The Problem with Measurement in Organisations

Metrics, when misapplied, risk distorting behaviours, eroding trust, and undermining organisational goals. Instead, by emphasising alignment with values, ethical leadership, and systems thinking, managers have a clear path to leveraging metrics wisely, fostering environments where organisations and individuals thrive.

Measurement has long been considered a cornerstone of effective management, largely on the say so of one guru or another. On more than one occasion, I have been complicit in the dark side of this process and quoted that famous quip attributed to management guru Peter Drucker (1909–2005): What gets measured gets managed. Of course, the danger in uncritically repeating the sayings of gurus is that history becomes legend, legend becomes myth, and truth passes out of all knowledge. Therefore, we need to pause from time to time when grabbing an apt quote for our slide deck and meditate on the history of the adage. Which in the case of Drucker is that it is something he never said. Instead, as was his style, what he said was not as punchy and ready for a 5-word meme, but it was far more important.

Work implies not only that somebody is supposed to do the job, but also accountability, a deadline and, finally, the measurement of results —that is, feedback from results on the work and on the planning process itself.

Peter Drucker, 1974.

In this context, the journalist Simon Caulkin had it better in observing:

What gets measured gets managed - even when it's pointless to measure and manage it, and even if it harms the purpose of the organisation to do so.

This telling of the quote, combined with the actual thinking of Drucker, elucidates a key management paradox and captures the tension that exists at the heart of organisational life: while measurement promises accountability and improvement, it often invites unintended consequences, distorting behaviour and eroding trust.

What these critiques reveal is a deeper truth: that measurement, when misapplied, becomes not just ineffective but actively harmful. Yet, by drawing from both historical examples and recent research, a few practical lessons for managers emerge which can keep them from becoming another statistic in the story of when metrics can go awry.

The terms measurement and metrics are often used interchangeably, but they have distinct meanings, particularly in management, science, and data analysis contexts. Measurements are the building blocks of metrics. For instance, measuring the number of visitors and purchases provides the data needed to calculate the metric 'conversion rate'. Metrics transform measurements into actionable insights, enabling organisations to track progress and make informed decisions.

When the Numbers Take Over

Imagine, for a moment, the plight of a 19th-century cotton mill manager in industrial England. Tasked with maximising output, he (for they were almost exclusively men) introduces a system of measurement: workers are rewarded based on the weight of fabric produced each day. At first, the results are spectacular—productivity soars. But soon, a troubling pattern emerges. Workers, seeking to boost their bonuses, start producing fabric that is heavy but poorly woven, riddled with flaws. The factory's reputation suffers, and customers defect to competitors.

This tale, though apocryphal, encapsulates the essence of metric fixation: the belief that quantifiable targets can capture the full complexity of organisational performance. The modern workplace is littered with similar examples. A 2020 study into the insurance industry unearthed unethical marketing practices that included misrepresentation, churning, discrediting competitors, unauthorised policy issuance, falsifying customer data, misappropriating funds, forgery, and deceptive account or policy management. Drucker would not have been surprised. He warned that measurement, when untethered from purpose, could become a tyranny, driving behaviours that undermine organisational integrity.

Similar distortions can be found in education, where accountability frameworks tied to standardised testing have narrowed curricula and incentivised teaching to the test. Wayne Au analysed this phenomenon in U.S. schools and found that performance metrics overshadowed broader educational goals like critical thinking and creativity. This reductionist approach mirrors what W. Edwards Deming (1900–1993) critiqued as a loss of systemic thinking—an obsession with parts at the expense of the whole.

The Tyranny of Targets

Deming's disdain for numerical quotas stemmed from his belief that they foster short term thinking and diminish intrinsic motivation. In his seminal work Out of the Crisis, he recounted a story from his consulting days with a U.S. manufacturing firm. Management, eager to improve efficiency, imposed rigid production targets on assembly-line workers. The result? Employees rushed through their tasks, cutting corners to meet quotas, which led to defective products and a spike in customer complaints.

By contrast, managers who prioritise ethical values over narrow performance targets were better able to foster organisational cultures where employees felt empowered to act responsibly and align their work with broader goals. Leading to psychological safety:

an atmosphere where one can take chances (which experimentalism implies) without fear and with sufficient protection (…) thus a climate is built which encourages provisional tries and which tolerates failure without retaliation, renunciation, or guilt.

Schein and Bennis, 1965.

