management by objectives: a philosophy and style of management for the public sector

MANAGEMENT BY OBJECTIVES: A PHILOSOPHY AND STYLE OF MANAGEMENT FOR THE PUBLIC SECTOR

Wa Zter Baker

Despite strong current interest in modern management concepts, management by objectives is a term that has not gained particular currency in the literature of Canadian public administration or even the much broader literature of the United States. It is primarily linked to a very few men who are themselves particularly well known in executive development circles or as management consultants1

If attendance at various executive development courses across Canada and throughout the United States is indicative, however, management by objectives is of growing interest to practitioners. Over the three year period in which York University has been offering non-degree courses for practising administrators, the demand for seminars on this theme has been consistently greater than for any other single topic. This interest by practitioners, moreover, appears to extend well beyond the seminar room, especially within the Federal Government.

The Defence Department, the Department of Transport, the Depart- ment of Agriculture, the Department of Industry, the Department of Indian Affairs and Northern Development and the Unemployment Insurance Com- mission have been variously involved during the past two or three years in seriously considering or actually instituting management by objectives. Air Vice-Marshall Hull, formerly of Air Defence Command and later Com- mander of Air Transport Command, instituted management by objectives in both the organizations he directed. Air Marshal Sharp, Vice-Chief of Staff, has proposed management by objectives for the Armed Forces as a whole. Within the Department of Transport, manager evaluation is based on management by objectives. In the Department of Agriculture, it has been decided to adopt this concept for the Department as a whole, although implementation is proceeding on a branch to branch basis. Prior to its amalgamation with Trade and Commerce, the Department of Industry

1For those interested in exploring the literature in this area the following books are relevant: Peter Drucker, The Practice of Management, New York: Harper and Row, 1954; C. L. Hughes, Goal Setting, New York: American Management Association, 1966; D. D. McConkey, How to Manage by Results, New York: American Management Asso- ciation, 1965; George Odiorne, Management by Objectives, New York: Pitman, 1965; Nathaniel Stewart, Strategies of Managing for Results, Englewood Cliffs, N J: Prentice- Hall, 1966; R. F. Valentine, P e r f m n c e Objectives for Managers, New York: American Management Association, 1966; and E. C. Schleh, Management by Results, New York: McGraw-Hill, 1961.

428 CANMIAN PUBLIC ADMINISTRATION

had undertaken a pilot operation, involving twenty-five managers, as a preliminary to the introduction of management by objectives. Still more recently, after careful study, the Unemployment Insurance Commission appears to have made a firm commitment to management by objectives. I am not familiar with the situation at provincial or municipal levels across Canada, but there are s i p s of the beginnings of an interest in the concept by the Government of Ontario in the Department of Agriculture and Food.2

It appears appropriate, therefore, to examine the general relevance and suitability of management by objectives as a philosophy and style of management for the public sector and to examine, further, its potential role in a modem management system. This paper is addressed primarily to those with managerial responsibilities, having a strong commitment to the use of modem management concepts and yet still unclear about what is involved in management by objectives (or what Schleh has, with particular appropriateness, called “managing by results”) .s

While the major concern of the paper is with the techniques of instituting management by objectives and with an evaluation of their relevance to public sector management, it is not inappropriate to begin with a discussion of it as a philosophy and style of management. Unless there is an initial commitment to this philosophy and a willingness to adopt the style, the techniques themselves have little value.

As a philosophy, management by objectives involves a belief in participative management and incorporates the central tenets of Douglas McGregor’s “Theory Y,”that “the motivation, the potential for development, the capacity for assuming responsibility, the readiness to direct behavior towards organizational goals are all present in people ...” and that the essential task of management is “to arrange organizational conditions and methods of operation so that people can achieve their own goals best by directing their own efforts toward organizational objective^."^

Unless a manager is committed to a considerable degree of involvement in decision-making by his subordinates, he will experience great difficulty operating within a framework of management by objectives. It demands a style of management that contrasts sharply with that of the authoritarian “boss,” benevolent or otherwise, and equally sharply with the charismatic leader of strong, dominant personality who may obtain apparently excellent results while breaking all normal bureaucratic rules and, in the process, leaving subordinates operating in highly ambiguous surroundings and considerably dependent on his personal strengths for organizational progress.

zFor information on current activities in the Federal public service, I am indebted to my colleague, Dr F. D. Barrett, who has been involved with several of the depart- ments and agencies mentioned in examining and implementing management by objectives.

SSchleh, op. dt. *Douglas McGregor, The Human Sfde of Enterprise, New York: McGraw-Hill,

1960.

MANAGEMENT BY OB JEcIlvEs 429

One central facet of management by objectives as a philosophy and style of management, then, is a belief in democratic, participative, coopera- tive management. A second is a commitment to purposive, planned, “rational’’ management, in which different managerial levels combine their best efforts, both in setting goals and in working purposefully towards them.

