Monthly Archives: April 2013

How long did it take you to see a difference using Management By Objectives?

I saw a difference in the attitude of my employees almost immediately after implementing Management By Objectives. I think the reason for this was that for probably the first time, each employee really understood the main goal of our department and even more importantly how their individual objectives played an integral role in redeeming our goal.

We all saw tangible evidence of improved performance at our very first monthly meeting. Everyone was excited to share how they were progressing against their individual objectives and to see how these objectives were moving us closer to our main goal.

Dan Stewart
Mr. Objectives
Twitter: @MrObjectives

Do You Set Non-Financial Objectives for Sales People?

Absolutely! Every sales person in an organization is assigned a financial goal or quota but the secret to sales success is the proven and agreed upon strategies to redeem these financial quotas. These strategies then become weekly and monthly activities that can be measured.

Using Management By Objectives, the sales manager assigns a financial quota as well as the sales strategies. These sales strategies could include number of first calls, number of verification calls and number of proposals required each week. By monitoring and managing these sales strategies, the sales manager and sales person are able to predict future success.

Dan Stewart
Mr. Objectives
Twitter: @MrObjectives

Where do objectives and supporting strategies come from?

The organizations mission is developed by the leader(s) of the company. Each manager in the organization then develops the objectives for their department/team to support the mission of the organization.

The next step is the managers meeting with their team to review the organizations mission and their team’s objectives to support this mission. The managers and team members then jointly discuss and agree upon the strategies for the team to be successful in meeting its objectives. These strategies are then assigned to the individual team members.

This process insures that every employee is working on a set of clear cut and agreed upon strategies that support their team’s objectives which in turn supports the overall mission of the organization. The net result is that every employee is rowing in the same direction and there is immense power when this type of synergy can be created.

Dan Stewart
Mr. Objectives
Twitter: @MrObjectives

What caused you to start using Management By Objectives?

When I was promoted to my first management position I was put in charge of an existing team in our company. I soon discovered that each member of the team had their own ideas on what was most important and everyone had their own agenda. This behavior resulted in delays to all project deadlines and low team morale. I tried everything from team building exercises to weekly group meetings to improve productivity and moral but nothing seemed to help. It was out of sheer desperation that I began searching for help and I discovered the management tool, Management By Objectives.

Using this tool, I met with my team to review the company mission and what our team was expected to do to redeem this mission. The meeting was very informative with lots of questions and sincere interest by all of the team members. We then discussed what would be the key strategies to insure our team’s success. To my amazement, everyone contributed ideas and we soon had a very solid list of key strategies. After reviewing these strategies, I set another meeting where I assigned our agreed upon strategies to the individual members of the team.


I think for the first time, every member of our team understood how they would be helping the team meet its objectives. We then agreed to meet monthly to review our progress. Using this process, we began completing our projects ahead of every deadline and everyone on the team was proud of their accomplishments. Management By Objectives helped turn our department from dysfunctional to one of the best teams in the company. I have been using this management tool ever since with the same results.

Dan Stewart
Mr. Objectives
Twitter: @MrObjectives

What differences in teams do you see when using Atlas Objectives?

I have visited many companies where a team does not have clear cut and agreed upon objectives. The usual result is poor performance, low morale and high employee turnover. This is directly related to the fact that the team does not understand what is expected of them personally and they certainly don’t understand how their work benefits the company. A good analogy would be going to your weekly bowling league to find that the bowling alley has put a sheet in front of the pins and has also turned off the automatic scoring system. It won’t take long before everyone on your team gets disillusioned rolling the ball down the alley with no feedback on how they are performing personally as well as the team’s performance.

I have also visited companies where every employee understands their individual contributions to the success of their team as well as the company. In these situations the teams are highly productive, employee morale is high and employee turnover is very low. Employees rarely leave jobs when they understand how their individual performance is contributing to the success of their team and their company.

Take a look at the video below to learn more about Atlas Objectives…

Lowry Stoops

Management by Objectives

Management by objectives is a technique applied primarily to personnel management. In its essence it requires deliberate goal formulation for periods of time (like the next calendar or business year); goals are recorded and then monitored. The management guru Peter Drucker (1909—2005) first taught and then described the technique in a 1954 book (The Practice of Management). In Drucker’s formulation the technique was called “management by objectives and self-control,” and Drucker saw it as one of the forms of “managing managers.”

It became popular in the 1960s, by then abbreviated as MBO, the “self-control” parts more or less neglected, at least in talking about the subject. It experienced both an upward and downward drift: it came to be applied to the organization as a whole and to employees below the managerial level as well so that in many corporations many employees labored and still labor, at least once yearly, in formulating objectives.

It was and remains an activity practiced predominantly in large corporations, although it spread in the 1970s and 80s to midsized organizations, commercial and other. In the mid-2000s it is viewed in many circles as a somewhat dated technique not well adapted to the rapid changes and uncertainties of a dynamic Information Age. However, it continues to have committed and enthusiastic supporters. In current practice it has also undergone changes and refinements.


Planning is the central concept supporting MBO in the sense that individuals and organizations do better by formulating goals than just by working or living alone—simply responding to crises and events. If an organization has clear objectives and managers and employees have set themselves objectives which support and harmonize with the company goals, then a coordination and orchestration of conscious motives will be driving the corporate activity. Thus management by objectives moves corporate planning downward so that it becomes translated into personal goals. But MBO was always articulated as a collective and supervised activity rather than as a personal discipline—precisely so that objectives could be coordinated. Goal setting is an annual exercise. The employee is asked to set five to ten personal goals; ideally these should be measurable in some way. Goals are discussed with the supervisor one level up. If the objectives are too vague or too easy, the employee must try again. Goals are next fixed in writing. Finally, periodic reviews of accomplishments against goals are carried out, the manager evaluating the employee. Reward systems are built around achieving the objectives.

