A History of How KPIs Ruin the Management
This week, with a topic of management, let’s talk about and discuss the most critical question about management: how does the assessment of indicators like KPI appear, and what potential harm will it bring? I will get you through A History of How KPIs Ruin the Management in the article. It raised me from about book called “The Tyranny of Metrics” The author of this book is an American history professor named Jerry Mueller. How could a history professor think of writing a book on critical index assessment?
Let’s talk about the author of the book first. He is the head of the history department of a private university in the United States. In addition to research and teaching, he is also responsible for the administrative affairs of the department, instructing the work of young teachers. In the beginning, he was comfortable with the job. Still, he gradually discovered that the various statistical data and assessment scales needed to be submitted to the higher authorities increased year by year. These data included the distribution of students’ grades, graduation rate, employment rate, post-graduation rate, Salary levels, related indicators of faculty academic research, etc. Mueller spends more and more time collecting and collating these indicators and less and less time teaching and researching.
Not only that but various departments are also caught in a data arms race. Mueller said one of his fellow department chairs, a senior scholar, spent the summer compiling a thick report on job metrics, complete with color charts. If Mueller does not follow suit, it will appear less rigorous than other departments. To deal with the increasing number of reports, schools have to hire more data experts and even designate a vice-principal to be responsible for the assessment. What’s even more ridiculous is that everyone knows that these indicators reports that take a lot of energy are useless, and no one even reads them.
Mueller was puzzled: Why does this apparent irrationality occur in a place that advocates rationality? He found that the most direct reason was that the U.S. Department of Education issued a regulation in 2006 requiring greater accountability for colleges and universities, collecting more indicator data, and evaluating colleges and universities based on these indicators. The Ministry of Education believes that index assessment is a magic weapon to improve the quality of teaching in colleges and universities. As a result, the task of indicators was decentralized in the education system and finally fell to Mueller.
We can see that many of us have to face performance appraisals such as KPIs in our work. We will feel more or less that such an assessment may not be reasonable. Can only a few cold numbers reflect the effectiveness of all our work? But if you ask what exactly is unreasonable in evaluating indicators, and we have to say one, two, or three, we don’t seem to be able to tell. This Professor Mueller is different. He said that he was a victim of index assessment. His book’s writing was to find out how the concept of using index assessment to manage management developed from a historian’s perspective. The drawbacks lie in where.
Indicators, to put it more simply, are numbers. One of the most important differences between modern and traditional society is the emphasis on numbers. According to historian Yuval Noah Harari, most of the knowledge of the conventional society system is composed of stories, such as various myths and legends and religious books, and there are almost no calculation formulas and charts in it. On the other hand, modern science relies on numbers to build a body of knowledge.
The scientific revolution started by measuring numbers: astronomers measure the trajectories of stars, geographers measure the size of the Earth, physicists measure atmospheric pressure and the speed of light, and so on. Scientists use measurements to collect numbers and then use mathematical tools to organize them and discover natural laws. People believe that it is impossible to understand the world objectively without measured numbers, and it is impossible to promote the world’s progress. The great 19th-century physicist Kelvin famously said: “If you can’t measure it, you can’t improve it.”
In the 20th century, “measuring everything” expanded from the scientific world to the business world. A landmark event was that in 1911, American engineer Taylor invented the “scientific management” method. The core of this management method is work-hour-action research. That is, measuring the time spent by workers in each action and each step during production, rewarding the most efficient worker, and, on this basis, continuously optimizing activities and processes, thereby significantly improving production efficiency.
Later, “scientific management” was criticized by many for being too ruthless, turning workers into an extension of machines and depriving workers of their work autonomy. Now, “scientific management” is considered outdated, and mainstream management academia advocates a more humane management approach. Still, it should be noted that the core concept of “scientific management” has remained intact – that is, measuring various Work indicators and reward and punish incentives based on these indicators. You found out that there is no, or isn’t this the performance appraisal that is often said now?
