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.
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':
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."
Special Interest Group
Management by Objectives, SMART Special Interest Group.
SMARTER Management by Objectives
In the 90s when Drucker refined his 1954 work on MBO, he puts in the caveat "if you know the objectives… 90% of the time you don't".
This meant to me that we work 90% of the time without a bearing an...
Management by Objectives and Clear Objectives
MBO gives clear direction to an employee what he is paid to do.... Under SMART whatever you do beyond set objectives goes in vain... Clearly defined objectives will be a greater use to him to avoid th...
Great Book on Management by Objectives
A great book I wrote to learn about Management by Objectives is "Performance Reviews, The Bad, The Ugly... The Alternative".
Traditional employee performance reviews are mandated in most companies bu...
Management by Initiatives!
To my personal considerations, MBO has had its day. It's time to add a new dimension to this 'age old' management style which reminds me of macho-management of the 60's and 70's (sic).
What should r...
Mission Statements and Management by Objectives
Many organisations have a mission statement that tries to encapsulate the overall strategic management of their company.
Such statements are designed to implicitly state the organisations objectives ...
SMART is Always Smart...
This is called you define your objectives... Though the implementation is tough.. The results are far from your imagination... Thats how they say... "good things don't come easily" - good to read it h...
Circumstances for Management By Objectives?
MBO is applicable in the right situation / circumstances only: in small and middle business scale. My experience is not really good when I was CEO for a big company with over 3,000 workers with hetero...
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Reference of 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?
The Essence of Management by Objectives (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 f...
Disadvantages of Management by Objectives?
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 an...
Management by Objectives, SMART, Business Performance Management, Balanced Scorecard, KPIs, CSFs In most organizations it is very common to specify organizational targets with the aim of increasing performance. This s...