ESSAY ON MBO (MANAGEMENT BY OBJECTIVES) (as a solution to modern ills!)

It is rarely possible nowadays to pick up a newspaper and not read about some national concern that leaves something to be desired, be it government department or commercial enterprise. Many people are troubled by these “failures” as some would call them and feel that more rigorous approaches to the problems are needed. Perhaps now it would be opportune to re-think present methods and to adopt a system that has proved its worth in the ( comparatively recent) past.  This approach to managing and confronting possible institutional difficulties is defining the objectives first and attempting to achieve them despite foreseeable difficulties and maybe less than optimal human resources. Often the strain placed on an organization (business, legislative, educational) with regard to administration, communication, delegation,  is great and needs to be tackled systematically and diligently. Enthusiasm would not go amiss either! The system I am advocating is called Management by Objectives. I am presuming everybody wants especially in the present climate of retrenchment value for their money – or for votes! MBO I submit, is one way of achieving this desirable goal.


Definitions of MBO abound in the literature. They are all valid in their own way  Probably an amalgam of them all would give the truest picture but it would be a long and involved definition. Perhaps Mali`s definition is as good as any:

“MBO is a participative system of managing in which managers look ahead for improvements , think strategically, set performance stretching objectives at the beginning of a time period , develop action and supporting plans and ensure accountability for results at the end of the time period.”

(Paul Mali, MBO UPDATED)

This definition is based on six current categories; that MBO is:

1)      A strategy for collaborative decision making .

2)      A process of planning and control so as to give future directions to complex organizations.

3)      A participation process leading to a commitment  agreed to by managers responsible for the accomplishment.

4)      A performance and evaluation system for getting results which engenders teamwork through collaboration and participation .

5)      An attitude which views management`s mission as change and improvement.

6)      A process that views results as to be achieved over a critical time period.


Therefore, says Mali, the setting of objectives and their pursuit through action steps leading to results is the heart and core of MBO. A successful implementation of the system would achieve a) an increase in the profits of the firm , b) bring satisfaction to shareholders and customers alike, c) set directions for growth and produce satisfaction among employees , d) advance the technology of the firm (improve the efficiency of  a government department.

Indeed, these are very laudable aims but their achievement is dependent on a new style of management : non-traditional. This style of management is characterised by a participatory way of doing things which allows for shared decision making. It is :

a system which aims at all departments to achieve interaction;

a generation of objectives from all levels in the organization;

a management system co-ordinated via objectives ;

a decision making system that is prioritised;

a process of planning whereby everything is laid out beforehand.



This has evolved historically through various “schools” of writers   and developed  by each one. The first seminal book in modern times was that of Peter Drucker in the fifties and sixties, where in THE PRACTICE OF MANAGEMENT the term MBO was first used. Further books by Drucker refined and reinforced the concept, particularly THE EFFECTIVE EXECUTIVE and MANAGING FOR RESULTS. Notable names in the “history” of management theory are Douglas McGregor, George Odiorne, John Humble, Walter Reddie, Paul Mali, -, to name but a few. Without a doubt , Drucker is the most important if only because he was the “founding father” of MBO. The axioms laid down by him have coloured all management thinking since. For him, management is the job  of organizing resources to achieve satisfactory performance , producing an enterprise from material and human resources. Objectives in a business enterprise enable management to explain , predict, and control activities and the soundness of decisions is examined while they are still being made.    As a result, future performance can be improved by analysing past experience. The most important feature of MBO is the effect on an individual manager thus enabling an organization to develop its best resource: management. Management by objectives then in one of Drucker`s best known aphorisms , enables an executive to be effective. Organizations tend not to remain in a condition of stasis or homogeneity is what Drucker is claiming; so the introduction of such a system as MBO helps to combat those forces that threaten fragmentisation . It relates the task of managers to the overall aims of the company ; it allows managers to develop to the best of their individual capacities; it increase the motivation of managers so that in another aphorism, organizational goals are reached by “having common people achieve uncommon performance”.

There are some main PRINCIPLES of MBO deriving from   systematic thinking that characterise the theory.

1)      Principle of improvement:  managers must act to make the future of an organization better than in the past . (Or part of an organization, such as a government Home Office)..

2)      Principle of expectation: people expend more effort when the probability of receiving a reward from achieving the goal is known in advance.

3)      Principle of achievement : large achievements are accomplished by people who break these down into smaller related elements.

4)      Principle of strategic planning : decision on desired future effects and formulation of present day causes to make them happen.

5)      Principle of targeting; the greater the focus of effort on a specific goal , the greater the possibility of reaching  it within a certain time scale.

6)      Principle of risk taking: a concerted effort should be made to set objectives to optimise expected value and minimise risk of failure.

7)      Principle of linking: setting objectives in a participative process in advance of doing work gives visibility to the state of co-ordination in an MBO management system.

8)      Principle of performance stretch: the more managers tolerate mediocrity in subordinates the more they tolerate it in themselves.

9)      Principle of accountability: when employees  participate in and are held responsible for what is being done.

10)  Principle of motivation: the greater the alignment of employee expectancies  ( needs) with employer expectances  (objectives) the greater the motivation to accomplish both.

11)   Principle of prioritising: assignments from a spectrum of possible objectives should be made on the basis of high payoff for both the organization and the individual.

12)  Principle of participation : productivity increases rapidly when employees participate in the decision affecting it and when expected benefits are shared.

13)  Principle of feedback: the quicker the difference between actual and planned performance is fed back to managers , the quicker adjustments can be made.

14)  Principle of commitment: this locks individual managers and their plans together for a period of time to achieve objectives which are commitments.

15)  Principle of system control: control over a new situation increases when key points of control  are identified.

The bases on which MBO works are, according to Mali, because managers have four main motives:  (a) the urge to achieve;  (b) the need to move towards excellence; (c) the desire to contribute . and (d) the need for identity. A fifth may be added: the need to make an organization fit for purpose, such as protection of the public.

APPLICATION OF MBO: if in theory the above principles are taken on board what in practice results in the organization? In a word, improvements; in managing. In the maximising of profits, in greater motivation to achieve,  in better performance appraisal , in staff development. , in co-ordinated teamwork. It may be that motivation is the key to all the others; certainly motivation is a keynote in the benefits of the application of  MBO. When staff are allowed a voice in the governance of an organization or institution,  keenness results,  but only insofar as  their voice is actually taken notice of: It is no good if what they say is noted and minuted and no action is taken. This happens all too often in meetings where a boss acts autocratically and tends to ignore advice given him/her by the meeting. Of course, proper MBO principles will obviate this sort of thing. It must be said, that motivation can be for good or ill on the part of staff  in organizations ; motivation can be malign when there is a sense of injustice felt by employees. Genuine participation is the only answer to this type of malaise. People must be permitted to put forward their ideas and in this way enthusiasm for the goals/objectives of their establishment is engendered. This is itself a sort of self-perpetuating  system because the more people feel that they are actually contributing to the advancement of the institution, the more do they feel that their efforts are worthwhile. An organization is more likely to reach its goals if it has a well motivated workforce. Subordinates who can see how their suggestions and ideas are taken “on board” by senior management have no problems with loyal motivation.

OBJECTIVES: need clear delineation ; there are some axioms:

1)      they must be specific and verifiable.

2)      they must be achievable within a certain timescale laid down in advance.

3)      they must motivate the people who have to attain them.

4)      they must be controllable and supportable by the organization.

5)      they must be  evaluated and at the same time validated.

Objectives are part of the planning  process. This planning must be formal , must be reviewed, and above all, enables one to have a view of future happenings in the company. Plans are executed in small phases so that large accomplishments are achievable. This imparts clarity of vision so that duplication  or omission is at once noticed. Objectives are ordered in time in order that logical progression is made from one goal to another  ; one achievement is built on another.

Naturally there are risk factors in such as MBO because it is a plan for the future – and futures are unknown! MBO can run into trouble if there is a lack of flexibility , if imperfect information is used in decisions, and plans are not validated. As Mali points out , however, remedies are at hand within the system to bring the organization on course. Strategic planning is necessary and involves the formulation of objectives; development planning:  first:,   establishes the purpose of the business/firm/college; secondly , assesses the general situation; thirdly, assesses the competition; fourthly, formulates (1) goals (2) objectives ; fifth, formulates operating plans;  sixth, monitors and controls.

STAFF DEVELOPMENT can be synonymous with courses i.e. attendance at. This interpretation of SD is but one element in MBO as it applies to the world of education and generally means external courses. In the world of business , MBO  SD does not generally  connote courses (or if it does they are usually induction courses of some kind) and in any case this form of training is not what MBO has in mind. Staff development occurs when  superiors actively  encourage subordinates in their ambitions,. give  them opportunities and take an interest in their work , problems and aspirations. Superiors have to be aware how their subordinates are getting on . Hence the importance MBO attaches to staff development “interviews” or appraisals.