MBO came of age in a time of change and ferment in U.S. management history, with corporations then responding to the dramatic rise of Japanese industry and Japan’s commercial invasion—most visibly of the automobile market. To be sure Japanese business culture had different roots than the American; it had its origins in tribal associations and featured a very loyal work force, the latter no doubt supported by Japan’s practice of lifetime employment. Meanwhile the American system, based on the creative energy of the entrepreneur, had evolved into very large and bureaucratic organizations. In this environment Japanese techniques were admired and imitated—under the leadership of MBA programs in business schools. “Quality Circles” sprang up and corporations were adopting numerical quality control—a Japanese technique the Japanese had learned from an American, Dr. W. Edwards Deming, and then perfected. Along with these methods came the promotion of other innovations all based on the conviction that loyalty could be trained and commitment induced: catch-phrases like the “learning organization,” “total quality control,” “team management,” “matrix management,” “reengineering,” and “empowerment” arose in this environment with battalions of consultants and gurus in business to teach the way.

Pros and Cons

The fundamental concept underlying management by objectives is based on wisdom: “If you don’t know where you’re going, you’re certainly not going to get there.” In any kind of complex activity, planning is good—be it a wedding or a new product introduction. Highly motivated individuals have conscious goals, pursue them with concentration, and do not rest until their aims are met. Effective individuals have to-do lists—on slips of paper, on personal digital assistants (PDAs), or in the head. In a sense MBO is simply the extension of the to-do list to a longer period with a few additional refinement: goals should be precise and measurable in some way. Discovering a measure in itself leads to closer attention to the goal. If the goal is broad and vague (“Greater Customer Satisfaction”) looking for a measurement might refine it into (“Reduce Product Returns by 80 percent”)—which goal will then more correctly focus attention on a company’s quality problems or poor packaging. Focused, goal driven activity produces all sorts of benefits, not least more effective use of resources, saved time, and also higher morale. Conversely, companies and individuals that simply “go with the flow” may find themselves “swept away.” One might say that effective managers and employees practice MBO knowingly or not.

The negative aspects of MBO have been due primarily to the more or less thoughtless and mechanical—and wholesale—application of the technique. MBO was and still is typically introduced as an exercise from the top and then administered by the numbers. Frequently employees with relatively narrow and straight-forward job descriptions (not just managers) are required to scratch their heads and come up with a precisely fixed number of goals. If the technique does not fit job descriptions well—if the only reasonable goals employees can come up with are restatements of tasks they ought to do in any case—the exercise becomes a ritual. Groups of people instinctively know when a technique is pro-forma. For this reason, in many organizations, the exercises resulted in detailed objectives recorded on paper and filed in notebooks to be routinely forgotten. Experience has shown that MBO works reasonably well where management leads and actively promotes goal achievement. But in such situations it is difficult to know whether it was the MBO program or leadership which actually achieved the results.

Rodney Brim, CEO of Performance Solutions Technology, LLC, and a critic of MBO, identified four reasons for the weakness of the MBO technique. He believed that the method went into decline in the market turn-down of the early 1990s when “downsizing,” “right sizing,” and other coping mechanisms captured management attention. “With the upturn of the market and the start of the Internet gold rush,” Brim wrote, “management by objectives slipped further into the past. The term ‘management’ itself seemed to lose a sense of compelling interest. Riches were made based upon technology, upon acquisitions, upon something new, upon association with the WEB, not (for heaven’s sake) management of work effectiveness.” Brim’s tally of weaknesses includes the following points:

  1. Emphasis on goal setting rather than on working a plan.
  2. Underestimation of environmental factors, including resources available or absent and the crucial role of management participation (already referred to above).
  3. Inadequate attention to unforeseeable contingencies and shocks—which sometimes make objectives irrelevant.
  4. Finally, a neglect of human nature.

Concerning the last point, Brim wrote: “People, the world over, set goals every year but don’t follow them through to completion. One can surmise that this is the standard goal follow through behavior.” Brim points out that business is well aware of this tendency, one reason why “work-out clubs” predictably sell more memberships at the first of the year than they plan on supporting through the year. The problematic assumption is that if you manage by goals and objectives, direct reports and team members will organize their work around what you are managing by, e.g. those same goals and objectives.”


The small business owner who has a vague feeling that his or her business may be adrift might wish to look into management by objectives as a way of reviving focus. The owner will probably benefit from reading one or two books on the subject, including Drucker’s own work, available in paperback—and then trying the method on him or herself. MBO was originally conceptualized as a management tool for managers—the managers presumed to be inherently motivated. MBO works well when its principles are internalized. It tends to fail when it is imposed. Its great benefits lie in the planning that it requires. In the case of the small business, corporate plans and the owner’s personal plans often coincide, thus giving MBO ideal scope. The requirement of formulating measurable objectives is a good discipline. And “working the plan” with “self-control” applied, may produce quite tangible benefits. Experience with this technique, more than 50 years old and counting, indicates that committed management involvement is vital for success. If the MBO works well for the owner, the owner’s own enthusiasm may act infectiously on other managers in the business. Use of the technique beyond a few key managers is more problematical.


Batten, Joe D. Beyond Management by Objectives: A Management Classic. Resource Publications, December 2003.

Brim, Rodney. “A Management by Objectives History and Evolution.” Performance Solutions Technology, LLC. Available from 2004.

Drucker, Peter F. The Practice of Management. Reissue Edition. Collins, 26 May 1993.

Weihrich, Heinz. “A New Approach to MBO.” Management World. January 2003.

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