The unintended consequences of management by objectives: the volume growth target at Volvo Cars

Abstract

PurposeIn order to lead and control large organisations, top managers could use objectives as an integrative mechanism and a driver of change. This paper aims to study the overall volume target of Volvo Cars regarding the consequences it has on organisational practices.Design/methodology/approachInterviews with relevant managers at Volvo Car Corporation were conducted.FindingsDifferent interpretations of a seemingly clear objective, different views on both the rationale for and possible direction of the needed change and an increasing gap between middle and top managers are organisational responses to the demanding volume ambition. The response from the interviewed managers was more emotional than expected, resulting in an overall sense of target fatigue in the studied organisation.Research limitations/implicationsThe study suggests that the lack of academic research interest in the management by objectives (MBO) discourse is misleading. Rather than dismissing MBO as what is an outmoded management fad, management researchers should examine how MBO is used in practice.Practical implicationsOrganisations rely on objectives, but such objectives need to be translated into detailed actions by top management. The creation of meaning and actual means to fulfil the targets is an important dimension to consider for managers wanting to manage the organisation by using objectives. Organisational context and cultural obstacles must not be neglected.Originality/valueThe paper offers a unique insight into how a major automotive company deals with long‐term objectives. In addition, the paper calls for a renewal of research on MBO.