Management by Objectives

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. 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 trac!ing and feedbac! in the process to reach objectives. Management by Objectives (MBO) was first outlined by "eter #ruc!er in $%&' in his boo! 'The Practice of Management'. In the $%%(s "eter #ruc!er 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 wor!s if you !now the objectives %(, of the time you don+t.* Core Concepts -ccording to #ruc!er 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) 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 trac!. Managerial Focus MBO managers focus on the result. .hey delegate tas!s by *negotiating a contract of goals* with their subordinates without dictating a detailed roadmap for implementation. Management by Objectives (MBO) is about setting objectives and then brea!ing these down into more specific goals or !ey results. Main Principle .he principle behind Management by Objectives (MBO) is to ma!e 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. .he complete MBO system is to get managers and empowered employees acting to implement and achieve their plans which automatically achieve those of the organization. Where to Use MBO .he MBO style is appropriate for !nowledge/based enterprises when the organisational staff is competent. It is appropriate in situations where the manager wishes to build employees+ management and self/leadership s!ills and tap their entrepreneurial creativity tacit !nowledge and initiative.

Setting Objectives 0or 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. .he managers of the various units or sub/units or sections of an organization should !now not only the objectives of their unit but also actively participate in setting these objectives and ma!e responsibility for them. .he review mechanism enables leaders to measure the performance of their managers especially in the !ey result areas) mar!eting1 innovation1 human organization1 financial resources1 physical resources1 productivity1 social responsibility1 and profit re2uirements. Balance between Management and mployee mpowerment .he balance between management and employee empowerment has to be struc! not by thin!ers but by practicing managers. .urning their aims into successful actions forces managers to master five basic operations) setting objectives organizing the group motivating and communicating measuring performance and developing people including self.

.hese MBO operations are all compatible with empowerment if the manager follows the main principle of decentralization) telling people what is to be done but letting them achieve it their own way. .o ma!e the principle wor! well people need to be able to develop personally. 0urther different people have different hierarchy of needs and thus need to be managed differently if they are to perform well and achieve their potential. 3mpowerment recognizes *the demise* of the command/and/control system but remains a term of power and ran!. - manager should view members of his or her team much as a conductor regards the players in the orchestra as individuals whose particular s!ills contribute to the success of the enterprise. 4hile people are still subordinates the superior is increasingly dependent on the subordinates for getting results in their area of responsibility where they have the re2uisite !nowledge. 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.* !ndividual "esponsibility

Management by Objectives (MBO) creates a lin! between top manager+s strategic thin!ing and the strategy+s implementation lower down. 5esponsibility for objectives is passed from the organization to its individual members. It is especially important for !nowledge/based organizations where all members have to be able to control their own wor! by feeding bac! from their results to their objectives. Management by objectives is achieved through self/control the tool of effectiveness. .oday the wor!er is a self/manager whose decisions are of decisive importance for results. In such an organization management has to as! each employee three 2uestions) 4hat should we hold you accountable for6 4hat information do you need6 4hat information do you owe the rest of us6

http)77www.$(((ventures.com7business8guide7mgmt8mbo8main.html