A balance between the measurable and the nonmeasurable is a central and constant problem of management.
Business, like any other institution, has important results that are incapable of being measured. Any experienced executive knows companies or industries that are bound for extinction because they cannot attract or hold able people. This, every experienced executive also knows, is a more important fact about a company or an industry than last year’s profit statement. Yet the statement cannot be defined clearly let alone “quantified.” It is anything but “intangible”; it is very “tangible” indeed. It is just nonmeasurable. And measurable results will not show up for a decade.
A balance between the measurable and the nonmeasurable is therefore a central and constant problem of management and a true decision area. Measurements that do not spell out the assumptions with respect to the nonmeasurable statements that are being made—misdirect, therefore. They actually misinform. Yet the more we can quantify the truly measurable areas, the greater the temptation to put all-out emphasis on those—the greater, therefore, the danger that what looks like better controls will actually mean less control if not a business out of control altogether.
ACTION POINT: List both nonmeasurable and measurable variables that are important to the achievement of the goals of your organization. Develop quantitative assessments for those variables that can be so measured and qualitative assessments for those critical variables that are qualitative.
Management: Tasks, Responsibilities, Practices
* Source: The Daily Drucker by Peter F. Drucker