Building Sustainable Organizations: The Human Factor Author(s): Jeffrey Pfeffer Source: Academy of Management Perspectives, Vol. 24, No. 1 (February 2010), pp. 34-45 Published by: Academy of Management Stable URL: http://www.jstor.org/stable/25682382 Accessed: 30-05-2016 10:33 UTC REFERENCES Linked references are available on JSTOR for this article: http://www.jstor.org/stable/25682382?seq=1&cid=pdf-reference#references_tab_contents You may need to log in to JSTOR to access the linked references. Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at http://about.jstor.org/terms JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. Academy of Management is collaborating with JSTOR to digitize, preserve and extend access to Academy of Management Perspectives This content downloaded from 130.102.42.98 on Mon, 30 May 2016 10:33:31 UTC All use subject to http://about.jstor.org/terms 34_Academy of Management Perspectives_February ARTICLES Building Sustainable Organizations: The Human Factor by Jeffrey Pfeffer Executive Overview Although most of the research and public pressure concerning sustainability has been focused on the effects of business and organizational activity on the physical environment, companies and their management practices profoundly affect the human and social environment as well This article briefly reviews the literature on the direct and indirect effects of organizations and their decisions about people on human health and mortality. It then considers some possible explanations for why social sustainability has received relatively short shrift in management writing, and outlines a research agenda for investigating the links between social sustainability and organizational effectiveness as well as the role of ideology in understand ing the relative neglect of the human factor in sustainability research. There is growing public and business interest Ambec and Lanoie (2008, p. 46) noted, "Firms are facing growing pressure to become greener." As it is operationalized in the literature, sus tainability is defined in part by an effort to con Academy of Management has a division called serve natural resources and avoid waste in opera Organizations and the Natural Environment, tions. Conservation and the more efficient use of in building sustainable organizations and in creasing research and educational interest in the topic of organizational sustainability. The and there are numerous journals and research resources naturally lessen the burden of economic papers concerned with ecological sustainability. There are growing numbers of higher education programs focused on sustainability and an As sociation for the Advancement of Sustainability in Higher Education (Fountain, 2010). Marcus and Fremeth (2009) noted that this enthusiasm for what they called "green management" came from people's expectations for how managers and the organizations they lead should conduct their business to protect the environment. As activity on the environment and help to ensure that the activity can be sustained over time be cause the resources required will not be exhausted. Sustainability also appears to encompass activities that renew and recycle what is used, once again with the goal of ensuring that the ecosystem that supports life and lifestyle can and will be pre served. Other aspects of sustainability include pre serving what is?as in preserving threatened plant and animal species and, in cultural sustainability, preserving the values, arts, culture, and food of I gratefully acknowledge the advice, encouragement, and inspira^ tion of Nuria Chinchilla from IESE, who encouraged me to think about the issue of human sustainability in both societies and companies. The helpful comments of the editor and the reviewers substantially clarified the arguments. "communities threatened by globalization and modernization" (Navarro, 2010, p. 20). In the physical sciences, much of the research on sustain ability has focused on the amount of stress an Jeffrey Pfeffer (Pfeffer_Jeffrey@gsb.stanford.edu) is the Thomas D. Dee II Professor of Organizational Behavior at the Graduate School of Business, Stanford University. Copyright by the Academy of Management; all rights reserved. Contents may not be copied, e-mailed, posted to a listserv, or otherwise transmitted without the copyright holder's express written permission. Users may print, download, or e-mail articles for individual use only. This content downloaded from 130.102.42.98 on Mon, 30 May 2016 10:33:31 UTC All use subject to http://about.jstor.org/terms 2010_Pfeffer_35 ecosystem can tolerate as well as principles for restoring ecological balance. In management, re search attention has focused on the possible links between profitability and sustainability as well as that this is not the case. Nonetheless, this empha sis on the natural environment raises an interest ing research question: Why are polar bears, for instance, or even milk jugs more important than the factors that cause organizations to pursue dif people, not only in terms of research attention, ferent sustainability strategies (e.g., Ambec & but also as a focus of company initiatives? Lanoie, 2008). In 2008, Doug McMillon (Colvin, 2008), the Although sustainability clearly could encom CEO of Sam's Club, a division of Wal-Mart, pass a focus on human as well as physical re expounded on the innovation in milk jugs and sources?in fact, the Academy of Management the fact that his company had introduced a new division on the natural environment has as one jug that was able to increase the shelf life of of its foci "managing human resources for sus milk, reduce the cost between 10 and 20 cents, tainability"?there is a much greater emphasis and eliminate more than 10,000 delivery trips, on the physical rather than the social environ thereby conserving energy. In 2005, Lee Scott, ment1 both in the research literature and in the Wal-Mart's CEO, made the first speech in the actions and pronouncements of companies. To company's history broadcast to all of its associ illustrate this point, a search of Google Scholar ates. In that speech, also made available to finds 20,800 entries for the term "ecological Wal-Mart's 60,000 suppliers, Scott committed sustainability," 53,000 for "environmental sus the company to the goals of being 100% sup tainability," but just 12,900 for "social sustain plied by renewable energy, creating zero waste, ability" and a paltry 569 for "human sustainabil and selling products that sustain resources and ity." And even a cursory review of the the environment (Plambeck & Denend, 2007). management literature shows that