Management by Objectives

Management by Objectives ( MBO ) ( to German: Leadership / Management by Objectives ) is a method of business administration to guide a company's employees, which was invented in 1954 by Peter Ferdinand Drucker. Under work and organizational psychological point of MBO is a form of transactional leadership.

Target

Aim of this procedure is to implement the strategic goals of the entire company and the employees by objectives for each organizational unit and also for the employees will be determined jointly. These objectives are SMART (originally the English acronym for: specific = " specific" measurable = " measurable", Attainable = " reachable " or less frequently as if now = " as already achieved," realistic = " realistic " or relevant = "relevant" and timed = " terminated " ) must be:

  • S - specific ( for each department )
  • M - measurable ( clear instructions ),
  • A - active influence (accessible; well: fair, attractive, accepted or challenging),
  • R - realistic ( feasible ) and
  • T - terminated ( clear time limit ).

From the sum of the targets then the company's goals are to put together. Employees should direct their daily operational work on their goals and so work in terms of the total house strategy. If the supervisor assess the performance of their employees, they examine the extent to which employees have reached their agreed objectives. This theory was developed primarily by the Austrian- American management theorist Peter F. Drucker, who developed the MBO approach during the 1960s and 1970s.

Function

  • Lead employees
  • Individualize management process
  • Motivate employees
  • Liberate creativity
  • Lead staff throughout the deployment
  • To achieve corporate goals

Procedure

The current procedure for the management by objectives is the goal setting discussion is:

At the beginning of the conversation the temporal effects (long, medium, short ), the content (strategic / operational objectives ), the scope ( overall objectives, field goals, personal goals ) and the specificity degree ( general / specific targets ) are presented. This will also communicate the intentions behind the goals for the said period. This preparatory phase is the introduction to the individualized goal setting and thus:

  • Representation of future demands on the workplace and the resulting duties by the employee,
  • Commentary and continuation of the representations of the employee by the supervisor,
  • Substantive agreement between the supervisor and employee on concrete targets, focus and priorities,
  • Discussion and unpredictable problems and difficulties in achieving a goal,
  • Agreement of the framework: standards for verifying the achievement of objectives ( quantity, quality, cost, etc. ), dates for interim inspections, mandatory period or end date,
  • Clearance and ensure the availability of the resources necessary for the accessibility of the target,
  • Review of the resources of the employee: If the employee on necessary and sufficient knowledge and / or skills?
  • Possibility of offering additional training measures,
  • Check the skills to make the necessary decisions can
  • Checking the temporal capacity of the employee,
  • Clarification of the financial environment ( premiums, etc. ) and the
  • Written documentation of the goals and agreements.

After the end of the agreed term of achievement and leadership employees come together again to discuss the level of results and in most cases the objectives for the coming period.

Requirements

The essential condition for the validity of the method of implementation MbO to understand it as a management task. This is to ensure that any targets are present. Properly Management by Objectives works only when it is regarded not only as a method of running a business as a whole (which it does), but as a task of each individual manager on the same principle. Since there are a variety of target types, defined by their temporal effects, content, scope and degree of concreteness in organizations, so it is in every company urgently needed to clarify what is meant by " management by objectives ".

The successful implementation of agreed targets is then dependent on a mutually agreed target system in such a way that the sum of the individual goals of all employees with the strategic objectives of the organization as a whole is consistent. Contradictions should be eliminated. This requires a good corporate culture and an efficient information and communication system in order to identify measurable, indisputable goals. Goals must be realistic and be agreed that they are accessible for employees with appropriate effort and lead to the desired result. Employment Law: Management by objectives requires that the interests of employees and of the works to be taken seriously and give them an adequate decision-making and freedom of action is granted.

Management by Objectives is an iterative process in which periodically a target-actual comparison is performed for evaluating the performance so that work processes can be improved continuously (continuous improvement).

Assessment

As a management task is the basic principle of " Management by Objectives " largely undisputed and easy to understand in principle. There is most likely no organization that has not dealt with this leadership model. So it is in many companies, and in particular the highly decentralized, often the only kind of leadership. Despite a growing importance succeed - according to recent polls - the implementation in practice more bad than good. Thus, the reasons for this are many:

  • It is not sufficiently clear what is meant by Run to understand with objectives ( time effect, content, scope and degree of concreteness, supra ).
  • It is enormously time-consuming and labor intensive to think through goals so far, plan, develop, discuss and clarify until they are really realistic and feasible.
  • For one simple principle in itself, a complex bureaucratic system or program associated with high time and administrative costs for the executives.
  • The basic intent behind the goals are not sufficiently communicated for the upcoming period.
  • There are often called too many goals and agreed to the really important fall out of focus.
  • Information or agreements on the availability of resources that are required for the accessibility of the target, are not clearly formulated or are entirely absent: What do you need for the arts does not matter, the Emperor wants that everything was ready.
  • Management by objectives is not applied individually.

Are these reasons largely resolved, the " Management by Objectives " in an effective and efficient management tool, the advantages are obvious:

The shared decision-making are the goals of all intentional. Objectives will be implemented jointly and mutually supportive of all. This increases the success. Target agreement then increased despite the high personal and organizational effort clearly employee satisfaction.

Benefits

  • Meets the needs of today's workers a greater say and leeway
  • Refers personal goals, wishes and ideas of employees with a
  • Individual goals are linked (ideally) with the objectives of the company
  • This stronger commitment ( binding ) of the employee to the company
  • Promote motivation
  • Promoting team spirit
  • If necessary. fair pay premiums by
  • Identification with the goals
  • Personal responsibility for goal achievement
  • Relief of executives

Disadvantages

  • Control of the employee
  • Increased pressure to perform for the employee
  • Risk of more quantity than quality
Peter Drucker SMART criteria Mephistopheles
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