Management by Objective Is Like Frankenstein: Good Intentions That Turn Into a Monster

Frankenstein started out with good intentions. The Dr. lost his brother to a tragic accident and vowed to bring him back to life. With all the best of intentions to create life, his work led to the creation of a monster. Management by Objective (MBO) is much like a Frankenstein monster. I am sure Peter Drucker had the best of intentions when he created the idea of MBO but it hasn’t turned out that way.

MBO is a tool to align all actions in an organization around a set of objectives by first identifying the objectives, giving employees objectives consistent with those of the organization, monitor progress, evaluate the employees and the performance (usually through performance appraisals), rewarding the achievers, punishing the slackers, and then revising the organization objectives again.

MBO is an outgrowth of a certain set of assumptions and these include:

• Employees won’t put in extra effort unless they are constantly reminded, rewarded, and threatened to work on what is most important. The pay-for-performance portion of MBO is a critical element for this.

• Improving the performance of individuals will improve the performance of the organization.

• Measuring results and holding people accountable to those results will create improvement

The unintended consequences of MBO (the monster) have just recently been confirmed thanks to the “No Child Left Behind” legislation passed by President Bush in his first term. A recent series of articles by USA TODAY uncovered frequent cheating by teachers and principals. This is not the first time cheating has appeared since No Child Left Behind was implemented. A study by the Wall Street Journal uncovered purposeful tampering of the Regents exams in New York. I think they should re-name the program: No “Cheating” Left Behind: MBO Fails Again!

Holding people accountable to results where they can’t control (or even influence) all the factors necessary for success will cause either manipulated numbers or cheating. The environment created by pay-for-performance and MBO encourages manipulation because of the pressure for results. Various studies show that students (when asked if they cheat) report as many as 80% admitting to some kind of cheating. The reports by USA Today and the Wall Street Journal confirm the pressure to achieve as one of the root causes.

Some of you may be thinking that these are isolated instances. If so, then why did Bausch and Lomb executives forge sales data and hide inventory to meet stretch goals? Why did Auto repair managers in Sears bilk customers with unnecessary repairs to meet monthly bonuses? Why did Jiffy Lube managers sell unnecessary parts to customers to meet weekly goals? Why did Enron executives manipulate projects? I could go on.

Pressure to perform damages employee engagement. It robs employees of pride and encourages breaks in rules to achieve the results. It puts results in front of ethics.

With the best of intentions your senior leaders may be creating a monster with MBO, stretch goals, pay-for-performance, and performance appraisals. This monster will damage employee engagement and stunt performance improvement.

These are the exact opposite of the original desired outcomes. It is time to eliminate the growth of MBO and to reverse its course before it consumes more employee engagement and valuable resources. We must especially protect the engagement of employees and must especially protect our children. We must kill this monster now.

Management by Objectives – The Revived Time Management Craze?

What purpose, not position, do you serve in your organization? What are you accountable for? How do you manage your time? What is your focus? How do you increase your effectiveness in your organization? Is Management by Objectives (MBO) our revival of the time management craze?

When we examine our array of tools, skills and methods that manage time in terms of goal setting, prioritizing projects, delegating tasks, planning, scheduling and monitoring time utilized, this all falls under the range of time management. Some may ask if time management and MBO are the same. Not quite. Both share the establishment of objectives and both require a large degree of managing, vision, planning and performing. However, MBO takes it another step further. Responsibility lies in the hands of the managerial staff and creates self-managers in employees. Management by Objectives is not a new concept, but one that is used tremendously in an organization’s managerial system.

Unlike time management that combines processes, techniques and tools, MBO identifies employee’s objectives, tracking feedback for achieving those objectives and time lines when these objectives must be completed. The concept and creation of MBO has been around for over seventy years.

MBO was first outlined by Peter Drucker in 1954 in his book “The Practice of Management.” He is credited as the first management guru and the man who invented management. Management by objectives (MBO) is a systematic and organized approach that allows management to focus on achievable goals and to attain the best possible results from available resources. It aims to increase organizational performance by aligning goals and subordinate objectives throughout the organization. “It’s just another tool. It is not the great cure for management inefficiency… Management by Objectives works if you know the objectives; 90% of the time you don’t,” according to Drucker.

Many critics comment that Peter Drucker’s MBO concepts are too difficult to implement, impeding creativity, while meeting their goals. However, once everyone is on the same page with a clear and defined understanding of what their organization’s objectives are, an employee’s performance and progress will help to achieve the results managers of the company are seeking.

