Definition of Management By Objective
Management by objective or MBO is a strategic method that is used by an organization to achieve its goals and objective by the implementation of a plan by which both the employees and the organization itself agreed. MBO is a way to enhance organizational efficiency and performance.
MBO can be used as a whole in an organization in which the organization wants to achieve a goal as a whole and MBO can be used among business units, divisions, departments, and even among teams to achieve an objective.
An essential and important component of management by the objective method is that employees are given feedback on their work after the evaluation of each individual performance and then they’re compared with the ideal approach that was set to achieve the objective. This evaluation and feedback give employees a snapshot of their performance and their alignment with the organization’s standards.
Example of MBO:
A detergent company wants to increase the consumer trial of its newly introduced detergent to increase brand recognition. The collective efforts of the Marketing and sales team, the effect their strategies have and the results are an example of Management by Objective.