This document discusses management by objectives (MBO) and provides examples of how MBO has been implemented at different companies. It notes that MBO aims to motivate employees by tying compensation to meeting objectives but can misapply if objectives are not properly set. Examples are given of how MBO was used at HP, Microsoft, Intel, and for improving sales force performance through compensation plans linked to objectives. The document concludes that for MBO to be effective, objectives must be clear, measurable, and aligned across all levels of the organization.

1. Management by Objectives –
Examples.
Agnes Miriam. I

2. Criticism on MBO
• W. Edward Deming – Argument against MBO.
• lack of understanding of systems commonly
results in the misapplication of objectives.
• Setting production targets – encourage
workers to meet those targets through
whatever means necessary – poor quality.

3. Peter Drucker on MBO
Management Buy Out !!!

4. Improving Sales Force Performance by
MBO.
• Tying compensation to MBO – Motivate the
sales team.
• Sales Compensation Plan – traditional – lack
proper data to measure sales.
• MBO Centric Compensation Plan – rewards
people for meeting objectives.

5. MBOs Have Their Time and Place
• When the company has indirect or insufficient
data that limit the ability to measure
individual sales performance.
• Technology company preparing for its first
product launch.
• No immediate results even though the
production and sales forces have worked hard.
• MBO based incentive plan is a good fit.

6. Building a Successful MBO Team
• Involve the entire team
• Drive results
• Develop strong objectives
• Tie to ratings
• Centralize and automate

7. Results Achieved
• The company established strong customer
relationships.
• The sales force’s efforts created a customer base
of eager first movers.
• the company retained its best salespeople in
larger numbers than expected.
• The company had approached MBOs the right
way, the technology company achieved its initial
goals, motivated the sales force and rewarded
salespeople appropriately.

8. MBO – “The HP Way”
• Highly acclaimed management style.
• MBO – an integral part of The HP Way !!
• Bill Packard – MBO – Antithesis of Management
by Control.
• Overall objectives are clearly stated, Flexibility
to work in different ways.
• Planning – High level management and then
delegated to all.
• Monitoring performance measures – plan
modified.

9. MBO at Microsoft by Bill Gates.
• Eliminate politics by giving everyone the same
message.
• Keep a flat organisation in which all issues are
discussed openly.
• Insist on clear and direct communication.
• Prevent competing measures and objectives.
• Eliminate rivalry between the different parts of
the organisation.
• Empower teams to do their own things.

10. MBO in Action at INTEL
• A Manager’s guide at Intel:
• Start with a well chosen objectives.
• Set your subordinates objective that fit in
within your objective.
• Allow the subordinates to setup their own
key results so as to achieve their own
objectives.

11. MBO in Action at INTEL
• In Intel, objectives are written down for each
level of the organisation and individuals are
given specific aims and targets.
• What organisation is trying to achieve, what
is their part and how they can help.

12. MBO in Action at INTEL
• Andy Groove – “ The only thing MBO should
provide is focus.”
• Keep objectives precise and their number
small.
• For MBO to be effective, the individual
managers must understand their specific
objectives and how those objectives fit into
the overall objective of the company.