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The pervasive use of performance indicators has led companies to see quantification as the sine qua non for success. But this is a mistake, argues Jerry Muller. Too many performance measures are detrimental to the measuring process and, by extension, performance itself. So what’s the solution? Make your metrics meaningful by refocusing on the power of human intuition and logic.

Quantifying tasks, measuring performance, publicizing the results, dividing up the rewards based on indicators: you have to juggle more and more figures. Your strategy, organization, and human resources are geared towards measurements and data, which are now supplied in vast quantities by new technology. Muller criticizes this obsession with all things metric, and highlights its limitations. If numerical indicators are employed in a systematic, indiscriminate way, they generate incomplete or biased results that don’t foster informed decision-making. Collecting and analyzing data becomes time-consuming and demotivating, with the explosion in indicators discouraging innovation and hampering agility. What’s more, routinely linking performance to metrics promotes short-term thinking or, worse still, dishonesty. At the same time, says Muller, don’t throw your indicators out with the garbage just yet. They can be useful, so long as you restore human judgment and experience to their rightful place. Only these two qualities can give context to your measurements, allowing you to take full advantage of them.

Metrics: a new way of interpreting the world?

Muller argues that several factors from the 1960s onwards have contributed to today’s obsession with numbers and figures. It’s a trend rooted in our declining trust in the experience and judgment of experts, which are considered unreliable compared to measurable data, associated with scientific objectivity and rigor. Numbers have become synonymous with transparency, accuracy, and efficiency. Subsequent generations of (mobile and nonspecialist) managers have been drawn to indicators as an all-purpose, easily understandable template — the benchmark par excellence in any and every organization, especially since measurement has emerged as the sine qua non for elevating performance. Or, in the words of management specialist and author Tom Parker, “What you can measure, you can control.” Using this approach, you can use indicators to track projects as and when they progress; incentivize and empower your staff; and make decisions with the aim of cutting costs. Numbers may also be thought of as a compass that helps make quick and (apparently) logical decisions in a volatile and uncertain environment. The wholesale use of quantification has gone hand-in-hand with advances in technology, which have further amplified the phenomenon. Developments in high tech have also led to numbers and figures being manipulated on a grand scale. Big data, artificial intelligence, and smart objects are now opening up infinite possibilities for exploiting the vast amounts of data available.

Staying alert to the flaws of metrics

 

Excerpt from Business Digest N°295, April 2019

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