(By Joe Koletar) Others dress this up a bit, and refer to it as “The sin of quantification.”
We like numbers, because they seem to be “hard,” and “scientific.” A number is an inert, immovable, thing. It never lies. It just sits there, looking at you. Perhaps saying, “Here I am. What are you going to do about it?”
The challenge moves from the number to mere human beings, those soft, mushy things afflicted by emotions, bad backs, and distractions.
Recent reporting reveals apparently popular and increasing efforts to better measure human behavior in pursuit of organizational success.
These ideas are not new. Witness:
o “The Balanced Scorecard – Measures That Drive Performance,” by Robert S. Kaplan and David P. Norton (Harvard Business Review, January-February 1992, page 71.)
o “The fact that ultimate goals often do not lend themselves to quantification usually leads to an attempt to work down the hierarchy of subordinate goals until one or more are found to which numbers can be assigned.” (Dr. Terry L. Cooper, Journal of Systems Management, September 1979, page 10.)
Are numbers important? Of course they are – $2 is more than $1; 20 years is longer than 10 years.
But do we perhaps ride the horse too fast and too far?
To mangle an old saying about a king in a time of distress:
“A number! A number! My kingdom for a number!”
But reliance on a number or numbers primarily because they are available is called, in management theory, “sub-optimization.” The hope is that the pristine number will somehow reflect a larger reality. It usually does not work.
Should numbers be thrown away, like clothes no longer in style? Of course not. But, is a notion of balance perhaps worthy of consideration? We’re talking about a zero-sum game here: Balance would divert at least some focus from numbers to the no-less-important factors— affect, culture, tone from the top, the ethics behind the numbers, and the longer-term mission of the enterprise. These non-number factors ultimately influence the numbers themselves. Positively and negatively.
(By Daven Morrison) It’s well known that smart phone use while driving often causes accidents. We can apply that lesson to the use of numbers. As Joe writes, attending to the numbers is very important, but that focus can distract us from organizational factors that stimulate or discourage fraud in the first place—emotions, culture, and the other factors mentioned by Joe above. That’s when the accidents occur. Former Fed Chairman Alan Greenspan appears to realize this in writing about the recent economic crisis in the U.S.:
• “I’ve always considered myself more of a mathematician than a psychologist. It all fell apart, in the sense that not a single major forecaster of note or institution caught it.”
• “The Federal Reserve has got the most elaborate econometric model, which incorporates all the newfangled models of how the world works—and it missed it completely.”
(From Alexandra Wolfe, in What Went Wrong?, Wall Street Journal, October 18, 2013)
The result: A financial disaster of epic magnitude.
We invite your comments.
Join us for more insights into behavioral forensics (behind fraud and similar white collar crimes) from the authors of A.B.C.s of Behavioral Forensics (Wiley, 2013): Sri Ramamoorti, Ph. D., Daven Morrison, M.D., and Joe Koletar, D.P.A., along with Vic Hartman, J.D. These distinguished experts come from the disciplines of psychology, medicine, accounting, law, and law enforcement to explain and prevent fraud. Because we are inspired to bring to light and address the fraud problems in today’s headlines, we encourage our readers to come back and revisit us regularly at BringingFreudtoFraud.com.