Mihaela GHICAJANU University of Petroşani, email@example.com Key words: control, planning, objectives, performance, plan. Abstract: The principle behind Management by Objectives (MBO) is to make sure that everybody within the organization has a clear understanding of the aims, or objectives, of that organization, as well as awareness of their own roles and responsibilities in achieving those aims. The complete MBO system is to get managers and empowered employees acting to implement and achieve their plans, which automatically achieve those of the organization. The planning and control is effective if it has strategic character, is aimed at achievement of concrete results, and is duly, flexible, simple and economic.
1. STRATEGIC MANAGEMENT AND MANAGEMENT BY OBJECTIVES SYSTEMS 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 (figure no.1). Organizational objectives reviewed
MBO for the next operating period begins
Employee objectives set
Performance evaluated Figure no. 1 Step MBO process
Management by objectives is not a new technique. It was introduced as a supplementary management tool by Alfred Sloan in the early 1950s; however, Peter Drucker
ANNALS of the ORADEA UNIVERSITY. Fascicle of Management and Technological Engineering, Volume VII (XVII), 2008
is credited with making it a central management concept in his classic management book, “The Practice of Management”, in 1954. Although Peter Drucker is credited with being the father of MBO, it was George Odiorne who popularized MBO with his statement of its six major premises. During the late 1960s and early 1970s, MBO seemed to emerge as the dominant tool for organizational management. But many applications met with failure. The concept was challenged, and many cast it aside as a theoretical idea that could not be applied in practical situations. The causes of failure were in the implementation; they were not inherent in the basic procedure. In the 90s, Peter Drucker himself decreased the significance of this organization management method, when he said: "It's just another tool. It is not the great cure for management inefficiency... Management by Objectives works if you know the objectives, 90% of the time you don't." According to Drucker managers should "avoid the activity trap", getting so involved in their day to day activities that they forget their main purpose or objective. Instead of just a few top-managers, all managers should: participate in the strategic planning process, in order to improve the implementability of the plan, and implement a range of performance systems, designed to help the...