Drucker 's ideas were expanded on and implemented in 1960 by McGregor at General Mills and became known as 'management by objectives. ' McGregor held that if an employee is directly involved in the goal setting process, they can be relied upon for self-control. Therefore productivity can be best improved by clarifying strategically aligned goals and coupling this with a related rewards system for achievement (Dinesh & Palmer, 1998.) Hence the concept of MBO (based on goal congruence) was held to be of most benefit at improving employee productivity if undertaken collaboratively.
Since its successful application at General Mills, MBO became increasingly popular during the 1960 's and 1970 's (Dinesh & Palmer, 1998.) The common elements of an MBO system are; objectives are established for all jobs in the firm; the use of joint objective setting; the linking of objectives to strategy; emphasis on measurement and control; the establishment of a review and recycle system (Reddin & Kehroe, 1974.) Hence MBO plays an integral part of the planning process for an organisation as it seeks to involve all employees in the process with the view that by collaboratively setting goals an increased commitment to attaining them will be achieved. It encourages employees to view their contribution to the organisation
References: Bechtell, M.L. 1996, 'Navigating organisational waters with hoshin planning ', National productivity review, spring, pp. 23-42. D 'Aveni, R.A. 1995, Hyper-competitive Rivalries: competing in highly dynamic environments, free press, New York. Drucker, P.F. 1955, Practice of management¸ William Heienemann Ltd, London. Dinesh, D. & Palmer, E. 1998, 'Management by objectives and the balanced scorecard: will Rome fall again? ', Management Decision, vol. 36, iss. 6, pp. 363-369. Reddin, W.J. & Kehroe, P.T. 1974, Effective MBO for Irish managers, Mount Salus press, Dublin. Schermerhorn, J.R., Campling, J., Poole, D. & Wiesner, R. 2004, Management: An Asia-Pacific perspective ,John Wiley and Sons Australia, Milton, QLD. Van Tassel, J.D. 1995, 'Death to MBO ', Training and development, vol. 49, iss. 3, pp. 2-5.