The business - Patrick Hosking finds that targets don’t work

Targets are all the rage in industry as well as in government; but company bosses, at BP and elsewhe

Lord Browne of Madingley, chief executive of BP, is human after all. The business hagiographers have for years attributed godlike talents to this man. He is credited with transforming BP from a debt-crippled also-ran into Britain's biggest company. He has been voted British manager of the year three years running. He is the cuddly, green-tinged face of Big Oil, and a people's peer as well.

The Financial Times, over the summer, published an unprecedented 10,000-word series based on interviews with the man they called the Sun King. In the City, which is always suspicious of personality cults, the articles went down like an anarchist in Lombard Street. I'm told they laughed like drains at Shell, where they regarded it as a sign that Browne was riding for an almighty fall.

Sure enough, Browne's personal gusher has suddenly fizzled out. For the third time in eight weeks, he has had to confess to shareholders that BP won't be disgorging as much of the black stuff this year as he'd earlier promised. Missing targets once is forgivable; do it twice and lips get pursed. Three times, and the big shareholder battalions ask what the hell is going on.

Browne is the ultimate target-obsessed Blairite. He would boast of targets set and met with all the fervour of a new Labour health minister enumerating waiting-list successes. The ultimate management task, he said four months ago, is "to say what you're going to do and then do what you said, and then repeat the experience again and again". No wonder that Anji Hunter, Blair's personal gatekeeper at No 10, jumped ship to join BP. She must feel at home in the company known as Blair Petroleum.

There are two versions of what has gone wrong. The official BP line is that the company was hit by natural disasters and one-off problems and had not allowed itself enough headroom to avoid an embarrassing output downgrade. Slow reporting lines added to the misery.

The unofficial reason - emphatically denied by BP - is that employees are terrified of bringing Browne any bad news. One City analyst suggests that subordinates simply produce wrong numbers, rather than admit failure, in a company where meeting targets is a religion. Certainly, to miss a target is to invite both a bollocking from above and a cut in your performance-related bonus. Even where the target is met, it may only be at the expense of other things. Targets can be dangerously distortive, especially in very large organisations.

Thus, Jurgen Dormann, the chief executive of another once hugely admired company, the engineering group ABB, has been forced to apologise for his completely inaccurate claim only two months ago that the group was operating healthily. "I really have to sort out what is wishful thinking and what is reality," he now says. "I have to change the culture, especially to encourage more openness and transparency internally, and this makes me cautious [about making promises]."

Translated, this appears to mean: I can't trust my own managers, I can't trust their figures and I can't trust their forecasts.

You can't help fearing that in some of our biggest multinationals - ABB employs 150,000 in 60 countries including 8,000 in Britain - there are black holes in the furthest-flung corners of empire that could take years to come to light. A few days ago, British Telecom's new chief executive, Ben Verwaayen, had to distance himself from a sales target set when he was fresh to the job in April. Maybe he demanded too much from his managers; maybe they were over-eager to please the new boss. Whatever, the figures given then look laughably optimistic now.

In all the accounting scandals of recent months, it has been outsiders who have been duped. Shareholders, bondholders and creditors of companies such as Enron and WorldCom in the US - and on a more modest scale MyTravel, Bulmers and Amey over here - feel misled by the companies' managers and/or their auditors.

I'm not for a moment suggesting that accounting scandals are about to erupt at either BP or ABB. But it is not just outsiders who need to treat company figures with great scepticism. Chief executives can be duped by their own numbers, too.

So farewell, Sir Geoff Mulcahy, the man who put a B&Q shed on the edge of every town. The Kingfisher chief executive retired this week, after a less than happy final three years. His bonuses had shrunk because of falling profits. His options were wiped out because of a slump in the share price.

But he still left clutching a £701,000-a-year company pension for the rest of his life. It confirms my first law of gravy trains: however many carriages are derailed, you'll find the smart director in the one caboose that is still upright.

Patrick Hosking is deputy City editor of the London Evening Standard