Sunday, April 1, 2018

Depending too much on data is bad for your company 
01.04.2018  times of india 

Managers are fixated on metrics these days. Everything from sales to your individual performance needs to be measurable. Decisions should be based on metrics, not judgment. Jerry Z Muller, author of ‘The Tyranny of Metrics,’ says this blind faith on metrics is not doing us any good.

While biases can colour our judgment when data is not available, Muller says too much data replaces management with ‘managerialism’, which is the belief that “all organisations are fundamentally the same and can be managed by the same tools...”

By this logic, “the head of a corporation becoming the president of a university or the head of a department of the federal government” is perfectly normal. Muller says this negates the importance of judgment acquired by personal experience and talent.

Under managerialism, metrics become the basis for rewards, which actually hurts performance, Muller shows with examples. For instance, if hospitals start scoring their surgeons on the success rate of surgeries, wouldn’t the surgeons avoid all risky surgeries? It will not only hurt patients who are in urgent need of an operation but also the surgeons themselves who will miss out on important learning opportunities.

When workers are told which metrics they need to work on — this happens in every workplace now — they do so mechanically to the detriment of other goals. For instance, if teachers are to be judged on the scores of their students, they will stress on rote learning. If CEOs are judged on stock prices, they will focus on quarterly profits while reducing spending on research. If police are promoted on the basis of crime statistics from their area, they will try not to note some crimes, or register cases under milder sections.

“In general a focus on measured targets discourages innovation — if the goals are specified in advance, there is little room for initiative, not to speak of risk-taking.”

Muller does not deny the importance of metrics, but he says they cannot be used effectively without judgment. Instead of being the basis for reward and punishment, they should be used to improve performance.

“Judgment is a matter of discrimination: of knowing which cases are harder, more challenging or more important than can be captured by a standardised measurement. And that discrimination is only possible when the judgment is linked to a sense of the overall purposes and peculiarities of one’s office, department, clinic or organisation.”

For more: Knowledge@Wharton


NOT BY DATA ALONE: Use judgement too

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