Peter Drucker's Management By Objectives

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When was it developed and flying highest? Or ”when did it happen”? How did he/she start doing it…? Etc. When and how it was created Peter Drucker first used the term "management by objectives" in his 1954 book The Practice of Management. While the basic ideas of MBO were not originally his, they borrow from other management practices to create a complete “system”. The idea draws on the many ideas presented in Mary Parker Follett's 1926 essay, "The Giving of Orders". After the term and idea were brought up, Drucker's student, George Odiorne, continued to develop the idea in his book Management Decisions by Objectives, published in the mid-1960s. MBO was popularized by companies like Hewlett-Packard, who claimed it led to their success.…show more content…
Setting challenging but realistic objectives promotes motivation and empowerment of employees. Managers are given the opportunity to focus on new ideas and innovation which in turn contribute to the development and objectives of organizations. Peter Drucker has set a number of requirements that must be met to have MBO model: • The objectives are determined with the involvement of the employees; • Objectives are formulated at both quantitative and qualitative levels; • Objectives must be challenging and motivating; • Instead of static reports, daily feedback is required • Constant feedback means a higher level of coaching and development • Rewards (recognition, appreciation and/or financial bonuses) for achieving the intended objectives is a requirement; • The basic principle is growth and development not punishments. Management by objectives had its peak as a management technique up until the mid-1990s. It is nowadays considered to over-focus on an unbalanced set of objectives. It is believed that MBO undervalues the qualitative judgment of leadership. The MBO…show more content…
Management consultants who had led the charge into it were now leading the charge away. Peter Drucker himself began to criticize MBO. ‘Management by objective works - if you know the objectives. Ninety percent of the time you don't.’ ~ Peter Drucker The main problem with MBO was that suddenly employees were evaluated by a handful of numbers (measurable objectives). An employee might have 5-10 objectives a year. Anything that wasn't written down as an objective was suddenly neglected. If objectives had production targets but no quality targets — employees would meet their production quota but quality was extremely low. Management by Objectives was meant to shift the management's focus from supervision to measurement. This was intended to let management focus on more important tasks. Measuring an employee's results with a handful of quantitative measures is easier than to supervise them constantly. Employees were content with having more freedom to meet their goals as they saw fit. Employee objectives had to be measurable. Anything that was not easily put into a number was not targeted or
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