Monday, October 15, 2007

Top Down Targets/Outcomes

The predictible response to hard targets or decreed outcomes is at least twofold. One, the group works hard to reach the target and is successful or not. If unsuccessful, people may cheat to avoid the heavy hand of punishment. Consider the case of Nortel, which fraudulently reported earnings over a multi-year period. An AP article had this to say:

"Nortel's culture had long been extremely target-driven," the SEC said. "It was understood across the company that either missing or exceeding a financial target reflected a failure to manage the company's business properly."

It added: "In that environment, accounting did not serve to measure Nortel's performance; instead, Nortel's executives and finance managers treated their books as tools to meet the company's financial objectives."

For another example look at the Bush White House, which clearly states its bias for outcomes. Recent reports on corruption in Iraq have been classified. The group also dropped critical measures that failed to improve over time. And anyone who read their Lessons Learned report after Hurricane Katrina got treated to a white wash.

These are the consequences of heavy handed, "perform or else" management perspectives. Greed intices people to cheat, while fear of losing their job and a steady paycheck does likewise. As Dr. Deming said "Will they ever learn?" He taught a system of knowledge for leaders. It's badly needed in today's world.