Management by Objective MBO

Management by Objectives (MBO) is a personnel management technique where managers and
employees work together to set, record and monitor goals for a specific period of time.
Organizational goals and planning flow top-down through the organization and are translated into
personal goals for organizational members. The technique was first championed by management
expert Peter Drucker and became commonly used in the 1960s.
Key Concepts
The core concept of MBO is planning, which means that an organization and its members are not
merely reacting to events and problems but are instead being proactive. MBO requires that
employees set measurable personal goals based upon the organizational goals. For example, a goal
for a civil engineer may be to complete the infrastructure of a housing division within the next twelve
months. The personal goal aligns with the organizational goal of completing the subdivision.
MBO is a supervised and managed activity so that all of the individual goals can be coordinated to
work towards the overall organizational goal. You can think of an individual, personal goal as one
piece of a puzzle that must fit together with all of the other pieces to form the complete puzzle: the
organizational goal. Goals are set down in writing annually and are continually monitored by
managers to check progress. Rewards are based upon goal achievement.
Advantages
MBO has some distinct advantages. It provides a means to identify and plan for achievement of
goals. If you don't know what your goals are, you will not be able to achieve them. Planning permits
proactive behavior and a disciplined approach to goal achievement. It also allows you to prepare for
contingencies and roadblocks that may hinder the plan. Goals are measurable so that they can be
assessed and adjusted easily. Organizations can also gain more efficiency, save resources, and
increase organizational morale if goals are properly set, managed, and achieved.
Disadvantages
However, MBO is not without disadvantages. Application of MBO takes concerted effort. You cannot
rely upon a thoughtless, mechanical approach, and you should note that some tasks are so simple
that setting goals makes little sense and becomes more of silly, annual ritual. For example, if your job
is snapping two pieces of a product together on an assembly line, setting individual goals for your
work isn't really necessary.
Rodney Brim, a CEO and critic of the MBO technique, has identified four other weaknesses. There is
often a focus on mere goal setting rather than developing a plan that can be implemented. The
organization often fails to take into account environmental factors that hinder goal achievement, such
as lack of resources or management support. Organizations may also fail to monitor for changes,
which may require modification of goals or even make them irrelevant. Finally, there is the issue of
plain human neglect - failing to follow through on the goal.
Management by objectives (MBO), also known as management by results (MBR), was first
popularized by Peter Drucker in his 1954 book The Practice of Management.[1]Management by
objectives is the process of defining specific objectives within an organization that management can
convey to organization members, then deciding on how to achieve each objective in sequence. This
process allows management to take work that needs to be done one step at a time to allow for a
calm, yet productive work environment. This process also helps organization members to see their
accomplishments as they achieve each objective, which reinforces a positive work environment and
a sense of achievement.[2] An important part of MBO is the measurement and comparison of the
employee's actual performance with the standards set. Ideally, when employees themselves have
been involved with the goal setting and choosing the course of action to be followed by them, they
are more likely to fulfill their responsibilities.[3]
According to George S. Odiorne, the system of management by objectives can be described as a

process whereby the superior and subordinate jointly identify its common goals, define each
individual's major areas of responsibility in terms of the results expected of him or her, and use these
measures as guides for operating the unit and assessing the contribution of each of its members.
Features and advantages[edit]

The principle of MBO is for employees to have a clear understanding of their roles and the
responsibilities expected of them, so they can understand how their activities relate to the
achievement of the organization's goals. MBO also places importance on fulfilling the personal goals
of each employee.
Proponents argue that benefits of MBO include:
1. Motivation Involving employees in the whole process of goal setting and increasing
employee empowerment. This increases employee job satisfaction and commitment.
2. Better communication and coordination Frequent reviews and interactions between
superiors and subordinates help to maintain harmonious relationships within the
organization and also to solve problems.
3. Clarity of goals.
4. Subordinates tend to have a higher commitment to objectives they set for themselves than
those imposed on them by another person.
5. Managers can ensure that objectives of the subordinates are linked to the organization's
objectives.
6. Common goal for whole organization means it is a unifying, directive principle of
management.

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Management by Objectives (MBO) is a personnel management technique where managers and

According to George S. Odiorne, the system of management by objectives can be described as a

Features and advantages[edit]

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