To many public administrators, therefore, management by objectives is not something new, radical or additional to their current beliefs about what constitutes effective management. Yet many who believe themselves fully sympathetic to the philosophy and style of management outlined above do not make an operational commitment to stating clearly their purposes or objectives. When Luther Gulick declared that “... a clear statement of purpose universally understood is the outstanding guarantee of effective administration” he anticipated the major point of departure for proponents of management by objectives. While tbe proposition that clarity of objectives is an essential prerequisite to an efficient use of resources is probably acceptable to the vast majority of practising managers, it is reasonably certain that many do not seek this clarification in a systematic way from year to year.

Manugemnt by Objectives as a Set of Techniques As an interrelated set of techniques, management by objectives incorpo-

rates a process cmtaining several distinct stages. I The clurification of ouerall purposes by top management, preferably

in consultation with lower echelons of management. Practitioners begin with a recognition that what is sought is a mosaic

of complementary objectives, set in conjunction with each other at all managerial levels of the organization from top management down to, say, first-line supervisor. The first stage in developing this mosaic is for top management to review what, in the business sector, tends to be known as the “master strategy”6 of the organization, its main formal reason for existing. James Thompson calls this the organization’s “domain,*’s that part of the total social system marked out by top management as the organization’s peculiar area of operation and responsibility, its “propitious niche.” This review of overall objectives is particularly important in modem soci- ety where a rapidly changing environment can cause such objectives to lose their relevance and hence threaten the organization’s viability.

I1 Analysis by top managemmt of the results expected of those reporting directly t o them, if overall objectives are to be met.

Assuming that the proper review has taken place and that it is con- cluded that overall objectives are still meaningful or, alternatively, that

5See W. H. Newman, C. E. Summer and E. K. Warren, The Process of Management, 2nd edition, Englewood Cliffs, N J: Prentice-Hall, 1967, chap. 18, for a useful discussion of this term and the related one, “propitious niche.”

6James Thompson, 0rganizath.s in AcHon, New York: McGraw-Ha, 1967, chap. 3.

430 CANADIAN PUBLIC ADMINISTRATION

they have been adjusted to new environmental needs, the vital problem of translating them into day-to-day action remains. This process of translating overall goals into a dynamic action system embraces, of course, the management process in its entirety.’ In modem organizations, the management system which carries out this process is increasing in complexity and in larger organizations many people are normally involved, in complicated interrelationships, in seeking to meet the overall objectives of the organization, If order and system are to be achieved among a potentially chaotic jumble of individuals, each engaged in discrete activities that might otherwise be meaningful only to him, then proponents of management by objectives suggest that a first imperative is that at every managerial level in the organization each manager must be clear concerning the results expected of him and hence his unit, and also concerning how these results will cantribute to the total resuIt desired if the organization’s overall objectives are to be met.

As a system and set of procedures, management by objectives is results oriented, therefore. Whereas many managers, in seeking to obtain maximum performance from their subordinates, focus upon the activities in which they are engaged, their personality characteristics, their background and their skills, to the practitioner of management by objectives these are all secondary to the results’ orientatim. It is acknowledged, however, that in achieving results certain activities will be carried out, utilizing certain skills, and that a particular background and personality configuration may aid or retard performance.

The focus upon results does permit, nevertheless, the widest possible range of activties, personalities, skills and background in achieving them, The perennial question concerning what personality configuration produces the strongest manager appears in management by objectives to become relatively inconsequential. What is really important is whether, once objectives are identified, a man can make the maximum use of available resources, working against recognized constraints, to achieve the results logically required if short and long term objectives are to be met. This

‘Newman et d., op. cit., is a useful source for further information on “the rocess of management.” Briefly, I assume it to involve the following: clarifying, deve P oping, interpreting, articulating oak, policies, plans; dividing up the work of the organization into manage&le units, jobs, and making sure that the individual units are pro erly linked together, their activities integrated and coordinated; mobil- izing and ediently utilizing needed resources of rsonnel, finances, physical plant and matbriel; assurin that individual units and organization as a whole move towards organizationefi Objectives at an optimum rate through assisting in goal setting, encouraging, inspiring, coaching, su porting and helpin ; coordinating the work of one

zational purposes, through a propriate control tems; making certain that o p w communications are establisged and maintaine T throu hout the organization, and between the organization and its environment; and, &ally, ensuring that prop” external relationships exist, including relationships with other agencies and groups as well as with clients of the organization.

individual or unit with that of anoger; countering ten f encies to diverge from orgaai-

MANAGEMENT BY OBJE- 431

stands in the starkest contrast with charismatic leadership, where personality characteristics are dominant.