Appraisal interviews are often approached with a degree of trepidation on the part of both the interviewee and the interviewer. This arises in both cases from a lack of confidence in each other or in the system ,or where the boss is not entirely committed to the process. MBO believes that appraisals are an intrinsic part of the job of managing and that they must be entered into with enthusiasm . Without appraisals there can be no self and staff development. Obviously these interviews are not without their problems and there is a technique to them. One difficulty is measuring qualities objectively i.e. not subjectively.  Keeping out personal bias is difficult but it must be done. Related to this is the problem of applying consistent and equitable criteria to each situation , each individual. There is also the common problem or difficulty  on the part of managers of giving stressful feedback – so they try to avoid this , which basically does not help their employee. So managers particularly need training in the art of appraisal.

Results which are to be achieved are written down  as objectives. At the end of the period allotted for the attainment of these objectives , superior and subordinate evaluate the results. Now comes the performance appraisal ; by means of this, the management process is evaluated,i.e. how well (or otherwise) the company is doing and the individual`s contribution to these goals is assessed. Indeed, performance dialogues can have little meaning without the setting of objectives to offer standards to judge  by.  Ideally,  both partners in the exercise should enjoy the situation once it has been established that an impartial stance has been taken up by the superior. Moreover, MBO and its inherent appraisal systems (staff development and performance reviews) depend on accurate and meaningful job  descriptions being written. The latter are often perfunctory documents giving the impression of being somewhat hastily put together. These will not do at all in the service of a thoroughgoing system of management by objectives. Job descriptions that are apt and tailored  for the post are essential ; creating such documents entails much work and time must be put aside for their accomplishment. Certainly in the field of education , at least, MBO is a dead letter without specific job descriptions which are known by a candidate for a post before being invited for interview.

Accountability is clarified by means of these appraisals ; accountability of both resources and results. It is an active process where both partners in the transaction experience a meting of minds ; it is not a one-way set-up where one person dominates ; it is anything but passive. To end this section , a succinct quote from Paul Mali is appropriate:  “…a performance appraisal program that uses MBO is both a `rating` device for evaluating individual performance and a `managing`  procedure to ensure the processes of management”.


We have mentioned that MBO was first expounded by Peter Drucker ; in the 1950s with reference to business management. Since then his writings have influenced management practice on both sides of the Atlantic and the technique has been introduced  into scores of companies, British and American. Its influence however .has not been confined to the manufacturing spheres but has been adopted by, for instance, LEAs, HE institutions, branches of the  Civil Service at various times. Basically, said Drucker, in THE PRACTICE OF MANAGEMENT , objectives are needed in every area where performance and results directly and vitally affect the service and prosperity of the business.”. Originally the concept was intended for application at three levels in an organization: to corporate objectives, to departments, and to individual objectives. These ideas were in Britain developed further by J,W. Humble in his books, IMPROVING MANAGEMENT PERFORMANCE and MANAGEMENT BY OBJECTIVES while retaining the same elements as Drucker.  For Humble, MBO is “a dynamic system which seeks to integrate the company`s need to clarify and achieve its profit and growth goals with the manager`s need to contribute and develop himself. It is a demanding and rewarding style of managing a business”. Since the middle sixties what has been added  is rather experience in modus operandi than conceptual development except perhaps in the sphere of education.


One eminent writer on the above subject, Ron Glatter, (MANAGEMENT DEVELOPMENT FOR THE EDUCATION PROFESSION). draws no distinction between the terms management and administration , taking them both to mean “the process of securing decisions about what activities the organization (or unit of an organization ) will undertake and mobilising the human and material resources to undertake them”  – a definition with which I concur. There is of course the opinion that a difference between `management` and `administration` exists viz. That the former is concerned at the core with people , having a personnel orientation, and is innovatory, planning for change, possessing a dynamism absent from the more merely regulative function of administration , whose concerns are largely with the preservation of the system , retention of the status quo. However, we must admit that management (or administration) in the educational field has claims to features that distinguish it from other forms of administration: business., health,  (NHS).  Nevertheless, the improvement of managerial capacity (relevant experience and competence) is as necessary for the educational institution as for the industrial; the individual`s interests and desire for advancement should be in harmony with the goals and policies of the employing organization, be it of whatever nature. Within this organization continuous managerial development is called for in the light of devised management policies relevant to the objectives of the institution. Current problems in highly fragmented jobs are made the excuse for postponing consideration of long-term ones. Management training for such types of administrators should be directed at helping them to overcome their inefficiency, “by giving them special training in the defining of job objectives, in setting work priorities and in the methods of checking that they are keeping to them”. (Rosemary Stewart, MANAGERS AND THEIR JOBS). The concomitant of this is organizational change, for the latter is a requisite for organizational improvement. As W.J. Reddin says in EFFECTIVE MBO, the success of an organizational effectiveness programme “depends on the appropriateness of the technique used and the commitment  of senior organizational members to it”.

