Management by objectives 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 best managers have always practised management by objectives, the cynic's view that it is merely old wine in new bottles is perhaps valid. However, it is timely and useful to restate basic principles and to demonstrate that there is a practical approach which will help all managers to improve their performance. Companies are meeting increased pressures of competition and rising costs and management’s task is becoming more complex with accelerating changes in markets, technology, and social environment. Yet, many companies are content to follow tradition based on past success. The explosive growth in knowledge had led to more specialisation, with the result that fewer general managers and entrepreneurial types are being produced. Moreover, the time span and range of objectives set by companies is often dangerously restricted. Management by objectives must create a climate of opinion in which these and other problems are recognised as well as providing the framework of techniques for solving them.
When a worthwhile system of management by objectives is operating in a company there is a continuous process of:
These techniques are interdependent and the dynamic nature of the system can be shown as in the diagram above. It follows that the development of managers, which is a matter of vital importance to every company, only makes sense if it is integrated with the purpose of the business. Looked at in this way, management development is a valuable by-product of running a business efficiently.
Some further comments can be made on: setting company objectives; key results analysis; management development and training.