I11 Top manugement and immediate subordinates meet, hopefully to reach a meeting of the minds on overall objectives and expected results for the organization as a whole, preliminary to having each immediate subordinate indicate the role he expects to play during the coming year in helping to achieve these objectives. At this stage, job responsibilities are clarified and acceptable performance criteria established and mutually agreed upon. Such criteria allow for “expected” and “outstanding” levels of performance.

An important expectation in management by objectives is that superior and subordinate managers will give serious attention to the respective roles of each in seeking to achieve desired results, and that they will have the opportunity to meet and clarify, in detail, these expectations. Three categories of objectives are used for discussion purposes: ( a ) routine: those concerned with meeting every day normal expectations of the position; ( b ) problem-solving: those concerned with identifying and taking steps to remove problems that have interfered in the past with optimal performance; and ( c ) innovative: those concerned with creative and innovative activity that will lead to results beyond those anticipated from routine or problem-solving activity. In other words, in setting realistic objectives every manager’s job is broken down into these three aspects - day-to-day routine management, elimination of existing problem areas and the search for improvement through creative, innovative activity.

There is a further refinement in setting individual objectives. Each par- ticipant in the process is expected to define his objectives with four key words in mind: concreteness, attainability, desirability, measurability. Taking each of these in turn, objectives are expected to be spelled out in such a way that they depart from the realm of the general and, dealing in concrete realities, become clearly understandable - concrete. They are expected to be realistic, given the constraints under which management must operate - attainubb. They are expected to be worth pursuing - desirabb - and this means particularly in light of competing priorities for available resources, as an objective can appear eminently desirable for itself and yet when measured against competing claims on resources will appear far less worth pursuing. Finally, and of central importance, objectives are to be stated in such a way that there are acceptable indices for measuring progress towards the achievement of these objectives - meusur- abk8

At this third stage, therefore, superior and subordinate managers reach SIf this is not clear, contrast the two following statements of objectives for concrete-

ness, attainability, desirability and measurability: (a ) “I intend to see that my unit does better this year” (New Year$ Resolution!); (b) “In 1969 I will revise our safety polides and procedures towards reducing the man-hours of work lost through on-the-job accidents by 18 per cent from our 1968 figures.”


agreement on job responsibilities and objectives ( routine, problem-solving and creative), They are expected also to reach agreement on priority ratings for objectives in both the short term and the long term. This agreement on priorities is extremely important. Many managers perform super- latively in one particular area of responsibility to the neglect of other important areas and often, therefore, to the detriment of overall objectives. Finally, in setting objectives, agreement is reached concerning “expected” and “outstanding” levels of performance.

Once verbal agreement is reached on objectives, a written memorandum is prepared covering the verbal agreement. This is carefully filed away and becomes a basis for future performance review.

It is expected that each subordinate will then programme to meet his objectives and will feel free to consult regularly with his superior should organizational obstacles interfere with optimal performance in his particular role or should there be other ways, generally, in which the superior can assist the subordinate in meeting his goals. Aside from this, it is anticipated that the subordinate will be given a large measure of freedom, working within existing constraints, in working out the means of achieving budgeted results.

IV This process is repeated throughout the organization to cover all managerial personml. As a result there will appear a clear statement in writing of objectives for each level in the organization, the product of careful consultation and subsequent agreement between superiors and subordinate on each reporting level.

V Top management the,n reviews the statements of objectives for overall c&ency to make certain that, when the process is finally complete, the budgeted results cover the results expected by top management. As Schleh notes: “Management objectives state the specific accomplishments expected of each individual in a specific period of time so that the work of the whole management group is soundly blended at a particular moment of time.79 VI The final stage of a system of management by objectives is per-

formance review, which occurs at the end of the period for which the objectives were originally set (usually m e year). In theory, what happens at this particular point is that a manager and his immediate subordinates meet and review the year’s performance against objectives. Because objectives have been concretely stated in measurable terms and because there has been an atmosphere of collaboration and cooperation throughout the year, it is anticipated that at this performance review, there will be very little that will surprise either the manager or his immediate subordinate; they have kept in touch and have made necessary adjustments throughout the year and simply meet for a general appraisal of perfor-

*Schleh, op. dt., p. 19.

MANAGEMENT BY OB JE(;TIvEs 433

mance as a basis for a still more realistic statement of objectives for the coming year.

Salary discussions do not normally take place at this time. This particular meeting is for a specific purpose, the review of performance against pro- jected results, with a view to learning from the experience. Nevertheless, how performance has measured up against objectives may give the manager a realistic basis for considering such matters as salary increases, bonuses and promotions. This, in brief, is the process of management by objectives, a process

of setting objectives that is co-operative and participative, that is meant to produce objectives that can be lived with and yet will be challenging, that will provide a basis for objective assessment of performance and yet give scope for innovative and problem-solving behaviour, that is precise and “scientific” while being flexible and realistic and that produces a system of properly integrated objectives for the organization as a whole, within the broader constraints acting upon management.

