Management by Objectives

In the literature on management science, Paul Romani (1997, 6) states that there are "few concepts as frequently mentioned and, simultaneously, as widely misunderstood as MBO." Indeed, even the apparent "inventory" of the term is misidentified more often than not. Most people give credit to either Peter Drucker or George Odiorne. However, the term was actually coined for the first time by Alfred P. Sloan in the early 1950s. Drucker's primary contribution was to place the term in a central position and to flesh it out by emphasizing the results of managerial actions as opposed to the supervision of activities. Odiorne added to this significantly in later publications.

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forces planning (Marlow and Schilhavy 1991, 31). As articulated by Drucker and Odiorne, MBO was a system of managerial leadership in which the superior and subordinate managers of the organization identify its common goals and jointly set performance objectives to meet those goals. The result is "a set of written performance objectives that guide the actions of each subordinate for the next performance appraisal period (Bearn 1996, 75)." The objectives should be neither too difficult nor too easy and should be challenging but attainable with hard work. Further, these mutually accepted objectives provide the yardstick against which both superiors and subordinates can measure progress toward goal achievement. MBO is seen as equally useful in for-profit and public sector organizations. Rogers and Hunter (1992, 27) reported on a meta-analysis of 30 studies on MBO in the public sector and noted positive results in every case. Productivity gains were correlated with the degree of top management commitment, from an average gain of 12.3 percent for low commitment, to a 63.3 percent gain for high commitment. The studies explored by these authors indicated that a basic requirement for successful MBO strategizing is a high level
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Approximate Word count = 2499
Approximate Pages = 10 (250 words per page)

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