MBO can be thought of first and foremost as a way of managing an enterprise , its people and resources and concerned with two fundamental and complementary tasks: a) setting and achieving performance objectives,  b) improving performance in a planned, systematic way. MBO represents an approach  which is to clarify and re-affirm the role, accountablity and therefore the contribution of the individual in the light of both the challenges and constraints of the environment within which he or she works. An element of job specificity will help and although job descriptions are now thankfully more the rule than they were , they are by no means either universal or a true specification. Individual role definition is a concomitant of institutional or organizational development : staff development itself connotes objectives  (among other things as planning, evaluation, education, etc.)  MBO is an aspect of management that is concerned with setting performance goals and improving performance within the system environment of the individual. Targets must be realistic and directly relevant to institutional goals; discussion by others of achievement in attaining these goals (or objectives) by the individual must be open. From  this flow staff counselling and appraisal. A.J. Light  (STAFF DEVELOPMENT IN EDUCATION)  comments neatly on three characteristics of MBO, “mutuality, responsibility, and accountability ….the mutual setting of targets and the agreeing of tasks and responsibilities ….where both partners become at  least in theory committed and motivated”. By `both partners` Light means of course  boss and employee or Principal; and staff . Let us now look at a definition of MBO as given by H.M. Treasury`s GLOSSARY OF MANAGEMENT TECHNIQUES:

“a technique under which targets are fixed as a basis for achieving greater effectiveness throughout the whole of an organization or part of an organization ….it is important that individual targets are not only clear and realistic in themselves but also that each should contribute effectively to the aim of the organization”.

ORGANIZATIONAL VARIABLES.   Often adduced is the thesis that MBO fails to take into account organizational and to a lesser degree, structural variables  (e.g. size) such as in a large firm or scattered site HE college, etc. As Baron however points out, much depends on the nature of the alternatives presented to those involved , particularly given the present limits on  resources (mainly financial) and the need for decisions on their allocation. If the inference that MBO is a device for controlling staff   is avoided, and the approach  “still provides opportunities for achievement and internal control, it is far more likely to result in staff development”. (B.Baron, THE MANAGERIAL APPROACH TO TERTIARY EDUCATION)  There will be almost inevitably, climate problems of a professional or political nature to take into account  in the operation and acceptance (or rejection) of MBO . Leadership style may well be crucial , for the style existing in the   institution will influence staff commitment to the achievement of objectives, the identification of which is necessary if group and individual goals are to be specified.

APPLICABILITY:  apart from the doubt expressed about MBO, adumbrated above, I think it is fair to deal with  others at the outset of this section.  First is the objection that the approach is too simplistic in that it does not sufficiently  consider how people do actually behave in complex organizations and that it is also somewhat short on accredited sociological theory. Of course, people designing MBO schemes must be careful to allow  for maximum flexibility in the operation of the scheme; they must allow due process of time for its acceptance and eventual fruition. Its introducers must have some knowledge of organisational  and systems theory and prepare well, psychologically, those who are to undertake personal MBO schemes. The other main objection is that the individual`s objectives and goals are not always identifiable with those of his employing organization – and cannot necessarily be made to coincide – and indeed that it is no easy task to isolate an organization`s goals and then distribute them between individuals for their achievement. It should be said however  that MBO is no panacea for organizational ills nor does it claim infallibility ; what it does purport to do is to act as a vehicle for change by means of a consensus  on aims  and thereby (hopefully)  reduce conflict. What it should   certainly do is to increase potential for greater organizational efficiency. It must not be perceived to be a control system , something for keeping people`s noses to the grindstone, or to be obsessed with minutiae; as Wickens says  “The more detailed the controls ….or detailed the performance standards , the more they [employees] might be expected to resist them”; on the contrary what is desirable is that “central direction would be replaced by by a common  philosophy and  group decision”. (J.D. Wickens: MBO: AN APPRAISAL). Indeed, it is more likely to be accepted if it is seen as conducive to better decision-making rather than merely as a policy for personnel. Wickens` conclusion is that MBO is applicable provided that  “the organization is modified to facilitate it ….and provided that a suitable psychological model is used”.

