How Quantification Can Help Contain Micro-Political Battles
Organizations increasingly believe that they can guide their activities using indicators. The idea is not that the choice of the right economic indicators will make it possible to base decision-making on them, but that indicators allow for more self-control in individual units. Instead of ‘government by rules’, the maxim is increasingly ‘governance by numbers’.
The idea of using figures to control one’s activities depends on the fact that almost all of the processes that take place within and between organizations can be expressed in the form of numbers: the total number of sick days taken by employees, the increase in productivity over the last few months, the percentage of people who have access to healthcare, the kilometres of motorway financed by the government in one year, the number of graduates of a certain education programme, or the percentage of water that is lost because of leaking pipes.
Figures have three characteristics that make them particularly interesting from the organization’s perspective. First, as indicators they are a form of information that is especially easy to move around. Because they aggregate quantitative information on complex situations, they can be shifted to and fro between profit centres and the business’s headquarters, suppliers and customers, businesses and the tax authority, and between the donors and receivers of developmental aid. Second, as information couched in numbers, it is comparatively easy to combine figures. The contribution margins of 20 local energy providers, for instance, can be aggregated into the single contribution margin of the national energy provider. And third, figures can be compared without great difficulty. One water authority’s contribution margin of 150% can be compared to another’s of 70%. Or a contribution margin of 50% in 2000 can be compared to a contribution twice that size in 2010. Comparisons between different sets of qualitative data often provoke complaints about ‘comparing apples with oranges’, but comparisons that refer to the same economic indicators do not usually meet with the same complaints.
At first sight, numbers appear to be neutral, independent, and objective. In this way, they imply that there is little room for interpretation. A figure means in western Europe just what it means in sub-Saharan Africa – or, at least, that is the initial impression. The assumption is that a cost–benefit analysis is independent of regional and cultural specificities, so it works in a US company just as it does in its Philippine business partner. Organizations believe that figures are their lingua franca – everyone understands them.
Of course, this lingua franca also has its dialects. Dialects, as linguistics understands them, are varieties of a particular language. On the level of basic structure, then, a language and its dialects are connected, and the speakers of the standard language and a dialect are able to communicate with each other. When it comes to the lingua franca of figures, this means that there may be different ways of carrying out calculations within a global framework, but these different ways are all intelligible to each other – because, despite the variations, there is a basic agreement on which figures are valid.
According to a financial realist view, power battles within organizations can be mitigated through the use of economic indicators as points of orientation. Investment calculations remove the effects of political interest from assessments of planned large-scale investment decisions, thus reducing opportunities for micro-political game-playing. Transfer pricing between the individual profit centres of a business can ensure that possible and already planned cooperation can be based on the objective principles of ‘market processes’, thus reducing the influence of the political power groups and their interests. On this view, economic indicators naturalize political relations.
From scientific studies, however, we know that the objectivity of the figures produced by organizations is limited. In the short term, businesses can massage their profits and losses in order to ensure the expectations of capital markets are met. Contribution margins can be presented in a form that pleases the head office by shifting factors between investment and running costs, resulting in an impressive growth curve.
Once one begins to question the figures, micro-political battles threaten to break out. Already existing conflicts would intensify, for each party would suspect that the other had fabricated the figures. The use of indicators as points of reference can therefore also prolong and complicate the micro-political processes it was meant to keep in check.
But so deep is the belief in the disruptive potential of indicators that they are usually not questioned. According to the ethnologist Richard Rottenberg, the reports that detail the figures become thinner and thinner ‘on their journey through the divisions and hierarchy’. In line with prescribed rules, they are transformed into ever new versions and continually reduced in the process. Finally, all that is left are a few condensed indicators that have very little to do with the contexts in which they emerged and thus no longer require any detailed knowledge of the actual social situations from which they have been abstracted.
The obvious conflicts involved in the construction of the indicators that were still visible in the negotiations from which they emerged, disappear in the course of the process of internal adjustment. The complex organizational reality is reduced to a figure, such as ‘contribution margin of 105%’, ‘share of staff costs: 28%’, or ‘8% return on investment’. The more ‘universally valid’ such indicators ‘are supposed to be, the less they take into account the diversity, complexity, materiality, and particularity of a localized reality’. As they become more and more processed, the way the indicators were originally constructed becomes harder and harder to unpack, and they acquire increasing plausibility.
This ‘becoming plausible’ in the course of being processed within an organization also explains why indicators are very useful when creating fictions of unity. Even if those involved in the negotiations know full well that they disagree about the details of how they arrived at the value for an indicator, they can safely assume that their organization will ignore these details when dealing with their agreement on the indicator.
