In Edgar Schein's groundbreaking book, Organizational Psychology,1 he opines that:

"The first major problem of groups in organizations is how to make them effective in fulfilling both organizational goals and the needs of their members. The second major problem is how to establish conditions between groups which will enhance the productivity of each without destroying intergroup relations and coordination. This problem exists because as groups become more committed to their own goals and norms, they are likely to become competitive with one another and seek to undermine their rivals' activities, thereby becoming a liability to the organization as a whole. The overall problem, then, is how to establish collaborative intergroup relations in those situations where task interdependence or the need for unity makes collaboration a necessary prerequisite for organizational effectiveness." (emphasis added)

This seems to be a reasonable reflection of reality. Given this, one should be especially careful about using Management by Objectives (MBO), especially when the objectives and their measures are not fully aligned. This is particularly true when there is a high degree of interdependence between groups, but the groups are held accountable for different and sometimes oppositional measures. Two groups that clearly fit this description are production and maintenance in a manufacturing plant. The opportunity for conflict is very high, increasing the likelihood for poorer overall performance, despite clear individual group objectives. For example, in a manufacturing plant, it is common for production to have...