Management by Objectives: All you need to Know

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A very famous Cheshire cat once said, “If you don’t know where you’re going, any road will take you there. ”

Alright, maybe Lewis Carroll is actually the one that penned that quote, but it’s true nonetheless, and helpful advice for life and business.

As a leader, you have expectations for your team. You want to see a specific level of performance and efficiency, but have you ever been clear about exactly what success looks like?

If goals and desired outcomes aren’t communicated to employees, they can’t possibly meet your expectations. This leads to micromanaging or helicopter-managing and instills the belief in your employees that you do not trust them or their capability to achieve results. Over time, this breeds resentment erodes job satisfaction and increases the rate of turnover as employees go off looking for greener pastures.

If you’ve seen this situation occur multiple times throughout your organization, it’s time to look at your leadership style. Do you provide your employees with the knowledge and the skills they need, and obviously communicate what you want to see?

If not, it’s not too late. Shift your mindset and company culture to management by objectives and watch your employees step-up to the challenge.

What is management by objectives?

The term “management by objectives” (MBO) may be not used to your vocabulary, but it’s certainly not a brand new concept. MBO is one approach managers use to get the absolute most out of their employees. It involves creating a series of concrete goals for an employee to complete for the betterment of the organization.

example of management by objectives

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What is the purpose of management by objectives?

MBO ensures that employees receive clear communication regarding their roles and responsibilities, and they comprehend the role they play in the overall health of the organization. It not only helps them get clear on what’s expected of them but also gives them a sense of purpose as they simply take ownership of how they impact other organization and help meet its mission.

Businesses that operate in silos where from one department to another, people don’t know what anyone else is working on, have less chance of succeeding. Employees can easily become disheartened when they can’t see the larger picture. Management by objectives aims to break down these walls for great transparency across organizations.

Management by Objectives Advantages and Disadvantages

Just like any management style, there are pros and cons to management by objectives. Let’s take a closer look:

Advantages of Management by Objectives

  • Employees can understand and appreciate their individual impact on the company all together.
  • Expectations are clearly communicated and based on Key Result Areas (KRAs) tailored to each employee.
  • Employees understand what success looks like and what they have to accomplish to reach it.
  • Teamwork improves and finger-pointing decreases. Employees know their responsibilities and tasks are less likely to fall through the cracks.
  • Employees feel important and indispensable to the organization as they each perform a unique task.

The Disadvantages of Management by Objectives

  • It’s possible for managers to rely too much on MBO and a management style. While it can revolutionize your organization, it has its limitations and is not always appropriate.
  • With goals and objectives overemphasized, non-measurable aspects of the job environment (like teamwork, positive customer interactions, etc . ) could become less practiced and valued.
  • With a constant focus on numbers and metrics, employees may feel anxious about their performance which could make things worse.

As you can see, management by objectives will help your organization move in the right direction, however , it’s not a cure-all for every single challenge your organization might face. Let’s have a closer look at how to utilize this leadership style for optimum effectiveness.

Just how to Incorporate Management by Objectives Into Your company

Like every thing in life, it will help to have a plan before you dive in. Let’s review how exactly to implement MBO is likely to company.

Management by Objectives Steps

Define Your targets

What would you like to see the organization in general achieve, and all through what time period? These goals should be shared with everyone in your organization.

Create and Communicate Employee Goals

How do your employee’s responsibilities play into the goals of the organization? This will allow you to create specific goals and objectives in order for them to meet.

Monitor Their Performance and Progress

Review your employees’ performance on a regular basis. Are they hitting whatever numbers you’ve assigned them? Are they steadily working towards a more substantial goal?

Assess Their Performance

It’s good to understand where your employees stand, however , it’s even more important to communicate how they’re doing with them. Without regular performance reviews, your employees can’t gauge how they are performing and if changes need to be made.

Provide Feedback

If employees are successful, let them know. You may desire to do this privately or publicly to congratulate them and inspire others. If they are not meeting your expectations, provide this feedback privately so as to not demean them facing their colleagues. Additionally, you will need to give them steps to take to improve their performance.

If they’re not reaching their goals, this may be because those goals have not been correctly communicated, or simply because they don’t have the best tools to do what’s expected. Have a conversation to assess if either of those factors is at play, and then do whatever is necessary to remedy the specific situation.

When you follow these steps, you are able to implement a successful culture of management by objectives and see an improvement in your team’s performance. This works for a sales environment, as well as customer service, or any other department in an organization.

Management by Objectives Examples

If this sounds like something you’d like to try, you may be wondering what are some examples of objectives that you could set. While specific objectives may differ depending on your industry, product, and specific company, there are a few blanket objectives that you could begin with. While any department can use MBO, we’ll take a look at 3 specific instances.

Sales MBO examples

  • Decrease the sales cycle to 2 months
  • Boost the average sales to $10, 000
  • Bring in 15 new customers

Marketing MBO Examples

  • Increase social media likes by 40%
  • Increase time spent on the internet site by 5 minutes
  • Generate 500 new leads per month
  • Get 5 media placements

Customer care BMO Examples

  • Decrease call time for you to under 5 minutes
  • Increase customer satisfaction by 30%
  • Reduce manager call intervention by 10%

Human Resources MBO Examples

  • Improve retention rate by 15%
  • Implement a leadership training program for remarkable employees
  • Increase employee satisfaction by 30%

When it’s time to inspire your team and breathe new life into your organization, consider incorporating management by objectives into your organization culture. You may be amazed how well your employees take to this new system as soon as they understand your expectations they’re in a better position to meet or exceed them.

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