Expectation issues in management by objectives programs.

Expectation Issues in Management by Objectives Programs

How many times have you felt like a member of Tennyson's Light Brigade, charging off into the "Valley of Death" for some far off, impossible, meaningless, vague objective with management exhorting you on to ever greater efforts?

Management by objectives (MBO) was intended to reduce the likelihood of such troubles. Yet MBO has not delivered the string of success stories that theorists and managers have expected. This lack of success has been due to fundamental difficulties in managing both management and employee expectations. In this article, we discuss some of the issues related to these expectations and their effect on the successful use of MBO. These issues occur in five major areas: 1) coordination among the participants in developing the objectives, 2) specificity of objectives, 3) level of aspiration, 4) appropriate planning horizon, and 5) perceptions about the objectives. The potential for manipulation, misapplication, and particularly misperception exists at every phase of an MBO program.

Many elements of MBO were used in large corporations as early as the 1920s. Executives who introduced goal-based programs included Sloan at General Motors, Patterson at NCR and Watson at IBM. In 1954, the first coherent, formal description of the concept and strategy of MBO appeared in Peter Drucker's book "The Practice of Management." Since that time, MBO has been proposed as the solution to a host of management problems.

Drucker's reputation or the persuasiveness of his writing propelled MBO into the forefront of management ideologies in the next 25 years. A 1974 survey found that nearly 40 percent of Fortune 500 firms had an MBO program. By 1980, 75 percent of large industrial firms surveyed used MBO. Since 1954, volumes of material have been produced for both academic and practitioner audiences. By 1981, Odiorne listed over 80 books and 1,200 articles on MBO. While the pace of activity has declined somewhat in the last 10 years, the appearance of new, improved versions of MBO is common.

Although there is an understandable degree of variation among the scholars and practitioners about the composition of an MBO program, they all appear to agree on the following guidelines: