Management by Objectives (MBO) Derivatives

One of the pre-requisites for effective implementation of Management by Objectives (MBO) is a clear thinking at the corporate level translated into long-term plans. Many organizations have over the years, implemented MBO and improved their operations and performance. Effective implementation of MBO requires a good reporting system. This is necessary for taking timely remedial action in case of deficiency is noticed in any area. As organization grows in size, this reporting system becomes complex and time consuming. It may not be possible for top management to directly supervise each and every activity at lower interested in critical activities rather than every activity. Thus, as a bye product of MBO, large organizations introduced what is called Management By Exception (MBE). In this management technique, higher levels of management will concentrate only on exceptional situations, i.e., critical areas.

Both MBO and MBE are scientific forms of management. However, they can be successful only and only if corporate level executives are capable of thinking ahead and have a real interest in promoting the organizations rather than selves. Combination of these two qualities are not frequently found and when MBO is introduced in an organization where these are lacking different distorted versions of MBO will appear on the scene. Four such distorted versions in the reverse order of their scientific efficiency, which can be occasionally seen in and around are given below.

  1. Management By Crisis (MBC): In this type of management, decisions are taken only when a crisis develops. This happens when the organization as a whole is incapable of thinking systematically and scientifically about its future. Because of this, ad hoc decisions are of the day When crisis develops executives are forced to take decisions at least to put out fire. But such decisions most often – though they temporarily put out fire – create future crisis and the organization moves from one crisis to another, demoralizing the entire system  Even with all the drawbacks of this style of management one has to agree that a certain amount of courage is required by the management to take decisions when crisis develops. Unfortunately there are managements, which do not act even in situations of crisis.
  2. Management By Inertia (MBI): In this type of management the manager believes that, left to itself, a problem will get solved automatically and any action by him is likely to jeopardize his present and future position in the organization. Thus, no actions or decisions are taken on very many important issues. A classic example of this type of management is found in organizations where representations from especially individual employees are not listened to for years together. Having waited for so long a period, the employee may feel that the management may not consider his request at all. Having, no other avenue to redress his grievance, he reconciles to his situation and later turns out to be a frustrated employee for the rest of his life.
  3. Management By Telegrams (MBT): This is a fall-out of Management by Crisis. When decisions are taken at the last moment, normal communication channels break down mostly due to lack of time. In this type of management telegrams are the order of the day. In addition to the heavy expenditure which affects the profitability of the organizations, MBT creates other problems also related with non-and wrong delivery of telegrams and distorted message communication. Telegrams, a communication media, which normally should have been used only in case of unforeseen exigencies, today are the major source of communication for many inefficient organizations. In fact, the level of efficiency of an office is directly inverse to the number of telegrams issued and received by that office.
  4. Management By Judges (MBJ): In all the above types of management, even though some of them are highly unscientific, a ray of hope remains in the sense that management is still in the hands of persons working in the organization. However, when on majority of the occasions decisions are not taken or decisions are taken on the basis of personal equations rather than merits of the case; persons affected by the issues, be they employees or creditors or customers, feel that justice and fair-play cannot be expected at the hands of the management and the only course left to them will be to approach courts obtaining justice. In such cases decisions are taken by courts and equity of this method can never be disputed it tells upon the quality of internal management. While every organization may have to adopt all these types of management styles at one time or the other, the overall quality of the management is decided by the ratio of each type of management style adapted to the total management style.

Credit: Management Control Systems-MGU