2 What is managerial effectiveness?

There are no absolute measures of managerial effectiveness. Organisations have aims and objectives, and managers are effective when they help their organisation to achieve these aims and objectives. Thus, it is important that every manager (and employee) knows the purpose of their organisation, the purpose of their job and the work-specific objectives they must meet.

There are various ways of explaining the purpose of a job, and we consider two approaches here.

The most common term is key performance indicators, or KPIs. Setting KPIs is often an organisation-wide process. One version of this process is Management by Objectives. Variations of this are found in all types of organisations, although the process is often no longer referred to as Management by Objectives.

Management by Objectives aims to identify key areas in a person’s work and to set targets against which his or her performance (or effectiveness) may be measured.

Management by Objectives is a simple idea which often proves to be very difficult to apply. Peter Drucker, a well-known writer on management, suggests that effective managers follow the same eight practices. They:

The first two practices give managers the knowledge they need. The next four help them convert this knowledge into effective action. The last two ensure that the whole team or organisation feels responsible and accountable. Most of the practices are applicable at all levels of management.