Management by Objectives. SMART

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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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Compare with Management by Objectives: CSFs and KPIs  |  Scientific Management  |  Value Based Management  |  Results-Based Leadership  |  RACI  |  Change Management  |  Seven Habits  |  Seven Surprises  |  Path-Goal Theory  |  Leadership Continuum  |  Result Oriented Management  |  Hoshin Kanri - Policy Deployment

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