MANAGEMENT BY OBJECTIVES

Managers always have been challenged to produce results, but the modern manager
must produce them in a time of rapid technological and social change. Managers must
be able to use this rapid change to produce their results; they must use the change and
not be used or swallowed up by it. Both they and the organizations they manage need to
anticipate change and set aggressive, forward-looking goals in order that they may
ultimately begin to make change occur when and where they want it to and, in that way,
gain greater control of their environments and their own destinies.
The most important tool the manager has in setting and achieving forward-looking
goals is people, and to achieve results with this tool the manager must: first, be able to
instill in the workers a sense of vital commitment and desire to contribute to
organizational goals; second, control and coordinate the efforts of the workers toward
goal accomplishment; and, last, help his or her subordinates to grow in ability so that
they can make greater contributions.
In hopes of increasing individual production and contribution, managers have
resorted to many different approaches: they have tried to get commitment and hard work
through economic pressure and rewards; they have sought greater production by
teaching the workers the best or most efficient ways to do a job; and they have tried to
cajole their employees into a sense of well-being, hoping that their comfort would
produce a desire to contribute. All these approaches had some success, but none
succeeded totally in injecting enough of that element of vitality and adaptability into
organizational life to allow it to thrive and remain viable in this age of change and
sociotechnological turmoil.
DEFINITION
The “Management by Objective” (MBO) approach, in the sense that it requires all
managers to set specific objectives to be achieved in the future and encourages them to
continually ask what more can be done, is offered as a partial answer to this question of
organizational vitality and creativity. As a term, “Management by Objectives” was first
used by Peter Drucker in 1954. As a management approach, it has been further
developed by many management theoreticians, among them Douglas McGregor, George
Odiorne, and John Humble. Essentially, MBO is a process or system designed for
supervisory managers in which a manager and his or her subordinate sit down and 

jointly set specific objectives to be accomplished within a set time frame and for which
the subordinate is then held directly responsible.
All organizations exist for a purpose, and, to achieve that purpose, top management
sets goals and objectives that are common to the whole organization. In organizations
that are not using the MBO approach, most planning and objective setting to achieve
these common organizational goals is directed downward. Plans and objectives are
passed down from one managerial level to another, and subordinates are told what to do
and what they will be held responsible for. The MBO approach injects an element of
dialogue into the process of passing plans and objectives from one organizational level
to another. The superior brings specific goals and measures for the subordinate to a
meeting with this subordinate, who also brings specific objectives and measures that he
or she sees as appropriate or contributing to better accomplishment of the job. Together
they develop a group of specific goals, measures of achievement, and time frames in
which the subordinate commits himself or herself to the accomplishment of those goals.
The subordinate is then held responsible for the accomplishment of the goals. The
manager and the subordinate may have occasional progress reviews and reevaluation
meetings, but at the end of the set period of time, the subordinate is judged on the results
the he or she has achieved. He or she may be rewarded for success by promotion or
salary increases or he or she may be fired or transferred to a job that will provide needed
training or supervision. Whatever the outcome, it will be based on the accomplishment
of the goals the subordinate had some part in setting and committed himself or herself to
achieving.