Is Measurement the Enemy of Management?
Growing up as a cub consultant, billable hours were without question the defining metric in the consulting industry. It seemed obvious therefore, that achieving success would be dependent on increasing my billable hours. I was hardly the only young consultant to come to this obvious conclusion.
Fortunately for me, I found a mentor who took me aside one day and explained that billable hours shouldn’t be seen as a goal; instead, I should see them as the outcome of the quality of my work. In other words, if my work was good, there would be no shortage of hours. From that perspective, billable hours were an indirect and lagging indicator of quality.
His message was loud and clear: I should worry less about my direct output metric, and focus more on the principles, behaviors, and attitudes with which I approached my work. It was, in retrospect, the most important lesson of my consulting career and one too few others are taught.
In that light, two recent blog posts caught my attention. One was by Charlie Green, in which he recounted a fable with a choice between trust and measurement. Another was by Chris Brogan, extolling the virtues of a trust agent at LinkedIn. The coincident timing of these two posts, with my own experience, drove the title of this post.
Is it possible that, as my mentor warned, we have systemically driven a wedge between the practice of good management and the tools of measurement? Has the relationship between driver and driven been reversed? Has the metric become the goal in itself rather than the outcome it sought to measure? Has measurement become the enemy of management?
Management and Measurement
Of course, good measurement should serve management. It has always been an important element of managing, it tells the good manager where to look although not what to do. There is nothing intrinsically that sets management at odds with measurement until the manager uses the metric as a substitute for judgment. How many companies established arbitrary targets for reductions in force in the recent recession rather than gaining a broad and deep understanding of where capacity could be reduced without damaging long-term capability?
I’m beginning to fear however, that measurement is replacing management. Several pervasive and tectonic factors have driven the two apart. One is simply, for lack of a better term, the modularization of business. Business process reengineering, supposedly invented 25 years ago, has taught us to break businesses into many pieces, and to achieve full scale economies (hopefully at a global level) in each of them.
That kind of approach demands that each module fit neatly with the next, the same way that couplers enable railcars to effectively and efficiently hook up and create a train. The “couplers” of choice have almost always been metrics. If we can specify measurements that our suppliers must meet, then we can have the best of both worlds – customization and scale. The more modularized our businesses, the more we manage by measurement.
Question: Did the folks managing the Deepwater Horizon rig think about the revenues and profit BP would gain from a safe and successful well in the Gulf and conversely the risk of a disaster? Or did they think about the bonuses that would go along with meeting budget and timing expectations for getting the drilling done and the rig moved?
Of perhaps more direct importance is that we have simply become more short-term and reward driven in business then we were 100,000 years ago when I was a pup. My fellow consultants who obsessed about their billable hours may not have had as much long term success in their individual careers as those who paid attention to quality and long-term relationships, but it seems that they have won the measurement war. The true tragedy is that the measures that may have merit when looking at a large scale organization, may destroy trust and relationships at the individual level. Charlie wrote about the dangers of measurement focus as it relates to sales and client relationships in his February 2, Business Week article, Metrics: Overmeasuring Our Way to Management.
The dominant belief systems today in business include “maximize shareholder value,” “if you can’t measure it you can’t manage it,” and “what’s the net present monetized value of that.” Finance is the driving function of today’s business world; in my day, that claim was held by the value producers. Too often we drive for the metric itself, forgetting that the metric is supposed to measure something bigger, deeper, more important and fundamental. To use the consulting analogy, we are all focused on monthly billable hours instead of value for the client. “Pay-for-performance” has become shorthand for lazy management. If you assume that the numbers are everything, then you don’t need to dig beneath the numbers to find out their drivers.
Actually, I suspect it goes deeper. “Pay-for-performance” is also an expression of lack of trust. It comes from an unwillingness to trust others to do the right thing in a business context; what we view as risk mitigation is in fact a form of management by asphyxiation. Managers throughout organizations know that it is the metrics that matter…the overall outcome is incidental. We have replaced “no pain, no gain” with “no risk, no loss” when it comes to developing managers and finding creative ways to add new value.
To go back to Chris Brogan’s trust agents, does your company know who its trust agents are? Does your organization support, value and reward its trust agents? These are the people who chose door number one in Charlie’s fable….choosing to have the highest level of trust while giving up the ability to have it measured.
So a question for the readers: Has measurement become the enemy of management? Or can we have it both ways?