Hidden Value

About the Author

Charles A. O'Reilly III and Jeffrey Pfeffer are esteemed professors at Stanford University's Graduate School of Business. Charles A. O'Reilly III holds the Frank E. Buck Professorship of Human Resources Management and Organizational Behavior. He is renowned for his consulting work with organizations across the United States, Europe, and Japan. Jeffrey Pfeffer, the author of influential books such as The Human Equation and co-author of The Knowing-Doing Gap, holds the Thomas D. Dee II Professorship of Organizational Behavior. Together, they bring a wealth of knowledge and experience to the exploration of how companies can leverage their existing human resources to achieve exceptional results.

Main Idea

In Hidden Value: How Great Companies Achieve Extraordinary Results with Ordinary People, Charles A. O'Reilly III and Jeffrey Pfeffer challenge the prevailing notion that success in business hinges on attracting top-tier talent. Instead, they argue that the key to sustained success lies in creating a culture and systems where ordinary employees can perform at extraordinary levels. Through a comprehensive study of successful companies, the authors identify six essential management practices that unlock the hidden value within organizations.

Table of Contents

1. Introduction: The Hidden Value of Ordinary People
2. What People-Centered Companies Do
3. Place Values and Culture First
4. Make Values Real
5. Hire for Fit
6. Invest in People
7. Share Information
8. Reward and Recognize Adherence to Values
9. Take Organizational Action

Introduction: The Hidden Value of Ordinary People

In their introduction, O'Reilly and Pfeffer recount McKinsey & Company's famous "War for Talent" study, which highlighted the importance of values and culture in employee retention. Contrary to the study's emphasis on superior talent as a competitive advantage, the authors posit that the establishment of supportive cultures and management practices is paramount. By focusing on the latent potential of ordinary employees, companies can achieve extraordinary results.

“Companies must find new ways to engage the knowledge, experience, talents, and energy of employees to find the hidden value in organizations and leverage that value to achieve strategic goals.” - O'Reilly and Pfeffer

What People-Centered Companies Do

People-centered companies thrive in competitive industries by unlocking the talent and motivation of their existing workforce. These companies do not rely on traditional competitive advantages like market power or barriers to entry. Instead, they excel by fully utilizing the capabilities of their employees. O'Reilly and Pfeffer identify three core themes common to these organizations:

• They have a well-articulated set of widely shared values that form the foundation of their management practices.
• They exhibit a remarkable degree of alignment and consistency in people-centered practices that reflect their core values.
• Senior management actively ensures that these values are maintained and embodied throughout the organization.

Management Practices

The authors outline six management practices essential to leveraging hidden value: