Management by objectives (MBO) is a management model that focuses on the objectives of the organization by establishing a reference point. It is a process in which management clearly defines the goals or objectives of an organization and then, with the help of the organization, defines the path or steps needed to achieve them. This approach allows work to be completed in small steps, allowing employees to feel more comfortable in a quiet work environment. In this article, we will discuss the five-step MBO process, its advantages and disadvantages, and how it can be implemented in an organization.
The five-step MBO process includes:
- Define Organizational Objectives - The first course of action is to define the objectives of the organization. This can be done by management, with the help of the organization, to review, discuss, and sometimes even negotiate these objectives.
- Reduce Objectives to Employees - Once the organizational objectives have been established, they must be reduced to individual employees. This involves setting specific goals for each employee that are INTELLIGENT (specific, measurable, achievable, realistic and limited in time).
- Monitor Performance - Supervisory managers should sit down with their respective reports and determine the objectives. This allows for continuous feedback on results and objectives, which allows employees to track and correct their actions.
- Evaluate Performance - Here, management will compare what the employee has completed with what the employee has committed to doing.
If there is a discrepancy between the objectives decided and those achieved, efforts should be initiated to determine the measures that should be taken to overcome the problems responsible for the discrepancy.
- Reward Performance - The final step is to reward performance. This can be done through recognition or monetary rewards. It is important for management teams to be aware of possible complications that may arise when using MBO.
It also allows for systematic progression and clear intentions. However, one of its main disadvantages is that it can lack flexibility in objectives. The first step in installing an MBO system in an organization is to establish real objectives for different positions at different levels. This should involve different types of managers and should be clear and concise.
Once these objectives have been established, it is important for management teams to frequently reevaluate their emphasis on various objectives. It is also important for them to provide vital information to managers relevant to future work assignments and compensation decisions. In conclusion, management by objectives (MBO) is a management model that focuses on the objectives of the organization by establishing a reference point. It involves five steps: defining organizational objectives, reducing objectives to employees, monitoring performance, evaluating performance, and rewarding performance.
It has several advantages such as participation and empowerment of employees but also some disadvantages such as lack of flexibility in objectives. To successfully implement MBO in an organization, it is important for management teams to establish real objectives for different positions at different levels and provide vital information relevant to future work assignments.