Alejandro Navas, Professor of Sociology, University of Navarra, Spain
Planning and control
During the last weeks of the year, meetings of executives, both in private corporations and in the Administration, tend to multiply in order to establish the objectives for the coming year. The classic expression of this planning effort in the public sphere is the General State Budget. This attempt to determine the future behavior of the various actors - taxpayers, suppliers, customers, investors, etc. - is a reasonable one, translated economically into a forecast of income and expenditure. The large magnitudes are appropriately sliced and assigned to Departments and business units, so that everyone is clear about what is expected of them in the coming year. The workers on the ground will have to work hard and their bosses will check that they are doing the right things. This way of working was systematized by the 'father' of management, Peter Drucker, with the degree scroll of 'management by objectives'.
The determination of this subject of goals can be a useful reference letter for workers, but doubts are beginning to arise about its effectiveness. It is not clear that the time and effort devoted to planning are commensurate with actual performance. The complex context imposed by globalization renders many detailed forecasts useless. We are all, governments and companies, large and small, at the mercy of uncontrollable circumstances, and planning often achieves precisely the opposite of what it sets out to do (perverse effects). Some companies have noticed the problem and have quickly adapted to the new framework, such as the drugstore chain 'dm'. This company, present in Central and Eastern Europe, manages more than 2,000 stores and 31,500 employees in a completely decentralized manner. Each store sets its own quarterly targets. General manager Erich Harsch, director , says that it would be pointless to try to control the activities of each subsidiary from the distant headquarters. Moreover, setting targets from above would lead store managers to be more attentive to their bosses than to their customers, an error of perspective that would be tragic for the very survival of business (how many governments or political parties succumb to the temptation to please their leader at any price, including ignoring reality).
Another reason that would speak against centralized planning has to do with productivity and trust. In today's highly contested markets, it is crucial to be more productive than skill, especially in Western countries, which have to cope with the low wages and lower costs of emerging economies. We know that the most decisive factor in increasing productivity is the climate of trust between managers and employees. Trusting employees and giving them the corresponding freedom is more effective than any system of rewards and punishments. In general, employees want to work and do well, and they respond positively when their managers trust them.
It is no coincidence that Finland, one of the top countries in the report PISA ranking, decided years ago to abolish educational inspection. Schools, including public schools, work much better when they are given the freedom to organize themselves in their own way and are left to work in peace.
It is difficult to give up the old controlling mentality and to opt for trust, which, on the other hand, cannot be established by decree. As it implies reciprocity, the question must be asked: Who should take the first step? Who has the authority or power: governors, managers, parents, teachers. In doing so, we will feel vulnerable for a moment, but the gamble will be worth it.