Management by objectives steps

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Management by objectives steps
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Management by objectives (MBO) is a systematic process, involving following steps:

  1. Systematization of business objectives. The postulated model of management makes sense only if it is implemented throughout the company and across organizational unit at all levels of management as a system of formal, officially declared rules. It includes a series of procedures and instructions for implementation.
  2. Designation by managers and subordinates of intermediate objectives correlated with strategic goals of whole company.
  3. Building participation in employees. Management by objectives requires the adoption of the style of leadership based on a large dose of confidence in the employees and the belief that increasing the degree of self-reliance is the way to realize the potential of people.
  4. Strategic and operational planning. Linking individual goals with overarching strategic objectives. The tasks of the unit, should contribute to the long-term goals of the company. In this regard, particular responsibility rests on the shoulders of senior and middle managers - it relates to communicate to employees strategic objectives and policies of the company and attentive, but not overly critical assessment of individual plans from the point of view of convergence with the aspirations of the organization.
  1. Regular control of objectives belonging to the area of ​​strategic decision-making and to an area of ​​personal freedom of action.
  2. Large degree of individual freedom in the implementation and execution phase, withdrawal from directive management style. Although it requires a manager to show the courage and confidence to the worker, risk is significantly lower when a worker himself, took part in setting his goals. They are usually realistic and filled with commitment, which greatly reduces the likelihood of failure.
  3. Evaluation of the effectiveness of management and staff, feedback on the results. The intention of management by objectives is to rationalize the monitoring and evaluation process. This system allows the simultaneous achievement of both: to control the degree of implementation of tasks and evaluation of employees. The assessment must be carried out regularly (usually in a series of six or twelve months), be systematic and based on transparent criteria. To fulfil its tasks it must be done in accordance with the principle of participation. Its result is not only to estimate the achievements and suitability of the employee, but also giving him feedback, guidance for the future, choice of appropriate training, suggestion for modification of individual path of development.

See also:


  • Drucker, P. F. (1995). People and performance: The best of Peter Drucker on management. Routledge.
  • Greenwood, R. C. (1981). Management by objectives: As developed by Peter Drucker, assisted by Harold Smiddy. Academy of Management Review, 6(2), 225-230.
  • Drucker, P. F. (1954). Management by objectives and self-control. Practice of Management.
  • Drucker, P. F. (1959). Long-range planning-challenge to management science. Management science, 5(3), 238-249.