Management by Objectives is a much celebrated concept propounded by Peter Drucker. It is a move away from the erstwhile reactive system of 'Management by Crisis'. Do things right. It is O.K. But it is more important to choose the rights things first. Efficiency will not give results, unless accompanied by effectiveness. The philosophy sought to give direction to management to look to the future with defined objectives to be fulfilled in the next phases of the future. MBO is a collaborative process whereby the Leader and team members can jointly determine objectives for each team members. MBO begins when the Team Leader explains the goals for his group. The team members take the goals and propose objective for his / her particular job. In case of any modification of individual's objectives, it is accomplished through negotiation since the Team Leader has resources to help the team member commit to the achievement of the objective. Thus, a set of verifiable objectives for each team member is jointly determined, prioritized and formalised. Transparency in Communication is the key factor in determining MBO's success or failure

Every business is initially started by its promoter for specific purpose(s). This is called the objective(s) of the business. Subsequently a number incidental and ancillary steps are undertaken by the business to achieve the main objective. As the business moves sailing on its voyage, frequently, the main objective is lost sight of, and managers get more obsessed with the incidental or peripheral steps, and pay greater attention to the performance of these secondary matters, even when some of them are found no longer contributing to the main objective. Pointed attention on the principal goal or goals of the business is by-passed. Instead of discarding them, we try to improve these incidental steps, try to execute them with more efficiency. This anomaly will not arise, if the basic purpose or objective of the business is properly defined at the beginning itself and kept in mind and detailed planning is made to achieve the objective. To manage a business is therefore to manage by defining objectives, and taking steps to reach the goals.

MBO deals with this strategy of business management. MBO can be defined as the system and philosophy that integrates all managing techniques and all human contributions into a unified organization to achieve a common purpose and individual fulfillment.

Management by Objectives (MBO) was introduced for over 40 years ago by Peter Drucker. While management science was hitherto emphasizing the right way of doing things, Peter Drucker gave a new slogan or philosophy. It is important to do things in the right way, but it is more important to do the right things. But unfortunately Drucker never wrote a how-to-do-it book. Consequently, those who have been interested in the idea have seen what they wanted to see and used whatever parts seemed useful to them. This has led to a rather checkered history of acceptance and utilization of MBO; it has been praised, criticized, offered as the magic solution to management problems, or spurned as a waste of time. This has caused considerable misunderstanding, confusion and misapplications. MBO as a total managing system is not often used and the parts that are adopted are imperfectly employed.

MBO, which was introduced as a Management Philosophy during 1954, soon became popular and considered by some as a Panacea for Business Management up to the sixties. It came to be applied narrowly and got entangled with Bureaucracy and reached its low point in reputation during the seventies. In the second phase of this program after 1970, better understanding of the concept started again. Its heavily technique orientation was recognized. It came to be accepted that good programs under MBO could bring benefits. Basic principles came to be again widely used. It is now recognized and referred as a Management System. The focus of MBO is now changed; from one based on individual manager, to one on the operations of the total organization. It came to be used to improve the major steps in the process that carry out the work.

In his book "The Practice of Management" Drucker did not merely write, Management by Objectives, he said "Management by Objectives and Self Control". Drucker used the latter term because, he asserted "It makes it possible for a manager to control his own performance. Self-control means stronger motivation; a desire to do the best rather than just enough to get by." The key subjects that Drucker wrote about are as follows:

All members must contribute to a common purpose but, in order to do so, they must know this purpose, that is the mission of the organization. Drucker wrote about the importance of purpose:

"If we want to know what a business is, we have to start with its purpose. It is then, the first responsibility of top management to ask the question 'What is our business?'. Management must also ask: "What will our business be?'. And 'Are we in the right business or should we change our business?"

Drucker is very specific about importance of objectives. He equates managing with managing by objectives.

"A business must be managed by setting objectives to it. Of course, objectives are not a railroad timetable. They can be compared to the compass bearing by which a ship navigates. The compass bearing itself is firm, pointing in a straight line toward the desired port. But in actual navigation the ship will veer its course for many miles to avoid a storm off. She may even change her destination in mid-ocean.

What a business enterprise needs is a principle of management that will give full scope to individual strength and responsibility, and at the same time give common direction of vision and effort, establish teamwork and harmonize the goals of individual with the common wealth. The only principle, which will do this is management by objectives and self control. It applies to every manager, whatever his level and function, and to any business enterprise whether large or small.

