Management by Objectives

MBO is one of the rational school of management's successful products

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• What is MBO• The Core Concepts of MBO• MBO Principles• The Five Step MBO Process

What is MBO

• MBO is a systematic and organized approach that allows management to focus on achievable goals and attain the best possible results from available resources.

What is MBO

• MBO aims to increase organizational performance by aligning goals and subordinate objectives throughout the organization.

What is MBO

• Employees get strong input in identify their objectives, time lines for completion, etc. MBO includes ongoing tracking and feedback in the process to reach objectives.

The Core Concepts of MBO

• According to Drucker managers should “avoid the activity trap”, getting so involved in their day to day activities that they forget their main purpose of objective. Instead of just a few top-managers, all managers should:

The Core Concepts of MBO

• 1. Participate in the strategic planning process, in order to improve the implement ability of the plan, and

The Core Concepts of MBO

• 2. Implement a range of performance systems, designed to help the organization stay on the right track.

MBO Principles

• Cascading of organizational goals and objectives.

MBO Principles

• Specific objectives for each member

MBO Principles

• Participative decision making

MBO Principles

• Explicit time period

MBO Principles

• Performance evaluation and feedback

The Five Step MBO Process

• Set or Review Organizational ObjectivesMBO starts with clearly defined strategic organizational objectives. If the organization isn't clear where it's going, no one working there will be either.

The Five Step MBO Process

• Cascading Objectives Down to EmployeesTo support the mission, the organization needs to set clear goals and objectives, which then need to cascade down from one organizational level to the next until they reach the everyone.

The Five Step MBO Process

• Encourage Participation in Goal SettingEveryone needs to understand how their personal goals fit with the objectives of the organization. This is best done when goals and objectives at each level are shared and discussed, so that everyone understands "why" things are being done, and then sets their own goals to align with these.

The Five Step MBO Process

• Monitor ProgressSet up a specific plan for monitoring goal performance (once a year, combined with a performance review is not sufficient!) Badly-implemented MBO tends to stress the goal setting without the goal monitoring. Here is where you take control of performance and demand accountability.

The Five Step MBO Process

• Evaluate and Reward PerformanceMBO is designed to improve performance at all levels of the organization. To ensure this happens, you need to put a comprehensive evaluation system in place.