virtually all Meanwhile, Wal-Mart paid its employees al of the articles focused on sustainability are pri most 15% less than other large retailers, and marily concerned with the effects of organiza because of the lower pay, its employees made tions on the physical as contrasted with the greater use of public health and welfare pro social environment (e.g., Ambec & Lanoie, 2008; Bansal, 2002; Marcus & Fremeth, 2009). Even when there is concern with the social effects of organizational activities, these con cerns are mostly directed to the consequences of grams (Dube et al., 2007). In 2005, 46% of Wal-Mart employees' children were either un insured or on Medicaid, a state program to pro vide medical care to low-income people (Rosen bloom & Barbaro, 2009). Compared to Costco, economic development and resource exploita Wal-Mart offered fewer medical and other ben tion for the viability of indigenous cultures efits, although these lower costs did not result in (Bansal, 2002) rather than the consequences of higher profits per employee (Cascio, 2006). management practices for every individual's Wal-Mart's relative emphasis on the physical health and well-being and the richness of social environment over its employees is far from un life as assessed by participation in civic activi usual. British Petroleum, a company that touts its environmental credentials in its advertising ties (e.g., Putnam, 2000). and other presentations, was one of the first Environmental sustainability is important, and nothing in this paper should be taken to imply major oil companies to devote significant in vestment to alternative energy, and at one point 1 In this paper I use the term social environment to include organiza tional effects on people and small groups. Just as physical sustainability considers the consequences of organizational activity for material, physical resources, social sustainability might consider how organizational activities affect people's physical and mental health and well-being?the stress of work practices on the human system?as well as effects of management practices such as work hours and behaviors that produce workplace stress on groups and group cohesion and also the richness of social life, as exemplified by participation in civic, voluntary, and community organizations. wanted BP to also stand for "beyond petro leum." Apparently less concerned about its peo ple, the company paid a record fine of $87 million for an explosion in its Texas City, Texas, refinery that killed 15 workers (Green house, 2009). The fine penalized the company not only for the explosion but also for numerous This content downloaded from 130.102.42.98 on Mon, 30 May 2016 10:33:31 UTC All use subject to http://about.jstor.org/terms 36_Academy of Management Perspectives_February safety violations found during a subsequent in vestigation and a failure to correct those defi ciencies even after the fatal explosion. Even as businesses have appointed "eco-man agers" (Hsu, 2010) to oversee company efforts to become more energy efficient and environmen tally conscious, and even as companies track and an ideology of the primacy of markets (Davis, 2008) and shareholder interests and the associated publicly report carbon emissions from their activ search focus on human sustainability. idea that market outcomes are fair and just (Jost et aL, 2003), with sentient individuals making in formed choices, may help explain the constrained focus of our research attention. The paper con cludes with some implications for building a re ities (e.g., Kaufman, 2009), one would be hard pressed to find similar efforts focused on employ ees. Just as there is concern for protecting natural resources, there could be a similar level of concern for protecting human resources. For example, there has been no groundswell of reporting on employee physical and mental health and well ness, even though that might be an interesting and informative indicator of what companies are doing about the sustainability of their people. This lack of concern is puzzling given that health-care costs, which as noted below are related in part to what companies do in the workplace, are an enor mous problem in the United States and through out the industrialized world. In this paper, I want to first make the case for Broadening Our Dependent Variables: Organizational Effects On Employee Mortality and Morbidity In assessing and evaluating countries and other political units, measures of population health (e.g., infant mortality and life span) are fre quently used as indicators of societal effectiveness and the level of country development. Cornia and Paniccia (2000) examined explanations for the dramatic increase in age-adjusted mortality, par ticularly for men, in Eastern and Central Europe during the 1980s and 1990s, taking these de creases in life span to be evidence of dysfunctional social conditions. Marmot and Bobak (2000) ex plored the "missing men of Russia"?the enor broadening our dependent variables in manage ment research from a focus on profitability and mous increase in mortality and consequent reduc other indicators of firm performance, such as tion in average life span for men following the shareholder return and productivity on the one collapse of the Soviet Union, once again implying hand and environmental sustainability practices that the health of a society's people reflects at and social responsibility on the other, to also include organizational effects on employee health and mortality. Being a socially responsible busi ness ought to encompass the effect of management practices on employee physical and psychological well-being. Indeed, there is a large epidemiologi cal and public health literature that suggests there may be important organizational effects on human health and life span. The available evidence sug gests that there is a good likelihood of finding some interesting research results if we continue to expand our understanding of the connections be tween organizational practices and human well being. least to some degree the functioning of that soci ety. Indeed, Marmot (2004, p- 247) explicitly ar gued that "health functions as a kind of social accountant. If health suffers, it tells us that human needs are not being met." Similarly, Gakidou, Murray, and Frenk (2000, p. 42) wrote that "health is an intrinsic component of well-being," and the economist Deaton (2003, p. 115) also noted that "health is a component of well-being." What is true for countries or other political units is also true for organizations. The health status of the workforce is a particularly relevant indicator