Setting objectives is only the beginning of the management process, of course, and yet properly accomplished it may take the manager a long way towards effective performance. It also seems probable that, in seeking means to accomplish the budgeted results, the philosophy of participative management, with a commitment to purposive, planned activity towards meeting objectives, will cume to permeate the entire administrative process.

The position taken to this point has been that of the proponent of management by objectives. From such a perspective, management by objectives clearly has relevance to modem management. Yet its great strength may also be its great weakness. The commitment to participative management and to objective rationality with the maximum use of scientific methods in management may not be universally feasible or even desirable. There are dangers, pitfalls and alternatives to management by objectives with which those considering adopting the approach should become familiar.

Dmgers, Pitfalls, Alternatiues Certain major areas of concern with management by objectives merit dis-

cussion. It may not meet its own criteria (concreteness; attainability; desirability; measurability) as an objective and it may have relevance to a limited range of organizations at this stage in the development of the public services.

I The lack of concreteness and concomitant dificulties of impkmenta- tion. While the statement of philosophy and style of management does strike a strongly responsive chord in many managers, serious problems arise in adapting actual management practices to a results orientation.


Both Odiorne and Schleh are careful to point out that each organization must experiment with techniques and procedures until a satisfactory set is evolved for the particular organization and both offer flexible guidelines for such evolution. Yet a recent study of managerial reaction to management by objectives, in the course of which fifty managers deeply involved in a system of management by objectives were interviewed regarding their reactions to the system, found that difficulties with procedural require- ments was the major problem cited. An important conclusion of the study was that “the implications of ... [the] ... use [of management by objectives] ... and especially the problems of implementation, need to be evaluated more completely.”1°

Dr F. D. Barrett, perhaps our most experienced Canadian consultant in the field of management by objectives, in working with an organization only newly acquainted with the concept takes great care to keep elLpecta- tions at a modest level during the first year of implementation and suggests that only at the end of three years of quite rigorous application will the benefits occur near their optimum level. He insists from the outset on emphasizing the difIiculties of implementation, while at the same time making the case for the worthwhileness of the effort involved. If the essence of the management by objectives philosophy and style can be communicated to top management and they agree that it is suited to their particular organizations; and if, further, the initial difEculties of implementation are understood fully and top management is prepared to allocate the necessary resources to overcoming them, then this first problem area concerning management by objectives is no longer compelling.

I1 The attainability of munagemat by objectives is also open to question. Herbert Simon introduced an intriguing distinction between “maximizing’’ and ‘‘satisficing,” in his comparison of “economic man” and administrative man”:

While economic man maximizes - selects the best alternative from among all those available to him; his cousin, whom we shall call administrative man, satis- fices - looks for a course of action that is satisfactory or “good enough” ... Econ- omic man deals with the “real world” in all its complexity. Administrative man recognizes that the world he perceives is a drastically simplified model of the buzzing, blooming confusion that constitutes the real world. He is content with this gross sim lification because he believes that the real world is mostly empty - situation he is facing .,.11

Simon’s contention, that in much behaviour there are severe and important limits on rationality, is in some sense directly counter to the “scienti-

lOH. L. Tosi and S. J. Carroll, Manugedal Reaction to Manugmnt by Objectives,

11Hergert A. Simon, Administrative Behiour , 2nd edition, Glen-: Free Press,

that most of t Yl e facts of the real world have no great relevance to any particular

Academ of Management, December 1968,415-26.

1957, p. m.

MANAGEMENT BY OB JEcllvEs 435

fic management” orientation of management by objectives. Yet Simon himself supports the spelling out of objectives in advance of action as clearly and concisely as the limits of human rationality permit.

Charles Lindblom takes Simon’s distinction between maximizing and satisficing to a more extreme conclusion relevant to the setting of objectives.12 Lindblom suggests that in actual practice goal-setting and the search for means are closely intertwined. Those who advocate the careful consideration of goals as a first distinctive step, prior to a serious, detailed consideration of necessary means, are overlooking the realities of administrative behaviour. For Lindblom, the test of a “good” policy is that various decision makers find themselves in agreement on action to be taken. They do not have to see the action in terms of an agreed objective. Indeed, they may approve common action while out of sympathy with each other’s objectives.

He sees three major difficulties in what he terms the “rational-comprehensive” approach to setting objectives.15 ( a ) On many values critical in setting objectives “citizens disagree, Congressmen disagree, and public administrators disagree.” Even where fairly specific objectives are pre- scribed for the administrator, there remains considerable room for dis- agreement on sub-objectives. (b) Intensity of feeling should be considered in the setting of objectives yet is very difficult to measure objectively. In deciding on an objective, even when an administrator resolves to follow his own values as criteria for decisions, often he will not know how to rank them when they conflict with one another, as they usually do. ( c ) Objectives do not always have the same relative values. One objective may be highly prized in one circumstance, another in another circumstance. The value problem is always, therefore, a problem of adjustments at a margin. But there is no practicable way to state marginal objectives or values except in terms of particular policies.

