Jeffrey Pfeffer: Does Performance Deliver Power?

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MIX Maverick Jeffrey Pfeffer discusses how large of a correlation there really is between job performance and career success.

Comments

Just eliminate power relations! We advocate that in a world with very effective tools of communication and coordination, to the individual level, power relations have a lesser role to play. In essence, power relations create accountability, which is needed to reliably transfer information to a center of analysis and back to action centers. But if very member of the organization has real time access to the entire picture and can coordinate with all other members the need for a center of analysis and coordination is greatly diminished. The organization self-structures (other mechanisms need to be in place to guide self-organization!).

WE DON'T NEED POWER RELATIONS to stay creative and productive! Once we realize this everything becomes easier.

SENSORICA tries to minimize as much as possible instituted power. Another form of power is present though, which is the capacity to influence others, by reputation, charisma, etc. One is not assigned influence, one earns it, on a continuous bases. This kind of soft power doesn't allow you to force someone to do something (revenue is contribution-based!).

We want to create a value-based organization.

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Transcript

Gary Hamel: You argue convincingly and present a lot of data that sheer job performance doesn’t correlate that well with promotion or the acquisition of power. And of course that’s a sobering thing. If you’ve been told through your whole career that hard work pays off and that it is a meritocracy, you’re saying, “Maybe not so much.”

Jeffrey Pfeffer: Well, all you have to is read. I mean to go back to something you’ve already alluded to in one of your questions. All you have to do is go back and look at the recent financial crisis and all that’s gone on, the low correlation between CEO pay and performance. There was a very interesting article in The New York Times, which I’m sure you saw some months ago, which talked about what happens to the directors. Many companies have had catastrophes –Lehman, Bear Stearns, Citigroup. What has happened to the directors of these companies? And the point of The New York Times article was that the answer to that question is, essentially nothing, that the directors in many instances were appointed or have continued to serve on very prestigious boards. And so this idea that somehow you know, it’s all going to come back. It may, but probably not in this life.

There is a lot of research evidence that suggests that while they’re certainly statistically significant, and substantively important, the correlation between job performance and career success is far less than one. And anybody watching this can think about their own experience and look at their own environment and think to themselves, are there people who have gotten ahead that I know who haven’t done a particularly good job? And are there people who have a particularly good job who haven’t gotten ahead?

Gary Hamel: You know it’s interesting and kind of a little depressing, because when you start with that assumption that the power you have is not all that tightly correlated to job performance – the CEO data is pretty convincing on that. Number two, you present some data that it's not also that much correlated with raw intelligence. What that seems to suggest is that organizations are going to end up being led not necessarily by the competent or the intelligent, but the Machiavellian. And I mean, is that a situation where you accept, or is it one we try to change over time?

Jeffrey Pfeffer: Well, I don’t know if we’re going to accept it or try to change it. I agree with the premise of the question that it is often depressing. But I think if you look around I agree with you completely. Are political leaders exactly the right people? Probably not. Are our corporate leaders, to go back to your comment about the recent financial crisis, were they all the right people? I think the answer to that is certainly not.