What Is Management by Objectives (MBO)?

Management by objectives (MBO) is a 澳洲幸运5开奖号码历史查询:strategic management approach in which the performance goals of an organization are aligned with the objectives of its emp🅘loyees and management. The goal is to improve the organization’s performance by clearly defining objectives.

According to the theory, having a say in goal setting and action plans encourages par💮ticipation and commitment among employees, and aligns objectives across the organization.

Understanding Management by Objectives (MBO)

Management by objectives (also known as management by planning) is the establishment of a 澳洲幸运5开奖号码历史查询:management information system (MIS) to compare actual performance and achievements with the defined objectives. Practitioners claim the major benefits of M🗹BO are that it improves employee motivation and commitment and allows for better 𒊎communication between management and employees.

However, a cited weakness of MBO is that it unduly emphasizes setting goals to attain objectives, rather than working on a systematic plan to do so. Critics of MBO, such as 澳洲幸运5开奖号码历史查询:W. Edwards Deming, argue that setting particular goals like production targets leads workers to meet those targets by any means necessary, including shortcuts that result in poor quality.

In his book that coined the term, Peter Drucker set forth several principles for MBO. Objectives are laid out with the help of employees and are meant to be challenging but achievable. Employees receive daily feedback, and the focus is on rewards rather than punishment. Personal growth and development are emphasized, rather than negative feedback for failing to reach objectives.

Steps of MBO

MBO outlines five steps🌟 that organizations should use to put the management technique into practice.

1. Either determine or revise organizational objectives for the entire company. This broad overview should be derived from the firm’s mission and vision.
2. Translate the organizational objectives to employees. In 1981, George T. Doran used the acronym SMART (specific, measurable, acceptable (or achievable or attainable), realistic (or relevant), time-bound) to express the concept.
3. Stimulate the participation of employees in setting individual objectives. After the organization’s objectives are shared with employees from the top to the bottom, employees should be encouraged to help set their own objectives to achieve these larger organizational objectives. This gives employees greater motivation since they have greater empowerment.
4. Monitor the progress of employees. In this way, managers can measure and track the goals set by employees. As step two states, a key component of the objectives is that they are measurable for employees and managers to determine how well they are met across a given time frame.
5. Evaluate and reward employee progress. This step includes honest feedback on what was achieved and not achieved for each employee.

Advantages and Disadvantages of MBO

MꩵBO comes wit🤡h many advantages and disadvantages.

Advantages

• Employees take pride in their work and are assigned goals they know they can achieve that match their strengths, skills, and educational experiences.
• Assigning tailored goals brings a sense of importance to employees, boosting their output and loyalty to the company.
• Communication between 澳洲幸运5开奖号码历史查询:management and employees is increased.
• Management can create goals that lead to the success of the company.

Disadvantages

• As MBO is focused on goals and targets, it often ignores other parts of a company, such as the culture of conduct, a healthy work ethos, and areas for involvement and contribution.
• Strain is increased on employees to meet the goals in a specified time frame.
• Employees are encouraged to 澳洲幸运5开奖号码历史查询:meet targets by any means necessary, meaning that shortcuts could be taken and the quality of work compromised.
• If management relies solely on MBO for all management responsibilities, it can be problematic for areas that don’t fit under MBO.

The Bottom Line

As a theory, MBO makes a lot of sense: If employees are involved🍬 in setting company goals, they are mor🅰e likely to share management’s objectives, work harder, and deliver.

However, there’s also a good reason why MBO is widely criticized. Like most things that look good on paper, it doesn’t always work in practice. The keys are to be aware of its drawbacks, custo🌺mize the plan according to your organization, ensure that everyone is fully on board, and identify objectives that are clear and reasonable before putting them into action.