Management By Objectives – Benefits and Processes


by Shamsul
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Management by Objectives – Benefits and Processes


Goals and objectives have a significant role in the development and growth of a company. Hence, it is important for the company and its employees. Management By Objectives (MBO) Model supports them to maintain track and assess their routine over time. First, we will talk about what is management by objectives; in-depth explanation, then different steps engaging the process, its advantages, and limitations.


MBO (management by objectives) has become a vital factor. It is a management form that obviously describes/defines purposes jointly agreed on by the workers and organization to advance the company’s routine. This model encourages loyalty and contribution among workers and supports the company’s goals while creating an action plan and setting goals.

Experts believe that the MBO model establishes the mind of the workers to get their goals and aims by using any means necessary. Typically, their actions for getting the targets cost or impact the company’s overall performance.


MBO also uses the management factors such as planning and designing. It offers a management information system to define goals by comparing accomplishments and the actual routine of the workers.

Many professionals and experts consider that the MBO model is best to motivate the employees in order to achieve the goals. It also improves the communication between the management and workers.

One of the main drawbacks of the MBO model is its over-emphasis. It overestimates the goal setting and the plans to achieve them. It must present a systematic approach to achieving the targets. W. Edwards Deming claimed that when a manager sets goals for employees like procurement, production, or marketing goals, then s/he compels workers to get the targets by any means necessary. This may promote a sense of using shortcuts. Many employees may start finding shortcuts in order to achieve their objectives within a short time. This happens when the employees are working on different projects and have multiple assignments.

Peter Ducker Proposed the Management By Objectives (MBO) Model

Peter Ducker was the first man who proposed the Management By Objectives (MBO) model. He mentioned numerous guidelines such as objectives and goals should be challenging but achievable. He also suggested that employees should feel light when they receive the new targets. Companies should provide them with assistance and feedback on a regular basis. The main focus should be encouragement and rewards rather than criticism. Most significantly, the workers should learn more about the system, work routine, and network to meet goals.

The important point to remember is that MBO is not a solution or cure to solve the management issues. All it provides is a process. Many professionals and experts believe that it requires more commitment from higher management in order to succeed. They must clarify the objectives and goals and provide training to the managers to bring changes.

Process of Management By Objectives (MBO):

Some of the important points involved in this process are as follows:

Company’s Goals:

Goal setting is important, but it doesn’t only offer much support for the success or growth of a business group. It offers new insights to motivate and engage the employees. This brings direct advantages for the company. When it is about setting new goals, managers should remember different types of departments and their functions.

Whatever the manager’s objectives and goals, these must be temporary, interim, or provision. It should be the best explanation of the development phase and plans to achieve certain tasks within a specific timeframe.

Employee’s Goals:

After that, line managers and supervisors should discuss strategic plans to achieve the goals. They must provide all the details to employees or subordinates to avoid confusion. However, workers must try to extract the main theme in order to understand the plans and goals. They should listen to their managers carefully during a discussion. Be responsive to managers, especially when they describe the next sales plans and targets. Write down the facilities, resources, and items you may need to implement the plans. This creates a harmonious working environment where all the departments work in a smooth routine.

Monitoring Progress:

The MBO model is important to implement the plans efficiently. Managers would need the Management By Objectives (MBO) model to evaluate and monitor work performance. They need growth statistics of every worker present in the project.

Evaluating the Performance:

This is the main task for any manager. Supervisors and line managers have to provide a detailed report about the achievements on a regular basis. The top management expects these reports with short intervals in order to evaluate the effectiveness of a plan.


The most significant section in the v model is the constructive feedback. Workers who bring the company’s policies and plans to the field receive a response from the customers. It is important to find this response. The managers should convey the positive and negative responses to the top management to get alternative plans. In case, if the plan is working well, there will be more improvements. On the other hand, the management will implement some alternative solutions acceptable for everyone if the plan goes wrong or fails to achieve the targets. Maintain the communication between workers and managers. There should be no barrier, especially when something new is being tested. In order to get regular feedback on a plan, company managers should visit the employees in person or online. They must discuss things in an open environment where everyone has the freedom to express their opinions.

Performance Appraisal:

Indeed, it is a type of performance review. The manager evaluates the working situation of a worker and delivers the report to top management. In return, the management offers more benefits to the employees if they are doing well.

Advantages of Management By Objectives (MBO):

Here are the Top Benefits of MBO.

1-It guides company managers to establish such workers’ goals that are similar to the company’s objectives.

2- The goals of all the employees may be different or unique. The line manager’s responsibility is to find positive points to encourage all the workers. Thus, it develops loyalty in a worker.

3- It provides a clear understanding of the expectations of top management. Line managers and supervisors are present to provide the details about any project or task. Workers should discuss if there is any confusion about anything.

4- Better teamwork and communication occur because of the special MBO model.

5- Planned key result areas (URLs) are unique to all the workers depending on their interests, qualifications, specializations and education.

6- MBO supports workers to love their jobs and roles relevant to the objectives.

Limitations of Management By Objectice (MBO):

· Some of the important limitations of this model are as follows:

· The focus of the MBO model is not exactly on goal setting. It focuses on the availability of resources to investors or stakeholders and purchase-in from the top management.

· Every manager has a working limit. S/he cannot deal with all types of projects, especially under specific circumstances. Top management must keep the managers easy in order to get more productivity.

· In some cases, the managers become too busy in achieving the goals rather than focusing on manufacturing or operational issues. This leads to failure. Companies must install the MBO model after checking this factor.

· The managers may also start pressuring the workers to achieve the goals. This happens when they have an extra workload. It is necessary to divide the workload according to their capabilities. Never engage a manager in multiple roles beyond his/her capacity.

· The managers and workers may start avoiding the work conditions. This can be managed by using a job-specific work nature.

Conclusion: Management By Objectives

After a detailed discussion on management by objectives, we realize that this model is very effective and useful. It is the best model to provide a perfect plan and strategy to achieve the goals. However, the organizations should consider the drawbacks and limitations of this model in order to keep the working systems in balance. 


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