How Would You Define The Management By Objectives?

Once they have defined their goals and plans, managers use these to direct the activities of the entire organization. One method often used to link goals and plans with everyday actions is management by objectives (MBO), the process by which managers and employees jointly define their goals, the responsibility for achieving these goals, and the means of evaluating individual and group performance. Popularized by management expert Peter F. Drucker, MBO provides a systematic method of setting goals for work units and for individuals so that all their activities are directly linked to achieving organizational goals.

A wide variety of for-profit organizations have adopted the MBO process, including General Electric and General Motors, two early adherents. In the public sector, schools, universities, and government agencies have also applied MBO. The Holt public school system in Michigan, the Canadian Post Office, and many other nonbusiness organizations has implemented the MBO process. For example, Planned Parenthood Federation of America uses MBO to connect management and employee activities with the attainment of organizational goals and with continued professional development. Each year, Planned Parenthood employees establish goals that are assigned a percentage weight to determine their relative importance. Supervisors measure progress against each goal and award salary increases based on how employees have performed.