Management by objectives
MBO or, more correctly, Management by Objectives and Self Control is a concept introduced by Peter Drucker, an American writer in the `50s. A significant feature of MBO is that managers participate in setting objectives for their own departments or work groups and then they are responsible for achieving those objectives. This approach leads to clearly defined and manageable tasks and forces managers into a more strategic role, hopefully creating better managers. The disadvantages are that individual managers may become too focused on their own objectives rather than those of the organisation, and the organisation may become inflexible and unresponsive to change.
Peter Drucker claimed that there are five basic principles of management: setting objectives, organizing, motivating and communicating, establishing measurements of performance and developing people. He also introduced the concept of reprivatisation. He argued that successful management depended on delegation, goal-setting and decentralization. He suggested that every three years or so a company should be put under the microscope and every product, process, technology, service or market subjected to a grueling assessment. Objectives are vital in marketing, innovation, human organization, financial resources, physical resources, productivity, social responsibility and profit attainment. A manager sets objects, organizes, motivates and communicates, measures and develops people.
John Humble sought to define the tasks required of the visionary manager, who can see the goals of the business beyond his functional role. Management by Objectives is the attempt to clarify the goals of management objectivity so that the responsibility for achieving the goals was reasonable distributed round the management team, and to check standards of performance against which management effectiveness can be measured. He noted the danger of the defensive strategy of setting low objectives.