Management by objectives (MBO) is a process in which management clearly defines the goals or objectives of an organization. This organization can review, discuss, and sometimes even negotiate these objectives. Then, management, with the help of the organization, will define the path or steps necessary to achieve the objectives. This approach allows work to be completed in small steps, allowing employees to feel more comfortable in a calm work environment.
Management by objectives has been successfully implemented in industries that have competent and knowledgeable staff, such as information technology. The MBO process involves 6 key steps that incorporate management plans in such a systematic way, that it is directly influenced by the efficient and effective achievement of individual and organizational objectives. In the goal-based management approach, the most essential step is continuous feedback on results and objectives, as it allows employees to track and correct their actions. Emphasis is placed on personal growth and development, rather than negativity from not achieving goals. Setting goals is not only critical to the success of any company, but it also serves a variety of purposes. They are established for all contributors to the organization, including managers, employees, CEO, team leaders, and other contributors.
The MBO process involves defining the roles and responsibilities of employees, helping them define their own tasks, which contributes to a certain course of action for individual employees, employees as a collective and for the organization. Employees will review objectives, recommend changes, and develop an action plan that will allow them to achieve their objectives. It is a development cycle that takes organizational objectives as a starting point and these must be translated at an individual level. Not only is the MBO process designed to provide additional effectiveness to managers across the organization, but it's also equally important for constantly monitoring employee progress and performance. It is the manager's responsibility to ask employees what goals they can achieve within a specific period of time and what resources they will use to achieve those objectives. This participatory process ensures that personal objectives with respect to the overall objectives of the team, the objectives of the department, the objectives of the business unit and, ultimately, the objectives of the organization.