of human sustainability and well-being because there is evidence that many organiza Then I want to open up the question as to why tional decisions about how they reward and man age their employees have profound effects on hu shrift in discussions of organizational effects on man health and mortality. A few of the many ways the environment and the implications of such company decisions affect the health and welfare of effects for sustainability. In so doing, I argue that their people follow. employee health has received relatively short This content downloaded from 130.102.42.98 on Mon, 30 May 2016 10:33:31 UTC All use subject to http://about.jstor.org/terms 2010_Pfeffer_37 The Provision of Health Insurance In the United States, in contrast to every other advanced industrialized country, access to health insurance?and, as a consequence, access to health care for working-age people who are not so poor as to be covered by increasingly limited social welfare programs?depends on whether or not one's employer voluntarily chooses to offer medi cal insurance as a benefit. Approximately half of the U.S. population today receives health insur health status, Card, Dobkin, and Maestas (2009) found that access to Medicare resulted in a 20% reduction in deaths for a severely ill patient group compared to similarly ill people who did not have access to Medicare because they had not yet turned 65. Other studies show that people without health insurance are, not surprisingly, less likely to obtain shows that the proportion of employers offering health insurance has declined while the amount various preventive screening tests for blood pres sure and elevated cholesterol, Pap smears, and so forth (e.g., Potosky et al., 1998; Sudano & Baker, 2003). Such screening reduces mortality and mor bidity through the early detection of harmful employees pay for their coverage has increased. The Kaiser Family Foundation reported that be Moreover, the data show that even short peri ance through an employer, and the evidence physical conditions (Sudano & Baker, 2003). tween 1999 and 2009, worker contributions to ods of not having health insurance substantially reduce the utilization of preventive services health insurance premiums increased by 128%, (Schoen & DesRoches, 2000; Sudano & Baker, while the proportion of companies offering health benefits fell from 66% to 60%. 2003). Having health insurance also affects people's These employer decisions about offering health economic well-being, because medical bills are a insurance and the cost to employees, something large contributor to personal bankruptcy. Him that can also affect access, are consequential be melstein et al. (2005) studied a sample of personal cause there is a great deal of evidence showing bankruptcy filers in five federal courts. About half that having health insurance affects health status. Levy and Meltzer (2001), reviewing the large lit of the people filing for bankruptcy cited medical erature on the connection between health insur causes: "Medical debtors were 42 percent more likely than other debtors to experience lapses in ance and health status, noted that hundreds of studies showed that the uninsured had worse coverage" (2005, p. W5-63). When employers de health outcomes than people with access to insur cide to drop or curtail medical coverage, there are ance. Wilper et al. (2009) recently replicated the health and economic well-being consequences for their people. results of an earlier panel study (Franks, Clancy, & In addition to providing, or not providing, Gold, 1993) showing significantly higher mortal health insurance, some employers have recently ity for people without health insurance. This re sult held when age, gender, income, education, race, smoking, alcohol use, exercise, body mass index, and initial physician-rated health were all statistically controlled. Based on their empirical results and population parameter estimates, Wilper and his colleagues estimated that there were more than 44,000 excess deaths per year in the United States because of lack of health insur begun implementing health and wellness pro grams for their employees, which can also have important effects on health. Because most large employers are self-insured, any savings from better employee health and reduced medical expendi tures flow directly to company profits. An evalu ation of one such program at GlaxoSmithKline (Stave, Muchmore, & Gardner, 2003), covering ance. Another study looking at the effects of more than 6,000 employees continuously em health insurance on health used the fact that a ployed from 1996 to 2000, reported an increased random event, one's birthday, affects access to use of stress reduction techniques, more eating of health insurance. At age 65, U.S. residents be fruits and vegetables, and an average cost savings come eligible for Medicare, federally provided of $613 per participant, largely because of reduced health insurance. Using this fact and data on disability expenses. This content downloaded from 130.102.42.98 on Mon, 30 May 2016 10:33:31 UTC All use subject to http://about.jstor.org/terms 38_Academy of Management Perspectives_February The Effects of Layoffs Work Hours and Work-Family Conflict Employers decide on whether or not to have lay Employers determine the hours people work and when they work, subject to federal and state reg offs, how many people they will lay off, and who will get laid off Budros (1997) has shown that ulations and any union-bargained contracts. layoffs are not just a consequence of economic There has been an intensification of work, partic conditions facing companies, a point made also by Cappelli (1999) in his discussion of the changing nature of the employment relationship. Budros found that layoffs are "contagious," in the sense that they spread through similarly situated and socially connected firms, which appear to model others' layoff behavior. Research has shown that layoffs are very harm ful to the physical and mental health of those laid off. There is consistent evidence that job loss is a significant predictor of reported symptoms of psy ularly in the United States (e.g., Rousseau, 2006). Americans work longer hours than workers in most European countries and now exceed the working hours of even Japanese (Yang et al, 2006). A report by the National Institute for Occupational Safety and Health (2004) summa rized the extensive evidence on the harmful ef fects of long working hours and shift work on people's health-related behaviors as well as on on-the-job injuries and employees' health status. There is a reasonably extensive body of