Some organizations that have used the explicit MBO model have their case histories detailed for us in the Glendinning and Bullock book , MBO IN LOCAL GOVERNMENT: the County Architect`s office , West Riding C.C ; the Town Clerk`s Department, Manchester City Council and the Education Department, Somerset C.C. Here great care was taken to establish correct procedures and a climate in which to operate the management technique. A summary of the results is possible. One result was the progressive development of management attitudes and a greater awareness on the part of officers of their aims. Another was an increase in effectual delegation and a consequent improvement in staff morale. The scheme also afforded officers the ability to stand back and critically review opportunities for improvement. Communication was much improved between officers and supervisors; a better inter-professional approach having  developed.  MBO had a particular strength in the firm way it related training to the real needs of the organization so that as an instrument of staff development it was invaluable. At this point we can look at some of the  reasons  why MBO may be regarded as an appropriate management approach to organizational effectiveness.


MBO is a goal setting process. However, MBO is distinguished from other goal setting approaches by its emphasis on measurable objectives, the setting of a time period for completion of objectives and participation by both the employee and the supervisor in determining  the objectives   and evaluating their accomplishment. It does involve weighing up the person at the end of each year – quite a task , but which is the culmination of the MBO exercise. Measurable objectives are not easy to specify especially in the world of education for example, but the claim is made that  objectives in such areas can be set. One approach is “to set qualitative objectives that indirectly measure the real goal being sought”.(Hicks and Gullett: THE MANAGEMENT OF ORGANISATIONS). Some organizations are of course complex, which may have several goals . This can be daunting for a manager (e.g.educational). To this end, MBO`s claim  – and thereby its viablity is that it is concerned not with all the activities of the organization or of the individual manager, but only with the key ones – “those which can be identified as having the greatest bearing on effectiveness”.(Glatter)  The MBO process basically is concerned with the fundamental question of matching performance with aspiration in the climate of a thorough-going participative mode of management. It is acknowledged that it is on this score that problems can arise i.e. where directive managers and apathetic employees are requested to assume the mantle of participative  and goal seeking professional roles respectively. “Securing large scale attainment and behavioural change is bound to be a lenghty process” comments Glatter. Instant MBO  cannot be a recipe for success. For what, it may be asked, is MBO a recipe and why its invocation at all? Only where an organization is felt to be in need of improvement with regard to its managerial style are we concerned. This must be very clear from the outset. The adoption of a management technique like MBO , it is suggested, may be an answer where something is felt to be lacking in the role effectiveness of managers. It may be advantageous here to give certain main reasons for the employment of MBO.

1 to develop a form of corporate strategy in  administrative, academic or social terms that reflects  the objectives of the organization in response to its clients` demands.

2 to assess the organization`s capability of response to changing needs .

3 to question ambiguity (job definitions, accountability.

4 to focus the individual`s attention on his main priorities.

5 to focus the the individual`s attention to staff development and staff appraisal.

6 to provide an effectual system of delegation and participation based on specific guidelines and performance standards.

On the individual level , a)  it is possible to start with an expression of some general corporate aims and to work out specific objectives for staff. It is not the only approach but it is better than individuals selecting their own personal key areas which are achievable only by the organization as a whole, i.e. top-down is better than bottom-up; b) a job description is necessary before an analysis of key results is possible; c) standards of performance and control information  are needed to give  reality to the scheme; d) the scheme must be appraised for results , difficult though it may be. Of course, in attempting to  introduce any innovation due regard must be paid to the “nursing” of it ; The “management of innovation” has a whole chapter to itself , but we must not be bogged down by a “search for procedures” to give effect to MBO. Indeed, .the perspective on MBO varies according to the various schools of writers on organizational theory.

In the light of systems  thinking [see later essay] about organizations , MBO`s theoretical basis is subsumed in the belief that all organizations to be effective , must adapt to the needs of the community , that sub-groups , decision-processes within an organization are all linked together and that there  are key   management activities in an institution necessary for its for its stability , growth and effectiveness. Seeing an organization in its wider environment has further implications for the successful implementation of MBO. The key activities mentioned, must be viewed in the light of performance standards  which should be both quantative i.e. measurable in terms of costs, time, staff,  and qualitative  (to offset the first) : considerations  of morale, satisfactions, effectiveness of groups and decision taking.

