Management by objectives is a program that incorporates specific goals, set in a participatory manner, for an explicit period of time and that is fed back with progress towards them.
Origins of management by objectives (1)
Administration by objectives (APO) or administration by results constitutes a fairly widespread administrative model and fully identified with the pragmatic and democratic spirit of neoclassical theory. Its appearance is recent in 1954 Peter F. Drucker, considered the creator of the APO, published a book in which he characterized it for the first time. APO emerged in the 1950s, when American private business was under heavy pressure. Since the Keynesian intervention during the depression that followed the crisis of 1929, capitalism successively suffered greater government interference and controls, as it was believed that national decisions could not depend on the action of businessmen.
The entrepreneur of the 1950s was well aware of the loss of his profit margins and the need to cut expenses, and focused more on results than on superfluous and scattered efforts. The economic pressure of the time generated within the companies a "pressure administration", but the pressure exerted on the managers did not lead to better results. This is due to the fact that the leaders of the companies interpreted the apathy of the managers to produce the expected results as rebellion. In response, the companies tightened the controls and with that the vicious circle was closed: greater control, greater resistance; greater resistance, greater control. It was then that a way was found to balance the objectives, admit greater participation, decentralize decisions,allow self-control and self-evaluation, providing greater freedom and greater flexibility in controls.
Definition
Administrative process by means of which the Chief and the subordinate, based on a clear definition of the goals and priorities of the organization established in a group by the senior management, jointly identify the key results that they are willing to achieve as well as the corresponding indicators of success, agree on a strategy to achieve those results, work to achieve them, follow up on the efforts and results achieved, and evaluate the performance of management staff based on them
Management by objectives emerged as a method of evaluation and control over the performance of rapidly growing areas and organizations. Initially, it constituted a financial evaluation and control criterion. As a financial criterion it was valid, but in the global approach of the company it brought as a consequence a professional distortion, since the profit and cost criteria are not sufficient to explain the social and human organization. The response of the middle and lower levels of the organization to this criterion was one of discontent and apathy, which caused conflicts between middle and lower level officials and senior management.
It was then that the ideas of decentralization and administration by results began to emerge. The only way the direction to reverse the process described above was found was to decentralize decisions and set goals for each key area: each would choose “how” to achieve results. Staff bodies were eliminated, leaving each division in charge of creating the "services needed to achieve the objectives", which strengthened the position of authority of each operational chief.
APO Features (1)
APO is an effort management technique through planning and administrative control based on the principle that, to achieve results, the organization needs to first define what business it is operating in and where it intends to go. Initially, the annual objectives of the company are established, formulated on the basis of a plan of long-term objectives (which can be five-year or ten-year), and the objectives of each manager or department, based on the annual objectives of the company. APO is a process by which the managers, principal and subordinate, of an organization identify common objectives, define each person's areas of responsibility in terms of expected results, and use those objectives as guidelines for the operation of the company.Common and secure objectives are achieved that eliminate any manager's doubts, together with a cohesion of efforts oriented towards the main objectives of the organization. Thus, the expected performance of a manager must reflect what is expected in terms of the achievement of the company's objectives; Their results must be measured by their contribution to business success. The administrator must know and understand what, in terms of performance, is expected of him based on the goals of the company, and his superior must know what contribution he can demand and expect of him, judging him accordingly.the expected performance of a manager should reflect what is expected in terms of the achievement of the company's objectives; Their results must be measured by their contribution to business success. The administrator must know and understand what, in terms of performance, is expected of him based on the goals of the company, and his superior must know what contribution he can demand and expect of him, judging him accordingly.the expected performance of a manager should reflect what is expected in terms of the achievement of the company's objectives; Their results must be measured by their contribution to business success. The administrator must know and understand what, in terms of performance, is expected of him based on the goals of the company, and his superior must know what contribution he can demand and expect of him, judging him accordingly.
In reality, the “APO is a dynamic system that integrates the company's need to achieve its profit and growth objectives, with the manager's need to contribute to its own development. It is a demanding and balanced style of business administration. ” “In APO, the top and subordinate managers of an organization define, together, their common goals and specify the main areas of responsibility of each position, in relation to the expected results of each, using those measures as guides to improve the operation of the sector and to verify the contribution of each of its members ”. The APO is, therefore, a method by which the administrator and his superior jointly define the goals and specify the responsibilities for each position, based on the expected results,the latter passing to conform the performance standards under which managers will be evaluated. By analyzing the final result, the performance of the manager can be objectively evaluated and the results achieved can be compared with the expected results.
summarizing
- It is a generalized response in the business environment to solve in a participatory way the problem of establishing objectives, and a procedure for correlation and reformulation of the strategy.The main advantages of a good objective program are that they clarify expectations work at all levels of the company, allow participatory management, can induce staff motivation and commitment to objectives, represent planning by line executives rather than by a separate group of staff, and result in strategy integration. It is a planning system at all levels of the organization, which is based on the initiative and responsibility of each person for their work.It seeks to integrate the individual and divisional goals of the entire company.
Core concepts:
- The business strategy, which serves as a guide for the individual action of the departments and people of the organization. The needs of individuals, their vital and work objectives, which can be fitted with the strategy of the company as a whole.
References:
(1) Juan Manuel Benavente Borbolla, Administration by Objectives
