MBO – Management by Objectives

MBO is a management method in which particular goals and objectives are jointly established by managers and employees for every department, project and organization. Responsibilities are assigned to every individual by superiors. Progress is periodically reviewed and the employees are rewarded on goal attainment according to their performance.

The term MBO was first used by PETER DRUCKER (November 19, 1909 – November 11, 2005) in his 1954 classic ‘The Practice of Management’. MBO rose in 1960’s and 1970’s when it was adopted by most publicly traded companies. It was popular and it is popular. MBO method is being used in many organizations.MBO is concerned with collaboratively goal setting and planning. Managers work with their subordinates to establish performance goals that are consistent with higher organizational objectives.

MBO is a process of joint goal setting between a supervisor and a subordinate Typically MBO process is consist of four basic and essential steps, Goals setting is the first step of MBO process. This is the primary purpose of MBO. Organizational objectives and strategies are formulated. Specific objectives are jointly allocated and set among all unit, department or organizational members. Mangers assign responsibilities to subordinates.

[adsense1]Second step of MBO process is develop action plans for every member and team. Action plans define, how can be we achieve our objectives within time frame and allocated resources, which are agreed upon by all members. Then implementation of action plans commences.