Lesson 3: Management Theories

Management by Objectives

Management by objectives (MBO) was introduced in 1954 by Peter Druker and became popular in the early sixties.


This theory is based on the philosophy that employees work more productively if they have goals they helped establish. Managers and their employees work together to establish goals and objectives. All decisions made by management are based on these jointly established goals and objectives. Employees understand clearly what is expected of them. Pay and promotion are linked to accomplishment of the goals.

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Can you think of any disadvantages to this management style?


Click the Drawbacks link below to review some of the weaknesses.

  • May be resented by subordinates (Some could be suspicious that employees are forced to agree with management’s wants and that their thoughts on objectives and/or goals are not taken into consideration.)
  • Increased paperwork (Too many meetings and too many reports add to the manager’s responsibility and burden.)
  • Difficult to do long-range planning that includes all workers because of constantly changing socio-economic environment