Roger Ravenhill is the CEO of Haida Company. Ravenhill has a financial management back- ground and is known throughout the organization as a “no-nonsense” executive. When Ravenhill became CEO, he emphasized cost reduction and savings and introduced a comprehensive cost control and budget system. The company goals and budget plans were established by Ravenhill 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 Roger Ravenhill, Haida has once again become financially stable and profitable after several years of poor performance.
Recently, Ravenhill 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 MBO entails and identify its advantages and disadvantages.
2. Does Roger Ravenhill’s management style incorporate the human-value premises and goals of MBO? Explain your answer.