The Human Equation

If you read one book on management this year, I can't recommend The Human Equation highly enough. It convincingly argues for investing heavily in your employees, an approach that seems out of vogue these days. The evidence seems to show that the cost of this investment is returned many times over in increased productivity and reduced turnover.

Investing in your employees means treating your employees as partners in the company, not contractors to be fired at will. Hiring should be selective. Training and cross-training should be routine. Teams should be self-managed, information widely and freely shared, and decisions decentralized. Wages should be well above average, tied to organizational performance, and relatively flat across the organization.

It's a compelling thesis. While I've seen others claim that some business models don't require investing in people, Pfeffer skillfully argues the advantages of this approach across all industries.