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Management By Objectives (MBO)

Management By Objectives (MBO)

What is 'Management By Objectives - MBO'

Management by objectives (MBO) is a management model that aims to improve performance of an organization by clearly defining objectives that are agreed to by both management and employees. According to the theory, having a say in goal setting and action plans should ensure better participation and commitment among employees, as well as alignment of objectives across the organization. The term was first outlined by management guru Peter Drucker in 1954 in his book "The Practice of Management."

Explaining 'Management By Objectives - MBO'

A key tenet of management by objectives is the establishment of a management information system to measure actual performance and achievements against the defined objectives. Practitioners claim that the major benefits of MBO are that it improves employee motivation and commitment, and ensures better communication between management and employees. However, an oft-cited weakness is that MBO unduly emphasizes the setting of goals to attain objectives, rather than working on a systematic plan to do so.

Basic Principles

Peter Drucker set forth several principles. Objectives are determined with the employees and are challenging but achievable. There is daily feedback, and the focus is on rewards rather than punishment. Personal growth and development are emphasized, rather than negativity for failing to reach the objectives.

Putting it Into Practice

MBO calls for five steps that organizations should use to put the management technique into practice. The first step is to either determine or revise organizational objectives for the entire company. This broad overview should be derived from the firm's mission and vision. The next step is translating the organizational objectives to employees. Drucker used the acronym SMART (Specific, Measurable, Acceptable, Realistic, Time-bound) to express the concept.


Further Reading

The use of MBO (management of objectives) method of attraction and evaluation of effectiveness of investments to the tourism and hospitalityThe use of MBO (management of objectives) method of attraction and evaluation of effectiveness of investments to the tourism and hospitality
dergipark.org.tr [PDF]
… to arisen problem, to our opinion, is based on the use of management of objectives (MBO) method (Raizberg … 5. Investments through financial intermediaries (investment companies and funds), which effectively manage the funds based on their … Tourism Management, 22, 351-362 …

Management by objectives–an effective tool for teamwork?Management by objectives–an effective tool for teamwork?
www.tandfonline.com [PDF]
… to arisen problem, to our opinion, is based on the use of management of objectives (MBO) method (Raizberg … 5. Investments through financial intermediaries (investment companies and funds), which effectively manage the funds based on their … Tourism Management, 22, 351-362 …

Management by objectives and the balanced scorecard: will Rome fall again?Management by objectives and the balanced scorecard: will Rome fall again?
www.emerald.com [PDF]
… to arisen problem, to our opinion, is based on the use of management of objectives (MBO) method (Raizberg … 5. Investments through financial intermediaries (investment companies and funds), which effectively manage the funds based on their … Tourism Management, 22, 351-362 …

Management by objectives: a case historyManagement by objectives: a case history
www.tandfonline.com [PDF]
… to arisen problem, to our opinion, is based on the use of management of objectives (MBO) method (Raizberg … 5. Investments through financial intermediaries (investment companies and funds), which effectively manage the funds based on their … Tourism Management, 22, 351-362 …

Management by objectives and corporate social responsibility disclosureManagement by objectives and corporate social responsibility disclosure
www.emerald.com [PDF]
… to arisen problem, to our opinion, is based on the use of management of objectives (MBO) method (Raizberg … 5. Investments through financial intermediaries (investment companies and funds), which effectively manage the funds based on their … Tourism Management, 22, 351-362 …

Attitudes towards management by objectives: An empirical investigation of self-efficacy and goal commitmentAttitudes towards management by objectives: An empirical investigation of self-efficacy and goal commitment
www.sciencedirect.com [PDF]
… to arisen problem, to our opinion, is based on the use of management of objectives (MBO) method (Raizberg … 5. Investments through financial intermediaries (investment companies and funds), which effectively manage the funds based on their … Tourism Management, 22, 351-362 …

Management by objectives and Student Management in Universities and Colleges [J]Management by objectives and Student Management in Universities and Colleges [J]
en.cnki.com.cn [PDF]
… to arisen problem, to our opinion, is based on the use of management of objectives (MBO) method (Raizberg … 5. Investments through financial intermediaries (investment companies and funds), which effectively manage the funds based on their … Tourism Management, 22, 351-362 …

Management by values (MBV): a new philosophy for a new economic orderManagement by values (MBV): a new philosophy for a new economic order
www.emerald.com [PDF]
… to arisen problem, to our opinion, is based on the use of management of objectives (MBO) method (Raizberg … 5. Investments through financial intermediaries (investment companies and funds), which effectively manage the funds based on their … Tourism Management, 22, 351-362 …


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