Blaming Management LO9504

Cherry Vanderbeke (ckv@wang.co.nz)
Tue, 27 Aug 1996 18:45:16 +1300

Replying to LO9249 --

In LO9249 on 20 August John replied to Hal...

"I don't see any evidence in what you write that the system *has* broken
down and *ample* evidence that it's working very well:

- triple digit growth
- headcount grew from 250 to 600 with the loss of only a very few
managers and mild turnover elsewhere"

... In my view, it depends what is meant by "working very well". I would be worried if
a company were only measuring its success by things like increased staff numbers and
profit, because I'd question whether it is really looking at everything that matters?

Profits only measure the change in a company's tangible assets. Headcount growth just
means you have hired more people. Triple digit growth could mean anything - eg. a
recent acquisition. And what if the company had had to hire _more_ than 350 people
(the difference between 250 and 600), because they had to replace all the people who
had been voting with their feet? Personally, I've always felt that _just_ reporting
things like profits and growth ("we've grown x% this year!") is a bit like driving by
the rear view mirror - "look where we've been!" The Balanced Scorecard is an example
of a 'back-lash' against a pure bottom-line focus.

It's highly possible that a company's increase in tangible assets could be at the
expense of its intangible ones (knowledge, skill, management quality, intellectual
property, etc. etc.). Yet I think the intangibles are where the vast proportion of the
asset value _really_ lies for many companies today. Surely this is one reason why
there is so much interest in the concept of learning organisations? The scary thing is
that by the time a loss of intangible assets starts to be felt, a company may already
be in severe decline because the effect on the bottom line is not necessarily
immediate.

Cherry

--

Cherry Vanderbeke, Wang New Zealand Limited Email: ckv@wang.co.nz "The greatest pleasure in life is doing what people say you cannot do"

Learning-org -- An Internet Dialog on Learning Organizations For info: <rkarash@karash.com> -or- <http://world.std.com/~lo/>