Administration by objectives: Know its benefits - Emptor

In today’s business world, efficiency and productivity are key to remaining competitive. One management technique that has proven effective in this regard is management by objectives (MBO). But what is management by objectives and how can it be applied in an organization? In this article, we explore this management approach, its advantages and disadvantages, and how to implement it effectively.

Definition of Management by Objectives

Management by objectives is a management approach that focuses on the definition and monitoring of specific goals and objectives at all levels of an organization. These objectives are agreed upon between employees and management, which allows for greater participation and commitment from all involved.

History and Evolution

Management by objectives was initially developed by Peter Drucker in his book The Practice of Management in 1954. Since then, it has evolved and adapted to the different realities of the business and work environment.

Fundamental Principles of Management by Objectives (MBO)

Management by objectives is based on three fundamental principles:

• Establishing clear and achievable objectives.
• Measuring and monitoring progress towards those objectives.
• Evaluating performance and making adjustments as needed.

Advantages of Management by Objectives

Implementing management by objectives in an organization can bring multiple benefits, including:

Improved Communication

By establishing clear and shared objectives, communication between employees and management is fostered. This allows for a better understanding of the expectations and responsibilities of each party, leading to greater cooperation and collaboration in achieving the objectives.

Increased Motivation and Commitment

When employees participate in the definition of their own objectives and play an active role in monitoring and evaluating their progress, they tend to feel more motivated and committed to their work. This translates into greater job satisfaction and better performance.

Facilitates Performance Evaluation

Management by objectives provides a clear framework for evaluating employee performance based on the established objectives. This facilitates the identification of areas for improvement and the implementation of corrective actions, as well as the recognition and reward of good performance.

Promotes Professional Development

The focus on achieving specific objectives helps employees identify and develop the skills and competencies necessary for their professional growth. Additionally, the continuous feedback and evaluation allow for better monitoring and support in the development process.

Disadvantages and Criticisms of Management by Objectives

Despite its advantages, management by objectives also has its drawbacks and has been the subject of criticism:

Rigidity in Application

In some cases, management by objectives can be too rigid, as it focuses on the achievement of specific objectives, without taking into account changes in the business environment or the individual needs of employees.

Focus on Short-Term Results

Management by objectives can lead to an excessive focus on short-term results, to the detriment of the company’s long-term vision and strategy.

Potential Conflicts between Objectives

There may be conflicts between the objectives of different departments or employees, which can generate tensions and difficulties in collaboration and coordination.

Steps to Implement Management by Objectives

To implement management by objectives in an organization, it is important to follow these steps:

1. Establishing objectives: The objectives must be clear, achievable, and measurable, and must be aligned with the company’s strategy and vision.
2. Developing action plans: Each employee must develop an action plan that details how to achieve the established objectives.
3. Monitoring and tracking: Management must monitor and track the progress of employees towards the objectives, providing feedback and support when necessary.
4. Evaluation and adjustments: At the end of the established period, the performance of employees must be evaluated based on the objectives, and adjustments to the objectives or action plans must be made as necessary.

Frequently Asked Questions about Management by Objectives

Q. What is the main purpose of management by objectives?
A. The main purpose of management by objectives is to improve the efficiency and productivity of an organization by establishing clear and achievable objectives for all employees, and measuring and evaluating their performance based on those objectives.

Q. What type of companies can benefit from management by objectives?
A. Management by objectives is applicable to companies of all sizes and sectors, as its focus on defining and monitoring objectives can be adapted to the specific needs of each organization.

Q. How are employees involved in the management by objectives process?
A. Employees actively participate in the management by objectives process by collaborating with management in defining their own objectives, developing action plans to achieve them, and monitoring and evaluating their progress over time.

Q. What is the relationship between management by objectives and performance evaluation?
A. Management by objectives provides a framework for evaluating employee performance based on the achievement of the established objectives. This facilitates the identification of areas for improvement and the implementation of corrective actions, as well as the recognition and reward of good performance.

Q. How can the disadvantages of management by objectives be avoided?
A. To avoid the disadvantages of management by objectives, it is important to maintain flexibility in the application of the approach, adapting it to the specific needs of the organization and its employees. Additionally, the focus on short-term results must be balanced with a long-term vision and strategy, and collaboration and coordination between different departments and employees must be fostered to avoid conflicts between objectives.

Management by objectives is a powerful approach that can help organizations drive performance and achieve success. By setting clear goals, involving employees in decision-making, and regularly reviewing performance, MBO can foster a culture of accountability and continuous improvement.

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