The use of economic models can have  a boomerang effect

by Caroline Fiche, Dossier Solutions.

The development of organisation and management is becoming more and more influenced by economic terms and models with a focus on measuring and controlling results. But when we make employees "things" on the bottom line, we also open the door to more elements of uncertainty that, once again, require more from the manager.

Language says something about the way in which we understand the reality and the people around us. The terms we use say something about human life and how we understand the world to work. Therefore, it is interesting to note that HR and management have become more influenced by language and models that we recognise from finance and accounting. We use terms such as resources when speaking of employees, we analyse which types of achievements provide the most profit with regard to the bottom line, and we are concerned with ensuring the accountability of all individual performance goals that need to be measured and weighed. The value of the achievements must be to be quantified, and the management and organisation of the work is based on clear rules and control. But does this economic model of understanding have its limitations?

New models of understanding are becoming popular because they provide us with the opportunity to see and demonstrate contexts and reason / impact differently. It opens it up for us to see challenges and solutions in a new way, and provides us with concepts possessing content that can expand our understanding and inspire new ways to work. The economic model of understanding is good for organisations because it makes them more result orientated. It highlights the connection between the individual's achievements and shared goals. However, there is much to suggest that it simplifies both processes and management requirements. Numbers are stable and have logical connections with results. But when the human input factor needs to contribute towards increasing the bottom line, it is immediately more unpredictable. It is easy to forget that we are talking about very complex relationships that produce results.


How does this affect management?

By "reifying" people and what they deliver, one automatically does something with the management role. Then administration, and having a focus on measurement and control, gains more weight than the personal dimension within management.

But to manage people, with those challenges and dilemmas that it can entail, requires something more than an administrator. It requires someone to manage, facilitate, guide and follow-up in the everyday situation. The value of good conversations and follow-up is still highly applicable. Perhaps especially today. Because what is the effect of the language and the continuously increasing focus on measurements? What is the individual's experience of their own role and effort? What does it mean for the individual when the requirements for re-organisation of work tasks and roles are based on "cost effective considerations"? A concept such as middle manager surely has great problems with creating understanding and support without showing good communication and leadership skills. To manage people is completely different to managing production funds.


Measuring performance versus developing performance

Measuring performance, built on a reason / impact mindset, is central in the economic model of understanding. The idea behind this is to define and control according to certain achievement indicators that are measurable, and that increase the employee's productivity. Moreover, they are defined based on which activities provide the best results on the bottom line.

There is a concept in accounting theory that says: "you get what you measure." Then it is important that one selects the correct measure indicators. What exactly is a good achievement, and what does it depend on? Does one actually receive the effect one thinks? Is it possible to have genuine control over this? Can one risk that a gap eventually occurs between the employee's experience of constantly performing, without delivering in accordance with the company's objectives?


The police have over 100 measurement criteria for success. One is the clear-up rate within the different types of cases. How does it affect which things are prioritised? Are things that are difficult and time-consuming receiving the necessary focus and time? Is care being taken to fulfil the clear-up rate at the cost of other things that are more important? As has been said, what you measure will get done, while that which you do not measure will not be done.

There is also another - perhaps unwanted effect - of too much control and management of detail.


It can make one passive, and affect both desire and ability to show initiative and creative thinking within one's own work situation. These are characteristics that most organisations wish to stimulate.

Measuring performance has always been important within sports. Previously it controlled all forms of training and preparation. The interesting thing is that today there has been a change that provides good results, which we can see in, among other things, skiing.


There is more focus on skiing at ones best in all situations, rather than focusing on ones end-time. A skier sees every part of the race in stages in order to achieve at his best at that particular stage through new knowledge, guidance and training, both mentally and physically. It is not the end time or result that is the most important, even though that is what they are measured on. To concentrate on performance development in a regular and gradual manner provides a better end time and more learning.


Can we transfer any of these experiences to the work life? It has been said that most of us are quite aware of our strengths, as well as our weaknesses. If we use the normal distribution curve for the achievements of an individual, it is easy to see that if someone manages to increase quality and efficiency within their regular, daily achievements, it will have significant impact on the productivity. It requires closer sequences of follow-up, and more individual facilitation.

As in sports, it is important to get a process support that supports positive feelings of coping through sufficient expertise, opportunities to develop new experience, and guidance.


The important balancing act

The reason that new models of understanding gain a foothold is because they provide us with new perspectives with new insight. The economic model demonstrates the necessity of everyone feeling ownership and responsibility for performance targets.

It stipulates what is delivered in relation to the strategic objectives and shows the necessity to set clear requirements. These are important advances. But that which is a strength in a certain context can become a weakness in other settings, or during excessive use. It is important to be aware of this balancing act. Not everything is transferable with as much success. From our experience with many work places,we know that the employees who often deliver the best results are less concerned with achievement objectives, and instead enjoy doing their work well.❉