Peter Drucker, a renowned management consultant of the 20th century, believed that any action without planning fails. In his book The Practice of Management, Drucker presented the management by objectives (MBO) strategy, which is a management system in which the manager and employees work together to develop areas of responsibility for employees. It is a control system in which the business objectives developed jointly are aligned with the company's objectives. Edwards Deming argued that a lack of understanding of systems often causes a poor application of the objectives.
With Drucker's successful proposal for goal-oriented management and Doran's focus on defining objectives, human resource and personnel managers have finally achieved an effective strategy. Peter Drucker's MBO is based on defining objectives for each employee and then on comparing and directing their performance according to the established objectives. Reliable management information systems are needed to set relevant objectives and monitor their reach ratio objectively. By comparing actual productivity with a given set of standards, managers can identify problem areas and improve efficiency.
Gotteiner points out that, while they adopt the principles of the MBO, companies face many difficulties, such as ineffective training, lax senior management and insufficient incentives. Management by objectives defines the roles and responsibilities of employees and helps them to chart their future course of action in the organization. The goals set by high-level managers are based on an analysis of what the organization can and should achieve within a specific period of time. The process of setting objectives in the organization to give employees a sense of direction is called management by objectives.
This ethical approach to management has been used by companies around the world for the past 80 years, and for good reason. Effective management goes a long way in extracting the best from employees and making them work as a single unit toward a common goal. According to theory, commenting on goal setting and action plans encourages employee participation and commitment, in addition to aligning objectives across the organization. Fully embracing Drucker's management theory will require time, resources, and a change in everyone's mindset, but the final rewards are worth it.