Many organizations default to control mechanisms to mitigate risk, but this focus often undermines performance. A shift toward prioritizing performance is essential for long-term success and competitiveness.
In small companies and startups, there is little to lose, so risk aversion has not yet developed. Once a business has grown into a large organization with a strong market position, there is a lot to lose, and there are a lot of investors looking to receive a return on their contributions. The pressure to not lose rather than to win becomes incredibly difficult to resist, and as a result, management teams begin adapting their organization to avoid risk and create control structures that allow them to micromanage the organization to prevent loss. Because of this preference for control, management behavior becomes such that the more performant options are ignored because they might interfere with control, causing missed opportunities.
In this article I will discuss why management prefers control over performance, drawbacks of that management style, the benefits of focusing on performance, and how to shift to performance-based management.
Why Management Prefers Control Over Performance
In a large organization that is already successful, it often seems the only way to go is down. This spirit can infect the culture of a company to the point that the line and middle managers become so risk averse that they prioritize structures that give them control in all aspects of their organization. Reasons they do this:
Mitigating Risk. Managers often equate control with safety, stability, and risk mitigation. They believe by putting in place approval requirements, standardized processes, extensive documentation creation and storage, and reporting tools that they have lowered the risk that something will go wrong and they will be blamed or punished for it. The threats to these managers are real. They come from regulatory compliance and legal concerns and shareholders demands. Managers are expected to prevent problems from arising through good governance.
Accountability and Reporting. Control structures provide a clear hierarchy and paper trail, which are necessary for internal and external audits. A publicly-held company must adhere to strict regulatory requirements. The Board of Directors will audit the organization to make sure that their investment is well-managed. The government provides regulations as well, requiring detailed reporting. Higher leadership will expect management to be able to speak not only to how work is being completed, but also how money is being spent to complete it.
Cost Control & Efficiency. Control allows managers to standardize processes and cut costs, maximizing resource utilization. Managers often believe that resource utilization, being efficient on the surface, yields lower costs while providing greater control to management. In order to facilitate controlling capacity and utilizing people, functional silos neatly organize people by skills into easily located bins.
Comfort with Status Quo. Many managers are rewarded based on predictability and stability, and thus shy away from riskier performance-focused initiatives. In a large company that has been highly successful, many lower middle managers become complacent, concerned mostly with not making mistakes and presenting as professional and non-offensive of an image as possible. Taking risks upsets the status quo and causes upset and the potential for at least temporary downturns. Such actions are frightening to such managers, so they avoid them.
Drawbacks of Control-Centric Management
Control is often an illusion. Creating reports, extensive tooling to generate reports, and then sending out armies of administrators to ensure that tools are continuously updated so that charts and graphs report that everyone is fully loaded with work and no extra people exist looks great on paper. But it causes problems down the road that eat the savings that it promised. These costs are usually unaccounted for and not considered.
Stifles Innovation and Creativity. Control mechanisms create rigid structures that leave little room for experimentation and innovation. Creative people do not choose to work in stuffy environments where they are micromanaged and the preference is on management reporting rather than innovation and achievement.
Delays in Decision-Making. When managers retain to themselves the authority to change things and make decisions, they become a bottleneck. Often, nothing changes, as the many ideas of the people below them are rarely accepted as ideas are often weighted to the social status of the person offering them in large institutions. The manager becomes a bottleneck for decisions, and many decisions are delayed waiting for that manager to become fully informed. Centralized, top-heavy decision-making processes slow down responses to changes in the market or customer demands.
Decisions Unmade. The more decisions are pushed upstairs, the fewer of them that are made. Most decisions that go upstairs are never made. Employees make requests and get no answer. Approvals are requested and denied by lower-level screeners who never pass the request along. Jealous supervisors squash ideas coming from below them to prevent being usurped. In top-down led companies, most decisions are not made at all. The employees either enact the change without permission, or more likely, just shrug and never share an idea again.
Lower Quality Decisions. Since information lives on the line near the customer, the higher it travels in an organization, the more inadequate the decision is to solving problems. Where are all of the management researchers recommending that decision-making be pushed higher into an organization to get better decisions? There are none. The people who know how to best do their jobs and get things done are the people doing the work.
Reduced Employee Engagement. Top-down control discourages autonomy, leading to disengaged employees who feel their input doesn’t matter. Employees are less likely to bring creative ideas to the table when they feel micromanaged or limited by strict processes. There is no way to force engagement. Employees will only volunteer their best selves. They cannot be coerced into doing it.
Limited Long-Term Growth. Companies in mature industries often focus on squeezing more efficiency from existing processes, neglecting opportunities for innovation and expansion. A focus on cost control over performance can lead to short-term gains but limits long-term business growth. Controlling costs is all about efficiency. Managers often define efficiency as maximum work performed by the minimum number of people at minimum cost. Operating a business in this way does not lead to a healthy organization long-term. Increased employee churn, reduced contribution, and hidden inefficiencies that employees do not allow to show on reports will remove the projected savings from the business and cause it long-term difficulties.
