Management by objectives helps employees appreciate their roles and responsibilities at work. The planned Key Result Areas (KRAs) are specific to each employee and depend on their interests, educational qualifications, and specialization. The MBO approach usually results in better teamwork and better communication. An important part of the MBO is the measurement and comparison of an employee's actual performance with established standards.
Ideally, when employees themselves have been involved in setting objectives and have chosen the course of action they are going to follow, they are more likely to fulfill their responsibilities. To ensure that you take advantage of the benefits of management by objectives, it is essential to stay away from difficulties. In general, if you can avoid the most common MBO mistakes, you'll get the significant benefits of management by objective. The functions of these managers can be centralized by appointing a project manager who can monitor and control the activities of the different departments.
The management of the IT company Hewlett-Packard (HP) has said that it considers politics to be an important component of its success. Once the term and the idea were proposed, George Odiorne, a student of Drucker, continued to develop the idea in his book Management Decisions by Objectives, published in the mid-1960s. Deming also noted that Drucker warned managers that a systemic view was required and considered that MBO practitioners largely did not listen to Drucker's warning. Managers and employees often work in departmental silos, focusing on a limited set of objectives rather than working across departments to achieve common objectives.
The goals set by high-level managers are based on an analysis of what the organization can and should achieve within a specific period of time. Point 7 of Deming's key principles encourages managers to abandon objectives in favor of leadership because, in their opinion, a leader who understands systems is more likely to guide workers to an appropriate solution than to incentivize an objective. Management by objectives defines the roles and responsibilities of employees and helps them to chart their future course of action in the organization. Management by objectives (also known as management by planning) is the establishment of a management information system (MIS) to compare actual performance and achievements with defined objectives.
MBO consultants abound and, over the years, numerous methodologies have been developed and refined to help organizations take advantage of the benefits of management by objectives. Professionals say that the main benefits of the MBO are that it improves employee motivation and commitment and allows better communication between management and employees. Management by objectives (MBO) uses a set of quantifiable standards or objectives with which to measure the performance of a company and its employees. Management by objectives is still practiced today, with a focus on planning and development to help various organizations.