evi chological disorders (Catalano, 1991). Being dence connecting work hours to poor health out laid off increases the likelihood that an individual comes. Some of this research focuses on hyperten will engage in violent behavior by some 600% sion. For instance, Yang et al. (2006), after (Catalano, Novaco, & McConnell, 2002). One summarizing studies showing the connection be study reported that job displacement increased the tween hours worked and hypertension in Japan, death rate of those laid off by about 17% during the following 20 years, so that someone laid off at age 40 would be expected to live 1.5 fewer years reported their findings from analyzing the Califor to-64-year-olds had more than twice the odds of committing suicide (Blakely, Collings, & Atkin son, 2003), which helps explain the cause of the increased mortality following layoffs. Another New Zealand study, based on an eight-year fol low-up of workers from a meat processing plant that closed compared to a neighboring plant that remained open, found an increased risk of self people will face a conflict between work and fam ily responsibilities. Work-family conflict is a form of stress and has been found to influence health nia Health Interview survey. They found that compared to people who worked less than 40 than someone not laid off (Sullivan & von hours a week, those who worked more than 51 Wachter, 2007). A study of plant closings con hours were 29% more likely to report having hy ducted in Sweden, a country with a relatively pertension, even after statistically controlling for generous social safety net, nonetheless found that variables such as socioeconomic status, gender, mortality risk increased 44% in the four years age, diabetes, tobacco use, sedentary lifestyle, and following job loss (Eliason & Storrie, 2009). A body mass index. New Zealand study reported that unemployed 25 Long work hours increase the likelihood that and health-related behaviors. Frone, Russell, and Barnes (1996), using two random samples of em ployed parents, found that work-family conflict was related to alcohol use, depression, and poor physical health. Moreover, work-family conflict is inflicted harm that resulted in hospitalization or related to anxiety, substance abuse, and substance death and also an increased risk of being hospi dependence (Frone, 2000). Depending on the talized with a mental health diagnosis (Keefe et type and degree of work-family conflict and the al, 2002). And downsizing is associated with neg particular disorder being investigated, employees ative changes in work behavior, increased smok were between 2 and 30 times more likely to ex ing, less spousal support, and twice the rate of perience a significant mental health problem if absence from work because of sickness (Kivimaki, they experienced work-family conflict compared Vahtera, Pentti, & Ferrie, 2000). to people who did not. This content downloaded from 130.102.42.98 on Mon, 30 May 2016 10:33:31 UTC All use subject to http://about.jstor.org/terms 2010 _Pfeffer _39 Work Stress and the Consequences of Job Design Organizations design jobs, and job design has important psychological consequences?for in stance, for motivation?as the large literature on job design attests (e.g., Hackman & Oldham, 1980). Job design also has important effects on people's physical well-being. One important di mension of job design is the amount of control people have over their work. High job demands that people cannot control, because they have little or no discretion over the pace and content of their work, coupled with work that is socially isolating, produce job stress. Marmot and col leagues have done extensive studies on the effects case that people with more income, higher edu cation, and better jobs are more likely to enjoy better health and live longer lives?although that is clearly the case (see Marmot, 2004, for a review of this research). Some argue that there is an effect of inequality, particularly income inequal ity, on the average health status of a population. Lynch et al. (2001) argued that income inequality in the United States in the 1990s caused as much loss of life as the combined mortality resulting from lung cancer, diabetes, motor vehicle crashes, homicide, and AIDS combined. Although the effect of inequality on average health outcomes remains a contested issue (e.g., Deaton, 2003), of job stress, emanating from an absence of there is growing concern about inequality in control over one's work, on health outcomes health outcomes within societies and increasing ranging from metabolic syndrome (Chandola, research attention to the causes and consequences Brunner, & Marmot, 2006) to cardiovascular of a number of forms of health-relevant inequality. The research and policy link to organization disease and mortality (e.g., Marmot, 2004). Us ing both retrospective and prospective panel studies is clear: Many, although certainly not all, studies, Marmot reported large effects of job of the inequalities in social systems that result in inequalities in health are produced in and by stress on mortality and morbidity. Much of this research was stimulated by studies of the British civil service. These studies, called the Whitehall studies, showed that, controlling for numerous individual characteristics such as family background, serum cholesterol levels, blood pressure, and so forth, it was nevertheless the case that the higher someone's rank in the bureau cracy, the lower that person's risk of cardiovascu lar disease and death from heart attack (e.g., Mar mot et al., 1997). organizations. Because most people work for orga nizations rather than being self-employed, income inequality is produced in part by decisions made by employers about how much wage dispersion to have, both within and across organizational levels, and who and what types of people will obtain higher and lower level positions and incomes (e.g., Baron & Bielby, 1980; Pfeffer & Langton, 1988). The organization literature has a number of studies exploring the effects of wage dispersion on various outcomes ranging from satisfaction to in dicators of organizational performance (e.g., Inequality Bloom, 1999; Cowherd & Levine, 1992; Pfeffer & The Whitehall studies are just part of a larger Langton, 1993; Siegel & Hambrick, 2005). The literature showing the connection between ine importance of inequality for health suggests two qualities in health outcomes and inequality in important extensions to this line of research: first, individual attributes ranging from income to edu including health outcomes as a dependent vari cation. Wildman (2003, p. 