Management By Goals (MBO)

What is ‘Management By Objectives – MBO’

Management by goals (MBO) is a management model that aims to improve performance of an organization by clearly specifying goals that are consented to by both management and workers. According to the theory, having a say in personal goal setting and action plans should make sure better involvement and commitment amongst staff members, along with positioning of objectives across the organization. The term was very first described by management expert Peter Drucker in 1954 in his book “The Practice of Management.”

BREAKING DOWN ‘Management By Objectives – MBO’

An essential tenet of management by objectives is the establishment of a management details system to measure actual efficiency and accomplishments versus the specified goals. Practitioners claim that the major advantages of MBO are that it enhances employee motivation and commitment, and ensures better communication between management and workers. However, an oft-cited weak point is that MBO unduly highlights the setting of objectives to attain goals, instead of dealing with a methodical plan to do so.

Standard Principles

Peter Drucker stated a number of concepts. Objectives are determined with the employees and are tough but possible. There is daily feedback, and the focus is on rewards instead of punishment. Individual development and development are stressed, rather than negativeness for stopping working to reach the objectives.

Putting it Into Practice

MBO calls for five actions that organizations must use to put the management strategy into practice. The primary step is to either determine or revise organizational objectives for the entire business. This broad summary needs to be stemmed from the company’s mission and vision. The next step is translating the organizational objectives to staff members. Drucker used the acronym SMART (Particular, Quantifiable, Acceptable, Sensible, Time-bound) to reveal the idea.

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