Management by Objective at Hewlett-Packard


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Management by Objective at Hewlett-Packard

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Management by Objective at Hewlett-Packard

  1. 1. Performance Management MBO at Hewlett-Packard Management by Objectives (MBO) is basically a process in which the superior and subordinate arrive at goals for the subordinate which are derived from, or related to, the goals of the superior. Many have written on the subject. The list includes names such as Peter Drucker (1954), Douglas McGregor (1957), George Odiorne (1965), and Charles Hughes (1966) (Tosi & Carroll, 1973) Hewlett-Packard Company offers various products, technologies, software, solutions, and services to individual consumers and small- and medium-sized businesses (SMBs), as well as to the government, health, and education sectors worldwide. Its operations are organized into seven segments: Services, Enterprise Storage and Servers (ESS), HP Software, the Personal Systems Group (PSG), the Imaging and Printing Group (IPG), HP Financial Services (HPFS), and Corporate Investments.(Hewlett-Packard, 2012) MBO received a boost when it was declared to be an integral part of “The HP Way”, the widely acclaimed management style of Hewlett-Packard, a computer company. At every level within HewlettPackard, managers had to develop objectives and integrate them with those of other managers and of the company as a whole. This was done by producing written plans showing what people needed to achieve if they were to reach those objectives. The plans were then shared with others in the corporation and coordinated. Bill Packard, one of the two founders of Hewlett-Packard, said of MBO: “No operating policy has contributed more to Hewlett-Packard's success … MBO … is the antithesis of management by control. The latter refers to a tightly controlled system of management of the military type … Management by objectives, on the other hand, refers to a system in which overall objectives are clearly stated and agreed upon, and which gives people the flexibility to work toward those goals in ways they determine best for their own areas of responsibility” MBO urged that the planning process, traditionally done by a handful of high-level managers, should be delegated to all members of the organization. The plan, when it finally emerged, would then have the commitment of all of them. As the plan is implemented, MBO demands that the organization monitor a range of performance measures, designed to help it stay on the right path towards its objectives. The plan must be modified when this monitoring suggests that it is no longer leading to the desired objective (The Economist, 2009) 1|Page
  2. 2. Performance Management MBO at Hewlett-Packard References; Hewlett-Packard. (2012). Hewlett-Packard Company - Annual Report. Retrieved from Retrieved on 21/10/2013 The Economist. (2009). Idea: Management by objectives | The Economist. Retrieved from Retrieved on 21/10/2013 Tosi, H., & Carroll, S. J. (1973). Improving Management by Objectives : A Diagnostic Change Prpgrajm. California Management Review, 16(1), 57–67. Retrieved on 21/10/2013 2|Page