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Management by Objectives

Posted By: Robert II Smith | Posted On: 2008-12-02 | Article ID: 121866

Management by objectives is a common principle discussed by several respected authors including Peter Drucker whose 1954 book entitled The Practice of Management has long been held in high esteem and is regarded as a definitive treatise on management theory.

The truly mechanistic as expressed by the classical or scientific management writers (Brech, Fayol & Taylor et al) are perhaps considered best suited to a factory or mass production environment where there are repetitive tasks. Many of these scientific management theories were derived from the scientific analysis of tasks.

However the business processes within many modern organisations including my company, have both mass production elements and other service type functions associated with other activities where the concept of output is difficult to quantify. In this common situation the truly scientific approach is not easily applied and an alternative model needs to be applied.

Thus Peter Druckers model of management by objectives was selected for study in the my company environment as this appeared to be the most appropriate. Additionally, this objective led management style is in common use and current practice at my company suggests that the existing Performance Development review process was largely based on Druckers model as it relies heavily on objectives as a means of assessment.

The application of this Performance Development Review process conforms to a common activity diagram for the management cycle.

A goal can be defined as a future expectation, a point at which the organisation striving to reach. These organisational goals are high level targets developed from a wide yet concise definition of the primary purpose of the corporate entity. Often this high level statement is constructed as a mission statement and affects all areas and parts of the organisation. Mission statements frequently include philosophical and cultural elements together with more visionary statements.

These missions are developed by top management in response to a strategic direction usually agreed at Board level and are intended to give the organisations workforce guidance in achieving the companyТs success.

Corporate goals strive to connect the mission with current capabilities. They form the basis for action plans, which as Miner has outlined are provided by management theory. These corporate goals and action plans are then developed into operational or functional unit objectives and are devolved by first level line managers to individuals or function leaders. Objectives must be carefully considered and have personal commitment from senior management in order to achieve the desired improvement in measurable outcomes.

Goals at different levels within an organisation my contribute to different interpretations and hence may provide alternatives to decision making. Where objectives are developed for an individual they may also be used as part of a performance appraisal and this is prevalent within my company.

There are different classifications of goals and Etzioni suggested, among others, order, economic and cultural goals. Often commercial organisations have a blend of order and economic goals. At my company for example, corporate goals could be classified as consumer, output and process goals. Consumer and output are really the same as they are driven by economic considerations. Process goals, management activities focussed on business process, can be interpreted as an embodiment of what Etzioni refers to as order.

There are difficulties with the corporate goal, functional unit goal and individual objectives. Frequently the high level mission statement and corporate goals derived from it are difficult for the individual to understand. The relevance of highly specific individual objectives to the corporate goals and mission is often missing or difficult to explain. Hence the requisite actions of individuals and operational units can be significantly off target. A significant burden of responsibility rests with managers to clarify these corporate goals and integrate them with personal objectives. As McGregor has pointed out, perfect integration is not a realistic target but the best that exists is to attain a level of integration where the efforts of the individual are directed to the success of the organisation.

Other disadvantages exist however, and Etzioni suggests that goals are ideals and are more attractive than measurable achievements.

 

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About The Author
Robert II Smith
Robert II Smith has spent more than 19 years working as a professor at New York University. Now he spends most of his time with his family and shares his experience about professional custom writing. Robert II Smith is a right person to ask about essay writing blog.



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