Tom Torres is the chief executive officer of Mayberry
Company. Torres has a financial management background and is known
throughout the organization as a “no-nonsense” executive. When Torres
became chief executive officer, he emphasized cost reduction and savings and
introduced a comprehensive cost-control and budget system. The company
goals and budget plans were established by Torres and given to his subordinates
for implementation. Some of the company’s key executives were dismissed or
demoted for failing to meet projected budget plans. Under the leadership of Tom
Torres, Mayberry has once again become financially stable and profitable after
several years of poor performance.
Recently, Torres has become concerned with the human side of the organization
and has become interested in the management technique referred to as
“management by objectives (MBO).” If there are enough positive benefits of MBO,
he plans to implement the system throughout the cOmpany. However, he realizes
that he does not fully understand MBO because he does not understand how it differs
from the current system of establishing firm objectives and budget plans.
1. Briefly explain what “management by objectives” entails and identify
its advantages and disadvantages.
2. Does the management style of Tom Torres incorporate the human
value premises and goals of MBO? Explain your answer.