What is MBO?
"MBO is one of the rational school of management's successful products."
~ The Economist
Management by objectives (MBO) is
a systematic and organized approach that allows management to focus on
achievable goals and to attain the best possible results from available
It 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
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
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
Management by Objectives (MBO)
is also used by
of multinational corporations (MNCs)
for their country managers abroad...
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
all managers should:
participate in the
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.
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
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
acting to implement and achieve their plans, which automatically achieve
those of the organization.
Management by objectives is achieved through
self-control, the tool of effectiveness. Responsibility for objectives is
the organization to its
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...
The Tree of
Balance between Management and Employee Empowerment
between management and
has to be struck, not by thinkers, but by practicing managers.
aims into successful actions, forces managers to master five basic
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
To achieve results, you should
develop a solid, sound, customer-focused, and
entrepreneurial strategy, aimed at
innovation, and tightly focused on decisive
7 Routes to
Creating Sustainable Profits:
9 Questions To Answer