Management By Objective (MBO) – How to Use this Technique For Practical Management Results

Management By Objective (MBO)

A Time Tested Management Method Classic That Works -
With the Right People

Management by Objective (MBO) is the basic “blocking and tackling” of management. It is simple, effective and can be used to some degree with most people who have some capability for forethought. Unfortunately this is not everyone. Here is a simple step-by-step description of how to use this powerful classic management method, which should be in every manager’s repertoire. It doesn’t always work for everyone; as the book Good to Great says, “you have to have the right people on the bus,” as no one can manage incompetent people to do a great job. However, if you have good people, then MBO is an indispensable tool. MBO should have a consistent structure and format that people understand and expect for best results in pretty much any group over five people.

Goal setting on paper is magic. Some people claim, and I cannot dispute, that writing goals down once and then just sticking the paper away hidden for a while will greatly increase the chances of these goals ever being achieved. My experience tells me this is absolutely true. I do believe there is a human psychology at work here that opens up the brain to perform and ask powerful questions that help us achieve more by tapping into our deeper brain and subconscious capabilities. Effectively we send the subconscious mind on a mission to find answers and we will get back intuition, ideas and other results we are sometimes not even aware of. Sometimes I get amazing answers in a dream, like Watson and Crick did in figuring out the double helix structure of DNA. I have even come up with some of my most brilliant solutions in dreams. The solution is my first thought when I awaken in the morning. You can enhance this by asking yourself a key empowering question when you are falling asleep. Your subconscious will set to work that night and offer help.

How to Manage By Objective

The first step in MBO is to define the objectives for the individual or the department (if this list is for a department manager). This is mostly the boss’s responsibility, but should be a participatory process with interaction, buy-in and agreement. Typically this should be a monthly process. I would use the following steps, depending on the capability of the person or manager you are managing:

1. Make a list of objectives for the coming month (or with more senior people ask them for the first draft of that list) at least a week before month end.

2. Review these to see that they are consistent with broader corporate priorities, resources and other commitments. Make sure most are objectively measurable, ideally with hard numbers compared to a historical and consistent benchmarks.

3. Meet with the person to review each objective and talk through any detail that needs to be added to insure complete buy-in and acceptance of accountability for achieving these goals without excuses based on others or outside forces that may be out of their control. This step is necessary and should be done one-on-one and in person as this sends the message this is serious business and you will hold them to these objectives. This meeting need not last more than 15-30 minutes though.

4. Most of the time you should meet monthly just before the first of the month for a meeting just on MBO goal setting with all the staff. This is AFTER you have individual agreement with the individuals. Publish each individual’s list to all other managers on the same level, merged with all their individual goals. This is the broader division, department or corporate goal list for the month.

5. Benchmark weekly progress at weekly staff meetings, requiring people to report where they are on each goal so far that month IN FRONT OF ALL OTHER MANGERS.

6. Always include at the special monthly meeting a separate time to report the level of completion achieved on each goal. Do not mix it with other business that can fog the reporting. Some will not be accomplished and will be ongoing. If everything always is accomplished, you are probably not setting aggressive enough goals and should challenge your people more. People are never scolded for not making goals (at least not in public), but they are required to “stand up” and explain why a goal was missed in front of the group. Once this is standard operating procedure, the group understands the process and knows that this person bought into that goal as achievable just four weeks ago. Maybe something has changed – that happens – but odds are there is some peer pressure and competition to look good that motivates people that little extra bit to achieve more than they would without any goals. In fact it is probably a lot more.

7. Go back to #1 and start all over again for the next month. Each month will get better as people get the system down and begin to challenge themselves, and sometimes even enjoy their work more and look forward to it.

By being consistent with this process and holding everyone accountable you will create a culture of responsibility, performance and reward for results. You will help to avoid the idea that cuddling up to the boss gets you somewhere, as everyone sees what everyone else does, and you will also be coordinating the troops to arrive at the destination at the same time. Would the army send in four groups without communications among them? Never, that would be disaster, but some senior managers do this.

Be consistent, fair and challenge people and you can get double the results of the average team. MBO does not allow people to coast through their job and most will actually get more fulfilment and will respect their boss for doing a good job too.

Project Manager Resume Objective Statement – Why I Believe It’s Completely Redundant

What is your objective?

The Project Manager Resume Objective Statement at the start of your resume usually has a light and fluffy statement about your personal mission and things you want to achieve, such as “My objective is to raise the bar in project success by balancing time, scope, quality and cost”. I would argue that this is a pointless exercise and is taking up precious space on your resume.

Why would I argue this? Because I believe that almost all employers don’t care about your objective!

What is your objective really?

When you’re just entering into project management for the first time your objective is clear, it’s to get a project managers job so you can boost your experience.

If you’re experienced your objective is also clear, it’s to get a better or more exciting project.

If you’re simply looking for more money, then I believe your objective is to get a higher paying job.

