A few decades ago, U.S. companies were making progress on the operations front, but now they seem to have lost their way—and business schools are in a position to help set them right again. Let me explain.
In the 1980s, our organizations learned a great deal about how to improve productivity, quality, and costs from Japanese practices. Lean production, which includes a vastly expanded role for front-line workers in addressing problems, was brought to the United States by Toyota in its auto plants but has now spread to health care, professional services, and virtually every other industry. And in the 1990s, our companies began to learn more from innovations at home, particularly in the area of high-performance work systems.
At their heart, such practices were about redefining the role of supervisor—from controlling dictator to empowering coach—to tap into the discretionary effort that employees could produce when they were engaged in their work. There was compelling evidence that they paid off, too: Toyota management took over one of the worst plants in the General Motors system, in Fremont, California, and turned it into the best-performing plant in the U.S. Clearly, well-run operations and careful talent management went hand-in-glove.
But if you look inside most companies today, you see little left of those talent practices. Typically, management is based on a model of formal authority and “hard” incentives: Bosses get bonuses when their units succeed, they get fired when their units fail, and they push employees to hit the numbers in whatever way they see fit. This is actually a repeat of what we’ve seen during previous financial downturns, when line management rejected HR initiatives as unnecessary because it was easy to fill jobs with so many people desperate for work. (For more on how HR’s profile tracks what’s happening in the economy, see my recent HBR article.) What’s different this time is that the practices we’ve pushed aside were so widely documented as being successful. It’s as if businesses have forgotten that they work.
Business schools should do their part to remind them. Understanding HR innovations and figuring out which ones are effective is, sadly, a low priority in the world of scholarship. That would never fly in marketing, operations research, or even accounting, where academics are all over new developments. In most companies, the HR staff is many times larger than the marketing department—yet while all leading B-schools have a marketing department, almost none have any HR-dedicated faculty at all.
The lack of research interest in HR stems partly from carving up the topic into so many subfields. There are separate associations for labor economists, sociologists, and psychologists that look at the same problems, but these specialists don’t seem to be aware of one another’s efforts, let alone work together on solutions to our talent problems.
And solutions face a bit of a chicken-and-egg problem, anyway: If companies were hiring MBA graduates to address HR questions, that would get the attention of business school deans, who allocate where faculty attention and resources go. But MBA programs aren’t actually producing those students. If they were, employers might hire them instead of leaning on their data scientists for insights and context they aren’t equipped to deliver.
So schools need to step up. The State University of New York at Albany is one of the few trying to meet the market, with a program that blends information technology and human resources. Its graduates have been snapped up, especially by consulting companies leading the big-data charge.
Other schools should follow suit if they want to help organizations and leaders thrive.
Peter Cappelli is a professor of management at the Wharton School and the author of several books, including Will College Pay Off? A Guide to the Most Important Financial Decision You’ll Ever Make (PublicAffairs, 2015). July 27, 2015