Tom Clay is the chief executive officer of Mayberry Company. Clay has a financial management background and is known throughout the organization as a “no-nonsense” executive. When Clay 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 Clay 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 Clay, Mayberry has once again become financially stable and profitable after several years of poor performance. 

Recently, Clay 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 Clay incorporate the human value premises and goals of MBO? Explain your answer.