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What is Management by Objectives? Management Process by MBO

admin July 31, 2024

Management by objectives (MBO) is a rather complex form of management, but if used correctly, it will bring good results in business management.

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What is goal management?

Management by objectives (MBO) is a management method in which managers and employees set, record and achieve goals within a specific time period.

Born nearly 70 years ago, MBO has a relatively long history of development and many large companies in the world have applied it. At Hewlett-Packard (HP), MBO is considered an important policy, contributing greatly to the company's success. Many other companies have also appreciated the role of MBO, including Xerox, DuPont, Intel...

Goals can be set in all areas of business, such as finance, marketing, sales, research and development, human resources, infrastructure, and information technology systems.

Management by objectives (MBO) process

The MBO development process includes 5 steps:

Goal Setting

The company's leadership needs to set common goals related to vision, strategy, and long-term and short-term development plans. After determining the common goals, the business needs to divide the goals into departments and divisions.

Whether the overall goal of the business is achieved or not depends on each individual in the company. Therefore, company leaders need to have detailed control and business management skills to have timely coordination.

What is Management by Objectives? Management Process by MBO

Build an action plan

An action plan is simply a set of specific activities to achieve a goal. Each individual and unit needs to master the principles and procedures for achieving the goal, and at the same time strictly adhere to and implement the set goals.

Continuously measure progress, evaluate performance

Process control is a way for individuals and organizations to re-evaluate the process of achieving goals. From there, there is a plan to adjust and replace appropriately when necessary.

Provide feedback

After completing the work process. Each individual and business needs to compare the results with the set goals. If your results are different from the set goals, you need to review your implementation process to draw lessons and experiences for the next time. You should also refer to more tips to conquer goals so that you can easily conquer the set goals.

Recognize results and reward

For individuals and groups that exceed their targets, businesses should have a reward policy to motivate all employees in the company.

Advantages and disadvantages of MBO management method

Advantage

  • Accurately assess the capacity and work efficiency of each individual and department..
  • It is a motivation for employees to understand more about their work. From there, they have a direction to solve and perform work more effectively.
  • MBO helps businesses manage goals effectively: Each individual is always aware of their role and responsibility. This is the connecting factor that helps businesses create great value in managing common goals.
  • Create a more open and developing working environment: Each individual always strives to achieve the company's goals. From there, help employees develop their abilities as well as their self-awareness in their work.

What is Management by Objectives? Management Process by MBO

Defect

  • Employees may feel stressed and overwhelmed with the pressure of the work they are given.
  • MBO depends only on short-term plans because quantitative factors are not suitable for long-term goals.
  • Whether the MBO system meets the requirements or not depends largely on the inspection of management levels.
  • Need to check and monitor periodically to have timely adjustment and replacement measures when necessary.
  • It is difficult to maintain connection between each department and division because everyone is focused on their own goals.
  • The MBO model makes your business operate in a disjointed manner because there is no connection.
  • Applying holistic management requires businesses to meet and plan many times, which is time-consuming.

 

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