Lindblom’s general position is contained in the following comment:

In summary, two aspects of the rocess by which values are actually handled

policies at one and the same time. Put a little more elaborately, one simuf taneously chooses a policy to attain certain objectives arid chooses the objectives themselves. The second aspect is related but distinct: the administrator focuses his attention on marginal or incremental values. Whether he is aware of it or not, he does not find general formulations of objectives very helpful and in fact makes specific marginal or incremental comparisons. Two licies, x and Y, con- front him. Both promise the same degree of attainment o F“ objectives a, b, c, d, and e. But x promises him somewhat more of f than does Y while Y promises

12Charles E. Lindblom, “The Science of Muddling Through,” Public Administration Review, vol. 19, 1959. Reprinted in W. J. Gore and J. W. Dyson (eds.), The Makfng of Decisions, Glencoe: Free Press, 1964.

18Lindblom’s “rational-comprehensive” concept is close to Simon’s “maximizing.”

can be distinguished. The first is c P ear: ... one chooses among values and amon

438 CANADIAN PUBLIC ADMIN’ISTRATION

him somewhat more of g than does x. In choosing between them, he is in fact offered the alternative of a marginal or incremental amount of f at the expense of a marginal or incremental amount of g. The only values that are relevant to his choice are these increments by which the two policies differ; and, when he finally chooses between the two marginal values, he does so by making a choice between policies.14

Many of us who have been in administrative positions will share, I am sure, Lindblom’s mistrust of those who believe that administrators invari- ably can state clearly in advance of action where it is they want to go and what it is they expect to achieve. Those who have worked in organizations which they helped to found know how often, in fact, objectives are clarified as day-to-day decisions are made. Faced with operating choices, we discover, in ways we could not have known beforehand, where our preferences really do lie and only after sufficient exploratory action has occurred are we in a position to state with any clarity, for others to comprehend, where it is we have been and intend in future to go.

111 Desirability. The arguments of Simon and Lindblom raise doubts concerning the feasibility of a “rational-comprehensive” approach to setting managerial objectives. Lindblom goes beyond Simon, raising doubts concerning its desirability, even were it attainable, in pointing out how much easier it can be to garner enthusiastic support for a course of action if the underlying objectives of the supporters are not brought into the open for critical analysis. H. E. Wrapp develops this still further, assert- ing bluntly that ‘‘good managers don’t make policy decisions.”16

Wrapp’s position is not a variant of the view that good public administrators “administer” while politicians set policy. On the contrary, Wrapp views business and public organizations alike, as political systems, in which the manager plays the role of broker or mediator among competing groups striving for competitive advantage. He suggests that the good manager seeks out what he calls “the comdors of comparative indifference”, among which he can walk without exacerbating existing potentially disruptive disagreements.

There are undoubtedly many organizations within which such a style of management exists. It is also possible to conceive of circumstances under which such a style of management is desirable. Organizations are by definition the structured attempt by human beings to work beyond the limits of individual performance. Through combining in rational effort, it is hoped that objectives can be achieved that might otherwise be beyond the competence of the individuals involved. Yet every manager is aware of the very real constraints that work against the application of rationality within organizations. If organizations are attempts at rational

14Lindblom, op. dt., p. 160. 16H. E. Wrapp, “Good Managers Don’t Make Policy Decisions,” Haward Business

Reukw, September-october 1987.

MANAGEMENT BY OB JECI’IVES 437

behaviour, they are, nevertheless, still human groupings and the upolitics” of internal organization can bear considerably on decision-making,

There have been several attempts to reconcile the opposing camps of the “rationalists” and those who stress human irrationality. Perhaps the most successful is that of James Thompson in his stimulating book, Organizations in A&*m.le Thompson’s position merits at least brief attention as it bears upon considerations of both the attainability and desirability of management by objectives. After stating the rational/irrational dilemma, he suggests that in actual fact the problem is capable of relatively easy resolution if we recognize that within organizations there are at least three distinct levels of responsibility and control - technical, managerial and institutional - and that the degree to which administrators can and should apply “scientific management” to their functions differs from level to level.

Thompson proposes that for purposes of discussion, an organization can be viewed, schematically, as a series of three successive circles (Figure I).

In the technical cure, at the other extreme, buffered as it is from the surrounding environment by both the domain of organizational management and that of institutional management, the technical manager may apply himself with diligence to solving those technical problems that organizations face in carrying out their basic functions. This is the domain in which the management scientist is most at home, the area where the application of rationality to setting sub-objectives and resolving organizational problems is at its most developed.

