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In his final article on management theories, Dr Tony Grundy looks at objectives, motivation, transformation and governance


Management comes in many forms. This month, we consider management by objectives, motivation, organisational transformation and corporate governance.

Management by objectives (MBO)

This was a way of dealing with the age-old problem of delegation: most managers - especially newly promoted ones - struggle with leaving subordinates to get on with things and try to do it all themselves. One of the economic points of leadership is to leverage the more 'drone-like' resources of staff with lesser skills by giving them guiding frameworks of what they are setting out to achieve. Poor delegation means the job is done twice - and by a more expensive resource.

MBO supports delegation by setting a more global sense of direction while leaving it up to staff to sort out the minutiae of how they actually do the work. It is linked with the idea of empowerment, with decisions being taken lower down the organisation.

MBO could be defined as 'setting a clear direction and aims without necessarily predetermining how that will be achieved and delegating much of the responsibility for making the 'how' decision'.

Empowerment is about encouraging staff wherever possible to be proactive and creative and solve problems with support and coaching from above, rather than just waiting to be told what to do.

MBO was popularised by management expert Peter Drucker decades ago. His idea has the virtues of relevance and simplicity, and helps combat micromanagement. Its relevance can be observed frequently in everyday management situations.

One of the key jobs of an MBO leader is thus to set objectives and to coach staff to achieve them, like a football manager, rather than dictating exactly how the ball should be kicked.


Motivation is another key leadership function. It can be defined in a management context as 'the innate and socialised drives that influence determined behaviour to achieve goals'.

The definition can be unpacked as follows:

  • innate: in part, the drives are instinctive
  • socialised: the drives reflect the desire to belong to a wider group, and the need for status and achievement
  • drives: they are part-conscious and part-unconscious.

Motivation is about understanding how people tick. Implicit is the thought that managers somehow have to influence staff to put themselves out so they produce over and above the minimum needed to get by. The idea has spawned a whole literature that appears to be dedicated to brainwashing people to stretch themselves.

As someone pointed out to me the other day: 'There are lots of people who show up every day and try to do the minimium: why stretch yourself?'

The manipulative element in the motivation model doesn't quite come off as most organisations operate in competitive environments. Where employees in the aggregate are competitive, then the whole organisation is better off: more growth, opportunity, choice, money and security.

So if we were to accept that high motivation was probably a good thing, then how might we go about promoting it?

The main motivation levers are:

  • performance management
  • rewards and recognition
  • incentives, bonuses and perks
  • training and coaching
  • having a manager who is a great leader
  • working conditions
  • manageable stress levels and good support
  • a 'feel-good' organisation and culture - very important
  • a sense of vision, strategy and purpose.

The main demotivation levers are:

  • perception that the company is mean
  • lack of positive feedback
  • too much negative feedback
  • insecurity
  • perception of unfairness
  • the wrong kind of politics
  • threats and bullying
  • the organisation is failing or has messed up - especially if its reputation is tarnished.

One theorist - Abraham Maslow in 1943 - split these motivational factors up into a 'hierarchy of needs', the implication being that if the most basic requirements are not met, such as physical comfort and safety, then there is little interest in aspects that are more about higher things like 'self-actualisation'.

In 1959 Fredererick Hertzberg introduced 'motivator-hygiene factors' to the model. This two-factor theory saw job satisfaction and job dissatisfaction acting independently of each other. A motivator factor is something that is a distinctive turn-on (eg, recognition, responsibility) while a hygiene factor is something which doesn't turn your motivation on but is a big turn-off if not present (eg, job security, fringe benefits).

Organisational transformation

This is another name for what was once called strategic change (and before that, managing change).

I once defined strategic change as the evolution of an organisation's strategy, structure and culture to respond to its environment.

Organisational transformation I would define as 'a dynamic evolution of the organisational model such that over a period its character has undergone a tangible shift; even though many of its fundamental capabilities have not changed, they might now be applied to doing things in new ways'.

So it is more internally focused than the idea of strategic change and is positioned somewhere between more incremental change and more radical or revolutionary change, at least in terms of meaning.

These are subtle differences but they are valid.

Transformational change requires visionary leadership, which in turn implies the need for transformational leadership - a term that can be traced all the way back to Bernard Bass in 1978.

Transformational leadership can be defined as 'leadership which seeks to inspire and fundamentally reshape the performance of staff by looking at all aspects of organisational capability, structure, behaviour and mindsets, and reshaping that'.

These are grand words and most managers may not have a clue about how that could be accomplished.

A lot of this isn't about complicated analysis but about how you state the obvious about where you are going, where you are now, what the gap is and how you are going to get across it. Yes, we are back where we started around a year or so ago - strategy.

It is also about having an overall map of all the key change projects and how and when they will fit together to deliver that strategy. Finally, it is about having a very real sense of the people issues and how you come over when you are having these deep conversations with people.

Corporate governance

Corporate governance can be defined as 'the policies, controls and processes that will help ensure that organisations are run in a responsible, guided way and are not driven off course in risky and damaging ways by sectional or personal interests and ambitions'.

Corporate governance grew up after the Enron disaster with the Sarbanes-Oxley legislation in the US to try to restrain rogue boards and CEOs. This was accompanied, particularly in the UK, by more voluntary codes of practice - eg, encouraging the appointment of non-executive directors to act as checks and balances against concentrations of power. But the question remained as to whether these processes were both necessary and sufficent to ensure that governance was duly executed.

The problem as I see it lies at least partly elsewhere: that it is all too often subverted by one or two key individuals who become intoxicated by a wicked cocktail of greed, power and accomplishment - often fuelled by ego. They are often pretty bright and may have got addicted to gambling with the business.

Such individuals, I suspect, are particular psychological types. This is the root cause of much of the problem and these accidents will always keep on happening if we don't address that.

Frankly, when individuals come up through the organisation with huge drive and are very bright they can carve a path through it with some charisma. Instead of weeding out such unstable people, the HR department may actually applaud their pushiness. Those who have floated around the top in corporate life have usually come across one or two such characters.

In conclusion, beware of thinking that checks and balances will always be effective - they may not be. The most important aspects here are behavioural and not processes.

If you are an accountant who happens to be looking for a new job, look beyond the formal processes and to the leadership and the agendas of the organisation before you take a job there. Otherwise you may end up being asked to look the other way - or find yourself out on the street…


Last updated: 10 Sep 2014