MBO, or Management by Objectives, is a process where management and employees agree on objectives for the organization and individual roles. The goals should be SMART - specific, measurable, achievable, result-oriented, and time-related. Performance is periodically reviewed to determine progress toward objectives, and rewards are given based on goal attainment. MBO aims to improve motivation, communication, performance, and efficiency but can demotivate staff if targets are unrealistic or imposed without agreement.

1. MBO

3. Management by Objectives (MBO) is a process of agreeing upon objectives within an organization so that management and employees agree to the objectives and understand what they are in the organization. The term "management by objectives" was first popularized by Peter Drucker in his 1954 book 'The Practice of Management. Objectives can be set in all domains of activities (production, services, sales, R&D, human resources, finance, information systems etc.). Some objectives are collective, for a whole department or the whole company, others can be individualized.

4. Appraise Performance Corporate Strategic goals Departmental goals Individual goals STEP 1: SET GOALS STEP 4: APPRAISE OVERALL PERFORMANCE Action Plans Review Progress & Take Corrective Action STEP 2: DEVELOP PLANS STEP 3: REVIEW PROGRESS

5. Cascading of organizational goals and objectives Specific objectives for each team member Participative decision making Explicit time period Performance evaluation & feedback

6. In an MBO, good goals are SMART goals: S S specific U M measurable C WORK A achievable HAVE E R result oriented S T t ime-related S

7. All individuals within an organization are assigned a special set of objectives that they try to reach during a normal operating period. These objectives are mutually set and agreed upon by individuals and their managers. Performance reviews are conducted periodically to determine how close individuals are to attaining their objectives. Rewards are given to individuals on the basis of how close they come to reaching their goals.

8. Improves employee motivation Improves communication in the organisation Flags up and highlights training needs required to achieve objectives Improves overall performance and efficiency Attainment of goals can lead to the satisfaction of Maslow’s higher order needs

9. May demotivate staff if targets are too high and unrealistic, also if imposed rather than agreed Requires the cooperation of all employees to succeed Can be bureaucratic and time consuming (meetings, feedback) Can encourage short-term rather a more focused long-term growth Objectives may go out of date and can restrict staff initiative and creativity Setting targets for certain specialised employees may be difficult

10. Lack of top management commitment and follow through on MBO. Employees’ negative beliefs about management’s sincerity in its efforts to include them in the decision-making process.

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