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Tuesday, February 2, 2016

Managing Activities Or Managing For Results?

This was one of the life-long questions in my management career: should I agree with my staff, as performance criteria, certain activities or should I agree certain results (regardless of activities). To give an example: what matters, in the final analysis, is the amount of profit contribution which an account manager can generate from his customer portfolio. If he achieves those results, I should not care whether he 'works hard' or only plays golf with his customers. Experience shows, however, that results have typically something to do with activities: if a salesman doesn't regularly call on his customers (i. e. an activity), his results are likely to deteriorate. Thus, most managers are inclined to not only manage for results but to also control activities in the process. In a way, this reflects mistrust in the account manager. The manager typically lacks trust that his account manager will opt for the right activities in order to achieve the agreed results.

This was a long way to lead into the primary issue of Greece's pension reform: the Greek government says to the Quadriga "we will deliver the results you want to see" and the Quadriga says "yes, but we want you to achieve those results in a different way". Essentially, this means that the Quadriga does not trust the Greek government to achieve the desired results in the way they plan to do it.

If one steps back and thinks what really happened in Greece since 2010, one sees a lot of 'managing activities'. If this was done because it was viewed as the only way to achieve desired results, one should conclude that 'managing activities' was not very successful. At the same time, I do not recall many instances where Greece on its own stepped forth and announced which results it planned to achieve.

This time it's different! The Greek government takes no issue with the Quadriga about the desired results. Instead, they have committed to achieving those results. They just want to achieve them in a different way than the Quadriga would like to see.

What's the big deal for the Quadriga? Are they prepared to jeopardize the results by insisting on activities which demotivate the other side? So far, the Quadriga has not made it clear as to why they want to have the cake and eat it at the same time, i. e. have Greece commit to results but at the same time force Greece to pursue activities which Greece does not want to pursue.

I once blew my stack when one of my account managers tested my nerve in the endless discussion about "do you want to see activities or do you want to see results?" I said to him the following:

"Look, I can only describe to you under what bodily pressures you go to the kitchen for food and to the toilet for relief but it's up to you to determine when you go to the kitchen and when you go to the toilet. All I can tell you is that if you ever go to the kitchen when in fact you should have gone to the toilet, I will be very mad at you!"

Should one perhaps trust Greeks that they know when to go to the kitchen and when to go to the toilet?

2 comments:

  1. Should one perhaps----? Judging from past experience with this, and other, governments, no.

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  2. I think that the two situations are not comparable. When it comes to account managers a lot depends
    on the specific situation and industry as well as in the interpersonal dynamics. Often the situation becomes
    tense because of status related competition between the various levels of the company hierarchy and the
    result/activity dichotomy becomes an excuse, as it appears to have been in the example above. In large
    structures though like an economy an abstract concept becomes paramount: path dependency. In other
    worlds the actions to achieve a specific result influence the future, even if the result is achieved, whereas in
    the case of the account manager if the tergets are achieved the situation is more or less settled. This may
    seem obvious but often it is not,
    because many actions have obscure consequences and it is easy to pretend -or even to honestly believe-that
    all or most actions are equivalent. For example the requirement may be for the government to cut the deficit
    by 2 billion euros by Jan 1 2017. If the cuts are concentrated in the areas of the opposition support it might
    lead to political instability. Or management cuts expenses in a way that compromises vital long term markets
    but hides it in creative accounting in order to protect this year's bonus. Hence a serious overseer of such an
    organization will keep close tabs on the details and may demand changes in activities that appear far removed
    from the aims.
    However in the case at hand the situation is pure politics. The quartet is trying to force SYRIZA to do things
    that it does not want to do and the quartet is putting pressure by asking for politically very unpalatable actions
    in exchange for the money. I am not sure what the aims of the quartet are though. It is possible that the refugee
    mess has become part of the reform negotiations in a major way. If that is the case it is impossible to find out
    what is going on and why.

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