I’ve been thinking about this issue for a long time. The aphorism that is repeated a lot in the business world is “You can’t manage what you don’t measure.” Every time I hear this, it grates on me. I prefer the corollary which is “What gets measured, gets managed.” I believed that the first version was the incorrect one, so I decided to research these two similar sayings to find out which one is the correct one – or rather which came first. Interestingly, I found that both of them go back a long way.
From the mid 1800’s, Lord Kelvin is quoted as saying “If you can not measure it, you can not improve it.”
Attributed to Albert Einstein (early 1900’s) is this version: “Not everything that can be counted counts, and not everything that counts can be counted.”
Today you tend to hear it said either of these two ways:
“What gets measured, gets managed.”
“You can’t manage what you don’t measure.”
Both of these versions have been attributed to many people, including Peter Drucker, but tracking down an actual citation has been unfruitful.
W. Edwards Deming (in Out of the Crisis, 1982, p. 121) stated: “One can not be successful on visible figures alone…. Actually, the most important figures that one needs for management are unknown or unknowable (Lloyd S. Nelson, p. 20), but successful management must nevertheless take account of them.”
So, what is the point of all of this? Here are my thoughts:
What gets measured, gets managed….
This means that people adjust their behavior to the reward system. In basic terms, if you give me a large bonus based on a certain measurement, I’m probably going to adjust my behavior to try to reach the target. So, be careful how you set the goal. Most people won’t go as far as unethical behavior, but they can still find it very difficult to take a short-term hit for a future potentially larger pay-off. Corporate executives tend to have a strong financial background and believe that the only measurement that really matters is money. Everything will ultimately be reflected in the company’s financial statements. Maybe this is true. If you have low employee morale, talented and knowledgeable people will leave, and presumably the company will be less successful than it would have been with those people. But by how much? You can’t measure it because you don’t know what would have happened if the people had not left. You can try to determine this by looking at a large set of companies and measuring both morale and financial success – ie. benchmarking – and make assumptions based on your findings. But that is still not a guarantee that if you mimic the successful companies that you will also be successful. Some of what made them successful is not part of the benchmarking and is probably unknowable.
You can’t manage what you don’t measure….
Remember that some things are hard to measure. Many successful managers use intuition, gut feel, and “soft” measurements. Financial statements are lagging indicators, and managing people’s behavior is not as simple as managing a number. So, how do you measure and reward people for taking an action that is the correct one, but where that correctness may not become apparent for many years? The Management System approach takes this dilemma into account. It presumes that it is not possible to manage only by measurement, but that a philosophy of continuous improvement can ensure that the right things are getting done. It also presumes that there is no “best”, only “better than before.” If you are intent on always improving, you will look at more predictive measurements. So, you might move from measuring attendance at training sessions to measuring comprehension of the subject matter at the end of the training session to actual application of the material in the person’s job (via audit or other verification method.) In other words, you are trying to measure organizational and personal behaviors.
In a later post, I’ll try to expand on the leading versus lagging indicator concept.