Management by objectives (MBO) as a management concept was first described by Peter F. Drucker in his 1954 book The Practice of Management. In it, he wrote: „effective management must direct the vision and effort of managing personnel to a common goal.”

MBO has been practised in the public, private and non-government sectors in the whole world for decades. However, each time this solution is implemented in organizations it is recommended to take into account its specifics and the way it functions.

According to MBO each employee has a task to make a certain contribution to the effectiveness of their organizational unit. It means that if all employees have achieved their personal goals, the goals of separate organizational units will be realised and thus – the goals of the whole organization.

Therefore, one of the main assumptions of MBO concerns achieving defined results by giving the employee the freedom to decide how to achieve them. This approach to management assumes that setting a goal is a stimulus which motivates employees to act and makes them put their best foot forward when it comes to the tasks they realize.

The process of setting objectives starts with defining an organization’s strategy. Tactical goals are defined for particular units on the basis of strategic goals and then – operational goals, which result from them, at an individual level. This process is called “cascading” and its underlying assumption is that the subordinate’s goals result from the superior’s goals. Determining goals and spreading them “from top to bottom” allows to delegate responsibility for results. In sequence, the realization of goals is monitored and appraised in defined cycles (e.g. quarterly, yearly).

The main advantages of effectively implemented MBO are:

  • increased integration and employees’ identification with organization,
  • ensured objective assessment of actions thanks to concentration on particular results,
  • organization becomes more resilient to unexpected change in its environment,
  • managers’ and subordinates’ independence and involvement increase
  • triggering innovativeness among employees,
  • replacing external control with motivating self-control,
  • strengthening participatory character of managing organization.

Glossary:

  • to implement – wdrażać
  • to take into account – brać pod uwagę
  • to make a contribution – mieć wkład
  • thus – zatem
  • assumption – założenie
  • stimulus – bodziec
  • underlying – podstawowy
  • subordinate – podwładny
  • superior – przełożony
  • assessment – ocena
  • resilient – odporny
  • to strengthen – wzmacniać

Idiom of the month:

to put one’s best foot forward

meaning:

  • to do something as well as you can
  • to act or appear at one’s best

in Polish:

  • zrobić coś najlepiej, jak się potrafi
  • włożyć w coś dużo wysiłku

example:

  • Put your best foot forward at this job interview.

Exercise:

After reading the text above which of the statements are true or false.

According to the described methodology, an organization’s operational goals result from tactical goals.

Implementation of MBO may limitate employees’ innovativeness.

Cascading means introducing an organization’s strategy to all employees „from top to bottom”.

In MBO, employees’ individual goals often happen to overshadow the common goal of an organization.

Peter F. Drucker was the author of harsh criticism with regard to implementing MBO system in organizations.

According to MBO an employee is given goals and not the way how to realize them.

A superior passes a subordinate operational goals together with the responsibility for their realization.

Exercise – Fiona C. the HR Lady:

Which of the statements can you infer from the text? Please decide whether the sentence is true or false:

Michael is satisfied with the goals in his MBO card.

In the organization which Fiona and Michael work for MBO system is a new solution.

Michael’s boss wants him to be accountable for the number of audits which were conducted well.

Michael works in Fiona’s team.

Fiona supports the implementation of MBO in the whole organization.

Michael has doubts as to whether his boss is capable of setting goals appropriately.