Since 2022, four executives from Hyundai Motor Group and external experts have gathered every Monday at 7:00 AM to read and discuss Peter Drucker’s Management. We share deep insights born from the convergence of field experience and diverse perspectives. This post is based on the session held on November 3, 2025, regarding “Chapter 34. Management by Objectives and Self-Control.”
Introduction
“I don’t feel at all that our company is managing based on ‘Management by Objectives and Self-Control.’ At best, we’re at a 30-40% level.” This was a candid diagnostic from one of our participants. Many companies set KPIs, measure performance, and conduct evaluations. So why do organizations often feel like they are standing still?
The most heated debate in this session was the realization that “the same result can have completely different meanings.” A result achieved while every member confirms their growth and autonomy through work is fundamentally different from a result that is simply “squeezed out.” Even when external performance looks good, this lack of self-control is why leaders and members often feel a sense of instability regarding long-term sustainability.
Key Takeaways from the Chapter: Deconstructing Myths of MBO
Myth 1. “A manager’s strict control leads to goal achievement”
Management by Objectives (MBO) is a concept every manager has heard of. However, Drucker emphasized “self-control” from the very beginning. These two were always meant to be a single, inseparable concept. Yet, in real-world management, “self-control” is often omitted.
The word “control” has two meanings: one is the ability to direct oneself and one’s own work; the other is one person dominating another. Drucker’s MBO must be the former—self-control. It should never be a tool for a boss or an administrative department to dominate others.
Myth 2. “Performance data is needed for efficient management by superiors”
Who is performance measurement information for? Drucker states clearly that it must be for the manager themselves. A manager must be able to measure their own performance against their goals. This information does not belong to the boss or a control department. It is not a tool for outside control, but a tool for the manager to exercise self-control over their own work.
Ironically, in the past, when measurement was difficult, self-control was often a necessity. Today, technology allows for granular measurement, but the danger is that this data can be used to strengthen control from outside. When this happens, morale plummets, and MBO degrades into a mere “numbers game.”
Myth 3. “If a leader articulates goals clearly, the organization will understand them”
Managers assume that setting clear, written goals ensures understanding. Yet, during evaluation seasons, we often see members who interpret goals entirely differently. Drucker explains that hierarchical structures inherently create Misdirection.
Not just a boss’s words, but their actions and even minor habits are taken as meaningful signals. For example, a plant manager who preached “human relations” but promoted those who handled accounting paperwork perfectly sent a clear signal: “Paperwork and cost-cutting are what really matter.”
To prevent such misdirection, Drucker proposes the “Manager’s Letter.” Twice a year, a manager writes a letter defining their goals, standards, and plans to share with their superior. This process reveals contradictions unknown even to the boss and serves as the starting point for genuine self-control.
Discussion: Our Reality and the Breakthrough
Same Results, Different Meanings
“Results achieved through growth and self-direction are entirely different from results that just happen. From the perspective of sustainability and corporate purpose, there is a lingering emptiness even when external performance is high.”
Participants argued that ‘MBO and Self-Control’ must become our core principle and the very foundation of how we operate. Tight performance management led by a few top executives or administrative departments might produce short-term quantitative results, but it fails to grow people. Ultimately, it cannot guarantee the sustainability of that growth.
Belief in Long-Term Investment
The problem is that our managers have not yet reached the level of becoming role models for self-control. We need long-term education and transition programs, especially for younger leaders. This is where the role of HRD is critical. The challenge is that current compensation and reputation systems do not always react to such long-term investments.
However, the company must invest with the belief that self-control-based management brings true innovation. This is not idealism. Without this shift, we will never grow “true managers” and will remain stuck at a “30-point performance management” level.
The Trap of “Isn’t that the leader’s job?”
Another hurdle for self-control is the “issue of connection.” Members often expect leaders to unilaterally hand down goals. In reality, goals should be co-created through Iteration between higher and lower levels. When members ask, “Isn’t goal setting the leader’s role?”, it reflects a misunderstanding. Self-control requires a shift in Attitude—the “this is my job” mindset must become part of the organization’s fundamental routine.
Conclusion: The “Manager’s Letter” as a Path to Genuine Freedom
“Self-control is a core right available to every employee in the workplace, and the very source of genuine freedom.” This was our final conclusion. If universities don’t teach this, the company must. We must help our young leaders internalize this so they can become agents of change. Where do we start?
The Manager’s Letter can be the starting point. This is a “charter of performance” where the subordinate manager defines:
- The goals of the superior and their own job as they understand them.
- The performance standards that they believe are being applied to them.
- What they must do to reach those goals and the major obstacles in the way.
- What the boss and the company do that helps or hinders them.
- The plan for achieving goals in the following year.
What drives a manager thereafter is not someone else’s command, but their own decision. At this point, stricter and more effective internal control replaces outside control. By converting objective needs into personal goals, performance is secured. Drucker called this Genuine Freedom.
“If I had clearly internalized this concept when I first became a team leader or an executive, I could have done so much better.”