Management by Consequences, a Failed Method

One of the features of the ISO9001 standard is the requirement to monitor and measure process performance (Section 8). External auditors tend to simply verify the existence of such measurements and move on, while the attitude of internal auditors tends towards indifference. This article attempts to discuss the value of such measurement, and the pitfalls of using these measurements as a basis for managing the business. Essentially this is managing by results, and since results are the product of the system and the people employed, there is a danger that process performance is interpreted as employee performance.

Management by results has a long history, and from the title alone it is difficult to raise an objection to the general principle. Organisations large and small have in the past adopted such a management approach and apparently profited by the experience. But does this system of management, some might call it a system of direction, best serve the stakeholders of the enterprise?

To manage by outcomes requires the organisation to set up numerical targets, not in itself a difficulty for the organisation as a complete enterprise, but when channeled down through the processes of the business, the sub-sets of the corporate target eventually become performance goals for the employees, and management against these goals follows. The problem with such a practice stems from their source as the corporate objectives. As corporate goals they are presumably fine, but as individual performance indicators they are frequently divorced from the reality of daily business life, since when applied to the processes of the business ( as with ISO9001) they bear little credible relationship to the capabilities of the business processes or the employees.

Despite managerial efforts to manage the organisation utilising occurrence based data, the reality of the position is one of supervisors and staff working to seem to have a satisfactory performance through creative data manipulation - commonly called 'fudging the figures' - where personal and group well being predominates over corporate benefit.

The consequences of managing by results lead to staff playing a numbers game of their own in order to appear driven by the imposed target regime. It is usual across industry for production goals to be created for a particular element of time - say a month. Equally common is the delivery reality where a large proportion of the monthly quota is delivered during the final days of the month, and only then by working excessive hours or through a diminution of standards. This is clearly not in the best interests of any participant in the delivery process. The strategy tends to divert focus from what is beneficial towards the achievement of short term goals that may even endanger the future integrity of the business processes.

These and other adverse consequences of the Management By Results strategy bring about one overriding effect, the fear of the consequences of failing to meet the declared targets or failing to follow precisely the executive instructions that surround the corporate goal setting. Fear of a missed promotion or even a demotion, maybe even the loss of a job. A Management by Results system inevitably generates fear, not simply because of the existence of the numeric objectives that are set, but also because of the nature of the people who are the instigators of such 'management' tools.

Management by Results should not be confused with management FOR results, which is clearly the necessary activity of any management team. Managing for results requires a totally different thought process on the part of management. Most of all it requires the managers of an organisation to realise that their staff are most likely better informed about the details of the operation, that advancements in the system of work require managers to interact with that information, and that to do this productively requires managers to acquire the trust of those whom they are delegated to manage. This will require a quality of Leadership, that management by results advocates do not have.

About the Author:

Ed Bones is the founder and senior partner of Meon Consulting. Ed's experience includes technical and senior management positions with major players in the engineering and defence industries located in the UK, Europe and North America. Meon Consulting provides support for ISO Standard management system development and maintenance, also interim engineering and management resources.
The Meon web site can be found at http://www.rent-an-auditor.co.uk