It is the organizational manager who accepts responsibility for blending the various activities of the organization as a whole, for buffering the technical core against the pressures of the environment and for making certain both that the decisions of institutional management are properly implemented and also that in reaching these decisions the experience of the organization as a whole in its day-to-day functioning is taken into consideration. The organizational manager is meant to be fully aware of the extent to which rationality can be applied in the technical core and must make certain that this is being done. At the same time, he must be con- scious of the limitations on the application of rationality and must fre- quently resort to the art rather than the science of management.

IV Measurability. At issue is the question of whether evidence is available that management by objectives does in fact work, that organizations which have adopted it have achieved measurable gains against whatever standards are acceptable over the results achieved in their pre-management by objectives’ period and, if such gains have been achieved, that they can be traced directly to management by objectives.

In support of management by objectives, one can compile an impressive list of organizations which have used it in its various forms over a con-

laJames D. Thompson, Organizations in Action, New York: McGraw-Hill, 1967.

438 CANADIAN F’UBLIC ADMINISTRATION

\ clcs

A inrtitutional

/ Management /

\

\ / Organizationai \ \ \

‘1 1 J Management

/\

Technical

Management

/ / I \ \

\ ’/ ’ I / \\

L- / *=’+ /

FIGURE 1 Each circle embodies a level of responsibility and is the domain of a particular type of mana er. The institutional manager is on the periphery of the organization, the ~~manageri3~* or organizational manager in the circle next to the p e r i p w and the technical manager in the centre or technical core.17 The responsibility of institutional management is to make certain that the overall purposes of the organization are kept constantly adjusted to the demands of a rapidly changing environment. While there are tools of analysis available to help institutional managers, this is very much the area of h a ation, vision, intuitive judgment and insight, and is a domain in which environmentfi?i?uences are very great.

siderable period of time and appear to have judged it worthwhile. Odiorne cites, for example, “General Motors, DuPont, General Electric, and numer- ous other leading corporations” and names Alfred P. Sloan as “its major architect in corporate management” - and, to paraphrase Wilson’s ill-fated comment, what is good enough for General Motors is surely worth considering by Canadian public administrators. As a consultant, Odiome has installed management by objectives “in such diverse organizations as Honeywell, Inc., Northwest Bancorporation, Dayton’s, Minnesota and On- tario Paper Company, Northwestern National Life, J. L. Hudson, and T. Eaton Company of Canada.”l*

This is weighty support, indeed, which certainly cannot be overlooked. To it can be added, from four separate research studies, generally favou- able evidence of the effectiveness of management by objectives.la Never-

17Thompson does not suggest, of course, that in every organization three such managers actually do exist. It is the functlon that he is stressin and it is immaterial whether they are combined in one manager or handled separate&.

lEOdiorne, op. ctt., pp. viii-ix. 1QA. P. Raia, “Goal Setting and Self Control,” Journal of Managentent Studim, Feb-

ruary, 1905, pp. 34-53; A. P. Raia, “A Second Look at Goals and Controls,” California

MANAGEMENT BY OB JECI”E?3 439

theless, there is very little in the literature of management by objectives to indicate that it has been subjected to rigorous, analytical study. As Tosi and Carroll suggest, “For the most part, ‘management by objectives’ has been implemented on the basis of its apparent theoretical practicability and advantages. There has been only limited research examining its effects.”2O

In view of the current level of interest and activity in Canadian public agencies, it is hoped that consideration will be given to devising reliable studies of the effectiveness of management by objectives.

V Limited relevance. There is adequate reason to beIieve that management by objectives cannot be universally applied, its relevance being limited to certain organizational situations.

In the first place, it assumes the acceptance of a particular philosophy and an ability to manage in a certain style yet many now in managerial positions are not attuned to either the philosophy or the style. Moreover, far a variety of reasons it may not be possible or feasible to bring them to accept the philosophy and adopt the management style. Even where a philosophical commitment exists, the demand on skills in interpersonal relations is quite high. Where such skills are weak, developing them is itself a formidable task. The costs in trying to apply management by objectives universally therefore could be simply too great.

The peculiar nature of top management will determine from the outset the chances of success of management by objectives. Without top management support and involvement, it has little chance of succeeding. This does not mean that the head of a unit with a high degree of autonomy cannot with advantage pursue management by objectives within his own unit, provided he takes the first step in making certain that he is clear on overall objectives and hence upon the responsibilities of the unit within the total organization.

Assume an innovative, creative environment, where morale is high and where “traditional” bureaucracy is already breaking down, and management by objectives might be introduced with relative ease. The further a particular organization departs from this, the harder management by objectives will be to introduce.

