Management By Objectives Case Study

Tremendous growth in international competition led to the introduction of self-regulating teams in work environments (Antoni, 2005). Most self-regulating teams operate under “Management by Objectives”, often abbreviated as MBO. Dr Peter Drucker – “the man who invented management” (Roth, 2009) – introduced MBO in a book published on 1954 titled “The Practice of Management” (Samson & Daft, 2015). Management by Objectives is an organisational system whereby employees define their goals or objectives to evaluate upon performances (Samson & Daft, 2015). Goals attained in the lower organisational level should strategically lead towards the achievement of upper organisational goals. MBO is comprised of four phases: goal setting, action planning, periodic review, and performance appraisal.
Objectives are settled in the goal-setting stage. Objectives must oversee beyond operational activities and they mainly revolve upon productivity and responsibility (Roth, 2009). Objectives must be “SMART”, which stands for Specific, Measurable, Achievable, Realistic, and Time-Bound (Odiorne, 2003). Goal commitment is defined as the measure to how individuals perceive the significance of …show more content…
Siemens manufactures a broad range of electronic goods. In the late 1990s, the industrial competition level spiked with the emergence of Samsung (Samson & Daft, 2015). As a result, Siemens’ margins plummeted by two-thirds (Samson & Daft, 2015). Heinrich Von Pierer, Siemens’ formal CEO, aimed to revive Siemens’ financial state within three years by eliminating lead time using MBO (Samson & Daft, 2015). As time passes, Siemens’ processes became speedier and their financial performances exceedingly improved. Lead time to manufacture one mobile phone whoppingly decreased from 13 hours to five minutes (Samson & Daft, 2015). As of 2012, Siemens has 370,000 staff members who collectively gathered a net profit of 10 billion dollars (Samson & Daft,