The Concept Of Management By Objectives

October 24, 2012 — Leave a comment

There is a very close connection between the concept of Management by Objectives (MBO) and that of planning. When you go through a planning process, it is somewhat implied that the achieving of objectives is in place. Management by Objectives is very much a process that is now commonly used by modern management teams, with the original idea of MBO made famous by Peter Drucker. The basic concept of Management by Objectives is that it should not be forced upon subordinates, but rather something that is decided by a management collective. The feeling is that using that method of objective selection will lead to support from all sides, leading to all the objectives being reached more effectively.

As demanding as the Management by Objectives (MBO) style of management is, it is one that is so widely employed because of the rewards that it reaps. It is a process that very much promotes the accomplishment of objectives through active participation and a high level of teamwork. The general concept of Management by Objectives is that employees tend to perform better when they know exactly what is expected of them, allowing each individual to tie personal goals to companywide objectives. Management by Objectives only works if the basic principles are followed, which include management and subordinates working together to set goals, all tied up with a high level of encouragement and support from superiors as the goals are achieved. MBO delivers real results, thanks in large part to the high levels of leadership, encouragement, and motivation that are passed on from management to their employees.

Management by Objectives is a style of management that relies on the participation of subordinates, allowing them a role in the decision making process. It’s a somewhat different approach than the Management by Control (MBC) style, with many industry insiders actually believing the MBO is the far superior method. The traditional method of management seemed to be concerned with more of a trickledown effect. The executive management team would set goals and objectives before passing instructions down to middle management, who then passed that information on to the lowest level employees. It was a method that did little to encourage participation or cooperation from those on the lower levels of the organizational totem pole. MBO ensures that everyone is included in the decisions process, from the top, all the way down to the lowest employee level.

When management levels and objectives are created, it tends to result in a number of hurdles that have to be leapt as the ideas are passed down the ranks. Those barriers are broken down when everyone is involved in the goal and objectives setting process. The concept of Management by Objectives approach was one that was first devised by Peter Drucker in his book “The Practice of Management.”

Definitions Of Management By Objectives (MBO)

George Odiome describes Management by Objectives as “a process whereby superior and subordinate managers of an Organization jointly define its common goals, define each individual’s major areas of responsibility in terms of results expected of him and use these measures as guides for operating the unit and assessing the contribution of each of its members.”

John Humble views Management by Objectives as “a dynamic system which seeks to integrate the company’s needs to clarify and achieve its profits and growth goals with the manager’s need to contribute and develop himself. It is a demanding and rewarding style of managing a business.


Up next Features and Steps in planning of Management by Objectives.

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Ritu Raj

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Ritu Raj is a serial entrepreneur dedicated to bringing innovative services and systems to market, which create new experience for people at the same time makes a difference in their lives. Ritu has been in Information Technology for 25 years. In the past he has founded successful companies like OrchestratorMail, WagHotels (Largest Chain of Dog Hotels in the world) and Avasta (Pioneered Cloud Computing, acquired by Navisite). Ritu was a Partner at Accenture and a Senior Executive at TMP Worldwide.

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