The concept of Management by Objectives (MBO) was first introduced by Peter F. Drucker in his 1954 book, The Practice of Management. This management approach requires a balance between employee goals and the objectives of the company. It defines the roles and responsibilities of employees and helps them to plan their future course of action in the organization.
The underlying psychological assumption that management unconsciously made was that managers had to be more efficient; thus, MBO was born. This group of management techniques, which focuses on commitment, team motivation and leadership, can be summarized as management methods by objectives. Although MBO has become an integral part of the management process, it can often lead to hostility, resentment and distrust between a manager and their subordinates. W.
Edwards Deming noted that Drucker warned managers that systemic vision was required and felt that Drucker's warning was largely ignored by MBO practitioners. As it is currently practiced, MBO is essentially industrial engineering with a new name, applied to higher managerial levels and with the same resistances intact. Goal-based management and performance evaluation processes are inherently counterproductive in the long term because they are based on a psychology of reward and punishment that serves to intensify pressure on the individual while offering a very limited selection of objectives. Using his extensive experience as a consultant at companies such as IBM, General Motors and Procter & Gamble, Drucker wrote The Practice of Management in 1954, where he presented a holistic approach to operating an organization and introduced a business management discipline, the first in business history.
The group evaluation of each manager's work should be a means of providing each with constructive feedback, not determining salary.