The agreeing on performance standards requires within an organization a  confidence based on good personal and professional relationships. A Department, for example, may well set team objectiveswith respect to new tasks the undertaking  of which  could enhance the future capabilities of the team as a whole. Of particular significance is the quality of information flows from outside the system . MBO connotes the notions of delegation , consultation and sensitivity to individual needs and aspirations. To sum up, MBO`s application establishes the mutuality of target setting ; encourages discussion of performance and achievement in an open and hopefully constructive manner and on a regular basis. Counselling and  appraisal are its concomitants.

Baron in the book mentioned lists four main problem areas facing institutions, especially large, complex, and site scattered.

(i)                  The clarification of organizational objectives.

(ii)                The control of costs and of resources utilization

(iii)               The promotion of effective managerial performance

(iv)              The satisfaction of individual needs within a framework that will also result in benefits to the organization.

MBO schemes are based on regular reviews or appraisals  of performance and criticisms have been voiced of some of these procedures. But as Baron says, “An appraisal system is more acceptable if it is seen  to provide useful information that highlights staff training needs and  as an aid to  staff development”. Certainly one must claim that the acceptance of staff development underlies the concept of MBO and that the teacher/employee needs to participate in the process of development.



There are problems in defining professional and non-professional objectives and standards of performance. Certainly if an MBO scheme is to be implemented the establishing the aims and objectives of the  institution are necessary. Agreement among staff on this score will not always be easy to achieve; there may be reluctance to commit oneself  to any statement of aims beyond a very general one. However, if we assume  that some agreement can be reached on the educational, economic, business , commercial, aims and objectives of the organization , strategic and tactical planning will be needed in order  to   achieve them. Strategic planning would be concerned with long-term changes – a limited number of high priority objectives  – that could be translatable into tactical plans having a more immediate effect on the organization. These tactical or action plans would affect the institution`s work over the  near-future, say, over two years. Departmental objectives would now be identified. The question of measurement of departmental objectives arises: some can be measured; others cannot [especially true in educational contexts]. Succinctly, the position may be expressed that those who argue only quantifiable objectives are relevant fail to understand that they may be closely related to unquantifiable objectives of equal or greater importance

Objectives are more likely to be achieved if the staff have been  participating in the objective –setting process. Commitment to these objectives is all important. Provided that staff see the managerial approach as giving them greater opportunities for professional autonomy then the scheme would be acceptable. Performance standards are now specified precisely, and a timescale for performance is indicated. Each member of staff would require adequate information about his/her tasks and feedback on current performance to make appropriate decisions on achieving his/her goals.



Three main limitations (MBO) are suggested by Hicks and Gullett in THE MANAGEMENT OF ORGANIZATION:

The end may justify the means

The time consuming nature of MBO

The emphasis on short run objectives

The evaluation of an MBO programme faces the danger of being over-rated for effectiveness by the introducers of the scheme – maybe naturally enough. Fears that evaluation will reveal weaknesses in  performance will also be a difficulty. But provided the evaluation process is seen as  an integral part of the MBO scheme and planned in outline before the occurrence of any implementation a requisite degree of consensus on goals should be obtainable. Also objectives can be stated too broadly or too narrowly. All of course  depends on how the MBO programme is  introduced. The MBO programme at  Huddersfield (Technical) college reveals that performance data must be investigated (i.e. comparison with the past few years) and that the significance of improvement lies in the contribution it makes to the two fundamental measures – output measures and attitudinal measures. Any  unsuccessful implementation of MBO would however result in harmful effects, staff alienation being one. Mechanistic and speedy introduction must be avoided. Careful preparation of the way is required. MBO is not a once and for all process. When the implementation is successful it can result in the growth of  managerial attitudes and increased opportunities for self-development.

Although we can use MBO to try to achieve specific organizational objectives , it cannot tell us which are the right objectives to pursue. Some defiition of goals is necessary  – for the educationalist as well as toilers in other fields. Also it must be said  MBO is not always the first vehicle to rush to when seeking the answer to organizational ills.  Maybe other solutions would be more appropriate and less complex. It is not a set of procedures to be adopted independent of people since basically it is a people-based , motivational system and MBO that is thought of only (or largely) as a technique is doomed to failure. The particular organizational situation is paramount. However, there is some resistance to accepting  MBO,  as Davies puts it, “If there appears to be a gulf between the perceptions of participants as to the purpose of the exercise and its implications and if there are feelings of considerable insecurity , momentum and commitment usually begin to fade. Nevertheless, it must be said, that if there is such a gulf , the MBO process has not been properly thought out and managed correctly. Much thought has to go into the inevitable process of change  beforehand.

