Management by objectives (MBO) is a strategic management approach meant to enhance workplace performance. This approach is pegged on the communication of organizational objectives by the management to the employees in an effective manner, in order to help achieve all the objectives. In the pursuit of inspiring an effective people strategy that drives workplace performance, involving employees in decision making and setting the organization’s strategic objectives is a key pillar.

Steps in management by objectives

Successful management by objectives can be executed in a number of steps that ensure the top and mid-tier management, and the employees are all on the same script. The idea here is to ensure that as many of the critical members as possible are involved in setting the strategic direction for the company, as a result of which, they can co-own the successful implementation with the company, thus enabling high workplace performance. These critical steps in management by objectives are summarized as;

  1. Organizational goal setting/revising: this step is meant to come up with clear goals/objectives for the entire company, or to revise the existing goals. Goal setting should borrow from the organization’s purpose, vision and mission
  2. Communication of the objectives: this is the step where the company gets to buy in the goodwill of its employees by sharing organizational objectives with the employees, and this is what can be called communicating the brand promise.
  3. Inspiring employees to set individual goals: in this step, the management tries to get employees to set individual objectives that align with the overall objectives of the company. This alignment gives employees a greater sense of ownership and control of not just their lives, but their service to the company, inspiring overall motivation to deliver excellence.
  4. Monitoring the progress: in this step, the management keeps track of the progress employees are making in the journey to achieve individual objectives. As a futuristic leader, it is important to ensure that individual employees are able to meet their objectives, because organizations are made up of individuals, and if those individuals do not achieve their objectives, it is an almost impossible dream for a company to seek to achieve organizational objectives.
  5. Evaluation of performance: this step is where management takes stock of its performance as well as that of its employees. This is the stage where companies get to see whether they have reached their target or not, and decide what should be done. Failure to do proper evaluation may lead a company into a losing battle played blindly. It is only at the evaluation stage that companies can quantify the areas that are performing well or those that are performing badly, in order to decide where to amend.
  6. Rewarding: this is probably one of the most neglected steps of management by objectives (MBO), where good performance is not appreciated and rewarded. Again, we mentioned earlier that the achievement of company objectives relies heavily on the achievement of individual objectives, so it is extremely critical to keep the individuals motivated to keep pressing on, and what better way is there than to make them feel appreciated? According to Maslow’s Theory, appreciation, which builds self-esteem is second from top of the hierarchy of needs. One of the 

Advantages of management by objectives

  1. Helps promote communication among the different levels of management and employees.
  2. Helps to foster teamwork.
  3. Helps to motivate employee performance by inspiring them to achieve more for themselves.
  4. Promotes employee loyalty because employees clearly understand the unique role they play in securing the company’s success.
Disadvantages of management by objectives
  1. Tend to insist too much on objectives and targets, and can easily disregard the process of achieving them, meaning that as long as one achieves the target, the process does not matter, and this is a dangerous philosophy.
  2. Increases workplace pressure to achieve targets, which can have a negative effect on the mental health and overall performance of employees.

Also read Importance of organizational culture in the workplace [5 advantages]

I hope the picture of why you should implement management by objectives in the running of your organizations has gotten clearer than it was before, and our consulting experts will be more than happy to walk you through business transformation within your company using this highly effective management strategy.

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