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When are polar bears or milk jugs more important than people? When the subject is sustainability -- and that isn't right, scholar says

February 1, 2010

For more information, contact: Benjamin Haimowitz, HHaimowitz@aol.com

Five years ago, in a landmark speech broadcast to all Wall-Mart's associates, CEO Lee Scott made a commitment to three highly ambitious goals with regard to sustainability -- 100% reliance on renewable energy, creation of zero waste, and sale of products that sustain resources and the environment.
 
In that same year, Wal-Mart paid its employees almost 15% less than other large retailers, and nearly half its employees' children were either uninsured or on Medicaid.
 
A shocking disjunction? Yes. A surprising one? Hardly, says an eminent management scholar.
 
"Wal-Mart's relative emphasis on the physical environment over people is far from unusual," writes Stanford  University's Professor Jeffrey Pfeffer in the current issue of Academy of Management Perspectives. "Even as businesses have appointed 'eco-managers' to oversee company efforts to become more energy efficient and environmentally conscious, and even as companies track and publicly report carbon emissions from their activities, one would be hard pressed to find similar efforts focused on people."
 
At a time when the U.S. health-care debate has obscured the future role of employers in this field, Pfeffer's message for companies is this: Like it or not, you have a profound effect on the health and mortality of your workers, and your policies ought to reflect it.
 
Yes, "environmental sustainability is important," Pfeffer acknowledges, but that doesn't justify what he sees as a relative lack of concern about human sustainability, seen not just in corporate policies but in a relative paucity of press coverage and scholarly research on the subject and a diminishing amount of government resources as well. Thus, "while between 1980 and 2006 there was a 62.3% increase in the number of U.S. federal staff dealing with the environment, during that same period there was a decrease of 34.5% in staff in agencies overseeing the workplace," Pfeffer notes.
 
Meanwhile, despite the fact that "many organizational decisions about how [companies] reward and manage their people have profound effects on human health and mortality," Pfeffer writes, "the proportion of employers offering health insurance has declined while the amount employees pay for their coverage has increased." And notwithstanding abundant evidence of their health-eroding effects, layoffs nowadays "are not just a consequence of economic conditions facing companies...but are contagious, in the sense that they spread through similarly situated and socially connected firms, which appear to model others' layoff behavior."
 
When it comes to sustainability, Pfeffer asks, why are polar bears or energy-saving milk jugs more important than people? He offers two explanations.
 
The first is a difference in visibility. In Pfeffer words, "You can see icebergs melting, polar bears stranded, forests cut down, mountaintops reshaped by mining, and experience first-hand the dirty air and water that can come from company economic activities that impose externalities. Reduced life expectancy and poorer physical and mental health status are more hidden from view. Even the occasional and well-publicized act of employee or ex-employee violence has multiple causes and is often seen as aberrant behavior outside of the control and responsibility of the employer."
 
The second is what Pfeffer calls the "presumption of choice." As he puts it, "Few would argue that trees choose to be cut down, that water or air decides to be dirty, or that polar bears make decisions that result in disappearance of food and habitat. ...Employees, however, have  choices and exercise their choices in a labor market in which they compete for jobs and employers compete for talent. Presumably, if they don't like the conditions of their jobs...employees can decide to work elsewhere. At the limit, if the conditions of work are really life-threatening, as the evidence shows, employees can choose unemployment over ill health and/or premature death."
 
Whatever the validity of this distinction may be, human and environmental sustainability reap comparable rewards from society, argues Pfeffer, while their lack imposes comparable costs. For example, "just as in the case of environmental pollution, companies that do not provide health insurance, lay people off, pay inadequate wages, and have working arrangements that stress and overwork their people also impose externalities that others pay for even as they save on their own costs. That's because some portion of the extra costs of increased physical and psychological illness fall on the broader health system through, for instance, increased use of public-health and emergency-room facilities."
 
In sum, the prevailing difference in attention devoted to human and environmental sustainability defies logic, while equating their importance would likely produce real benefits. Noting that lack of health insurance, often attributable to employer decisions, has been estimated to cause more than 44,000 deaths in the U.S. annually, Pfeffer concludes: "If one added to the portion of these deaths resulting from employer actions the mortality coming from layoffs, company-generated inequalities in income, and control over work...it might possibly spark some serious effort to prevent deaths from employer decisions. There is already a great deal of focus on individual choices such as diet and exercise. A focus on the role of the employer in individual health status would round out the picture."
 
The article, "Building Sustainable Organizations: The Human Factor," is in the February issue of Academy of Management Perspectives. This peer-reviewed publication is published quarterly by the academy, which, with about 18,000 members in 103 countries, is the largest organization in the world devoted to management research and teaching. The academy's other publications are the The Academy of Management Journal, The Academy of Management Review, and Academy of Management Learning and Education

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