Drucker on controls and control

In Is a Balanced Scorecard Bad?, Jonathan Becher argues "... metrics by themselves are unlikely to increase the performance of an organization... metrics must be accompanied by objectives and initiatives."  This echoes Peter Drucker's often repeated view that:

• controls are different from control; and, most importantly, that
• more controls do not necessarily lead to more control.

Becher makes the equally important point that use of the term "scorecard" inevitably places undue emphasis on measures (ie 'scores' and scorekeeping).  As I've suggested elsewhere, organizational scorekeepers and commentators are too often seen as more important than the players!

Contrasting controls and control

Drucker (in Management: Tasks, Responsibilities, Practices, for example) points out that controls are concerned with measurement and information. In contrast, control is concerned with direction.  Where controls focus on past facts - analysing what was and what is - control is founded on future expectations of what ought to be.  In short, controls are a means to the end of better control. They are not - nor should they become - an end in themselves.

Too often, the knee-jerk reaction of managers to a felt lack of control is to impose yet more controls.  Paradoxically, the plethora of targets, key performance indicators (KPIs) and measurement information that result from this can often reduce the capacity of the organization to achieve effective control; that is, to deliver its overarching purpose, ethos and strategy. George Odiorne refers to this tendency to place activity ahead of purpose as "the activity trap" (see Management and the Activity Trap).

Characteristic of Good Controls

According to Drucker, controls should be:

• Economical - Fewer controls lead to more effective control. The more effort that is required to measure and analyse performance, the less control that will result.
• Meaningful - Controls should be limited to those few things that have a significant impact on performance and results.
• Appropriate - Controls need to be appropriate to the nature of the process being measured and the demands placed upon it, if these are to provide (everyday) vision and lead to effective action.
• Congruent - Controls need to be measured and reported only at the levels of precision that are appropriate to the factors being measured. For example, "roughly" is often sufficiently precise to enable effective action to be taken. More decimal points don't necessarily lead to better control.
• Timely -  The frequency of measurement and feedback is vitally important. For effective control, this frequency needs to be appropriate to the event being measured rather than being subordinated to the artificial demands of administrative timetables.  The fact that technology can often provide so-called "real-time" controls  (through "dashboards" and the like) does not always lead to real - ie effective - control.
• Simple - Complicated controls lead to confusion. These misdirect attention away from the purpose of the control towards the mechanics of the control system - an example of the "activity trap" mentioned above.
• Operational - Controls should focus primarily on enabling more effective action to be taken by those whose job it is to carry out the tasks and processes being measured. They should not be seen simply as a means of providing information for more senior management. This means that measurement and feedback should be in a form that is useful to those carrying out the work and tailored to their needs.

The Leadership Paradox

The aim of management control, from a conventional standpoint, is to achieve organizationally rational behaviour.  But a central tenet of Informal Coalitions is that leaders (at all levels of an organization) are both 'in control' and 'not in control' at the same time.  Drucker's specification provides excellent guidance for managers to design and implement controls that will improve their control of the formal, rational and 'legitimate' aspects of their organizations.  However, outcomes ultimately depend on how people perceive, interpret, evalauate and decide to act on these issues and events - both alone and with others. This continuing process of conversation and interaction is not within the gift of managers to control. Nor can it be.  It is self-organizing and emergent, with outcomes co-created by participants.

From an informal coalitions perspective, managers can influence this process if they are willing to embrace the paradox of being both 'in control' and 'not in control' at the same time; and if they actively engage with the dynamics of this everyday conversational process.

Failure to recognize the inevitability, impact and pervasiveness of these hidden, messy and informal dynamics of organizations, coupled with the anxiety that comes from not being in control of them, can often add to the pressure on managers to bring in yet more formal management controls. As Drucker would predict, though, more controls do not necessarily lead to more control.  More than this, the dynamics of informal coalitions would suggest that the introduction of more, centrally imposed controls would be more likely to lead to less control, not more.

Comments

[Jonathan Becher]

Thanks for the mention, Chris. I probably should have given a bit more credit to Drucker. He's obviously been thinking about this stuff for much longer than I have...

You might be amused to know that on my wall I have a sign that says "More controls does not mean more control".

[Chris Rodgers]

Obviously a case of "great minds think alike"!