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8 Key Result
Areas Where Managers Must Pursue Clear Objectives |
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Management by
Objectives (MBO) Principles |
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2 Questions
You Need to Answer To Get The Whole Process Rolling |
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Where do I want to go ?
(What is the objective?)
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How will I pace myself to
see if I am getting there? (What are my milestones, or key results?)
Make sure
that the answers are precise!
Keep Your Computer-tired Eyes Healthy
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Types of Objectives1 |
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The objectives
must be:
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MBO Strategy: Three Basic Parts5 |
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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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Performance reviews are conducted periodically to determine how close
individuals are to attaining their objectives.
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Rewards are given to individuals on the basis of how close they come
to reaching their goals.
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Six MBO Stages |
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Define
corporate objectives
at board level...
More
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Personal
Empowerment |
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The
Four Powers
you need to do an excellent job:
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Freedom to challenge
everything and anything
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Continuous training and
development on the job
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Knowledge of, and faith in,
the organization's
mission
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The ability to achieve and
see results
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MBO: Key Advantages and
Disadvantages5 |
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Advantages
Disadvantages
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The development of objectives can be time
consuming, leaving both managers and employees less time in which to
do their actual work.
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The elaborate written goals, careful
communication of goals, and detailed performance evaluation required
in an MBO program increase the volume of paperwork in an
organization.
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29 Obstacles To Innovation
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What is MBO?
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
resources.
Stretch Goals
Inspiring Culture: 5 Elements
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
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."
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
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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.
Inspiring People: 4 Strategies
Put Values First
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.
Smart Executive
Case in Point
MBO in Action at Intel
A Manager's Guide at Intel provides the
following directions.
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Start with a few well-chosen overriding
objectives.
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Set your subordinates
objectives that fit in with your overriding objectives.
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Allow your subordinates to
set their own key results to enable them to meet their objectives.
Leadership-Management
Synergy
To maximize your long-term success you should
strive to be both a
manager
and a
leader
and to
synergize their functions. Merely possessing management skills is no
longer sufficient for success as
an executive in
today's business world. You need to
understand the differences between managing and leading and know how to
integrate the two roles to achieve organizational success...
More
Leader 360
Innovation
Management Policies for Large Corporations
By:
Bill
Gates, Founder of
Microsoft
25 Lessons from Jack Welch
Loose-Tight Leadership
The Jazz of Innovation: 11 Practice Tips
Setting
Objectives
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 managers of the various units
or sub-units, or sections of an organization should know not only the
objectives of their unit but should also actively participate in setting
these objectives and make responsibility for them.
The review mechanism enables
leaders to measure the performance of their managers, especially in the key
result areas:
marketing;
innovation;
human organization; financial resources; physical resources; productivity;
social responsibility; and profit requirements...
More
The Tree of Business Success
6Ws of Corporate Growth
Systemic Innovation: 7 Areas
Balance between Management and Employee Empowerment
The
balance
between management and
employee empowerment
has to be struck, not by thinkers, but by practicing managers. Turning their
aims into successful actions, forces managers to master five basic
operations:
These Management by Objectives (MBO) operations are all compatible with
empowerment, if you follow the main principle of decentralization: telling
people what is to be done, but letting them achieve it their own way. To
make the principle work well, people need to be able to
develop personally. Further, different people have different hierarchy
of needs and, thus, need to be managed differently if they are to perform
well and achieve their potential.
Empowerment recognizes "the
demise" of the command-and-control system, but remains a term of power and
rank. A manager should view members of his or her
team
much as a conductor regards the players in the orchestra, as individuals
whose particular skills contribute to the success of the enterprise. While
people are still subordinates, the superior is increasingly dependent on the
subordinates for getting results in their area of responsibility, where they
have the requisite knowledge. In turn, these subordinates depend on their
superior for direction and "above all, to define what the 'score' if for the
entire organization, that is, what are standards and values, performance and
results."
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...
More
Building a High-Growth Business: 10 Rules
Balanced Business System
Individual
Responsibility
Management by Objectives (MBO)
creates a link between
top
manager's
strategic thinking and
the
strategy's
implementation lower down. Responsibility for objectives is passed from
the organization to its individual members. It is especially important for
knowledge-based
organizations where all members have to be able to control their own
work by feeding back from their results to their objectives.
Management by objectives is
achieved through self-control, the tool of effectiveness. Today the worker
is a
self-manager, whose decisions are of decisive importance for results.
In such an organization,
management has to ask each employee three questions:
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What should we hold you accountable for?
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What information do you need?
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What information do you owe the rest of us?
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,
Peter Drucker