Editing Management by objectives (section)

==Limitations==
MBO has its detractors, notably [[W. Edwards Deming]], who argued that a lack of understanding of systems commonly results in the misapplication of objectives.<ref>Deming, W. Edwards, ''Out of the Crisis'', 








 Press, 1994, {{ISBN|0-262-54116-5}}</ref> Additionally, Deming stated that setting production targets will encourage workers to meet those targets through whatever means necessary, which usually results in poor quality.<ref>[http://www.pmhut.com/demings-14-points-and-quality-project-leadership Deming’s 14 Points and Quality Project Leadership] ''J. Alex Sherrer, March 3, 2010''</ref>

Point 7 of Deming's [[W. Edwards Deming#Key principles|key principles]] encourages managers to abandon objectives in favour of leadership because he felt that a leader with an understanding of systems was more likely to guide workers to an appropriate solution than the incentive of an objective. Deming also pointed out that Drucker warned managers that a systemic view was required<ref>Drucker, Peter, "Management Tasks, Responsibilities, Practices", Harper & Row, 1973</ref> and felt that Drucker's warning went largely unheeded by the practitioners of MBO.

There are limitations in the underlying assumptions about the impact of management by objectives{{citation needed|date=November 2012}}:
# It over-emphasizes the setting of goals over the working of a plan as a driver of outcomes.
# It under-emphasizes the importance of the environment or context in which the goals are set.

That context includes everything from the availability and quality of resources, to relative [[wikt:buy-in|buy-in]] by leadership and stake-holders. As an example of the influence of management buy-in as a contextual influencer, in a 1991 comprehensive review of thirty years of research on the impact of Management by Objectives, Robert Rodgers and John Hunter concluded that companies whose CEOs demonstrated high commitment to MBO showed, on average, a 56% gain in [[productivity]]. Companies with CEOs who showed low commitment saw only a 6% gain in productivity.<ref>{{cite journal |last1=Robert |first1=John E. |last2=Rodgers |first2=Hunter |title=Impact of management by objectives on organizational productivity |journal=Journal of Applied Psychology |date=1991 |volume=76 |issue=2 |pages=322–336 |doi=10.1037/0021-9010.76.2.322 |url=https://psycnet.apa.org/record/1991-25999-001|url-access=subscription }}</ref>

When this approach is not properly set, agreed and managed by organizations, self-centered employees might be prone to distort results, falsely representing achievement of targets that were set in a short-term, narrow fashion. In this case, managing by objectives would be counterproductive.

The limitations mentioned above, combined with the challenges faced by modern service companies, have led to the development of methods that integrate aspects of MBO but appear to be significantly more effective in application. These include, for example, the [[objectives and key results]] (OKR) method, which was developed by [[John Doerr]] (among others) and has been used successfully in many companies, notably at [[Google]].<ref>{{Cite news |last=McGinn |first=Daniel |date=2018-05-04 |title=How VC John Doerr Sets (and Achieves) Goals |work=Harvard Business Review |url=https://hbr.org/2018/05/how-vc-john-doerr-sets-and-achieves-goals |access-date=2022-03-08 |issn=0017-8012}}</ref> [[Agile management]] techniques also have a strong emphasis on goals. The group of management techniques that are based on goals, with a strong focus on engagement, team motivation and leadership, can be summarized as [[Management by Goals]] methods.