Controls for Nonmeasurable Events
A balance between the measurable and the nonmeasurable is a central and constant problem of management.
Business, like any other institution, has important results that are incapable of being measured. Any experienced executive know companies or industries that are bound for extinction because they cannot attract or hold able people. This, every experienced executive also knows, is a more important fact about a company or an industry that last year’s profit statement. Yet the statement cannot be defined clearly let alone “quantified.” It is anything but “intangible”; it is very “tangible” indeed. It is just nonmeasurable. And measurable results will not show up for a decade.
A balance between the measurable and the nonmeasurable is therefore a central and constant problem of management and a true decision area. Measurements that do not spell out the assumptions with respect to the nonmeasurable statements that are being made – misdirect, therefore. They actually misinform. Yet the more we can quantify the truly measurable areas, the greater the temptation to put all-out emphasis on those – the greater, therefore, the danger that what looks like better controls will actually mean less control if not a business out of control altogether.
The Ultimate Control of Organizations
People act as they are being rewarded or punished.
There is a fundamental, incurable, basic limitation to controls in a social institution. A social institution is comprised of persons, each with own purpose, his own ambitions, his own ideas, his own needs. No matter how authoritarian the institution, it has to satisfy the ambitions and needs of its members, and do so in their capacity as individuals through institutional rewards and punishments, incentives, and deterrents. The expression of this may be quantifiable – such as a raise in salary. But the system itself is not quantitative in character and cannot be quantified.
Yet here is the real control of the institution. People act as they are being rewarded or punished. For this, to them, rightly, is the true expression of the values of the institution and of its true, as against its professed, purpose and role. A system of controls that is not in conformity with this ultimate control of the organization, which lies in its people decisions, will therefore at best be ineffectual. At worst it will cause never-ending conflict and will push the organization out of control. In designing controls for an organization, one has to understand and analyze the actual control of the business, its people decisions. One has to realize that even the most powerful “instrument board” complete with computers is secondary to the rewards and punishments, of values and taboos.
Managing Oneself: Revolution in Society
Managing oneself is based on these realities: Workers are likely to outlive organizations, and the knowledge worker has mobility.
Managing oneself is a REVOLUTION in human affairs. It requires new and unprecedented things from the individual, and especially from the knowledge worker. For, in effect, it demands that each knowledge worker think and behave as a chief executive officer. It also requires an almost 180-degree change in the knowledge workers’ thoughts and actions from what most of us still take for granted as the way to think and the way to act.
The shift from manual workers who do as they are being told – either by the ask or by the boss – to knowledge workers who have to manage themselves profoundly challenges social structure. For every existing society, even the most “individualist” one, takes two things for granted, if only subconsciously: Organizations outlive workers, and most people stay put. Managing oneself is based on the very opposite realities. In the United Stats MOBILITY is accepted. But even in the United States, workers outliving organizations – and with it the need to be prepared for a second and different half of one’s life – is a revolution for which practically no one is prepared. Nor is any existing institution, for example, the present retirement system.
A Noncompetitive Life
No one can expect to live very long without experiencing a serious setback in one’s life or in one’s work.
Given the competitive struggle, a growing number of highly successful knowledge workers of both sexes – business managers, university teachers, museum directors, doctors – plateau in their forties. They know they have achieved all they will achieve. If their work is all they have, they are in trouble. Knowledge workers therefore need to develop, preferably while they are still quite young, a noncompetitive life and community of their own, and some serious outside interest. This outside interest will give them the opportunity for personal contribution and achievement beyond the workplace.
No one can expect to live very long without experiencing a serious setback in one’s life or in one’s work. There is the competent engineer who at age forty-two is being passed over for promotion in the company. The engineer now knows that he has not been very successful in his job. But in his outside activity – for example, as treasurer in his local church – he has achieved success and continues to have success. And, one’s own family may break up, but in that outside activity, there is still a community.