Management by Objectives. SMART
(Drucker)

Defining objectives for employees and directing their performance against these objectives. Explanation of Management by Objectives of Peter Drucker. ('54). SMART.

Peter Drucker - Management By ObjectivesWhat 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

  • Cascading of organizational goals and objectives,

  • Specific objectives for each member,

  • Participative decision making,

  • Explicit time period, and

  • Performance evaluation and provide feedback.

Management by Objectives also introduced the SMART method for checking the validity of the objectives, which should be 'SMART':

  • Specific

  • Measurable

  • Achievable

  • Realistic, and

  • 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."

 

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Recent User Comments
Helen - Ireland SMART "What would be the best SMART objectives to set for the first-line manager, who just started on the job in the retail industry in the current economic crisis"    6
Abdul Wahab - Saudi Arabia SMART is a SMART Way to think of MBO and Drucker "The last time I saw Dr. Peter Drucker was in the early 1990s, in Dallas. He was at the peak of his age. He was smart as usual. SMART is a smart way of characterizing goals\objectives."    0
Raphael - Cameroon Management Without Objectives "Is it possible to manage without objectives? Even when we don't seem to detect clearly the objectives of a particular management, there must be some kind of objective. In this way, we are tempted to ask what's new in Drucker's MBO, if not simply clarifying the concept."    0
Shelle - USA Responsibility Based Management "I worked for a very successful company that uses these principles. I must say, I became a better associate and person because of it. We called it Responsibility Based Management (RBM). As a trainer turned RN (mid-life change) I still find the implementation of the principles timely. SMART is awesome...use it to develop goals in patient care as well!"    0
Amit - India MBO and SMART are nice "This is very nice, both concepts are applicable in any, small to big organization. It gives satisfaction to all levels of employees."    2
Best User Comments
Robert - Ireland 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."		    51
lui - philippines MBO "very relevant for student leader's who would like to practice MBO - SMART, - it will lead the organization into what they heading for."    47
Heylen - Belgium 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."    44
Ana - UK 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,"    40
Amit Srivastava - India 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."    39
Frank - Netherlands 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...."    19
FRED - PHILIPPINES MANAGEMENT "This article is nice... Thank you. Because without this article, I cannot do my report...."    11
Bashir - Jordan SMART Management "(Smart) the title and the contents are both wonderful. I now know something new."    9
 - Russia Achievable vs. Realistic "I don`t see much difference between the terms "Achievable" and "Realistic", I`d rather say "Results-oriented" or "Results-directed"."    8
Chipo - Zimbabwe MBO "Does MBO work in times of uncertainity and change?"    3

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  ●  (India) smart "Smart is the guide line to achieve the desire goals"

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  ●  (United States) Management by Objectives "I agree with this stament. Not only is it helpful to employees, but to students as well. I recommended this site to all my fellow classmates."

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  ● Martin (USA) MBO Disadvantages "Here's a couple of weaknesses in the MBO assumption base that I use:
1. It emphasizes the setting of goals over the working of a plan.
2. It underemphasizes the importance of the environment or context in which the goals were set. That context includes everything from the availability and quality of resources, to relative buy-in by leadership and stakeholders.
3. It doesn't address the importance of successfully responding to obstacles and constraints as essential to reaching a goal. The model didn’t adequately cope with the obstacles of:
· Defects in resources, planning and methodology,
· The increasing burden of managing the information organization challenge,
· The impact of a rapidly changing environment, which could alter the landscape enough to make yesterday’s goals and action plans irrelevant to the present."

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  ● Kingsley (Nigeria) Human Resources "What exactly are the steps and relevance of Management By Objective?"

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  ● Ken (England) SMART "I think the SMART acronym is often misrepresented as Specific Measurable Achievable Realistice and Timebound. I think people have difficulty with the Achievable and Realistic elements. Try Specifc Measurable Alligned Relevant and Timebound. I think it is much better and I actually think this is the correct acronym. Why? Would a Vinci have designed a Helicopter with the usual acronym. Think Realistic!!!"
  ● Markus (Germany) Who invented SMART "I really would like to know when the acronym smart was firstly used and who used it."

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  ● Shahadat (Bangladesh) Is MBO operational? "Is Management By Objectives an operational everyday job? If yes, how?"
  ●  (INDIA) SMART Mgt. "Hi.. Actualy i realized that in my own organization."

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  ● farrokh mehta (india) SMART Goals "Make it SMARTER. Goals must be Energising and Reviewed"

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  ●  (Russia) MBO report "Hello. Could you tell me about your report. It would be very interesting 2 read it."

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  ● Gemma (UK) MBO - SMART "Achievable v realistic... Is achievable more relevant to the individual completing the tasks? Whilst realistic may tak into account external factors out of the control of the individual?"
  ● Pam (USA) SMART: Achievable vs Realistic "An easy way to see the difference between achievable and realistic is with weight loss. Is having a goal of losing twenty pounds in two weeks SMART? It is specific, measurable, achievable, but losing twenty pounds in two weeks is not realistic. Changing the time frame can make this achievable and realistic."

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