Management by Objectives Report

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  • Topic: Management, Peter Drucker, Management by objectives
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  • Published : January 25, 2011
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(Project management: Case Studies
Harold Kerzner, (2006). John Wiley and Sons)

Management by objectives
This technique allows all parties, the project manager, the functional manager, and the employee, to share and to participate in the appraisal. It epitomizes the systems approach since it allows for objectives modification without undue or undeserved penalty to the employee. Finally, it uses objective data and downplays subjective data.


emphasis on results rather than on abstract personality characteristics

Little difficulty with
-conflict (over schedules, priorities, technical issues, administration, personalities, costs) What IS MBO (Management by Objectives)
MBO (or management by objectives) is a technique credited to management guru Peter Drucker, to describe a method of performance management that is based on the setting of clear and measurable objectives, and the use of those objectives to evaluate and review performance. When done correctly, MBO is probably the best, and fairest way to plan for and create effectively performing employees, although, of course, if the implementation is poor, the outcomes will be poor. Here's a formal definition:

Management by objectives (MBO) is a systematic and organized approach that allows management to focus on achievable goals and to attain the best possible results from available resources. It aims to increase organizational performance by aligning goals and subordinate objectives throughout the organization. Ideally, employees get strong input to identify their objectives, time lines for completion, etc. MBO includes ongoing tracking and feedback in the process to reach objectives.
By Marlow, Edward,Schilhavy, Richard
Publication: Industrial Management
Date: Tuesday, January 1 1991
Expectation Issues in Management by Objectives Programs
How many times have you felt like a member of Tennyson's Light Brigade, charging off into the "Valley of Death" for some far off, impossible, meaningless, vague objective with management exhorting you on to ever greater efforts? Somehow instead of feeling energized you feel as if, to quote Tennyson, you are riding, "Into the jaws of Death/Into the mouth of Hell." Management by objectives (MBO) was intended to reduce the likelihood of such troubles. Yet MBO has not delivered the string of success stories that theorists and managers have expected. This lack of success has been due to fundamental difficulties in managing both management and employee expectations. In this article, we discuss some of the issues related to these expectations and their effect on the successful use of MBO. These issues occur in five major areas: 1) coordination among the participants in developing the objectives, 2) specificity of objectives, 3) level of aspiration, 4) appropriate planning horizon, and 5) perceptions about the objectives. The potential for manipulation, misapplication, and particularly misperception exists at every phase of an MBO program. Many elements of MBO were used in large corporations as early as the 1920s. Executives who introduced goal-based programs included Sloan at General Motors, Patterson at NCR and Watson at IBM. In 1954, the first coherent, formal description of the concept and strategy of MBO appeared in Peter Drucker's book "The Practice of Management." Since that time, MBO has been proposed as the solution to a host of management problems. Drucker's reputation or the persuasiveness of his writing propelled MBO into the forefront of management ideologies in the next 25 years. A 1974 survey found that nearly 40 percent of Fortune 500 firms had an MBO program. By 1980, 75 percent of large industrial firms surveyed used MBO. Since 1954, volumes of material have been produced for both academic and practitioner audiences. By 1981, Odiorne listed over 80 books and 1,200...
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