Management by objectives steps

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.
5. Regular control of objectives belonging to the area of ​​strategic decision-making and to an area of ​​personal freedom of action.
6. 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.
7. 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:

• Objectives of the organization

Examples of Management by objectives steps

1. Establish Goals: The first step in implementing a successful MBO program is to establish specific, measurable goals that are based on the organization's overall strategy. The goals should be set in consultation with employees and should be agreed upon by all involved parties.
2. Set Objectives: Once the goals have been established, objectives should be set that are directed towards reaching the goal. These objectives should be measurable and achievable and should contain a timeline for completion.
3. Monitor Progress: The progress of the MBO program should be monitored on a regular basis. This can be done through regular performance reviews and feedback sessions with employees.
4. Reward and Recognize: Once the goals and objectives have been achieved, it is important to recognize and reward employees for their contributions. This could be in the form of bonuses, promotions, or other forms of recognition.
5. Evaluate and Reassess: Finally, it is important to evaluate the MBO program and reassess the goals and objectives as the organization's needs and strategies evolve. This can help ensure that the program is still relevant and effective.

Advantages of Management by objectives steps

Introduction: Management by objectives (MBO) is a systematic process, involving several steps that can bring numerous advantages.

Advantages of MBO:

• Defines the goals and objectives of the organization in a very clear and specific manner.
• Helps to align the objectives of the organization in the best possible way with the individual goals of the employees.
• Provides an effective way of evaluating the performance of the employees by comparing their goals with the results that they achieve.
• Encourages employees to take ownership of their individual goals and strive for better performance.
• Helps to create a sense of accountability and responsibility among employees.
• Enhances communication and collaboration between the management and staff.
• Provides an effective way of setting realistic goals and targets, and monitoring their progress.
• Facilitates the implementation of effective decision-making processes.

Limitations of Management by objectives steps

Management by objectives (MBO) is a systematic process involving a series of steps. However, it has several limitations that must be kept in mind:

• Limited flexibility: MBO can be rigid and inflexible, as it requires setting objectives that must be accomplished within a certain time frame.
• Difficulty in goal setting: Establishing the right objectives and goals can be difficult, as it requires extensive research and understanding of the organization’s current position and future needs.
• Time consuming: MBO can be a lengthy process, as it involves collecting data, setting objectives and goals, and then monitoring progress throughout the process.
• Lack of creativity: The focus on accomplishing objectives can lead to a lack of creativity and innovation, which can hinder the organization’s growth.
• Misalignment of objectives: If objectives are not properly aligned with the organization’s overall strategy, the process can be ineffective and costly.

Other approaches related to Management by objectives steps

Introduction: In addition to the steps of management by objectives, there are other approaches related to this process. These include:

• Goal setting: This approach involves setting specific and measurable goals that the organisation wishes to achieve, such as increasing sales numbers or reducing costs. It encourages team members to strive for success and gives them a sense of purpose.
• Performance appraisal: This approach involves assessing team members’ performance and providing feedback on their progress. It can help identify areas for improvement and ensure that the team is working towards the same goals.
• Feedback: This approach involves providing feedback to team members on their performance and progress. It can help identify areas of improvement and ensure that team members are on the same page.
• Coaching: This approach involves providing guidance and advice to team members on how to improve their performance. It can help to motivate team members and keep them focused on their goals.

Summary: In addition to the steps of management by objectives, there are other approaches related to this process, such as goal setting, performance appraisal, feedback and coaching, which can help to motivate team members and ensure that the organisation is reaching its goals.

Management by objectives steps — recommended articles

Management by objectives — Achievement oriented leadership — Short-term objectives — Task assignment — Strategic human resource management — Organizational culture and project management — Merit rating — Strategic human resource — Conditions of strategy implementation

References

• 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.