Management By Objectives
NoteAlthough the term MBO was in widespread management use in the 1960s, these days the acronym MBO more commonly refers to Management Buy Out.
Management by Objectives Process
1. Revise the Organizational Objectives
2. Set Employee Objectives
SMART GoalsDrucker also introduced the SMART method of checking objectives agreed to are sensible. SMART is an acronym representing Specific, Measurable, Achievable, Realistic, and Time-bound.
Management by Objectives Advantages
- Continually driving the organization to move towards its strategic goals.
- Everyone within the organization knows what they have to achieve during the period.
- It helps employees understand how their targets contribute to organizational targets.
- Employees who understand how what they do contributes to the organization can be more motivated.
- The model secures the commitment of employees to attaining the organizational goals.
- As each employee understands how they uniquely contribute to the organization, employees feel crucial to proceedings, leading to increased loyalty.
- Employees tend to have more commitment to goals that they themselves helped set.
Management by Objectives Disadvantages
- Developing targets can be time-consuming, leaving both managers and employees with less time to carry out their duties.
- If not implemented with care, it can lead to poor teamwork between employees. This happens as each employee is only concerned with their targets, and not good teamwork.
- It can result in unnecessary office politics as employees fight to outshine each other.
- It underemphasizes context. For example, it does not take the extent of senior management buy-in into consideration. It does not take into account the ability of lower-level teams to hit the objectives set.
The 5 Levels of Leadership: Book Summary
Three Levels of Leadership Model
Blake Mouton Managerial Grid
Bureaucratic Theory (Max Weber)
Path-Goal Theory of Leadership
Situational Leadership Model
Fiedler’s Contingency Theory of Leadership