In addition to these limiting factors, the stage of development of an organization may work against management by objectives. Organizations in pioneering, entrepreneurial situations where the managers are essen- tially feeling their way through unknown territory should probably be operated more closely akin to the position taken by Lindblom, with policy and means intertwined. Moreover, in the area that Thompson designates

Management Reuiew, Summer 1968, pp. 49-58; H. H. Meyer, E. Kay and J. R. P. French Jr., “Split Roles in Performance Appraisal,” Haruurd Business Review, January- February, 1965, pp. 123-9; and Tosi and Carroll, op. cit.

NTosi and Carroll, op. cit., p. 416.


“institutional management,” it is probable that the maximum of flexibility demanded in remaining aware of environmental changes and opportunities militates against management by objectives. Even in established organizations, where they are of the research and development type there may be special difficulty in instituting management by objectives, particularly regarding the identification of objectives that are “concrete, attainable, desirable and measurable.” Management by objectives may work generally against the highly motivated, more creative person. But then perhaps traditional bureaucracy is an evem more unfavourable setting and management by objectives would help rather than hinder the adjustment of such personnel. Finally, Wrapp’s advocacy of finding the “corridors of comparative indifference” will make sense in certain organizations, either new organizations or those in a state of flux, where the real opportunities and potential responsibilities of the organization are not yet clear and where top management therefore wants to keep all its options open. In such situations, with a dynamic administrator and a reservoir of good will the organization will probably function effectively, although even in these situations it is perhaps well to keep in mind that the reservoir does become depleted over time and that there are limits on the tolerance of ambiguity by managerial and operating personnel alike.

Management by Objectives and the Public Sector Much of what has been stated to this point is relevant to all organizations

and hence to the public sector. While there are distinctive features to be noted concerning management by objectives and the public sector, it may be useful before discussing these to draw some conclusions regarding the material covered so far.

Despite the legitimate objections that can be raised against management by objectives, once the dangers and pitfalls have been noted and the possibility of its limited applicability considered, there can be no question that the focus on objectives is a salutary one. Those involved in managing know how seductive day to day detail is and how fatally easy it is to mis- allocate resources because goals are unclear. (If non-managers have doubts about this, they need simply consider their use of time and resources to meet their individual goals.) Because experience does indicate that a purposeful regular review of objectives is not as widespread as it might be, this makes the plea for a more systematic, results oriented approach to managing even more compelling.

A second conclusion is that the recognition of at least a three-fold split in the setting of objectives - routine, problem-solving and innovative - is also very useful. If it is relatively easy to ignore objectives under the pres- sure of day-to-day business, it is still easier to keep busy on routine matters to the neglect of more demanding problem-solving and innovative

MANAGEMENT BY OBJECrrVEs 441 activities and creative endeavour. Useful, too, is the insistence upon establishing priorities among objectives, and upon balanced performance throughout the year. The stage of Cross-checking and integrating sub- objectives is also worth noting, for its possible contribution to coordina- tion, to ease of communications and to the general broadening of horizons.

Management by objectives, further, appears highly beneficial in achieving meaningful decentralization. When those involved have agreed upon objectives and have worked out satisfactory indicators for measuring performance, it is possible to go the next step and for the superior to delegate freely concerning means. The commitment of budgeted results and mea- surement indices to writing provides the control framework sufficient to allow considerable latitude in seeking these results.

Finally, management by objectives appears to have a very real part to play in the review of performance, developing executive potential, recog- nizing executive potential and finding a base for just remuneratian.

Turning specifically to the public sector, we are now in the post-Glassco era of Canadian public administration, an era which began with the pub- lication of the first volume of the Glassco Report in 1965LZ1 It is probable that the Glassco Commission acted primarily as a catalyst in bringing to the surface and articulating the depth of concern with efficiency and economy already existing in the Federal public service. This does not de- tract from the Commission’s role in touching off a period of intense activity related to bringing the administration of public agencies in line with the best practices of managers in other sectors as well as its own. What has happened at the federal level has had its counterpart, in greater or lesser degree, in several provincial and municipal jurisdictions. While it is probably correct to state that we are still in the first stages of introduc- ing modern management concepts throughout the Canadian public services, at least there are signs of a growing interest in doing so.

The Ghsco Report is silent on the specific topic of management by objectives. But one major tenet of the Report, that public administrators must be responsive to public wants and responsible both in their participation in policy evolution and their search for administrative means, provides a useful starting point for an examination of the special features of public sector management.

It is not the purpose of this paper to develop what John Carson has elsewhere singled out as “the managerial philosophy of J. Grant Glasscoy”= but the following brief extract from the Glassco Report does give the Commission’s views on what constitutes a responsive and responsible public service.

ZlThe Royal Commission on Government Organization, vols. I-v, Ottawa: Queen’s

%John J. Carson, “The Changing Scope of the Public Servant,” CANADIAN PUBLIC Printer, 19823.

