Management by Objectives

Management by Objectives (MBO)

The Management by objectives or MBO is a management system where the objectives of an organization are agreed upon such that, the employees and the management come up with a consensus of the way forward. The organization of setting goals, decision making and actionable in an organization is made clear such that the managers and their subordinates understand their roles precisely. MBO was suggested by Peter Drucker in early 1950s and enjoyed success for a period but later became unpopular due to its administrative burden and rigidity. Drucker himself also reduced the concepts significance when he declared in the 1990s “It’s not the great cure for management in efficiency.” The core concept of MBO is that both the management and subordinates should participate in strategic planning process in order to enhance the implementation of the plan. The managers should also implement a range of performance system to ensure that the organization stay on track (Drucker, 1954). The Management by objectives principles, seek to ensure that everybody in an organization understand their role and responsibility towards achieving set goals and objectives.MBO forms the bases of systematic procedures through efficiency, planning process participation through employees’ commitment and motivation, and work result oriented planning. The practice involves the determination of specific objectives by the managements and their employees and their progress where results are reviewed periodically for the purpose of reward.

For Management by objective process to be successful there are four criteria which must be achieved and includes, arranging the objectives in order of importance, where possible express the objectives quantitatively or measurable values, should be realistic, be consistent with the organization goals and policies, and lastly be compatible with one another (Drucker,1954). The arrangement of objectives in order of importance assist to prioritize what is more urgent for both the employees and management to follow. If a problem arises, the procedure in solving the problem is clearly stated and therefore save time and avoid acrimony. The second criteria insist that the objectives should be measurable or quantifiable. When the goals are measurable, a value is attached to them. They assist in monitoring the progress, of the set objectives and the anticipated results. Another advantage of the measurable objectives is that it creates a benchmark in motivation of the employees as it can be used in deciding how much reward that can be awarded to an employee depending on their performance. The management and the employees should set objectives those suites companies needs and augur well for either party. Realistic objectives motivate the employees who will perceives that their efforts are achievable. They also assist in creating