295) reviewed papers able in studies of the consequences of wage dis reporting substantial "income-related inequalities persion, and second, renewing efforts to under stand the factors that create greater or lesser in health in a number of developed countries," noting that the United Kingdom and the United inequalities in income, power, job responsibilities, time pressure, and other such dimensions inside States were high-inequality countries. Marmot (2004) reported that virtually all diseases followed organizations. If inequality is consequential for health, we need to better understand how that a status gradient and that gradients in both in come and education were important in under relationship operates inside organizations and standing differences in health. It is not just the what factors produce inequality in the first place. This content downloaded from 130.102.42.98 on Mon, 30 May 2016 10:33:31 UTC All use subject to http://about.jstor.org/terms 40_Academy of Monogement Perspectives_February The foregoing is only a partial review of a large epidemiological literature that potentially ties or ganizational decisions to health outcomes. There seems to be overwhelming evidence that organi zational decisions about whether to offer health insurance and choices about layoffs, work hours, job design, and the degree of inequality created by tion, has evolved over time to largely although not exclusively consider the connection between job satisfaction and turnover?which is costly to the firm?and also the relationship between job satisfaction or its conceptual cousin, employee engagement, and customer service and other dimensions of organizational performance. Al though there is obviously a large and important literature on work-family conflict and its conse ple's life spans. There are other aspects of the work quences, once again a focus of at least some sig environment that are also likely to be important nificant fraction of this literature is on the con wage structures have profound effects on em ployee physical and mental health and even peo and might productively be studied, including sequences of such conflict for organizational well-being, as reflected in absenteeism, sickness, whether or not people have paid sick days, the turnover, and job performance. amount of vacation they receive and take, and the This is not to say there is no interest in social emotional climate of the workplace, including responsibility and people for their own sake, but in whether or not there is bullying and verbal abuse. the management literature, such concerns are of If we want to understand employee psychological and physical well-being, and if we want to assess ten, although not invariably, coupled with their connection to profits, costs, or productivity. This the effects of management decisions on people, health outcomes would seem to be one productive is scarcely the first time this point has been made. focus of research attention. That's because orga Walsh, Weber, and Margolis (2003, p. 859) have nizational effects on psychological well-being fre noted that while the Academy of Management was founded to deal with society's objectives and quently manifest themselves in people's health status, as, for instance, in the effect of socioeco the public interest along with organizational eco nomic status on physical health as operating nomic performance, over time the field "has pur through its effect on negative emotions (Gallo & sued society's economic objectives much more Matthews, 2003). Moreover, health-care costs are than it has its social ones." March and Sutton important both to companies and to society. (1997, p. 698), in their critique of performance as a dependent variable, commented that organiza tional researchers live in two worlds, one of which Why Does Human Weil-Being Receive "demands and rewards speculations about how to Relatively Short Shrift? improve performance." Given the profound effects of organizations and Why some topics get attention and others work arrangements on the psychological and don't and how research questions are framed are physical well-being of the people who work in themselves important topics for research and the them and the growing interest in sustainability, it oretical exploration. As Ferraro, Pfeffer, and Sut is interesting that the human dimension of sus ton (2005, 2009) have argued, theories matter, tainability remains largely in the background. In not just because theories influence the institu both social psychology and economics, there is tional arrangements, norms, and language of or increasing research attention to happiness as an ganizational management, but also because theo important dependent variable in and of itself (e.g., ries focus both research and public policy Diener, Suh, Lucas, & Smith, 1999; Frey & attention. Molotch and Boden (1985) described Stutzer, 2002; Oswald, 1997; Ryff, 1989). And as already noted, health is considered an important indicator of well-being for both individuals and societies. three faces of power. The first face is the ability to prevail in explicit conflicts over decisions. The However, in the management literature, the focus on a somewhat related topic, job satisfac sions over which to fight and what such decisions will entail. They defined the third face of power as second face of power concerns the capacity to set agendas?whether or not there will be any deci This content downloaded from 130.102.42.98 on Mon, 30 May 2016 10:33:31 UTC All use subject to http://about.jstor.org/terms 2010_Pfeffer_41^ "the struggle over the linguistic premises upon which the legitimacy of accounts will be judged" with the environment, during that same period there was a decrease of 34*5% in staff in agencies (Molotch & Boden, 1985, p. 273), and argued overseeing the workplace (Dudley & Warren, that this aspect of power was the least visible and 2005). These changes in federal staffing oversight accountable and possibly therefore the most po also provide some indication of shifting social priorities and alterations in the focus of public policy attention. One lesson for those interested in human sus tent. In the present context, how we talk?or don't?about sustainability and what is consid ered legitimately included and excluded from such discussions affects what we study, how we study it, tainability is that developing a consistent set of and by extension, what becomes included in pub measures or indicators of the construct, gathering lic policy debates as well data on them, and publicizing such data might There are undoubtedly many reasons that the provide more impetus for