Abstract
Levinson (2003) examined the concept of Management by Objectives (MBO). He
addressed the limitations of MBO as a process and suggested solutions for coping with the
problems MBO programs present. He also outlined group goal setting and shared
compensation on the relative success with which the group goals are achieved along with
regular appraisals of the manager by subordinates.
This article seems to be about management by objectives, an approach to performance
appraisal thats gone out of fashion for the most part. However, the intent of this article is to
scrutinize the measurement systems we still use today. Levinson (2003) identified a
constellation of problems that cripple performance appraisal systems: Unit managers are
forced to commit to goals they dont believe are realistic. An obsession with objectivity and
quantitative measures means that quality is neglected. Supervisors, who are profoundly
uncomfortable rating people on their performance, make a hash of this critical task. Most
important, in Levinsons view, the individuals needs and desires are absent from the
performance measurement system; its assumed that these are in perfect alignment with
corporate goals and that, if theyre not, the individual should move on. Levinsons
suggestions for reform recall Frederick Herzbergs findings: People are most deeply
motivated by work that stretches and excites them while also advancing organizational
goals.
According to Levinson (2003), despite the fact that the concept of management by
objectives (MBO) has become an integral part of the managerial process, the typical MBO
effort intensifies distrust between a manager and subordinates. Coupled with performance
appraisal, the intent is to approach a more rational management process. That is, which
people are to do what, who is to have control over it, and how compensation is to be
related directly to individual achievement. The MBO process is an effort to be fair and
reasonable, to predict performance and judge it more carefully, and to provide individuals
with an opportunity to be self-motivating by setting their own objectives. Yet, MBO as a
process is one of the greatest of managerial illusions because it fails to take into account
the deeper emotional components of motivation. In most organizations, MBO simply
increases pressure on the individual.
To see how the human point of MBO is being missed, let us follow the typical process.
Top management sets its corporate goal for the year. Reporting managers may then be
asked how much their units will contribute to meeting that goal. If managers are left free to
