After a round of performance reviews with my team, I’m so with Jonathan Becher about the pitfalls of management by objectives (here). It is easy to fall into the vicious cycle he describes, where
MBOs that measure outputs, rather than impact, [which then] cause outputs to decrease. Which encourages more bad management by bad objectives.
Poor MBO procesess also tend to encourage Pareto suboptimal solutions to business problems, especially when coupled with an out-of-whack incentive structure. Like where the incentives for individual objectives — oh, let’s say bonus payments for objective achievement — outweigh those for more organization-wide objectives (e.g., firm margin, revenue growth, market share).
Not that I’ve seen that anywhere…