By Philip Whiteley – In the strange world of management theory, it seems that some influential thinkers are coming round to the point of view that organisations consist of people. It’s been a long battle, lasting most of the previous century, with huge reverses, but there are definite signs of progress. The recent article in Harvard Business, The Fallacy of Financial Metrics (Anthony Tjan, 8 June 2009), states:

‘We too often spend time focusing on the desired financial performance target, rather than the inputs that drive those numbers.’

It adds: ‘When we [the author’s consultancy] ask management teams what are the most important drivers ... of their financial results, I usually see one of two reactions: a) a dog in front of the television blank stare or b) a further breakdown of financial results: “sales on the West Coast drove the results.”.’

Yet one never sees the equivalent story in the sports section: ‘Coach admits he spends all his time studying league tables, when really he should pay attention to his players and tactics.’

The problem seems to be that management has permitted a lexicon of opaque terms and dubious concepts to build up like sedimentary layers upon foundations that are not sound. The notion that the company is a set of ‘resources’, of which people are but one, is a metaphor, and an extremely inaccurate one. Over-reliance on accountancy, which only measures effects, not causes, compounds the error.

There are now so many layers built up that it has become difficult to identify or question the underlying assumptions, and many of the distorted priorities have become hard-wired into managerial thought. It’s time for a fresh start; to strip away all the jargon and acronyms, and start building businesses, and business theory, based upon the people and skills that make them work.