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Management by Objectives (MBO)
relies on the defining of objectives for each employee and then
comparing and directing their performance against the objectives which
have been set. It aims to increase organizational
performance by aligning goals and subordinate objectives throughout the
organization. Ideally, employees get strong input to identifying their
objectives, time lines for completion, etc. MBO includes ongoing tracking
and feedback in the process to reach objectives.
Management by Objectives was first outlined by
Peter Drucker
in 1954 in his book 'The practice of Management'. According to
Drucker managers should avoid 'the activity trap', getting so involved in
their day to day activities that they forget their main purpose or
objective. One of the concepts of MBO was that
instead of just a few top-managers, all managers of a firm should
participate in the strategic planning process, in order to improve the implementability of the plan. Another concept of MBO was that managers
should implement a range of performance systems, designed to help the
organization stay on the right track. Clearly, Management by Objectives
can thus be seen as a predecessor of Value Based Management!
MBO principles are:
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Cascading of
organizational goals and objectives,
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Specific
objectives for each member,
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Participative
decision making,
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Explicit time
period, and
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Performance
evaluation and feedback.
Management by Objectives
also introduced the SMART method for checking the validity of
the Objectives, which should be 'SMART':
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Specific
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Measurable
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Achievable
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Realistic, and
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Time-related.
In the 90s, Peter Drucker put the significance of this organization management method
into perspective, when he said: "It's just another tool.
It is not the great cure for management inefficiency... MBO works if you know the objectives, 90% of the time you don't."
Compare with Management by Objectives: Value Based
Management |
Results-Based
Leadership | RACI | Change
Management |
Seven Habits |
Seven Surprises
| Path-Goal Theory
| Leadership
Continuum |
Result Oriented
Management
More management models
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