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MBO:
Key Advantages
and
Disadvantages |
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8 Key Result
Areas
Where Managers Must Pursue Clear Objectives |
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Types
of
Objectives |
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Routine objectives
→
Innovation
objectives
→
Improvement objectives |
The objectives
must be:
focused on a
result, not an activity
consistent
specific
measurable
related to
time
attainable |
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MBO Strategy: Three Basic Parts |
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All individuals within an organization
are assigned a special set of objectives that they try to reach
during a normal operating period. These objectives are mutually set
and agreed upon by individuals and their managers...
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MBO aims to increase organizational
performance by aligning goals and subordinate objectives throughout the
organization. Ideally, employees get strong input to identify their objectives,
time lines for completion, etc. MBO includes ongoing tracking and
feedback
in the process to reach objectives.
Management by Objectives (MBO)
was first outlined by Peter Drucker in 1954 in his book 'The Practice of
Management'. In the 90s, Peter Drucker himself decreased the significance of
this organization management method, when he said: "It's just another tool.
It is not the great cure for management inefficiency... Management by
Objectives works if you know
the objectives, 90% of the
time you don't."
Where to Use MBO
The MBO style is appropriate for
knowledge-based
enterprises when your staff is competent. It is appropriate in
situations where you wish to build employees' management and
self-leadership skills and tap their
→
entrepreneurial creativity,
tacit knowledge
and initiative.
Management by Objectives (MBO)
is also used by
→
chief executives of multinational corporations (MNCs)
for their country managers abroad...
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Core Concepts
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.
Instead of just a few
top managers,
all managers should:
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>> participate in the
strategic planning
process, in order to improve the implementability of the plan, and
>> implement a range of performance systems,
designed to help the organization stay on the right track.
Managerial Focus
MBO managers
focus on the result, not the activity. They delegate tasks by
"negotiating a contract of goals" with their subordinates without dictating
a detailed roadmap for implementation. Management by Objectives (MBO) is
about setting yourself objectives and then breaking these down into more
specific goals or key
results.
Main Principle
The principle behind Management by
Objectives (MBO) is to make sure that everybody within the organization has
a clear understanding of the aims, or objectives, of that organization, as
well as awareness of their own roles and responsibilities in achieving those
aims. The complete MBO system is to get managers and
empowered employees
acting to implement and achieve their plans, which automatically achieve
those of the organization.
Individual
Responsibility
Management by objectives is achieved through
self-control, the tool of effectiveness. Responsibility for objectives is
passed from
the organization to its
individual members...
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Setting
Objectives
You must ensure that you set the right
objectives if you want to achieve the right results.
For Management by Objectives (MBO)
to be effective, individual managers must understand the specific objectives
of their job and how those objectives fit in with the overall company
objectives set by the board of directors...
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Balance between Management and Employee Empowerment
The
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balance
between management and
employee empowerment
has to be struck, not by thinkers, but by practicing managers.
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Leadership-Management Synergy
Turning their
aims into successful actions, forces managers to master five basic
operations:
Managing for Results
The only place where meaningful
management results can be won is the outside world.
Managing for results is expansion
of Management by Objectives (MBO) into the marketplace. It is the theory and
practice of how to produce results on the outside, in the market and
economy.
To achieve results, you should
develop a solid, sound, customer-focused, and
entrepreneurial strategy, aimed at
market leadership,
based on
innovation, and tightly focused on decisive
opportunities...
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,
Peter Drucker