Management by Objectives (MBO) is a strategic management model that seeks to improve the performance of an organization by setting clear objectives that are agreed upon by both management and employees. This process helps to define roles and responsibilities, as well as provide employees with a sense of direction.
Management by Objectives(MBO) is a powerful tool for improving organizational performance, as it encourages employees to strive for tangible goals and objectives. It also helps to create a positive working environment, as it allows managers to provide support and guidance to their subordinates.
The key environmental factor in achieving success with MBO is the relationship between the manager and the employee. Goal-based management and performance evaluation processes can be counterproductive in the long term, as they are based on a psychology of reward and punishment. However, when used correctly, MBO can help to foster a sense of trust between managers and employees, which can lead to improved performance. MBO is an important component of many successful companies' professional management styles, which have resulted in commendable growth.
The process of setting objectives in the organization helps to inform managers about their roles and responsibilities, as well as what objectives they can achieve in a specific time frame with available resources. This allows managers to better understand their own behavior and how it affects the organization. For example, customer service managers can use MBO to set goals for reducing customer wait times and call volumes. This helps to ensure that customer service representatives are providing the best possible service while also meeting the company's objectives.
Peter Drucker first used the term management by objectives in his 1954 book The Practice of Management. Overall, Management by Objectives is an effective tool for improving organizational performance. It helps to create a positive working environment by providing employees with clear objectives and guidance from their managers. It also encourages employees to strive for tangible goals and objectives, which can lead to improved performance.