The Application of Management by Objectives to an Engineering Organization
Authors: Adams R.H. , Sauer W.D. 
Published: December 2007

This paper was prepared for the 44th Annual Fall Meeting of the of the Society of Petroleum Engineers of AIME, to be held in Denver, Colo., Sept. 28-Oct. 1, 1969. Permission to copy is restricted to an abstract of not more than 300 words. Illustrations may not be copied. The abstract should contain conspicuous acknowledgment of where and by whom the paper is presented. Publication elsewhere after publication in the JOURNAL OF PETROLEUM TECHNOLOGY or the SOCIETY OF PETROLEUM ENGINEERS JOURNAL is usually granted upon request to the Editor of the appropriate journal, provided agreement to give proper credit is made.

Discussion of this paper is invited. Three copies of any discussion should be sent to the Society of Petroleum Engineers office. Such discussion may be presented at the above meeting and, with the paper, may be considered for publication in one of the two SPE magazines.

The Producing Department of the Standard Oil Company of California, W.O.I., has for the past number of years been conducting a program past number of years been conducting a program of decentralization of accountability and responsibility to the lowest acceptable level of management - a District. Concurrent with this decentralization during the past two years has been the acceptance, implementation, and application of the concept of Management by Objectives. This concept involves the setting of realistic goals to accomplish an optimum performance in the area of: performance in the area of:

Profit Reserves Manpower Safety Training

The attainment of these goals is premised upon the successful completion by each District of a predetermined detailed operating plan.

This paper presents the application of this concept to the-engineering organization of a District. A basic discussion about the program, its conception and application is included. Generalized forms, curves, and reporting procedures are discussed. Some of the advantages and procedures are discussed. Some of the advantages and disadvantages of the objectives concept as observed from the District profit center are reviewed.

The paper concludes that encouraging results can be obtained in improved accomplishment of the five goals through total involvement of all working segments. The challenge of authorship and personal participation in setting the objectives tends to increase efficiency, creativity and morale.

Introduction

A prime requisite of successful management is to assure the minimization of loss, the optimization of profit, and the perpetuation of the business. Profit is our business. As early as January, 1967, when the decentralization of authority, responsibility and accountability was being emphasized within our company, the concept of sound planning, effective organization, and maximizing the use of the talents of our manpower to achieve optimum profits became even more apparent. Motivation for this effort was encouraged by attendance at a Management by Objectives Seminar conducted by Mr. Howard Mold under the auspices of the training center of the California Institute of Technology. The basic concept, as presented during the seminar, suggested that "if a manager cannot or does not state in advance of the time required for action, his objectives in writing and in detail, he cannot know for sure what he is doing." Either he runs his job or his job runs him.