Management by objectives (MBO) is a popular approach to management that has been used by organizations for decades. It is a system that focuses on setting and achieving goals, and it has been proven to be an effective way to improve communication between employees and management, increase employees' understanding of company goals, focus employee efforts on organizational objectives, and provide a concrete link between compensation and performance. Critics of MBO argue that it can lead to employees trying to achieve set goals by any means necessary, often at the company's expense. To ensure that this does not happen, small business managers should be involved in formulating the company's long-term goals.
This will help to ensure that the goals are realistic and achievable. Once the goals have been set, it is important for senior management to evaluate their relationship in relation to the manager's individual goals and their joint objectives. This should involve reviewing what has been done together and discussing their implications for their next joint steps. It is also important for managers to provide direct feedback on their own behavior, especially when they are protected by a high-level review of this evaluation.
The owner of a small business must also defend the MBO system from the start, as well as set an example for the company's managers to succeed. This will help to ensure that managers understand the importance of achieving their goals in a way that is beneficial for the company as a whole. In addition, managers should be provided with comprehensive guidance and support programs to help new employees adapt. This will help to reduce turnover and ensure that all employees are working towards the same objectives.
Finally, it is important for managers to be held accountable for achieving their objectives. This means that they should be responsible for ensuring that all employee objectives are consistent with department and company objectives.