Management by Objective Is Like Frankenstein: Good Intentions That Turn Into a Monster

Frankenstein started out with good intentions. The Dr. lost his brother to a tragic accident and vowed to bring him back to life. With all the best of intentions to create life, his work led to the creation of a monster. Management by Objective (MBO) is much like a Frankenstein monster. I am sure Peter Drucker had the best of intentions when he created the idea of MBO but it hasn't turned out that way.

MBO is a tool to align all actions in an organization around a set of objectives by first identifying the objectives, giving employees objectives consistent with those of the organization, Monitor progress, evaluate the employees and the performance (usually through performance appraisals), rewarding the achievers, punishing the slackers, and then revising the organization objectives again.

Frankenstein

MBO is an outgrowth of a certain set of assumptions and these include:

Management by Objective Is Like Frankenstein: Good Intentions That Turn Into a Monster

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• Employees won't put in extra effort unless they are constantly reminded, rewarded, and threatened to work on what is most important. The pay-for-performance portion of MBO is a critical element for this.

• Improving the performance of individuals will improve the performance of the organization.

• Measuring results and holding people accountable to those results will create improvement

The unintended consequences of MBO (the monster) have just recently been confirmed thanks to the "No Child Left Behind" legislation passed by President Bush in his first term. A recent series of articles by USA TODAY uncovered frequent cheating by teachers and principals. This is not the first time cheating has appeared since No Child Left Behind was implemented. A study by the Wall Street Journal uncovered purposeful tampering of the Regents exams in New York. I think they should re-name the program: No "Cheating" Left Behind: MBO Fails Again!

Holding people accountable to results where they can't control (or even influence) all the factors necessary for success will cause either manipulated numbers or cheating. The environment created by pay-for-performance and MBO encourages manipulation because of the pressure for results. Various studies show that students (when asked if they cheat) report as many as 80% admitting to some kind of cheating. The reports by USA Today and the Wall Street Journal confirm the pressure to achieve as one of the root causes.

Some of you may be thinking that these are isolated instances. If so, then why did Bausch and Lomb executives forge sales data and hide inventory to meet stretch goals? Why did Auto repair managers in Sears bilk customers with unnecessary repairs to meet monthly bonuses? Why did Jiffy Lube managers sell unnecessary parts to customers to meet weekly goals? Why did Enron executives manipulate projects? I could go on.

Pressure to perform damages employee engagement. It robs employees of pride and encourages breaks in rules to achieve the results. It puts results in front of ethics.

With the best of intentions your senior leaders may be creating a monster with MBO, stretch goals, pay-for-performance, and performance appraisals. This monster will damage employee engagement and stunt performance improvement.

These are the exact opposite of the original desired outcomes. It is time to eliminate the growth of MBO and to reverse its course before it consumes more employee engagement and valuable resources. We must especially protect the engagement of employees and must especially protect our children. We must kill this monster now.

Management by Objective Is Like Frankenstein: Good Intentions That Turn Into a MonsterWilly Wonka "Frankenstein" Part 01 Tube. Duration : 4.63 Mins.