Studies in Personnel and Industrial Psychology

By Edwin A. Fleishman | Go to book overview

It will not be possible to formalize through new mechanisms or through technology and organization changes all of the nonformal relations required by the work flow. It should be possible, however, to remove or reduce the major points of variance between the technology and the organization. It makes sense for a company that has been farsighted enough to bring in a new technology to be equally farsighted in recognizing that established organizational patterns will not usually serve with the same effectiveness as they once did. If the new technology is to live up to production expectations, then management must see to it that organization relationships are carefully restudied and wisely redirected.


48. Measuring Organizational Performance*

Rensis Likert

DECENTRALIZATION and delegation are powerful concepts based on sound theory. But there is evidence that, as now utilized, they have a serious vulnerability which can be costly. This vulnerability arises from the measurements being used to evaluate and reward the performance of those given authority over decentralized operations.

This situation is becoming worse. While companies have during the past decade made greater use of work measurements and measurements of end results in evaluating managers, and also greater use of incentive pay in rewarding them, only a few managements have regularly used measurements that deal directly with the human assets of the organization--for example, measurements of loyalty, motivation, confidence, and trust. As a consequence, many companies today are encouraging managers of departments and divisions to dissipate valuable human assets of the organization. In fact, they are rewarding these managers well for doing so!


New Measures Needed

The advocates of decentralization recognize that measurements play a particularly important function. Ralph J. Cordiner, one of the most articulate spokesmen, has stated his views on the question as follows:

Like many other companies, General Electric has long felt a need for more exact measurements and standards of performance, not only to evaluate past results, but to provide a more accurate means for planning future activities and calculating business risks. The traditional measures of profits such as return

____________________
*
From Harvard Business Review, Vol. 36, 1958, pp. 41-50.

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