The Benefits of Performance-Focused Management
Managing to performance, rather than control, is the secret of building a successful organization that creates success. The benefits are:
Improved Innovation and Flexibility. When performance is the goal, organizations are more likely to encourage innovative thinking and rapid iteration. Decentralizing decision-making gives teams autonomy to solve problems creatively and respond to customer needs faster.
Increased Employee Engagement. Employees who understand how their work contributes to business performance are more motivated and invested in their jobs. Empowering teams with ownership over outcomes fosters a sense of accountability and enthusiasm.
Faster Adaptation to Market Changes. Performance-focused organizations adapt more quickly to market fluctuations because decision-making happens closer to the ground. Cross-functional teams empowered to make decisions can pivot faster when market demands shift. By having the organization divided this way instead of centralized, the organization’s reaction is of many independent groups rather than a large ship that easily sinks when one part is damaged.
Sustainable Long-Term Growth. Prioritizing performance encourages companies to continuously seek new growth opportunities rather than relying solely on cutting costs. Organizations that foster a culture of performance can better innovate, scale, and stay competitive in the market.
How to Shift from Control to Performance
The secret for managers who want to go from keeping the ship floating to winning the race? Stop preferring control over performance. Begin adopting more performant work models instead of focusing on tooling, roll-up status, approval chains, and vertical communication and decision-making. Here’s how:
Decentralize Decision-Making. Information is most rich on the line where the employee meets the customer. Stop moving information to authority. Instead, 0ush authority down to the teams that are closest to the information, empowering them to make decisions. Implementing a decentralized leadership model or cross-functional teams to foster faster, more creative problem-solving. By doing this, you will grant people the autonomy that most everyone craves on the job. Anytime I have spoken to people about the best job they ever had, they describe a time when they solved a problem their way. They invented how to work it, and they were allowed to make decisions about what to do. The fact that most people do not report their current job as their favorite job, even when asked in front of their boss, is telling about the state of management.
Reward Performance Over Compliance. Change incentives to reward employees based on performance outcomes, rather than adherence to rigid processes. Tie compensation or recognition to business impact and innovation rather than mere completion of tasks. When managers prefer a project to meet schedule, scope, and cost to delivering value for customers, they are preferring control to performance. Is it more important that budget and schedule be controlled? Or is it more important that we do something competitive and innovative?
Promote a Culture of Autonomy and Accountability. Foster a work environment where employees feel empowered to take risks and ownership of outcomes. Change the reward system so that goals are not compliance-driven but instead are focused on business success. That doesn’t mean giving line employees corporate revenue plan targets to drive for. They will have little connection to any of that in their world. Rather, set goals for what successes they need to make happen and then give them rules to operate within. With goals, rules, and knowing how to do a job, a group of people can do anything.
Pivot From Control to Support. Rather than managing capacity, assigning work, wondering how many people are needed in a functional silo to meet demand and how much budget is needed to pay for it, managers should be spending their time asking their people what they need to solve their problems and helping ensure they get solutions. Cross-functional, self-managing teams solve capacity problems through prioritization of work and denying low-value work capacity while allowing people to remain available enough to keep work moving.
Shift Focus from Cost-Cutting to Value Creation. Cost-cutting appears to save money on paper when planning. If I cut three people who are not particularly busy and load up everyone else with their work, we can do the same thing and save a half million dollars, right? RIGHT? The real answer is no, that money is never saved. The layoffs demoralized the team, and they stopped giving their all. The cost of loading everyone up is that everyone is busy all of the time, and no one is available to work with anyone else. Scheduling meetings extends farther into the future, urgency is lost, and the organization starts to move more slowly. Work on fewer, more valuable things. Building capacity to do all of the things is a mistake that leads to process slow-down and organizational bottlenecking.
While control offers stability and the comfort of status quo, the cost is innovation, adaptability, and sustainable growth. We know the intrinsic rewards that motivate people: autonomy, mastery, purpose, and connection. Controlling management teams with roll-up status reporting and approval chains up the ladder, attempts to maximize savings by loading everyone up with work, assigning work to employees and then dictating how the work is done – all of these things are control that hurts performance.
Assessing my own management style through the years, I can see my own preference for control. Some previous employees of mine from way back probably laugh at the word “preference” since I was heavily engaged in controlling management techniques. It didn’t get me anywhere. I and everyone around me lived in a world where it was more important that the people upstairs know exactly what we were doing than it was that we succeed at something.
Managers often deny this is a choice and believe they can control and get performance. But performance of employees and control of managers are at opposite ends of a wide spectrum. Control negates performance.
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