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Management by objectives

The news

Management by Objectives is still alive and kicking?

Management by Objectives (MbO) is almost not a theory anymore, to hear many managers talk. It has become accepted as the only way to manage. In fact, what is taken to be MbO in most companies, is a very watered down version of what was once put forward as the ultimate break-through in running organisations.

The idea that clear objectives could be set and agreed, monitored, trained for, measured and rewarded seemed to bring together both the classical school of management (measurement, process - Taylor and others) and the human relations school (involvement, enrichment - Herzberg and others). Whatever its benefits it seemed to become out of date.

However, George Obidone, one of the most astute users and critics of MbO, now holds that it is applicable mainly to those jobs which can be measured in numerical outputs - profit, sales figures and so on. Even then, the best sales people argue that it is easy to get good sales figures for one year. It is developing relationships with customers so that one can repeat them year over year that matters. Like many aspects of management, the applicability of MbO depends upon the situation.

MbO is essentially top down. That is to say, the objectives are set, even when agreed, by a boss and a subordinate, so that the subordinate knows what to do. The boss's job is either to set the objectives or at least to ensure that they are consistent with the objectives of the team, his or her own jobs, the department and company at large.

The theory

MbO aims to increase organisational performance by aligning goals and subordinate objectives throughout the organisation. Ideally, employees get strong input to identifying their objectives, timelines for completion etc. MbO includes ongoing tracking and feedback in the process to reach objectives. Follow the link below to see more detail on objectives.

What should objectives be?



  1. What is meant by the term 'management by objectives'?
  2. Outline the main characteristics of effective objectives.
  3. Explain the process for the setting of objectives.
  4. Examine whether there is a connection between management by objectives and other forms of encouraging employees.

Suggested answers