Peter Drucker's Theory

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Peter Drucker's Theory

Peter Drucker's Theory

Peter Drucker's Theory


This paper gives an evaluation of the practicality of employing Peter Drucker's, management by objective (MBO) theory to Company XYZ marketing communications firm to implement an employee recognition program (ERP). XYZ plans to implement MBO to ensure that team members have a clear understanding of the aims and objectives, of implementing an ERP. This paper balances the organization's management needs with the reality of bottom-line effectiveness along with determining what factors to consider in an ERP change management initiative.

Practical Applications of Management Theories

XYZ is a certified female-and minority-owned business, established March 1988 in Houston, Texas. XYZ relocated its main office to Cleveland, Ohio in October 1991 maintaining a satellite office in Houston. XYZ's core competencies are marketing; logistics projects and facilities support management services. Services are rendered on a contract or fee basis, either cost plus or firm fixed price.

During an 18-year time span, the business has grown from two employees to 85 employees at its peak performance level. XYZ now operates with a smaller staff of five employees. XYZ's downsized operation could benefit by applying MBO during the implementation of an employee recognition program (ERP). MBO will assist XYZ by holding individual employees responsible for achieving pre-determined goals and objectives, that are ideally specific, time defined, challenging and measurable, (Schermerhorn et al, 2004).

Management by Objective Principles

MBO endeavors to increase organizational performance by supporting goals and subordinate objectives throughout the organization. Hoopes (2003), discusses MBO as proposed by Peter Drucker referencing that, MBO requires a manager and subordinate to collaborate in setting goals and agree upon the deadlines. If the goal is unreachable by the deadline as agreed, the employees' performance standard is unsatisfactory. Hoopes (2003), states, ?managers enable subordinates to work with autonomy and 'self-control' rather than as irrational neurotics manipulated from above' (p.253).

MBO provides a functional process by which objectives flow throughout the organization. This process constructs a hierarchy of objectives that link each objective to the next level. This method guides employees to achieve specific individual performance objectives. MBO as an effective management approach has been challenged since the evolution of newer management theories. Kondrasuk (1981) concluded that MBO effectiveness should serve as a contingency approach because case studies and experiments could not validate the effectiveness in various situations. Bowditch (2005) states, 'The central thesis of contingency theory is that there are no universal principles of management that can be applied uncritically in all organizations' (p.20). Instating MBO at XYZ to initiate the ERP is relative in creating an effective work environment. The broader empirical literature does find MBO effective(Hoopes, 2003).

XYZ and Associates Management Needs

The organization is in jeopardy of losing its high caliber of professional consultants, due to personnel recruitment by larger firms. XYZ's small staff of marketing consultants is in need of cross training to improve productivity. The creation of the ERP will provide rewards with monetary value to employee for buying into the mission and helping to increase company ...
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