ectives, setting individual and corporate goals, establishing an effective reward and motivation system, and developing a useful feedback monitoring system. Although it is not a guaranteed panacea for internal difficulties, it is one method for bringing management and subordinates closer together."
The origins of this approach to resolving tensions between workers and supervisors can be traced to the 1920s, when a number of executives at U.S. firms such as General Motors, National Cash Register and IBM introduced goal-based programs (Marlow and Schilhavy 1991, 29). In 1954, Peter Drucker presented the first formal and coherent description of the concept and strategy of MBO in his book, The Practice of Management. Since then, MBO has been proposed as a solution to a host of management problems.
According to Marlow and Schilhavy (1991, 29), Drucker's work (and that of Odiorne) propelled MBO into the forefront of managerial ideologies for some 25-plus years. A 1974 survey found, for example, that nearly 40 percent of Fortune 500 firms had an MBO program; by 1980, some 75 percent of large industrial firms surveyed used MBO. Since 1954, volumes of material on MBO have been published in both academic and professional journals. Over time, new management theories and strategies have emerged and MBO has lost some of its luster and support; nevertheless. MBO continues to command attention among managers and scholars alike.
First, it is important to remember that MBO is a philosophy. It is not a step-by-step prescription for running any business. Secondly, MBO encompasses the idea that a business has many objectives and all businesses do not have the same objectives. There is only one common to all - "the customer is king." That is, the core purpose of a business is to satisfy the customer. Third, MBO shifts the focus of management thought to productivity - output - away from work efforts - inputs. The key question then becomes: "W...