Management by Objectives

This report examines the managements technique known as Management by Objective (MBO), with particular consideration of the procedure for instituting an MBO program in a salesoriented organization.

Management by Objectives, or MBO, means, in its simplest terms, exactly what the name implies: so managing as to direct organizational efforts towards the achievement of specific goals. So stated, it sounds both simple and obvious, but it is often difficult to put into practice, as suggested by the popular saying that "when you're up to your neck in alligators, it's difficult to remember that your objective was to drain the swamp." All too often, managers find themselves neckdeep or deeper in immediate problems and crises, and overall objectives, which seem so distant, get lost sight of. The art of Management by Objective, then, is to keep managers and the organization as a whole on track towards its goal, even when the "alligators" are snapping all about.

Management by Objectives must, in some form at least, be nearly five thousand years old at least. No ancient Egyptian inscribed management theory in heiroglyphics, but the proof is simple: someone established a goal, directed an organization to achieve that goal, and did in fact achieve it. The Pyramids are proof of this, standing there for all to see.

As a consciously formulated concept, however, MBO is somewhat more recent. The term was first used by management consultant Peter Drucker in

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hem or not, or how close we are to achieving them. Even the outwardly unmeasurably must be tested, perhaps indirectly, against some yardstick (e.g., achieving smoother workplace relations can be measured by looking ________ 4Ibid., 424ff.for reductions in grievances, disciplinary actions, etc.). Time. Establishing time constraints is a vital element of MBO. Without a time factor, goals become vague and measurement of progress impossible. The purpose of MBO is to make it possible for everyone to know how much progress is being made (or not being made) towards achieving the goals. Does MBO work? That is in some ways difficult to answer, since organizations can claim to have implemented MBO when in fact they have simply stated a set of "New Year's resolutions." This question can best be answered by looking at organizations where it is not applied notably the centrallyplanned economies of the Soviet Union and Eastern Europe, whose failure and collapse became so obvious at the end of the 1980s. These economies are bureaucratic, but that is also true that much of the most dynamic element of advanced Western economies is provided by bureaucratic organizations, not by the lonewolf entrepreneurs of pop

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