Management by Objective
Objectives are essential in every area where performance and results directly affect the lifespan as well as the growth of an enterprise. Management by Objectives is a way of integrating organizational and individual goals. The major principle behind management by objective is to empower employees so as clarify the roles and responsibilities expected from, comprehend the objectives to be attained and hence participate in achieving the stipulated organizational goals as well as personal goals. Management by objectives ensures that everyone is aware of what they should be doing and how this is beneficial to the entire organization. This type of management confirms the saying that "when parts work in one accord, the whole runs in harmony." By focusing on what needs to be attained, one can easily discriminate between tasks that waste time and those that must be done.
Benefits of MBO
Management by objectives has been used immensely since its inception in the 1950s. It is a management that concentrates on the actual outcome. It does not assume that the employee's traits needed for good performance can easily identify and measured. An employee is deemed to have reached the acceptable level of job performance if she or he meets or exceeds the set objectives.
MBO enhance management by invoking managers to reflect on planning for results rather than providing a list of activities. Managers are also challenged to formulate realistic objectives and avail the necessary resources to achieve such targets. The set objectives act as evaluation standards hence improving management.
The predetermined targets for all stakeholders ensure orderly growth in the organization. This implies that it is possible to measure the actual achievement. Management by objectives focuses on the skills, achievement, and ability of managers and not on the personality of total quality management. Therefore, orderly growth is assured.
Another great benefit of MBO is the creation of an ideal atmosphere for everyone. The fact that everyone is aware of their roles and responsibility is a clear indication of ideal working conditions.
Apart from sharpening planning, MBO also ensures the development of effective controls. Objectives are quantified and monitored. It provides for annual performance evaluation as well as periodic reviews. This is essential in the realignment of the set targets.
Four Activities in MBO
The four major activities involved in the MBO include Setting/Reviewing organizational objectives, communicating the objectives to the employees, encouraging participation in the goal-setting, and Monitoring progress. There is a fifth and an essential activity in the MBO model known as evaluation and rewarding of performance.
Setting/Reviewing organizational objectives: the organization set clearly defined and strategic objectives. When the organization is vague on where it is going, the employees are likely to be vague too. After setting the clear goals and objectives the next step is to cascade those objectives down to the employees. The objectives formulated must be attainable so that employees feel accountable. According to Ducker, the pioneer of MBO, the goals must be Specific, Measurable, Achievable, Realistic and Time-based which fills an acronym SMART.
The third activity involves encouraging stakeholders to participate in the goal setting. All stakeholders need to understand how their personal targets fit in the goals of the larger organization. Therefore, the managers need to share the organizational goals at each level of the organization so that everyone understands why things are being done in a given manner. This aspect also helps the employees to own the objectives and feel mandated to achieve them.
The fourth activity is to monitor the progress in achieving the set goals. The management team has to create a monitoring system that signals when things are getting out of hand. The greatest goal of MBO is to improve performance at every level of the organization. Therefore there is the need for an evaluation as well as a rewarding system.