MBO stands for Management by Objectives, which is a management approach that involves setting specific, measurable goals for individual employees and departments, and then regularly evaluating progress towards those goals.
The key idea behind MBO is to align the goals of the organization with the goals of individual employees so that everyone is working towards a common purpose. MBO typically involves setting objectives at various levels within the organization, from the individual employee level to the overall company level.
MBO is a supervised and managed activity so that all of the individual goals can be coordinated to work towards the overall organizational goal.
The MBO process is often supported by regular performance evaluations, goal setting, and feedback sessions to help ensure that everyone is on track and making progress towards their goals.
Key Strengths and Weakness of MBO
| Strengths | Weaknesses |
| 1. Improved Performance: MBO aligns individual goals with organizational goals, improving performance and making individual efforts more visible. 2. Employee Engagement: Clear goals and understanding how their job contributes to the company’s success encourage and engage employees. 3. Better Communication: Regular feedback and goal-setting meetings strengthen employee-manager connections. 4. Better Decision-Making: Tracking progress toward goals helps firms manage resources and adapt to changing conditions. 5. Increased Accountability: MBO sets explicit objectives and monitors progress toward goals, increasing responsibility. | 1. Rigidity: MBO can be too focused on goals, sacrificing flexibility and innovation. MBO might focus on individual aspirations rather than organizational achievement. 2. Time-Consuming: Setting goals, evaluating progress, and offering feedback takes time in the MBO process. 3. Resistance to Change: Employees who don’t like performance reviews may fight MBO. 4. Inadequate Resource Allocation: MBO’s focus on goal achievement rather than organization performance may result in poor resource allocation |
A strategic approach to enhance the performance of an organization
MBO vs OKR vs KPI
Organizations define and track goals using MBO, OKR, and KPI.
Management by Objectives (MBO): MBO involves creating measurable goals for employees and departments and monitoring progress. MBO aligns company and employee goals so that everyone works toward a single goal.
Objectives and Important Results (OKR): OKRs are a goal-setting framework that involves creating explicit, quantifiable objectives and tracking key results to attain them. From the employee to company level, OKRs are set. They allow companies to adapt to changing circumstances and adjust their aims.
Key Performance Indicators (KPIs): KPIs measure progress toward a goal. They are typically used with MBOs or OKRs to assist organizations track their progress. KPIs track department, process, or initiative performance, not individual personnel.
In conclusion, MBO, OKR, and KPI are three methods for creating and measuring goals. Organizations can choose the method that best suits their needs and goals. Regardless of the approach, organizations must define clear, quantifiable goals, evaluate progress, and change as needed to achieve their goals.
