 What
is Management by Objectives? Description
MBO relies on the defining of objectives for each employee and then to
compare and to direct their performance against the objectives which have
been set. It aims to increase the performance of the organization by matching
organizational goals with the objectives of subordinates throughout the organization.
Ideally, employees receive strong input to identify their objectives, time
lines for completion, etc.
MBO includes continuous tracking of the processes and providing feedback to
reach the objectives.
Peter Drucker
Management by Objectives was first outlined by Peter Drucker in 1954 in
his book 'The practice of Management'. According to Drucker managers should
avoid 'the activity trap', getting so involved in their day to day activities
that they forget their main purpose or objective. One of the concepts of MBO
was that instead of just a few top-managers, all managers of a firm should
participate in the strategic planning process, in order to improve the implementability
of the plan. Another concept of Management by Objectives was, that managers
should implement a range of performance systems, which are designed to help
the organization to function well. Clearly, Management by Objectives can thus
be seen as a predecessor of
Value Based Management.
Principles of Management by Objectives
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Cascading of organizational goals and objectives,
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Specific objectives for each member,
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Participative decision making,
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Explicit time period, and
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Performance evaluation and provide feedback.
Management by Objectives also introduced the SMART method for checking
the validity of the objectives, which should be 'SMART':
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Specific
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Measurable
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Achievable
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Realistic, and
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Time-related.
In the 90s, Peter Drucker put the significance of this organization management
method into perspective, when he said: "It's just another tool. It is not
the great cure for management inefficiency... Management by Objectives works
if you know the objectives, 90% of the time you don't."
Recent User Comments
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anjali - india
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MBO |
"I loved this article and comments. I think MBO is the best PMS which helps organisation and the employee to attain its goal to the maximum. I am writng a dissertaion on MBO and its importance in Construction Industry. I would like to collect material related to the same. Can anyone help?" |
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Amit Srivastava - India
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SMART Management |
"A very nice article. Organizations transcend from good to great because people use SMART goals as foundation for every day work and strive every day to beat the goals." |
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Robert - Ireland
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Disadvantages of MBO? |
"I'm trying to build a complete list of all disadvantages of Management by Objectives: 1. May lead to suboptimalization: people or departments are not stimulated to look beyond their own objectives and help eachother. 2. Innovation is not stimulated. 3. The time and paperwork involved. 4. Potential misuse by superiors who simply assign (rather than negotiate) objectives. 5. Subordinates may try to negotiate easy goals. 6. Watch out for unrealistic (too high) expectations about what can be reasonably accomplished. 7. Inflexible, rigid." |
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lui - philippines
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MBO |
"very relevant for student leader's who would like to practice MBO - SMART, - it will lead the organization into what they heading for." |
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Heylen - Belgium
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Essence of MBO |
"MBO somewhat resembles farming, each animal or plant is allowed to individually produce a product. The farmer is there to give guidance, to control and support the process. Whatever you can imagine for a farmer to do wrong, actually also applies to managers applying MBO. This includes negligance through abdication of authority, failing logistical support, lack of forecasting future demand, etc." |
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Best User Comments
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Ana - UK
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SMART GOALS |
"Does anyone know the reference for SMART goals?
I checked in Peter Drucker’s book: “The practice of management” and did not find it.
Is really Peter Drucker who invented this acronym?
Thank you," |
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Frank - Netherlands
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SMARTIE! |
"We often use 2 extra terms: Inspiring en Enthousiasm. It puts the word SMART into another perspective. If your people don´t accept the objectives, it won´t work...." |
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FRED - PHILIPPINES
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MANAGEMENT |
"This article is nice... Thank you. Because without this article, I cannot do my report...." |
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Kojo - Ghana
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SMART goals |
"SMART goals means the goals or objectives must be specific, measurable, attainable, realistic and time bound. The submission is an indication of the deep thought proponents of the theory gave to the subject since it is all embracing and says it all." |
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Bashir - Jordan
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SMART Management |
"(Smart) the title and the contents are both wonderful. I now know something new." |
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