(By Joe Koletar) In 1954 the management theorist Peter Drucker brought light unto the land, and the people saw the light, and the people thought the light was good, and thus they pursued the light.
Drucker’s revelation was actually very simple – the leader sets the big goal. Lower and lower levels of management set subordinate goals to help achieve the “big goal.” If everyone does their job the “big goal” is achieved and joy and happiness reign throughout the land. Silos are full, cattle are fat and cups runneth over. Drucker used the acronym SMART – goals should be “…specific, measurable, actionable, realistic, and time-sensitive…”
Were it that simple. The article cited below advised there have been over 1,000 studies of goal-setting systems, and over 90% have achieved positive results. But, in fairness, the article also offers some critical analysis of such systems. It comes from Professor Gary Latham at the University of Toronto, whose research produced the 90% success figure, and Max Bazerman of the Harvard Business School whose work on goal-setting resulted in a 2009 book, “Goals Gone Wild.” There have been other voices regarding the “magic” of informed and insightful goal -setting. All, apparently, is not perfect in the “promised land.”
First, to state the simple, the theory assumes the leader has set an appropriate and productive goal. (To see how that expectation can go awry, read Vic Hartman’s blog about the Atlanta Schools scandal.) Then the theory assumes that each level of subordinate executive or manager will set goals to achieve the primary goal. Latham, Bazerman, and others have come to have doubts about the mechanically precise nature of such processes. It is reported that Drucker himself, over time, came to realize that there were issues. To briefly summarize but some of the issues:
• It is too bureaucratic. The subordinate goals have to be monitored.
• The focus of the system is “outcome goals,” say 20% increase in sales, when the future is rarely that certain a thing.
• Periodic goal-adjustment seems to work better than an annual process.
• Managers under goals pressure may tend to abuse their subordinates.
• Important matters outside the goal-range target may not be addressed.
• Goal pressure may promote risky or even fraudulent behavior (Again, the Atlanta Schools scandal underscores this point).
In management theory this is called “sub-optimization.” As long as I meet my goal of keeping engine pressure at a certain level, the fact that the ship hit an iceberg is someone else’s problem.
Those messy things called “humans” seem to have a habit of getting in the way of precise theories. Thus, the A.B.C.’s of Behavioral Forensics major point: The “human” element is in pretty much anything.
We welcome comments.
For quotes and general information see, “Management By Objectives Is Making A Comeback, Its Flaws Supposedly Fixed,” The Economist magazine, 3/7/15, page 70.
Join us for more insights into behavioral forensics (behind fraud and similar white collar crimes) from the authors of A.B.C.s of Behavioral Forensics (Wiley, 2013): Sri Ramamoorti, Ph. D., Daven Morrison, M.D., and Joe Koletar, D.P.A., along with Vic Hartman, J.D. These distinguished experts come from the disciplines of psychology, medicine, accounting, law, and law enforcement to explain and prevent fraud. Because we are inspired to bring to light and address the fraud problems in today’s headlines, we encourage our readers to come back and revisit us regularly at BringingFreudtoFraud.com.