What is MBO? Meaning
Management By Objectives (MBO) was introduced by Peter Drucker in 1954. In MBO, the subordinate (junior or lower level) managers are allowed to participate in planning and controlling activities. They are allowed to participate in the decision-making process. In MBO, the superior and subordinate managers jointly fix the objectives of the organisation. They collectively make the plans to achieve these objectives. They also collectively monitor (evaluate) the performance of the subordinate managers.
Image Credits © Ahmed Ali Abul Hassan Ahmed.
So, in MBO, there is a Two-Way communication. It increases the morale of the subordinate managers. It motivates them to work hard and achieve the objectives. This leads to more and better results. MBO is result-oriented. It leads to better planning and controlling. It leads to good team work. MBO also helps to train and develop the subordinate managers.
Definition of MBO
According to George S. Odiorne, MBO happens when,
"The superior and subordinate managers of an organisation jointly define its common goals, define each individual's major areas of responsibility in terms of the results expected of them and use these measures as guides in operating the unit and assessing the contribution of each of its members."
Read more articles on the concept of MBO i.e. Management by Objectives.
- Four stages or steps in the MBO process.
- Benefits or advantages of MBO process.
- Management By Objectives (MBO) - Peter Drucker.