focusing on the human sustainability of the physical environment has re sustainability implications of what organizations ceived more emphasis than have people. One do. Another implication is that federal and state regulation and oversight matter?both for the possibility is that the consequences of organiza substantive effect and as a signal of what society tional actions on the physical environment are values. frequently much more visible and, therefore, sa Both environmental and social sustainability lient. You can see the icebergs melting, polar bears stranded, forests cut down, and mountaintops re confront one issue: the belief that the sole goal of shaped by mining, and experience firsthand the companies should be to maximize profits and the dirty air and water that can come from company idea that "markets work well to reach optimal use of scarce resources" (Ambec & Lanoie, 2008, p. economic activities that impose externalities. Re duced life expectancy and poorer physical and 45) so that markets should generally be left un mental health status are more hidden from view. impeded. Davis (2008, 2009) has provided an Even the occasional and well-publicized act of account of the rise of shareholder (as contrasted employee or ex-employee violence has multiple with stakeholder) capitalism and the associated causes and is often seen as aberrant behavior primacy of economic criteria in business and pub outside of the control and responsibility of the employer. Another explanation for the relative attention to physical versus human sustainability is the dif lic decision making and has noted the growing importance of the market-like aspects of many domains of life, ranging from housing to employ ment. Because all forms of sustainability contra ferential actions taken to make sustainability sa lient. Organizations and groups focused on im vene both the idea of economic performance coverage. Partly as a result of this public attention, between normative (cultural) and rational (eco laws have been passed in numerous countries nomic) bases. The point is that ideas and ideology mandating environmental compliance to various standards and requiring assessments of environ mental impact before certain forms of economic are themselves important topics of study, and such above all else and the inviolability of markets, much more research is needed to understand the proving the physical environment have taken waxing and waning of managerial ideas and ide steps to increase the visibility of what companies do?reporting on carbon emissions and measures ology. A model for such an investigation is Barley of environmental compliance, for instance, and and Kunda's (1992) exploration of the cycling of trying to ensure that these reports generate news managerial discourse related to employee control development can take place. These laws, at a minimum, ensure the availability of more data to assess physical environmental effects. And while between 1980 and 2006 there was a 62.3% in crease in the number of U.S. federal staff dealing an analysis is inextricably linked to variation in the interest in sustainability in any of its forms or manifestations. In many respects, sustainability represents a set of values and beliefs. As such, it is an ideology. Unfortunately, as nicely documented by Jost (2006, p. 651), "the end of ideology was declared This content downloaded from 130.102.42.98 on Mon, 30 May 2016 10:33:31 UTC All use subject to http://about.jstor.org/terms 42_Academy of Management Perspectives_February more than a generation ago by sociologists and to human sustainability. Threatened plants and political scientists." Jost, Nosek, and Gosling animals and the natural world need protection, (2008) also detailed the resurgence of ideology as an explanatory construct in many branches of psychology and illustrated its explanatory useful ness. Ideology and belief may be even less frequent topics of study in management, with its emphasis on performance, efficiency, and rationality. How ever, as Tetlock (2000) demonstrated, political ideology can be empirically uncovered, dimen sionalised, and, most important, used to explain how managers decide what course of action to take in realistic scenarios concerning topics rang ing from correcting safety defects to corporate accountability. If we are to understand why hu man sustainability receives relatively short shrift, ideology, how and why it develops, and how it affects decisions will need to be a part of the research agenda. Another factor that may explain the difference between environmental and human sustainability derives from the different actors in the two sys tems and the presumption of choice. Few would argue that trees "choose" to be cut down, that the but sentient humans making free choices in com petitive markets can, and should, fend for them selves. This line of argument, coupled with the finding that profitable companies are believed to be more ethical than unprofitable ones (Jost et al., 2003)?as one way of justifying their profitability and as an example of the tendency to attribute good qualities to an entity that is successful?lead to greater reluctance to find human sustainability problematic and requiring intervention. Although I have highlighted two factors?vis ibility of consequences and ideology?as helping to account for the relative emphasis on environ mental as opposed to human sustainability, there are undoubtedly many other factors at work. The fundamental message is that we need to under stand what subjects receive attention and why, as well as the beliefs and values that form the foun dation for our theorizing?not just for the topic of sustainability but for many others, as well. The evidence suggests that these are important and underexplored issues. air or water decides to be dirty, or that polar bears make decisions that result in the disappearance of What If We Took Human Sustainability food and habitat. Therefore, there is an implicit assumption that people must act on behalf of the Seriously? A Research Agenda environment, threatened species of plants and an Throughout this article I have highlighted ques imals, and possibly even indigenous populations tions that could productively receive research because these entities can't act on their own be attention. In this concluding section, I offer half. Employees, however, have choices, and ex some additional suggestions that logically follow ercise their choices in a labor market in which from the literature reviewed in this article. they compete for jobs and employers compete for talent. Presumably if they don't like the