The “culture” of an organization is also a distinctive feature which shapes its performance and the feelings of the workers within it. This culture is an array of basic assumptions on the part of an organization developed to cope with adaptation and integration and which are transmitted like an educational culture to new members of the firm or business. A key role is played by the leaders in an organization in transmitting the culture. In fact, managing cultural change is the key to leadership. Cultural change needs to be consciously managed. Just as there are cultural differences between races, so there can be “cultural” differences between one firm and another when it comes to “take-overs” which can give rise to problems. Similarly , problems can arise when a firm /business./organization attempts to diversify into new product areas or new markets. Where this is not successful it is often due to the original culture being so pervasive that merging it is thwarted subconsciously.


In essence, MBO is an attempt to improve management performance by agreeing on organizational and personal goals on the part of managers and their subordinates. The basic premise is that MBO is first and foremost a way of thinking about the job of management. Some main features follow.

1) Clearly we have in mind   hierarchical structures where leaders especially (and initially) need clear statements of aims. MBO is a system for making this hierarchy /bureaucracy more efficient.

2) It is claimed that results are measured by means of the MBO system—the results that managers achieve (or fail to achieve !)

3) Areas of responsibility are defined and teamwork is the keynote.

4) It matches organizational and personal goals.

5) It offers a system of staff appraisal and staff development beneficial to organization and individual alike..

Management must be effective if an organization is to prosper and succeed. . Unfortunately we know that this is not always the case. Undoubtedly, some people are “born” managers but most are not. Often in the world of business a boss may have been, say,  a successful salesman , but it is no guarantee that he will be a good manager. Managing, for most people, is a skill that has to be learnt, but by  one`s mistakes can be expensive. One way of learning it is by the thinking process of managing by considered objectives. Of course, it is essential that the manager knows the goals values of the organization he works in.

In the world of business a manager is clearly in a technical and economic environment that does not obtain in, for example, educational spheres. It is possible to survive in an educational setting despite several mistakes (although you will not do your reputation much good) but it can be quite otherwise with the manager in an organization whose primary goal is profit. Managers` tasks are manifold: from decision taking to managing people.

These tasks are all directed to one end: achieving a particular goal (or goals). As Odiorne says, “If you don’t have a goal , you have no idea whether you are on the right road or not.” (G.S. Odiorne:   MBO ) A manager identifies the common goal  in such a way that each employee  (particularly under managers/; subordinates) knows the goals he/she has to achieve , the areas of responsibility  and theresults he should be measured against. It is very important that managers know what their boss expects of them: a system of MBO if it is working well should tell them this. In any organization there will always be grey areas where a subordinate does some things that he thought valuable but which his boss thought a waste of time and conversely some things left undone that a boss thought should have been done. At the very least, putting into practice MBO will cut down the incidence   – if not entirely eliminate  – these misunderstandings, Many a work “problem” is due to these misunderstandings on the part of an individual vis a vis his subordinates or superiors giving rise to supervision difficulties which can only hinder the smooth operation of the enterprise. This in turn creates motivational problems and motivation  is the one single element  in an individual`s psyche that has most bearing on  his success and concomitantly his organization`s success.

There is of course a hierarchy of needs that motivates people. As these are satisfied so in theory an employee grows in motivation  and becomes at one with the employing institution. The difficulty is in providing the circumstances that enable this to happen. MBO has a better chance than most of achieving this desirable end. Understanding between subordinates and superior is a sine qua non beforeany tasks can be tackled, so that an employee`s powers and responsibilities are thoroughly examined and delineated beforehand. At the same time the superior`s expectations are clarified. What is achieved is a systematic approach to the task of managing in the world of business or industry. Of course , the goals must be realistic as must the motivational factors if needs are to be satisfied. Risks also must be spelt out if an individual is to have a valid area of discretion and consequently of responsibility and power.


MBO should provide an insight into management potential.

MBO should provide a pointer as to what sort of employee an organization should appoint in future.

MBO should facilitate the area of information gathering as communication difficulties are some of the most troublesome problems that beset large organizations.

MBO should be an aid to delegacy of responsibilities.

This is very often the Achilles Heel of many executives: they cannot or will not delegate! This  itself creates a feeling of frustration and powerlessness which is not good for individual nor organization. It goes without saying that top people must be enthusiastic about the system or rather the process of thinking that is the precursor of the system . All must be seen to be actively involved. At the top is the place to begin: in fact it would not be too much to expect that Boards of Directors in industry and Governing Bodies in education  would be at least sympathetic to the introduction of  MBO into “their” organization . Changes as necessary to old established “customs” are agreed upon and effected.