I can’t think of single scenario where the objective is NOT to get a job. Based on that rational I don’t believe that an objective should be stated in your resume it’s just taking up valuable resume space.

State Your Single Purpose

The aim of your resume should be to do one thing, convince people you’re worth an interview.

Look at it from this perspective; you need your resume to do one thing, communicate to the employer that you’re the best choice for the job based on your previous experience and skills. You don’t need to convince the employer that your objective is be a good PM, that’s assumed, no one has an objective to perform poorly.

This might hurt a bit!

I’m sorry to say this, but no one cares about your personal objectives and missions in life. You should, however care about what an employer wants. An employer is looking for someone that can solve their problem and hopefully that’s you.

Ok, I will admit, there are some nice companies where people do actually care about your career, however, be under no illusion, they only care so you can improve and be better at solving their problems, harsh, but true!

Use the spare space

Hopefully I have convinced you that removing the project manager resume objective statement is a good idea. Now that you have, you should find a nice new section of white space has been liberated. This is a perfect place to clearly list your biggest career achievements instead.

State Your Achievements

It’s much more important to list out your career defining statements than it is to state some objective that’s going to get glossed over. Try putting in a few sentences like “successfully managed a $3M software rollout project resulting in a $5M in operational savings” this is a much better way to introduce yourself in your resume don’t you think?

As a Project Manager I know how rewarding a career in Project Management can be. I also know how hard it is too keep your resume up to date.

Management By Objectives – A New Way Of Management

In 1965, George S. Odiorne completed a textbook titled, Management by Objective. The fact that the term “Management by Objective” has now become common nomenclature to company executives around the country attests to the success of Odiorne’s literary efforts.

Management by Objectives (MBO) is a practical application of the reasoning behind the notion of goal-setting theory. MBO is a process in which employees participate with management in the setting of goals or objectives. An essential feature of an MBO program is that it involves a one-on-one negotiation session between a supervisor and subordinate in order to set concrete, objective goals for the employee’s performance. During the session a deadline is set for the measurement of accomplishment, and the paths to the desired goals and the removal of possible obstacles are discussed. After an established period of time has elapsed (typically six months or year), the supervisor and subordinate meet again to review the subordinate’s performance using the agreed-upon goals as a measuring stick.

Odiorne’s concept of management by objective is based on an underlying premise that any system of management is better than no system at all. A secondary premise states that to be workable, any management system must bridge the gap between the theoretical and the practical.

Research at such organizations as Black and Decker, Wells Fargo, and General Electric has shown that, on the whole, MBO programs can succeed. Because MBO relies on the established principles of goal setting, it has great potential for improving performance. Real-world constrain however, can sometimes reduce the positive impact of a goal-setting system.

The notion that management activity should be directed towards the accomplishment of pre-established goals has considerable intuitive appeal. None of the conditions are at variance with acceptable manager conduct from either a social, legal, or common sense standpoint.

Odiorne’s concept of management by objective is based on an underlying premise that any system of management is better than no system at all. A secondary premise states that to be workable, any management system must bridge the gap between the theoretical and the practical. A third important premise establishes that the appraisal of managerial performance is not an activity autonomous from other activities of the firm. In other words, it regards the appraisal process as only one of several sub-systems operating within the confines of a goal-oriented management system.

Before proceeding into a discussion of the basic elements of the management-by-objective system several “statements of condition” seem warranted. Each of the following statements relates to the environmental conditions with which managers are confronted and establishes the setting for later determining the practical relevance of the management-by-objective system:

A. Because the economic environment within which business firms operate has changed so drastically in recent years, a whole new set of requirements has been placed on companies and their managers.

B. The preliminary step in the management-by-objective system dictates that managers identify, in some manner, organizational goals designed to meet the new requirements noted in A, above.

C. Immediately following the identification of company goals, management must have available to it an orderly procedure for distributing or allocating responsibilities which are directed toward achieving those goals.

D. In the practical world of business management, managerial behavior must become predominant over managerial personality. Furthermore, in the final analysis, results of the behavior (measured against established goals) become the basic criteria for good performance evaluation.

E. Total management staff participation in goal-setting and decision-making is recognized for its social and political value even though its impact on production levels may be negligible.

F. There exist no one best system of management. Moreover, since managerial activity is dependent, to a large degree, on each manager’s view of specific goals and the total economic system, his actions must be discriminatory.

In its briefest form, Odiorne’s decision making system of management by objective contains the following basic elements: (1) Establish an objective before you begin; (2) Collect and organize all of the pertinent facts; (3) Identify the problem and its causes; (4) Work out a solution and some options; (5) Screen options through some decision criteria; (6) Establish some security actions to enhance the probable success of the solution; (7) Gain acceptance of the decision; (8) Implement the decision; and (9) Measure the results. Each of the nine elements shall now be considered in more detail.

