Management by Objectives

What is Management by Objectives (MBO)?

Management by Objectives (MBO) is a collaborative framework where managers and employees set specific goals together, aiming to align individual performance with the organization's strategic objectives and ensure fair, performance-based rewards.

It is necessary to bear in mind that the MBO is strategic. The people sitting at the top chairs want to accomplish certain predefined objectives, set, executed, and agreed upon. The objectives are there for achievement but towards the vision completion.

The roadmap from mission (the very reason for being of an organization) to the vision (what you want to be) is taken task via MBO. It is highly pertinent to mention here that the objectives are to be very clearly communicated to the organizational members at the strategic level say the employer(s).

What are the Important Steps in MBO?

The important steps in MBO that should be followed are as mentioned:

• Explanation of the Objectives by the Strategic level: It is the prime responsibility of the strategic level to define clearly the objectives to its employees so that there remains no confusion. Hence the objectives need to be discussed cum communicated before even being agreed upon by the employee and the employer.
• Know and design Employees’ objectives by the Managers: The managers should know what the objectives of their subordinates are and how to devise the objectives for their subordinates which are as per the organizational requirements.
• Regular Monitoring: Routine monitoring and evaluation are the key tasks managers should never forget to know where they are and where they need to be.
• Analysis of the Performed tasks: The analysis of the performed tasks is necessary for two reasons, first to see whether what is done is as per the SOPs Standard Operating Procedures or not; secondly what outcomes were expected and what those are in real-time.
• Well come Feedback: Feedback should be welcomed from your employees and subordinates, so far as the improvements of people and processes are concerned for improvisation needs.
• Appraise performance: Performance appraisal is a key tool to recognize your employees’ work and reward the same. Therefore a strategic HR manager should praise the right done and should accept as well as rectify the wrong done in a way that works should be focused and discussed in meetings and not the person.
• Training of the appraisers: For performance review purposes, the raters should be trained from time to time so that the standards of quality along with the quantity are not compromised.
• Alignment of individual performance to organizational goals: The managers are not there only for one position to get the jobs done timely and as per SOPs. But then again they are there for a possible push for strategic alignment of employees’ goals with the organizational objectives, hence the progress of the one is the progress of the other.
• Communication improvisation: Do not stop the communication flow. The horizontal, as well as the vertical communication, paves the way for bridging the gaps if any. Designate as well as extend authority along with the responsibility.
• Motivation stimulation, learning, and leadership: As a strategic HR domain specialist, you are required to motivate your employees, stimulate their learning process by introducing several novel interventions, and lead them so they follow you because leaders need not manage, they simply follow in their footsteps. Hence being a role model strategic HR manager is an excellent motivator for the employees.  
• Managers as the Integration devices between the subordinates and the organization: The duties of the managerial level workers within MBO do not end with the said but at the same time the managerial level employees should be an integrative force between the strategic management (employer) and the employees (workers).

What are the Benefits of MBO?

Below mentioned are the benefits of the MBO:

• MBO results in better teamwork
• Better Communication is appreciated via MBO strategy following
• Individual goal setting and integration with the organizational objectives
• MBO is applicable in any organization
• Sense of loyalty creation within employees due to given tasks individually makes them feel important to the organization
• A clear understanding of the employees of what they are expected to do
• The KRA is improved – Key Results Areas - as each employee is given the individual tasks and timelines as per their education, interests, job skills, knowledge, abilities, and experiences
• Through MBO the employees feel Self-directed rather than Boss-directed
• Employee appreciation channel for performance on the job roles and responsibilities they have 

What are the Limitations Attached to MBO?

The limitations attached to MBO are:

• Sometimes supervisors’ expectations from subordinates in terms of overemphasis on targets and objectives
• Ignorance toward organizational conditions as a whole rather than giving individual tasks on individual resource provision
• Not all the stakeholders are taken into consideration
• Over-dependence of managers on MBOs
• It is not easy for the managerial level employees to identify all the objectives concerning employees as well as employer

Summarizing Management by Objectives (MBO)

The key understanding about the MBO is that the managerial level employees get work done from individual workers providing them a series of tasks that are aligned with the organizational as well as employee’s self-set objectives concerning professional lives. It is the way of a clear understanding for the employees about the management’s expectations of workers.

MBO is a course of action whereby the individual goals and organizational goals are related to key results together. In the MBO process, the team members have clearly defined company goals, roles and responsibilities, and performance management standards.

Several organizational structures have diverse work environments and human resource needs for specific goals, hence the best practice of management in MBO is to identify, communicate, agree upon; and administer the targets. Recognize, appraise, and benefit your employees for what they have so far done for you. Review, rectify, and point out the work and not an employee; and do as required as per your company’s progressive needs for being a successful employee cum employer having a sense of ownership via MBO.