Management by objectives (MBO) is a strategic approach to management that focuses on improving the performance of an organization. It involves the establishment of goals and objectives through the active participation of superiors and subordinates, which helps to clarify the objectives and create realistic plans that people are committed to. MBO makes the objectives clear and specific, and the planning is directed towards these objectives. It also encourages employees to develop their skills and capabilities, leading to their professional development. The mutual goal setting of MBO improves the clarity of objectives and results in realistic plans that people commit to.
Individual members of the organization have a greater sense of identification with the company's objectives, which improves their morale and commitment. Because goals are set in consultation with subordinates, they are more difficult to achieve and more challenging than if superiors had imposed them. This leads to maximum utilization of human resources, as there is no ambiguity or confusion of functions in the organization. In MBO, there is better communication between management and subordinates. This two-way communication helps clarify any ambiguity, refine and modify any process or any aspect of the objectives.
Management is efficient when the team's results exceed the inputs and resources invested in it, which is directly related to employee productivity or the time it takes them to meet their goals and objectives. Productivity often decreases when there is no adequate structure aligned to meet the organization's objectives. Organizations that follow MBO are more productive in their jobs and their efficiency increases. Employees are more explicit about their objectives, helping them to plan and have an outstanding structure to follow. Managers must learn to manage this situation, because sometimes it is necessary to review short-term goals to achieve long-term objectives. In addition, there are too many meetings and too many reports to prepare, increasing managers' responsibilities and burden. MBO can help organizations cope with changes in the environment by forcing them to review their objectives based on environmental needs.
It also provides an objective basis for reviewing performance based on achievements rather than personality traits. However, it can only be made applicable when both subordinates and managers are comfortable with it and are willing to participate in it. One of the biggest advantages of MBO is that it provides an objective basis for reviewing performance based on achievements rather than personality traits. It helps subordinates inform their managers and better understand them, since the assigned work is decided by mutual agreement. It also encourages managers to carry out detailed planning. On the other hand, since goals are set according to the particular abilities of subordinates, it can be difficult for managers at lower levels to have full freedom to set their own goals.
In addition, there are too many meetings and too many reports to prepare, increasing managers' responsibilities and burden.