Management by objectives in the R&D environment — A simulation

A System Dynamics model of the interrelations in an R&D organization between management by objectives (MBO), social interaction, and employee motivation and productivity is presented. In many cases, MBO is shown to increase employee productivity by generating task-related work pressures. However, longer run counter-acting decreases in productivity may result if management neglects the negative effects of task pressure on social interaction. Policies are discussed for managing these positive and negative effects inherent in MBO.