In the business environment it may be said that goals are more readily identifiable than in, say, an educational environment. Obviously in the former, goals are largely economic and therefore more susceptible to measurement, so this is an advantage when introducing MBO into a business context. Nevertheless, this is a crucial stage when attempting to get the system working initially  when organizational and personal goals have to be synchronised. Yearly budgets and yearly targets are essential matters in business which   have to be discussed between man and boss. Co-operation is the key note here. In some ways, a subordinate has less room to manoeuvre, less autonomy   than his counterpart in education who usually has his/her own specialism or forte to offer.


Towards the end of the budget year there are some concrete facts and figures to go on. In education opinions can be of more moment than facts and figures in business. Evaluation comes at the end of the year. Staff must not feel distrustful of top management`s motives. If the review or appraisal is characterised by a two-way dialogue  session, both partners must feel that a meaningful exchange of information has been achieved. Both must be enlightened on the aims of the coming year.

MBO can apply  as much to one boss , “one man” businesses as it can to multi-nationals. Naturally with the former, it can be  more difficult as one man concerns tend to be ruled by dyed –in –the-wool paternalistic , if not autocratic figures, who have a personal (if not idiosyncratic) method of managing.   Such people find it difficult to change—but a study of the profit and loss account can work wonders in a person who feels it is now time for a system that may bring improvement! Whether  a large organization or small, successful MBO demands an innovatory approach on the part of bosses and some relinquishment of personal control. A point here  needs to be emphasised : a leader may have held the job that is at present done by a subordinate and as a consequence over-supervises him , Clearly though in industry the profit motive is the guiding principle to an extent that it never is in the state sector of education.

Participative  decision making  is one of the attributes of successful MBO; this must be genuine  and meaningful, not just a genuflexion towards democracy. Decision making should be seen to be collective where it is appropriate; fundamental decisions however may be made by the most experienced man: the boss. There are some boundaries which must be defined beforehand within which employees can realistically make decisions. This participative and collective decision making in business is not to be confused with that supra-person , the committee. Naturally, if new goals are  to be considered , new bases for making decisions are needed which will bring about change. This change is likely to be brought about by the most likely person to be affected by the new system , namely, the MD or other top person. The following principles apply:

  1. a) the use of time productively and sensibly is inherent in MBO thinking.
  2. b) MBO is not an adjunct to existing modes of management but is in itself THE new system of managing
  3. c) Successful implementation of MBO connotes trusting subordinates to do certain tasks well.
  4. d) Following on from the above, behavioural change is necessary and is to be expected on the parts of both superior and subordinate.

The above four items are indeed applicable as much in the sphere of education as in business. Regarding salary and increases and promotion prospects, discussions between boss and subordinate are expected to be common in education as well as in  industry. MBO facilitates this.

It follows that good MBO  will intrinsically  address the  subject of  staff development.This should entail an appraisal interview, skillfully handled. Each has to  (or make a great effort to) jettison his/her prejudicies  good or bad. Clearly there are imperfections in any appraisal interview. Human beings are not perfect so any system devised by humans must per se be imperfect. But skilled interviewing is an attempt to see justice done to an individual and to reward achievement.. There are difficulties when a person has not been in situ very long and where there is insufficient data to enable a valid judgement to be made. This is where the under manager in business or the head of department in education  proves useful.

So good appraisal, has to overcome  prejudice on some people`s part. Appraiser and   appraised have to have faith in the procedure that beneficial results will follow  for both organization and the individual.

Finally, the MBO procedure must solve problems but if any remain obdurate it will seek solutions and find answers.


MBO is essentially  a continuous and cyclic process which follows a logical pattern of events:

1)      Top management formulates a strategic plan by defining the corporate aims and objectives in the short, medium and long term in the key areas of its business.

2)      Courses of action and the resources required to meet these objectives are incorporated in a tactical plan.

3)      Unit objectives and the roles of individual managers are clarified and the desired outputs agreed/

4)      Improvement possibilities are identified and incorporated in individual and corporate improvement plans.

5)      After allowing time for action,  systematic reviews are carried out to assess the performance results.

6)      Objectives and output requirement are updated.

Additionally, MBO requires:

1)      an organization structure providing maximum freedom and flexibility in which to operate.

2)      Management control and information in a form and frequency which enables quick decisions and progress checks to be made.

© A.B. Finlay Ph.D