management by objectives

A reductionism approach to management which coordinates activity primarily through defining specific goals which members of the organization are held accountable for achieving.

Objectives lead to perverse incentives

“Objective” in the sense of a goal comes from the 19th-century military term “objective point,” meaning a strategic position you would sacrifice your life and the lives of others in order to control. This etymology hints at a key criticism of management by objectives, that it incentivizes sacrificing anything outside of the objectives in order to achieve them. Given the objective of increasing widget production by 30% in Q2, a factory manager might push workers to rush (sacrificing quality) or work overtime (sacrificing morale). Even when an objective is achievable, one might ask “at what cost?”

In complex systems, objectives are largely out of any one person’s control anyway

As Moral Mazes highlights, this puts managers in an impossible situation:

Managers are also in a tough spot because they largely don’t have control over the outcomes on which they are supposed to be judged. They are typically held responsible for hitting their numbers, but luck and timing play an enormous role over whether they are able to actually meet their objectives. As a result, managers are in a constant state of anxiety, since they are forever subject to the whims of fate.

New Public Management

“New Public Management” refers to the application of management by objective to public/government services. Despite its widespread practice, it is largely considered to be a failure, perpetuated out of habit and because we haven’t yet discovered a better way.

“A Human.Learning.Systems Approach to Managing in Complexity” diagnoses the problems with NPM/MBO and proposes an alternative, systems thinking approach to public services, in which

• the purpose of the intervention/service is to meet human strengths and needs
• the purpose of management is to create the conditions for learning and adaptation
• the purpose of leadership is to nurture healthy systems toward positive outcomes, to be a system steward