Based on the insistence that Objectives are necessary to manage an organization, Drucker explains the extent to which objectives are necessary for setting expected results and for the horizontal communications needed to accomplish these objectives:

"Each manager from the 'big boss' down to the production foreman or the chief clerk, needs clearly spelled-out objectives. They should lay out what contribution he and his units are expected to make to help other units obtain their objectives. Finally, they should spell out what contribution the manager can expect from other units toward attainment of his own objectives. Right from the start, in other words, the emphasis should be on teamwork and team results. These objectives should always derive from the goals of the business enterprise"

Drucker cautions that priorities must be set so that efforts can be focussed on the most important areas:

"Objectives are needed in every areas where performance and results directly and vitally affect the survival and prosperity of the business. It is essential that management knows and consciously decide, which area to give priority."

Drucker also stresses the need to monitor the improvement and make revisions to the objectives as required.

"It is Always important to adapt to economic changes rapidly, intelligently and rationally. We can assume that there always will be fluctuation. All objectives have to be re-examined continually""

Throughout his book, Drucker stresses the individual; each person must be involved in developing the objectives for his or her job, with good communications:

"Work will become more easier, more effective, more productive, the more we plan before we do. There must be at least a trace of doing in one's job. Otherwise one dreams, rather than performs. One cannot, above all, do only; without a trace of planning in his job, the worker does not have the control he needs even before the most mechanical and repetitive routine chore. A job must contain planning and doing.

A decision should always be made at the lowest possible level and as close to the scene of action as possible. Moreover a decision should always be made at a level insuring that all activities and objectives affected are fully considered. This requires that each manager to develop and set the objectives of his unit himself. He must know and understand the ultimate business goals, what is expected of him and why.

Most organizations recognize the need to develop their people; it is one of the axioms of managing. But many organizations do this without clear objectives; Drucker sees the development of people as a requirement for the organization to do its complex work:

"The prosperity if not the survival of any business depends on the performance of its managers of tomorrow 'to discharge tomorrow's management task. We therefore will need advanced education for people already in management'. One does not become broader by adding one narrow specialty to another; one becomes broader by seeing the business as a whole. Manager development must embrace all managers in the enterprise"

From the early days of MBO, there was recognition of the participative, evaluative, and motivational aspects of the process. Drucker describes the growth and development of 'free human beings' who are 'directed, focused and united' into an effort that produces a 'real whole':

"Management by objectives tells a manager what he ought to do. The proper organization of his job enables him to do it. But it is the spirit of the organization that determines whether he will do it. It is the spirit that motivates. The greatest advantage of management by objectives is perhaps that it makes it possible for a manager to control his own performance. Self-control means stronger motivation. The human being, unlike any other resource, has absolute control over whether he works at all"

This refers to implementation of objectives. Drucker mentions about attaining Company objectives', 'results', 'contributions to success' throughout the book. More specially he talks about action.

"Objectives should always reflect the objectives of the business, should always be focused ultimately on business performance and business results. Finally any solution has to be made effective in action. For the solution to become a decision, action is needed""

There must be in every organization a relationship between a person's performance and the rewards received. Drucker makes the connection very clear:

"Insistence on high goals and high performance require that a man's ability both to set goals and attain them be systematically appraised. The subordinate, too, must demand that these decisions be rational rather than hunch, for they more than anything else, spell out what his superior expects and considers important. Appraisal should always focus on proven performance. Rewards should be directly tied in with the objectives set for the manager's job. If one 'get fired' for poor performance, one must also be able to 'get rich' for extraordinary performance"

The comprehensive new working definition for MBO based on the above analysis of the Philosophy, ideas and thinking of Peter Drucker, as above stated, is built by Eugune J.Syna, Director of International Management Consulting Services, Eastman Kodak Company, Rochester, New York. The working definition given Mr. Syna for MBO system is shown in the following table:

1. The Organization Defines its purpose

2. Priority areas are chosen

3. The Total Environment is analyzed

4. Integrated Plans are produced

5. Information is Communicated Throughout the Organization.

6. Needed Skills and Understanding are developed

7. Individual Objectives are prepared

8. All Participants are motivated

9. Action is taken to achieve Results

10. Progress of Plans is continuously reviewed

11. Apprpriate Rewards are made for Performance

Power will always go with expertise. Knowledge is power and information is strength. In the pre-industrial age, the individual businessman possessed the expertise, ownership and management. But with the advent of Industrial age and development of National and International business concerns, there is shift in the bases of power, control and ownership. The Corporate bodies are owned by shareholders, controlled by the Directors, but managed by professional experts (or Top Team), who finally come to have the major say in day to day business management. In the next phase or the coming phase management may shift to the gross root level, where knowledge and expertise come down to this level and the organization has to depend on the base worker for delivering its results. Today IT workers do not stay at a point for more than 2 years. The demand for skilled workers have become global. In a situation when the management is not sure, who will stay and go will quit looking for greener pastures, where is the scope for charge sheets. This scenario is not away from our country. It needs only 10 to 15 years of effort keeping twin evils at check (1) Corruption and (2) Terrorism.