condi tions of their jobs, including the degree of inequal ity, the amount of stress, or the absence of health insurance, employees can decide to work else where. At the limit, if the conditions of work are really life-threatening, as the evidence shows, em ployees can choose unemployment over ill health and/or premature death. Ideas about market outcomes being fair?even if they sometimes aren't (Blount, 2000)?the pri macy of markets (Davis, 2008), and the fact that As Ambec and Lanoie (2008) noted, one of the major issues addressed by research on environ mental sustainability has been whether or not adopting sustainability practices imposes net costs on companies, thereby eroding their competitive ness, or whether the benefits of being "green" more than outweigh any costs incurred. Com pletely parallel questions and issues confront a focus on human sustainability. First, just as in the case of environmental pollution, companies that do not provide health insurance, lay people off, pay inadequate wages, and have work arrange people are capable of making choices?even if ments that stress and overwork their employees such choices are constrained and socially influ also impose externalities that others pay for even enced?lead naturally to a very different approach as they save on their own costs. That's because This content downloaded from 130.102.42.98 on Mon, 30 May 2016 10:33:31 UTC All use subject to http://about.jstor.org/terms 2010_Pfeffer_43 are undoubtedly many answers to this important ical and psychological illness fall on the broader question. But one possibility is this: If health sta health system through, for instance, increased use tus is affected by what happens to people on the of public health and emergency room facilities. job, the relatively poor health-care outcomes in Second, just as green companies enjoy reputa the U.S. might result from a laissez faire labor tional benefits that help in brand building and market that leaves even the provision of paid sick product differentiation, so, too, we might expect days and paid vacation at the discretion of em that companies with better records of human sus ployers. In other words, differences in the distri tainability could enjoy benefits in attracting and bution of working conditions across different retaining employees and also in building a repu countries (or, for that matter, other political units tation that could attract additional consumer de such as states or even industries) could possibly mand. Therefore, whether or not it pays to be a help account for differences in health outcomes. company that offers a system high in human sus Because of differences in unionization rates (by tainability, and how the various costs and benefits industry and sector) and differences across states balance and under what conditions, would be an in both formal regulation of working conditions important focus for research. and the vigor with which such regulations are There are some data that suggest that human enforced, there is a great deal of natural variation sustainability may pay off for companies. Each year in working conditions that research has shown to the Great Place to Work Institute, in conjunction be relevant to health and mortality. Exploring whether those variations also account for varia with Fortune, publishes a list of the best places to work. Most of the places are noted for their provision tions in health-care outcomes and costs would be some portion of the extra costs of increased phys of good working conditions and benefits, including fruitful. vacations, sick days, health insurance, training, and Wilper et al. (2009) estimated that there are jobs that provide people autonomy and challenge. more than 44,000 excess deaths in the United The Institute's Web site shows data indicating that States annually because people lack health insur companies on the list consistently outperform ance. Some, although not all, of the absence of benchmark indices over varying periods of time, indicating that, at least as measured by stock market performance, it is good to be a great place to work. How and why these returns accrue remains to be explored in more detail. But it is quite likely that, just as in the case of environmental sustainability, human sustainability pays. Indeed, the literature on the positive effects of employee-centered manage ment practices is extensive (e.g., Becker & Huselid, 1998). If so, that raises a third question: If it does pay to be green, whether "green" is assessed in environ mental or human terms, or both, then why is it so difficult to get companies to adopt practices consis tent with sustainability? health insurance results from employer decisions. If one added to the portion of these deaths result ing from employer actions the mortality coming from layoffs, company-generated inequalities in income and control over work, and all the other factors briefly reviewed in this article, the result ing number would be both interesting and impor tant. It might spark some serious effort to prevent deaths from employer decisions. There is already a great deal of employer and public policy focus on individual choices such as diet and exercise. At tention to the role of the employer in individual health status would round out the picture. There is no reason why building sustainable Another implication of the research cited may companies should focus just on the physical and help to explain one of the paradoxes of the U.S. not the social environment. It is not just the health-care system?why it costs so much even as it does not deliver measurable health benefits, as natural world that is at risk from harmful business practices. We should care as much about people as assessed by indicators ranging from infant mortal we do about polar bears?or the environmental savings from using better milk jugs?and also un ity to life expectancy to survival rates for various serious illnesses, that are no better than in many derstand the causes and consequences of how we other industrialized countries. Once again, there focus our research and policy attention. 