Management by Objective (MBO) has been around for a long time. MBO consultants abound and numerous methodologies have been developed and refined over the years to help organizations reap the benefits of Management by Objective.
What exactly is MBO that sets it apart from other
workforce management philosophies, such as Management by Walking Around or Management by Exception? Don’t all managers have goals or “objectives” that they and their employees must meet?
While it’s safe to assume that all managers set goals for their teams and themselves, those objective may not be entirely in sync with overall company goals. Managers and employees often work in departmental silos, focused on a narrow set of goals instead of working across departments toward common goals.
One of the main benefits of Management by Objective is its top-down approach. Company goals are set by top management and made transparent. Everyone knows the overall objective(s) of the company and every employee has a say in determining the best way to get there. Each employee has a clearly defined role to play and measureable objectives to achieve. Controls, checks and balances are built into the MBO process via frequent reporting and regular evaluation of
performance metrics.
Sounds great, right? The truth is, MBO in theory was always more idyllic than MBO in reality. There are upsides and downsides to MBO. For the most part, if you can avoid the common MBO pitfalls, you will reap the significant benefits of Management by Objective.
The benefits of Management by Objective are worth the effort
MBO strategies are not easy to implement. MBO affects every function in the company and takes time to implement. Typically, the organization will need a cadre of professional MBO consultants to help them establish MBO strategy, set goals at all levels, define roles, coordinate processes, and determine how “goals achieved” will be rewarded.
Some of the main benefits include:
MBO Pitfalls to Avoid
To realize the compelling benefits of Management by Objective, you need to be aware of the pitfalls along the way, and avoid them:
Reaping the Benefits of Management by Objective
To make sure you realize the benefits of Management by Objective, it is critical to steer clear of the pitfalls. I suggest the following short list for successful MBO implementation:
- Secure top management buy-in and support – including budget
- Commit your entire organization to MBO to instill performance orientation throughout.
- Set clear objectives that are realistic and achievable
- Be transparent and train everyone toward MBO
- Be flexible. Business reality can change quickly. MBO processes must allow for goal adjustment.
