HR Glossary  >   Management By Objective

Management By Objective

What is Management By Objective?

Management by objective (MBO) is a strategic management model that strives to improve an organization’s performance by clearly defining its objectives, for which the management and employees agree. The theory encourages the employee’s participation in setting goals, planning out actions, and aligning the objectives across the organization.

An example for better understanding:

  • The marketing team of a company had its monthly meeting
  • The agenda of the meeting was to set the objective for the coming month
  • They set 3 goals to be achieved
  • One of them was to gain five hundred followers on social media
  • As per the objectives set, the team formulated the action plan


What is the process of MBO?

The steps in the process of MBO are:

Establish the organization's goals

First and foremost, the organization must set long-term objectives and goals to be achieved.

Set employees' objectives

As per the goals set, managers need to delegate the work and set objectives for individual employees to work on.

Monitor the performance constantly

Monitoring the performance is necessary as it will give a clear picture of whether the work is going on as per the set objective.

Evaluate the performance

Each activity performed should be evaluated. Management needs to take steps against inaccurate actions.

Provide feedback

Feedback should be given to employees on their performance so they can work on its betterment if required.

Performance appraisal

Appraisals are given to employees performing well and achieving the organization's goals.


Frequently Asked Questions

What is the need for management by objective?

The management by objective is crucial for the organization as it brings different benefits; they are:

  • Goal establishment
  • Clear objectives set for employees
  • Actionable plans
  • Organizations aligned toward a single goal
  • Effective management, feedback, and appraisals

What are the types of MBO?

The types of MBO can be categorized into three:

Team development objective

The objectives set are for the overall development of the teams and departments.

Individual development objective

The objectives are set individually for employees' development.

Strategic development objective

The objectives are generic for the organization's overall development.

Modify your HR and payroll tasks with factoHR today

Let your HR and workforce focus on most important business decisions while factoHR can reduce the burden of daily activities of the organization.

whatsapp icon
Request Free Trial