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Management By Objectives (MBO)

Tags: management

Performance of a given department or division is measured quantitatively by a few metrics/objectives. Managers are encouraged to manage to a target and success and failure is determined by whether they hit that objective1. The overall theory is that by improving the key metrics, the progress and success is assurred.

Created by Drucker2.

Counter arguments

  • In order to manage to objectives, we muset assume that incremental progress can by made. If things are changing dramatically, an easy baseline will be difficult to establish.
  • Individual managers will optimize locally while ignore global contribution.
  • Metrics can fail to capture the real utility. E.g. example of a metric for weight of nails produced in a day results in one gigantic heavy nail being made1.

Bibliography

1. DeMarco, T. Slack: Getting Past Burnout, Busywork, and the Myth of Total Efficiency. (Currency, 2002).

2. Hayes, A. Management by Objectives (MBO). Investopedia.