Long before Peter Drucker formalized Management by Objectives (MBO) in 1954
the idea existed that goals need to be included in thinking and planning.
Drucker’s reason for putting MBO into management theory was that evidence
showed that over time the main purposes or objectives of an organization
were detrimentally forgotten or replaced without analysis or justification.
Drucker’s theory expanded the idea of a few top-managers being responsibile
to goals to all managers, supervisors and even employees being both
responsible and accountable for identifying and achieving goals. What
followed in many business and government situations was that personnel
performance evaluation was based on how well the goals were met.
At
this point in stepped quality pioneer W. Edwards Deming with his Theory of
Profound Knowledge
which blasted MBO as a barrier to quality improvement. Dr. Deming felt so
strongly about it that he made “Eliminate management by Objectives” as the
11th Point of his 14 Point Program to Increase United States
manufacturing quality to save the U.S. from industrial defeat due to
Japanese dramatic creation of quality products at acceptable costs after
World War II. Deming,s statistically based teachings to the Japanese had
been the major stimulus for that industrial quality improvement. And when
American industrial leadership saw the U.S. markets declining due to Japan’s
quality control and management achievements the Quality Movement took hold
in America.
At
Deming’s seminars around the United States during the 1980s he was
invariably asked “What’s wrong with MBO?” I have heard his response, often
made in a caustic and sarcastic tone, of “MBO insures mediocrity and
stiffles innovation.” The Drucker-Deming opposing views on MBO continued
until Deming’s death in 1993. But the issue remains today as one of the
controversial classics of Quality Management.
On
September 8, 2005 I asked Google to search for “Management by Objectives.”
The anwser in 0.16 seconds was “about 97,400,000 hits.” Why didn’t Deming’s
long critique of MBO kill it? The answer follows the logic of “An
unidentified goal can never be met.” Deming’s critiques were valid of many
MBO processes that filled employee’s working days with measuring progress
toward systems-wide detailed goals. And Deming was correct in his
observation that
when leadership formally evaluates subordinates’ performance using
measurement of goals reached, those subordinates will design goals in the
MBO process that they know are feasible to achieve. That fails to inspire
innovation and creativity to achieve continual improvement.
But
97 millions MBO internet hits in 2005 is evidence that there is no casket
needed for MBO yet, and maybe never will be needed. The age old concept
that “If you don’t have a destination, you are sure to get there” remains
valid. The management truth that “What you do is terribly important; but
how you do it is equally important” remains. The conclusion must be that MBO
done right will improve quality.
How
do you do MBO right? Following are fundamentals I suggest:
1. Establish goals after first doing strategic planning that formally
identifies the philosophy and the values reached by consensus in the
organization.
2. Frequently challenge those goals as things change.
3. Use Quality Management tools and methods to make continual improvement,
and even paradigm change, principles that manage the goals. Know if the
goals are changing the principles.
4. Have personnel evaluation based on a more sophisticated package of variables than MBO measurements. Include human needs and
emotions as well as diverse individual career goals.
5.
Use
Deming’s definition of CUSTOMER, “Anyone who gets your work.”
6. Prevent technology or processes becoming the goal.
7. When objectives are achieved review the structure, processes and people
used to meet the objectives and ask “Do we still need them?”
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"Quality Classics" is a project of the
American Society for Quality (ASQ) Inland Empire Section 0711. This Quality
Classic was published in the Inland Empire Quality Newsletter, Vol
13, Issue 2 (Oct-Nov-Dec 2005). Quality Classics meet the criterion of
documenting a concept, model, tool, formula or algorithm that has 50
years or more validated utility in the Quality Movement begun in the
1950s. Readers can access the entire series of Quality Classics at:
http://www.asq711.org
