Management by objectives (MBO) is a strategic model used by organizations to clearly outline the specific objectives and main goals of the company agreed upon by both management and employees. This approach has the potential to work as a solid tool within a broader scope of knowledge about management styles. It is an important management tool that helps organizations align the competencies of their employees with the objectives and goals of the organization so that they can work to their full potential. The 5-step MBO process begins with defining organizational objectives.
This is the first course of action, and if employees have easily achieved the objectives in a defined period of time, managers try to make them challenging and motivating to further improve their performance. The next step is managerial decision making, which is the art of selecting one feasible alternative decision among many. The purpose of management by objectives is to increase employee productivity and efficiency by setting achievable, result-oriented and time-bound objectives. Goal setting usually starts from the top level of the organization and moves down to the lowest management level.
This communication channel is very vital to the success of the organization, since employees can only perform better when they obtain clear and achievable objectives directly from top management. Through this approach, managers can keep their employees motivated and engaged at work by rewarding them. An important step in the MBO approach is the monitoring and evaluation of the performance and progress of each employee compared to the established objectives. This helps ensure that all employees are on track with their goals and that any issues or problems can be addressed quickly.
It also allows managers to identify areas where employees need additional training or support in order to reach their goals. Although MBO has been criticized for being too short-sighted, it remains an effective tool for achieving organizational objectives, increasing employee participation, and improving overall performance. By following these steps, organizations can ensure that their employees are working towards achieving their goals in an efficient and effective manner.