This paper reviews the concept of management by objectives. Management by objectives is a part of the body of participative management theory (Abrahamson, 1997).
The concept of participative management appeared for the first time at the General Motors Corporation prior to World War II, when that firm was under the leadership of Alfred Sloan. The participative management style did not receive wide attention, however, until the 1950s, when Peter Drucker introduced the term management-by-objectives. One characteristic of all forms of participative management is that organizational superiors consult with their subordinates concerning the development of performance objectives which are compatible with organizational goals. Thus, participative management, by its very nature, requires very different leadership styles from those associated with the authoritarian style. Prior to the emergence of the participative management concept, the principles of scientific management developed by Frederick Taylor (1911) dictated against any consultation with one's organizational subordinates. Later, in the 1930s, studies by Elton Mayo led to the discovery of what was termed the Hawthorne Effect, which led to the development of the human relations approach to management. The human relations approach postulates that treating employees less as if they are automatons will lead to improved productivity (Abrahamson, 1997). Scientific management and the human relations approach continue to provide the polar extremities of the management continuum.
Developments in participative management techniques have lead to a greater emphasis on a relationships-orientation for managers, as opposed to the more traditional task orientation. The most successful organizational leaders, however, are those who are able to combine task orientation and relationships orientation characteristics in an optimal manner consistent with the characteristics and goals of their ...