work organizations continue to use decision logics that leave them blissfully—perhaps even willfully—unaware of what they are doing to their employees.

 

Healthcare, which in America is provided by employers (the only advanced industrial economy to rely on such a system), has become one of the biggest political footballs of our national discourse. Pfeffer devotes a whole chapter to the on-the-ground realities of the issue, including how it affects the labor market and employee health. It’s not good:

 

Compared to sixteen other rich nations, the United States has the fourth-highest mortality rate from infectious disease, the highest rate of maternal and infant mortality, and the second-highest mortality from noncommunicable diseases such as diabetes and heart disease.

 

All while spending more on healthcare than any other nation, and in a system in which the employees who do have insurance still have to fight with insurers over what is, in fact, covered once they get their bill—”diverting employees’ attention from their work and increasing their level of stress.”

 

As one individual told me, it seems particularly inhumane that individuals confronting serious, sometimes life-threatening illnesses, should also have to cope with insurance companies, insurance plans, and their benefits office, and be at the mercy of these entities about what are often life-and-death decisions.

 

Everyone knows how complicated this is, both administratively and politically, but Pfeffer adds in one more wrinkle, which is at the heart of this book throughout:

 

Looking at what employers do daily to create healthy or harmful workplaces is a crucial missing piece of the story of human well-being, health, and health-care costs.

 

Pfeffer also devotes a chapter to “The Health Effects of Long Work Hours and Work-Family Conflict,” which is especially pernicious in the fields of law, finance, and high technology, the currently driving forces of our economy and setting the tone for work culture elsewhere—which is, perhaps, one reason the trend is moving in the wrong direction and the number of hours worked across America has been steadily increasing for decades. The devices that keep us tethered to our work 24/7 and the rise of the so-called gig economy are only making matters worse. And yet, as we’ve discussed in other reviews here many times, and as Pfeffer clearly documents again —especially “for creative work, for work that requires thought, for innovation—working longer hours leads “to making more mistakes and also being less thoughtful and insightful.” Indeed, there’s strong evidence that working longer hours actually decreases employee performance, and instituting management practices that eschew such schedules improve the overall performance of employees and the company.

There are an additional “Two Critical Elements of a Healthy Workplace,” which are the subject of Chapter Six: job control and autonomy, and social support within the workplace. “When people cannot make decisions and do not have sufficient control over their work,” Pfeffer writes, “they are stressed and suffer ill-health, as extensive evidence makes clear.”

 

As with many other situations discussed in this book, there is no real trade-off between designing jobs to improve people’s health and designing jobs that increase motivation and performance for the benefit of employers. Jobs that provide individuals more autonomy and control serve to increase their motivation, job satisfaction, and performance—and also make individuals healthier and live longer.

 

And there are even simpler choices that employers have to make:

 

Consider as just one example the effects of employer decisions about wages. Although wages are partly determined by labor market conditions, there are low-wage and higher-wage employers in the same industry—Costco and Walmart being one example of such differences. And the evidence is clear: wages affect health.

 

And it doesn’t affect just the health of employees; it externalizes those costs and imposes them on the larger society. For example, 10,000 of the 166,000 children enrolled in Georgia’s Children’s Health Insurance Program in 2003 were dependents of Walmart employees, adding an estimated $455 million to the state rolls. Uncompensated Walmart workers themselves added an additional $220 million. Walmart is, of course, the largest private-sector employer in the United States. Considering that “Costco, a direct Walmart competitor, pay[s] better, offer[s] better benefits including health insurance, and [is] able to realize almost twice the sales per employee,” and it's “even after accounting for the incremental costs profits per employee are higher,” it doesn’t seem to be good for Walmart, either.

Pfeffer offers a wealth of data and analysis on all of these issues, but he also offers solutions, whether through the examples of companies like Southwest Airlines that haven’t resorted to layoffs during recessions and come out on the other side better for it, or Patagonia offering health care on the first day of employment to all workers, full-time and part-time, with zero premiums for employee-only coverage. Patagonia also offers on-site childcare, and has moved to a nine-hour workday so that “every other Friday, people can have an extra day off—twenty-six three day weekends a year.” As for calls or emails or calls when they’re off, “It just doesn’t happen.” Other examples of good employee practices come from Zillow, Landmark Health, and Barry-Wehmiller, whose CEO Bob Chapman, put the issue directly to a group of thousand CEOs he was speaking to in Texas: “You are the cause of the health-care crisis,” he said, “because 74 percent of all illnesses are chronic. The biggest cause of chronic illness is stress, and the biggest cause of stress is work.”

Pfeffer acknowledges that there is no control group where stress isn’t present in the workplace, and that it’s probably not entirely possible to have one in a competitive world. But he also doesn’t even get into other harmful aspects of work environments, like bullying or discrimination. In the end, his “fundamental message is simple: employers have a choice.” In Dying for a Paycheck, they also have the data and analysis to convince other decision makers that it’s the right choice, and the tools they’ll need to start implementing change right away. Because making employee health and well-being integral to the company’s culture and values is not only good for the employees; it is a competitive advantage that is also good for the company’s bottom line.


 

About Dylan Schleicher


Dylan Schleicher has been a part of the 800-CEO-READ claque since 2003. Even though he's stayed on at the company, he has not stayed put. After beginning in shipping & receiving, he joined customer service and accounting before moving into his current, highly elliptical orbit of duties overseeing the ChangeThis and In the Books websites, the company's annual review of books, and in-house design. He lives with his wife and two children in the Washington Heights neighborhood on Milwaukee's West Side.