In addition to Taylor’s “scientific management” ideas, there is a force that further enhances the cult of numbers in modern society: the development of statistics and accounting systems. After World War II, the American business community launched a “digital management revolution,” from subjective decision-making based on managers’ personal experience to objective decision-making based on digital analysis. The origin of this digital management revolution can be traced back to the U.S. military in World War II. Let me expand on this story.
In the early days of World War II, the management of the U.S. Army Air Force was particularly chaotic. Essential data such as the number of aircraft, the number of pilots, the inventory of crucial parts, and gasoline inventories were all confused. Once, the air force commander, General Arnold, asked at an internal meeting: “How many people are there in our air force?” As a result, the personnel, operations, intelligence, and materiel departments gave different answers.
This kind of chaotic management results in sometimes a large number of pilots without planes to fly, and sometimes there is a severe shortage of pilots. Sometimes, bombers at one base are grounded due to malfunctions, waiting for parts to be replaced, while at another dozen kilometers away, they hoarded a lot of these parts, but they didn’t know it. At its worst, up to 12 percent of planes were grounded for lack of details.
In response to this situation, the Army Air Corps convened a group of young officers proficient in statistics. They established the “Statistics Control Office” to collect information and data on personnel and equipment and directly make decision-making recommendations to the military’s top management. They require frontline troops to submit daily lists detailing the number, deployment, location, usage, and more of all aircraft. Every morning, an up-to-date statistical report was presented to General Arnold’s desk, giving him a glance at thousands of planes, tens of thousands of parts, billions of gallons of gasoline, and all personnel’s exact numbers and locations.
Throughout World War II, these young officers of the Statistics Control Office, with the help of digital management, significantly improved the logistical efficiency of the U.S. military and saved billions of dollars in military expenses. In the later stages of the war, their digital analysis reports also became the authoritative basis for war decision-making, deciding whether to keep or continue to use a particular type of aircraft and even changing the decision of troop deployment. It can be said that the digital management they brought has become a critical force for the victory of the U.S. military in World War II.
After World War II, the ten best young men among the officers joined the largest automobile company, Ford Motor. They soon discovered that Ford was in the same predicament that the Army Air Corps had initially, with the management of workforce, materials, and production processes extremely disorganized. So they brought their digital management experience from the war to Ford, and the military’s “statistical control office” became the company’s financial department, using financial data to evaluate and monitor all operations comprehensively. Ford, who had fallen into huge losses, came back to life thanks to their efforts.
These ten young people are later known as the “Blue Blood Ten Heroes.” One of the highest achievers is called McNamara. He became a professor at Harvard Business School at the age of 24, proficient in statistics, and was a vital member of the “Statistical Control Office.” Later, McNamara became president of Ford Motor, U.S. Secretary of Defense, and President of the World Bank.
The “Ten Blue Bloods” represented by McNamara brought the concept of digital management from the U.S. military to the corporate world, setting off a “digital management revolution” in the corporate world. In this revolution, digital measurement and analysis have replaced the original judgment based on experience and intuition; evaluation by indicators has replaced the assessment based only on leaders’ likes and dislikes. It is undeniable that this has been the driving force for social progress for a long time. Later, the evaluation of indicators further expanded from the corporate world to the whole society and was widely adopted by public departments such as medical care, police, and education, and became more and more respected.
However, Mueller’s reflection did not stop there. He saw that the idea of the U.S. Department of Education is not an exception but a common problem in modern society. Mueller called it “index addiction,” which means: “There is a seemingly irresistible pressure to measure performance and publicize it. Performance, and reward performance.” Mueller believes that the proliferation of “index addiction” in modern society has caused the “tyranny” of index assessment, and all of us are more or fewer victims of this “tyranny.”
The problem is that when the application of index assessment exceeds a reasonable limit, it is believed that all things should be assessed by index. Index assessment becomes the only and unquestionable evaluation standard. At this time, the organization will fall into the “index trap.” Its shortcomings are also seriously exposed.
Mueller believes that index assessment has at least three harms: first, it will bring cheating; second, it will make easy-to-quantify goals crowd out difficult-to-quantify ideals; third, it will allow abstract numbers to override concrete experience above. Next