A positive feature of an MBO system lies in its emphasis on establishing specific measurable goals. In fact, a goal is un-acceptable or inadmissible in an MBO system unless in is measurable You may think that this is impossible for all goals, especially those for those of top-level executives. Although it is difficult to set measurable goals at the higher levels of an organization, it is nonetheless possible. For example, one such quantifiable goal might be that an institutional will be ranked in the top ten by an annual polling of executives in the same industry. 0r the head coach of a college football team may set a goal of making the top 20 in the Associated Press’s coaches’ poll within the next five years. Some more typical goals would be to increase market share from 45 to 55 percent by the end of the next fiscal year, to increase annual production by 10 percent, or to increase profits after taxes by 3 percent. Some goals can be measured in simple yes or no fashion. For example, the goal of establishing a training program for sales personnel or completing a feasibility study by a certain date can he judged in a simple success or failure fashion when the deadline arises. Either such a project has been completed or it has not.

Advocates of MBO believe that everyone in an organization could and should be involved in goal setting This includes all personnel, from the chief executive officer (who may set goals in consultation with the board of directors) to the newest member of the clean-up crew. In practice, however, middle level managers and first line supervisors are more commonly involved in such goal-setting systems.

Proponents of MBO systems also believe that supervisors must play a special role in the goal-setting process. Supervisors should view themselves as coaches or counselors whose role is to aid their subordinates in goal attainment. This role of coach/counselor extends beyond merely helping to identify and remove obstacles to goal attainment (for example, using personal influence to expedite shipments from another department). It also implies that supervisor will serve as a mentor-someone to whom subordinates can go with their work-related problems and assume that they will be treated with respect and support.

One major obstacle to the success of an MBO program can be lack of support from top-level executives. If key people in the organization, especially the president and vice presidents, do not fully endorse MBO, their lack of support will likely he felt and responded to at lower levels. The net effect will be a decided lack of enthusiasm for the program.

Problems may also arise if managers are not interested in having subordinate to participate in the goal-setting process. Some managers prefer to retain an evaluative and superior posture and are uncomfortable with the notion of being a coach or counselor to their subordinates.

Personality conflicts between superiors and subordinates are another potential problem for goal-setting systems, as is competitiveness. A superior who feels threatened by talented subordinates may do little to help them be more successful and, consequently, more visible, In addition, subordinates may hesitate to set challenging goals for fear of failure and its consequences.

MBO systems also tend to emphasize the quantifiable aspects of performance while ignoring the more qualitative aspects. This is an understandable tendency, since participants in MBO systems are encouraged to focus on such dimensions of performance.

Qualitative aspects of performance, which are often more difficult to identify and measure, are likely to be overlooked or de-emphasized. For example, how can the quality of service that an organization provides or an organization’s image in the local community be defined and measured? Because the success of an MBO system rests heavily on the quality of the relationship between supervisor and subordinates, the degree of trust and supportiveness that exists in a work unit is a central concern.

For an MBO system to be highly successful, these elements are critical prerequisites, The absence of trust and supportiveness severely restricts the system’s effectiveness. Despite these many potential obstacles, the track record of MB0 has been fairly good, In a recent review of the research literature devoted to MBO, Robert Rodgers and John E. Hunter examined 70 reports that included quantitative evaluations of MBO programs. Their findings showed productive gains in 65 of 70 evaluation studies. The average productivity increase was 47 percent, while cost data showed an average savings of 26 percent. Employee attendance was also shown to improve by 24 percent. Follow-up surveys of the level of top-management support for the programs revealed that productivity increased by 57 percent when top-management commitment was high, 33 percent when commitment was average, and only 6 percent when commitment was low.

MBO has passed through several phases since its introduction in the l95Os. Initially, MBO was greeted with much enthusiasm by managers and management scholars, During the late 1960s and early 1970s, MBO appeared, so be “sweeping the nation.” Presently, MBO is viewed more objectively by scholars and practitioners as a tool that can be most effective under specific favorable conditions. It is now becoming passé even to invoke the initials MBO. In fact, the principles and philosophies of MBO have become so emotion-laden in the minds of managers than an organization will often introduce an MBO system under a different label. For example, an organization may establish a program called START (an acronym for Set Targets and Review Them) or GAP (Goal Acceptance Program). The mechanics of such programs are likely to borrow heavily, if not totally, from the MBO approach. In short, the trend is toward putting old wine into new bottles, with recognition that mutual goal setting is not a panacea for all organizational problems under all possible circumstances.