ADMINISTRATION, Winter 1968,407-13.


The first guarantee of administrative integrity lies in the proposed new concept of management, with its emphasis on the sharper dehition of responsibility, authority and accountability, and on the systematic encouragement of strong administrative leadership. ... In the last analysis, the ultimate safeguard lies in the rlitical process itself - in the accountability of ministers, both individually an collectively, to Parliament and through it to the ublic.

of government by which it is served is unquestionably great and grows w each new increase in the size and scope of government. But even greater is the importance of a service responsive to ublic wants and expectations ... This is the test, not merely of the machinery o P government, but also - and principally - of the political process by which goals are set.-

“3: ... The importance to the pub E ‘c of efficiency and integrity in the machin

These remarks indicate what is perhaps at the core of any diEerenws which do exist between public and private sector management. The public administrator, performing like functions to those of his counterparts in the private sector, is uniquely enmeshed in a political system which rightly demands a high degree of responsiveness to public wants and expectations and which has elaborate institutional safeguards designed to ensure responsible administrative behaviour.24

Relating this to our discussion of management by objectives, if administrative responsibility is to be achieved in the more traditional sense of Cabinet and ministerial responsibility, and hence hierarchically through the deputy-minister, minister, cabinet and legislature, or their counterparts in other political jurisdictions, then, at least from the deputy-minister down, management by objective is not only suitable; it is probably highly desirable whenever its adoption is at all feasible. To Glassco’s list of guar- antees of administrative integrity might be added, therefore, that stressed by Gulick and given earlier in t h i s paper: “A clear statement of purpose universally understood is the outstanding guarantee of good administration.”

The rather fluid situation that currently exists at the Federal level and in certain provinces concerning the administrative roles of central agencies, the individual minister and the Cabinet makes it difficult to visualize how these might fit into a system of management by objectives. Perhaps the proper parallel for them is with Thompson’s “institutional management,” in which case the deputy-minister becomes Thompson’s “organiza-

2sRoyal Commission on Government Organization, op. cit., vol. I, abridged, pp. 623.

24This is stated in full knowledge of the genuine concern with sociall responsible behaviour that currently exists in many parts of the business sector; wiJ-knowledge too of the relationshi for business enterprises between organizational viability and ureqnmsiveness to pu&ic wants.” Similarities exist between public and private sectors even here but, in examinin priorities for resource-allocation and rating the degree of

sible behaviour as discussed by Glassco is a distinguishing characteristic of the public sector.

effectiveness of facton whic a influence managerial decision-making, responsive, respon-

MANAGEMENT BY OB JEcIlvEs 443

tional manager,” with the special responsibility of keeping administrative action in tune with the plans and edicts of those having a special responsibility for the adjustment of overall objectives to changes in the environment and particularly the political environment.

There is a second major application of the word “responsibility,” as anyone familiar with the Friedrich/Finer debate is aware.26 As Friedrich suggests, complementing the ”accountability to” definition is that of responsibility as “an inward personal sense of moral obligation” where the emphasis is put “on the conscience of the agent.” To this second meaning of responsibility, which may be strengthened by a sense of professionalism, management by objectives is clearly relevant. Indeed, management by objectives rests upon the premise that managerial personnel can and will act responsibly in this second usage of the term.

The relevance of management by objectives to creating or maintaining a responsive public service is not as readily apparent. If “responsiveness” conjures up the image of public agencies as passive “service bodies,” stand- ing at the ready, waiting to be activated by sensitive politicians with their fingers on the public pulse, then operating through management by objectives would be virtually impossible, Yet this is not how governments really operate. At all levels of public service, by far the major part of administrative activity lies outside the political sphere, most of the time. Ongoing programmes are left to the permanent public service to administer - it is hoped with political sensitivity but with relative freedom from day to day involvement with legislators. Responsiveness is tied closely to responsibility, therefore, and management by objectives is again relevant.

Conclilsion Management by objectives is a philosophy, style and system of management suited to the public sector. It is not universally applicable to public agencies, however, and, even where it is applicable, there are sdcient dangers and pitfalls related to its introduction and operation that it should be adopted with great care. Moreover, at this point in the development of the public services, it may not be appropriate to introduce it now in agencies which, with different top management and a changed internal environment, will prove eventually to be particularly appropriate settings for management by objectives.

W. J. Friedrich, “Public Policy and the Nature of Administrative Responsibility,” in C. J. Friedrich and E. S. Mason (eds.), Public Policy, Cambrid e: Harvard Univer- sity Press, 1940, p .3-24; Herman Finer, “Administrative Responsi % ility in Democratic Government,” Pu l? lic Administration Reukw, summer, 1941, pp. 33850.

management by objectives: a philosophy and style of management for the public sector

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