These findings echo Deming's warning that an over-reliance on numbers can distort decision-making, encouraging tampering rather than genuine improvement. A similar phenomenon occurs in higher education where universities, faced with pressure to climb league tables, prioritise metrics like faculty-student ratios and research output over the actual quality of education or research. One university, which shall remain nameless, even created an entire department dedicated to managing its ranking position. Such practices exemplify what Deming called sub-optimisation: when components of a system are optimised at the expense of the whole.

Big Data, Bigger Problems

In the digital age, measurement has taken on new dimensions. Advanced analytics and machine learning promise to refine performance management with unprecedented precision. Yet, these tools also amplify the risks identified by Drucker and Deming. For instance, Shoshana Zuboff in The Age of Surveillance Capitalism describes how data-driven metrics in technology firms incentivise invasive data collection practices, prioritising shareholder value over user privacy. This practice is emblematic of Drucker's critique of metrics untethered from organisational purpose. By measuring only what benefits the company financially, such systems neglect their broader ethical responsibilities.

Yet this principle of singular focus on a metric that matters most is to double down on the fallibility of the average management system, which promotes individuals who can elbow their way into a position of authority and then get it done. Whether it is worth doing becomes irrelevant, the metric is about getting other people to do what you want—a rather selfish definition of leadership if ever there was one. The organisational equivalent of L'État, c'est moi [I am the state].

In such an organisational context, Deming's principle of variation is instructive. He argued that measurement systems must account for the inherent variability in any process. When they do not, they are flawed metrics and like a flawed algorithm or a poorly designed KPI, fail to consider the broader context—treating all deviations from the norm as errors to be corrected rather than signals to be understood. This is the inflection point in organisations in which people at the top stop practicing management begin to practice ideology. Not sampling across reality for hits of confirmations but filtering for error or non-conformance. A negation of performance management if ever there was one, because not all high performance will necessarily achieve the stated organisational goal set by the leader—yet the performance is high nonetheless and if critically considered can be used to the benefit of the organisation. To not try and properly situate high performance and instead filter for non-conformance is to send a troubling signal to all employees who will increasingly be in fear of their own role. After all, start filtering out and disciplining the higher performers and what chance do less gifted employees stand?

A Return to Wisdom

In thinking about complex situations, Shimon Peres (1923–2016) was right when he said: "the good news is there is light at the end of the tunnel. The bad news is there is no tunnel." Surfacing metrics in organisations is certainly complex, but we can construct a tunnel so long as we implement metrics thoughtfully. True, an over-reliance on metrics can distort behaviours, erode trust, and compromise long-term objectives. This happens when managers cease to use metrics to understand and instead use them to control—treating numbers as definitive truths to filter non-conformance rather than as tools for insight into processes and people. Organisations must resist the allure of simplicity and recognise the complexity of the systems they seek to manage. This requires moving beyond a fixation on short-term indicators to embrace a more holistic, purpose-driven approach.

One of the critical lessons from Drucker and Deming is the importance of aligning measurement systems with organisational purpose. Metrics should reflect the mission and values of the organisation, not merely operational outputs or financial gains. Managers have a responsibility to critically evaluate the systems they implement, asking whether these measures truly advance their goals or merely encourage superficial compliance.

A balanced approach to measurement also requires humility. As Deming emphasised, systems thinking must guide measurement practices, acknowledging the interconnectedness of processes, people, and outcomes. This means complementing quantitative metrics with qualitative insights and viewing deviations as opportunities for learning—sometimes that the latest organisational goal is not worth pursuing. By adopting this mindset, organisations can move away from the tyranny of metrics and instead harness metrics as a tool for reflection, growth, and continuous improvement. In doing so, they can create environments where both people and systems flourish, advancing not only organisational performance but also the broader societal good. Some ways in which this can be achieved:

Focus on Long-term Outcomes: For a healthcare organisation, measuring patient well-being over months or years rather than focusing solely on short-term metrics like discharge times ensures that performance aligns with the mission of improving health.
Use Metrics to Foster Ethical Behaviour: In financial services, shifting from aggressive sales quotas to metrics that measure customer satisfaction or long-term client retention can reflect a commitment to ethical client relationships.
Integrate Qualitative Feedback: Combining employee engagement surveys with performance data allows organisations to measure both productivity and the quality of workplace culture, ensuring alignment with values like fairness and inclusion.

As a final thought, let us return to Deming's warning about the dangers of 'tampering'. The next time you find yourself tempted to tweak a metric or chase a target, pause and ask: Is this truly advancing our mission? If not, it might be time to set the numbers aside and focus instead on the principles that make organisations not just effective, but meaningful.

Good night, and good luck.