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This content downloaded from 130.102.42.98 on Mon, 30 May 2016 10:33:31 UTC All use subject to http://about.jstor.org/terms APJHR_44_2_Wilcox.qxd 184 20/05/2006 9:39 AM Asia Pacific Journal of Human Resources Page 184 2006 44(2) Human resource development as an element of corporate social responsibility Tracy Wilcox* University of New South Wales, Sydney, Australia This paper discusses the concept of corporate social responsibility as it applies to human resource development (HRD). It is argued that the economic and political power enjoyed by contemporary corporations brings with it an associated set of responsibilities and duties, particularly in the light of issues emerging in the global and local political environment. These issues arise in part from a shifting of the regulatory ground from the achievement of 'social good' to 'economic good', and the shifting of risk from business organisations to individuals and communities. The paper considers the impact of these changes on human resource development. Some of the areas in which an organisation's social and ethical responsibility can encompass HRD practices are explored, and possible HRD responses to the issues and concerns raised are discussed. Keywords: corporate social responsibility, ethics, human resource development Within corporations, human resource management activities such as recruitment and selection, performance and reward systems or restructuring may give rise to a number of easily recognisable ethical issues. Human resource development (HRD) has been considered more benign and, with a few exceptions (e.g. Hatcher 2002), has been exempted from ethical scrutiny. However, as the social and economic consequences of corporate activity are becoming clearer, a number of HRD implications are being brought into relief. For this * An earlier version of this paper was presented at the 11th Annual Conference of the Australian Association of Professional and Applied Ethics, Richmond, NSW 2004. I would like to thank Michelle Greenwood, Doreen Tan and Karen Wilcox for their helpful comments on earlier drafts. Correspondence to: Tracy Wilcox, School of Organisation and Management, University of New South Wales, Sydney, New South Wales 2052, Australia; e-mail: t.wilcox@unsw.edu.au Asia Pacific Journal of Human Resources. Published by Sage Publications (London, Thousand Oaks, CA and New Delhi; www.sagepublications.com) on behalf of the Australian Human Resources Institute. Copyright 2006 Australian Human Resources Institute. Volume 44(2): 184-196. [1038-4111] DOI: 10.1177/1038411106066395. Downloaded from apj.sagepub.com at UQ Library on May 30, 2016 APJHR_44_2_Wilcox.qxd 20/05/2006 9:39 AM Asia Pacific Journal of Human Resources Page 185 2006 44(2) reason, a discussion of the ways in which corporations may respond to their powers with ethically informed HRD decision-making is timely. This paper commences with a consideration of some of the reasons why issues of corporate social responsibility have emerged in business and practitioner literature. The emergence of these issues is tied to an increased awareness both of the power of corporations in the global economy, and of some of the negative repercussions of global economic activity. Ethical analysis suggests several reasons for an acceptance of a range of responsibilities and duties towards those affected by the actions of business organisations, both individually and in aggregate, and some of these reasons are considered. The paper then moves to an exploration of the interconnection between HRD issues and social responsibility, especially the responsibility towards marginalised workers. Finally, some potential means of addressing some of the issues raised are presented. The argument that corporations possess an unprecedented degree of power and influence has been well articulated in popular forums (Kelly 2001; Bakan 2004), and in the business ethics literature (Ferrell, Fraedrich, and Ferrell 2005, 226-30; Shaw and Barry 2001, 213-14; Carroll 2000). The complex nature of global corporate operations and financial activity can serve to concentrate the power of many corporations, with their economic reach extending well beyond their nation of origin. Public debate about the misuse of corporate power has been sharpened by an increased public awareness of the positive and negative consequences of corporate activities. Controversies over corporate collapses, tax evasion, and workplace safety have raised public awareness of corporate social responsibility, and of the consequences of irresponsible actions. The growth of corporate power has been facilitated by an increasingly market-oriented political and regulatory agenda, in Australia as well as elsewhere. Trade liberalisation and deregulation have reshaped patterns of trade, foreign investment, financial transactions and technology transfer (UNCTAD 1994) and have impaired the viability of entire industry sectors - as the decline of local manufacturing in industrialised countries illustrates. Corporate decisions to move manufacturing and, more recently, service operations offshore to take advantage of lower labour costs become part of this context. The government in Australia has perpetuated this market-oriented regulatory agenda through legislation such as the recently introduced Workplace Relations Amendment (Work Choices) Act 2005. The Work Choices Act constrains the institutional framework for resolving employment relations issues using an independent arbitration body (the Australian Industrial Relations Commission (AIRC)); an institution that has historically considered a range of perspectives, both social and economic, when making decisions. It has been argued that the expanded use of the corporations power of the Australian Constitution reshapes the character of employee-employer relations in favour of employers (Munro 2005). Along with the removal of safety net conditions and the explicit economic Downloaded from apj.sagepub.com at UQ Library on May 30, 2016 185 APJHR_44_2_Wilcox.qxd 186 20/05/2006 9:39 AM Page 186 Asia Pacific Journal of Human Resources 2006 44(2) agenda set for the Fair Pay Commission, the reliance on corporations power represents a further shifting of the government regulatory ground from 'social good' to 'economic good'. The impact of this shift on both corporations and individuals is likely to be significant. Moreover, much of the risk associated with the ownership of capital has been shifted both to the state and to individuals, particularly the employees of firms (Van Buren 2003, 141). For example, the health costs associated with manufacturing and service work are often borne by individuals and communities. It has been argued that the taxation systems of countries such as the United States and Australia also function to shift the risks of corporate decision-making onto individual taxpayers, insofar as many large corporations pay less than standard corporate tax rates (Dawkins 2002; Anderson and Cavanagh 2000; Baragwanath and Howe 2000). Deetz (1992, ix) has contended that a corporate 'colonisation' of