Management by objectives (MBO) is a process in which a manager and an employee agree on specific performance goals and then develop a plan to achieve them. It is designed to align objectives across the organization and drive employee participation and engagement. Management by objectives (MBO) is a strategic approach to improving the performance of an organization. It is a process in which management defines and transmits the goals of the organization to the members of the organization with the intention of achieving each objective.
Once the term and the idea were proposed, George Odiorne, a student of Drucker, continued to develop the idea in his book Management Decisions by Objectives, published in the mid-1960s. Reliable management information systems are needed to set relevant objectives and monitor their reach ratio objectively. Point 7 of Deming's key principles encourages managers to abandon objectives in favor of leadership because, in their opinion, a leader who understands systems is more likely to guide workers to an appropriate solution than to incentivize an objective. The management of the IT company Hewlett-Packard (HP) has said that it considers politics to be an important component of its success.
While the management approach by objectives is necessary to increase the effectiveness of managers, it is equally essential to monitor the performance and progress of each employee in the organization. The group of management techniques that are based on objectives, with a strong focus on commitment, team motivation and leadership, can be summarized as management methods by objectives. Management by objectives defines the roles and responsibilities of employees and helps them to chart their future course of action in the organization. This process allows managers to do the work that needs to be done step by step to allow for a calm and productive work environment.
In the management by objectives approach, the most essential step is continuous feedback on results and objectives, since it allows employees to track their actions and correct them. Within the framework of the MBO, performance evaluation is achieved through the participation of interested managers. Deming also noted that Drucker warned managers that a systemic view was required and considered that MBO practitioners largely did not listen to Drucker's warning. Once employees are informed about the general objectives, the plan and the strategies to follow, managers can start working with their reports to establish their personal objectives.
Peter Drucker first used the term management by objectives in his 1954 book The Practice of Management. Management by objectives (MBO), also known as management by planning (MBP), was first popularized by Peter Drucker in his 1954 book The Practice of Management. The functions of these managers can be centralized by appointing a project manager who can monitor and control the activities of the different departments.