The editor's chair - connection between management by objectives and total quality management - Editorial

Business Horizons, Nov-Dec, 1996 by Dennis W. Organ

There is more than a touch of irony in this issue of Business Horizons. In our continuing feature "Profiles in Executive Education" (p. 73), Henry Beam gives a fitting tribute to George Odiorne. Although Odiorne did not invent "management by objectives" (MBO), and probably didn't even coin the phrase, more than anyone else he was the one who popularized this approach to management. His seminars, books, articles, and consultations fashioned MBO into something approaching a comprehensive doctrine of management and left few companies untouched by some kind of MBO program. There were many stylistic variations on such programs, but they all stressed the importance of specific (preferably quantitative), challenging goals.

On the other hand, we have on p. 6 a discussion of the "core paradigm changes" wrought in management theory by the principles of total quality management (TQM). Robert Amsden, Thomas Ferratt, and Davida Amsden argue that TQM does not work as an add-on to a motley mix of "traditional" management precepts. It works only by taking it as a new paradigm altogether-meaning adios to MBO as we know it.

Certainly W. Edwards Deming, perhaps the foremost prophet of TQM, had little good to say about MBO in Out of the Crisis (1986):

Eliminate management by objective.

Eliminate management by numbers, numerical goals .... If you have a stable system, then there is no use to specify a goal. You will get whatever the system will deliver. A goal beyond the capability of the system will not be reached. If you have not a stable system, then there is again no point in setting a goal. There is no way to know what the system will produce .... Focus on outcome is not an effective way to improve a process or an activity. (pp. 24, 76)

So it would appear that if we embrace TQM as a new paradigm for management, somehow we are implicitly devaluing the contributions of Odiorne. I doubt Amsden, Ferratt, and Amsden would put it quite that way. They would probably credit Odiorne for inspiring and popularizing an approach that, in its time, was good enough. The main problem with it now is that MBO is too static and uses goals as ends in themselves rather than punctuations of continuous improvements to the system.

My own sense is that Deming, in his diatribes against MBO, reacted against managers who used the numbers to beat up on people. And Odiorne himself could attest to the dark side of MBO-- rigid numbers enforced on people not only as "goals" but as "quotas"--on the assumption that failure to meet those quotas bespoke either lack of effort or lack of ability.

But using MBO in that fashion would have been condemned as quickly by Odiorne as it was by Deming. MBO was never just a device; it too was a paradigm of sorts and it worked only when you purchased the whole nine yards. Buying into the whole of MBO meant, among other things, collaborative goal-setting by superior and subordinate alike. Implicitly, the process of continuously, collaboratively setting and revising goals based on feedback meant "understanding the system" and "empowering" people (though that trendy word was not in vogue in Odiorne's heyday) with training, resources, and the authority to change things--all in order to achieve the goal.

I think the adherents of TQM would agree that it emphasizes the importance of accurate and timely feedback. This is at the heart of the plando-measure-standardize loop. But Edwin Locke demonstrated long ago that accurate and timely feedback induces people to set goals. More to the point, he found that feedback had no relationship to performance when controlling for its intervening effect of inducing people to set specific, challenging goals.

All the foregoing is not meant to deny the role of TQM as paradigm-wrecker. The authors offer some compelling arguments as to why TQM has to be taken in toto as a system of interrelated premises. The premises stand or fall as a set; picking any one or two of them is not TQM, and calling it TQM won't make it work. Yet though we might well be talking about a contrast in paradigms, I think you will find that an objective reading of Odiorne renders MBO far from hostile to TQM; indeed, there is much more affinity with it than Dr. Deming was willing to recognize.

Dennis W. Organ, Editor