I’m deep into the annual review cycle and struggling with not-so-SMART objectives for employees that I inherited during the year. The frustration is acute enough that it makes me want to channel Deming and eliminate management by objectives.
For those who may not remember, Deming is best known for his work in the 1950’s during which he taught top Japanese management how to improve design, product quality, testing and sales. In fact, Deming is often cited as having more impact on Japan’s rise to greatness in manufacturing than any other individual not of Japanese heritage. Despite this, Deming was largely unknown in U.S. until shortly before his death in the early 90’s.
I consider Deming one of the fathers of performance management. This characterization is largely based on his fourteen key principles for management to transform business effectiveness:
- Create constancy of purpose for the improvement of product and service.
- Adopt the new philosophy of cooperation (win-win) in which everybody wins.
- Cease dependence on mass inspection to achieve quality.
- End the practice of awarding business on the basis of price tag alone.
- Improve constantly and forever the system of production, service, planning, or any activity.
- Institute training for skills.
- Adopt and institute leadership for the management of people, recognizing their different abilities, capabilities, and aspiration.
- Drive out fear and build trust so that everyone can work effectively.
- Break down barriers between departments.
- Eliminate slogans, exhortations, and targets asking for zero defects or new levels of productivity.
- Eliminate numerical goals, numerical quotas and management by objectives. Substitute leadership.
- Abolish the annual rating or merit system that ranks people and creates competition and conflict.
- Institute a vigorous program of education and self-improvement.
- Put everybody in the company to work to accomplish the transformation.
While many of these are now common practice, some (especially 10, 11, and 12) are potentially counter-intuitive and often ignored by managers. In fact eliminating management by objectives is probably the most controversial of the fourteen points. The problem, according to Deming, is that quantative targets are typically set by picking what an average person can do with a particular job. As a result, half of any group will be below average and therefore will never be able to meet the standard. To make matters worse, the above average half will be pressured to produce no more than the average so as not to make their peers look bad. As a result, overall production will fall.
It’s a vicious cycle. MBOs that measure outputs, rather than impact, might actually cause outputs to decrease. Which encourages more bad management by bad objectives. Instead of the vicious cycle, let’s follow Deming’s advice and substitute leadership for MBOs. And remember to lead by example.
Who else is ready to abolish management by objectives?