Jul 04, 2013

Measurement Myopia

Here’s this month’s piece from neuroeconomist Paul Zak. For those who might dismiss some of our thinking as the “soft side” of management, Paul puts “hard science” behind it.

“If you can’t measure it, you can’t manage it.”

This maxim ranks high on the list of quotations attributed to Peter Drucker. There’s just one problem: He never actually said it.

Confession: I’m a numbers guy, and so I’ve always loved using this purported Druckerism. After rolling it out at a recent conference to emphasize the importance of measuring outcomes, Zach First of the Drucker Institute, who was also there, kindly informed me of my mistake—not only on the misquote, but regarding Drucker’s broader views on the subject.

The fact is, Drucker’s take on measurement was quite nuanced. Yes, he certainly did believe that measuring results and performance is crucial to an organization’s effectiveness. “Work implies not only that somebody is supposed to do the job, but also accountability, a deadline and, finally, the measurement of results —that is, feedback from results on the work and on the planning process itself,” Drucker wrote in Management: Tasks, Responsibilities, Practices.

But for all that, Drucker also knew that not everything could be held to this standard. “Your first role . . . is the personal one,” Drucker told Bob Buford, a consulting client then running a cable TV business, in 1990. “It is the relationship with people, the development of mutual confidence, the identification of people, the creation of a community. This is something only you can do.” Drucker went on: “It cannot be measured or easily defined. But it is not only a key function. It is one only you can perform.”

What a wonderful insight. When it comes to people, not everything that goes into being effective can be captured by some kind of metric. Not enthusiasm. Not alignment with an organization’s mission. Not the willingness to go above and beyond. True, a 360-degree review might pick up on some of these qualities, but often poorly.

This is why Drucker believed—and so do I—that conversations with colleagues are essential. The science backs this up. Expansive conversations and socializing can induce the brain to synthesize oxytocin, the “social engagement” molecule. When the brain releases oxytocin, we are motivated and internally rewarded to cooperate with others for a common purpose.

This is likely the neurochemical basis for that highly sought-after employee attribute: intrinsic motivation.

The goal of conversations (including, as I’ve written, during the annual-review process) is not only to understand the employee next to you, but the human being next to you.

So, measurement, yes. Only measurement, no.

Paul Zak is the director of the Center for Neuroeconomics Studies at Claremont Graduate University and the author of The Moral Molecule.

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