Management by objective is also known by the acronym MBO, for Management By Objectives in English. This managerial approach was proposed by an American consultant, Peter Drucker, in the 1950s. ‘business. In concrete terms, the manager sets quantified objectives for each of his employees, monitors their progress and then rewards the objectives achieved and exceeded.
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What is management by objective?
Management by objective consists of assigning measurable objectives to each employee, rather than assigning them tasks. In practice, these are therefore precise figures to be achieved. The objectives are determined in consultation with the employee, to ensure that they are not only achievable, but also motivating. We therefore also speak of DPPO, for Participatory Management By Objectives.
What are the advantages and disadvantages of management by objective?
- The involvement of the employee regardless of his hierarchical level : management by objective is based on clear communication of the employee’s missions and responsibilities. Under these conditions, the employee is able to become aware of his role in the company: he knows exactly what he has to do, he understands the challenges of his missions and he realizes how his work impacts the overall performance of the company. ‘business. The collaborator feels invested with a role of the greatest importance, insofar as he personally contributes to the results of the company. Increasing employee involvement gives meaning to their work and motivates them.
- Valuing the employee : the employee is aware of the company’s strategy, duly informed by his manager. This is proof that the manager places his trust in his collaborator, without withholding information. Everyone feels better valued in the exercise of their work. From then on, the benefits are observed at company level: well-being and satisfaction at work increase, the company offers itself the opportunity to better retain its talents.
- The emergence of team spirit and the exploitation of collective intelligence : management by objective helps to decompartmentalize functions. Indeed, everyone works in the general interest and is aware of it, because the transparent discourse of the manager gives an overall view of the final result of the coordination of individual actions. The cohesion and collaboration of the teams allows the company to gain in performance.
- Empowerment : the MBO clarifies expectations by setting measurable objectives. Consequently, the collaborator can easily evaluate his progress himself, and he challenges himself. When he participates in setting his objectives, in addition, the employee offers himself greater leeway in the performance of his duties. The manager, for his part, exercises less daily control over the tasks carried out by his team. Result: more autonomy for all, and the manager takes the opportunity to free up time to devote to other missions.
- In a changing economic context, the MBO imposes a regular update of objectives. The manager revises down the objectives suddenly become too ambitious, or on the contrary increases the figures to be reached to face increased competition. This involves an additional workload, and requires a lot of responsiveness from the manager.
- Management by objective is not not suitable for all situations or all profiles. It should therefore not be considered on a systematic basis, but used in a timely manner. Illustrations: an employee sensitive to the pressure of figures can feel anxiety and unease at work, which is the exact opposite effect to the purpose pursued by the MBO; certain performance indicators of the company cannot be measured with figures, management by objective then proves to be ineffective.
- When it comes to rewarding results, in particular by granting performance bonuses, alone employees who have reached their figures are highlighted, the others are left out. This can create jealousy within the team: a harmful competitive spirit can appear over time, and some employees may feel demotivated. Here again, it is the opposite effect to the initial goal of management by objective that occurs.
To overcome the limitations of the MBO, the manager makes sure to use it only when the approach proves to be appropriate, and implements management by objective in a measured way. The manager also regularly assesses the results of his approach, to make the necessary corrections if necessary.
How to implement management by objective?
Define business goals
Management by objective consists of assigning each employee intermediate objectives, the sum of all these intermediate objectives making it possible to achieve the final objectives of the company. The 1st step therefore consists of clearly identifying the company’s objectives, a task that falls within the decision-making power of the managers. Once the figures are set, the strategy is rolled out from top to bottom of the hierarchy, so as to determine everyone’s participation according to their role and level of responsibility.
Assign individual goals
The manager gives each employee his roadmap: the employee learns the figures he must achieve. This approach takes place within the framework of a transparent exchange: the manager communicates on the transversal strategy of the company to allow the employee to understand his role and its importance on the basis of an overall vision. During this stage, the employee participates in determining the means as well as the time required to achieve his objectives.
The SMART method is useful at this stage to ensure the relevance of the objectives, which determines the success of management by objective. It’s about setting goals:
- Specific, that is to say precise, to properly guide the employee.
- Measurable, that is to say quantified, to easily assess the result.
- Achievable, but for all that ambitious, to gain in performance.
- Realistic, to avoid the risk of demotivation.
- Temporally defined, by imposing a deadline.
Measure progress and track individual performance
If management by objective empowers employees, the manager must continue to monitor it on a regular basis. In doing so, he ensures the progressive progress of each employee in the pursuit of his objectives. This is also an opportunity to review the figures or the deadline if necessary.
Give regular feedback
To encourage successes, but also to provide support in the event of difficulties, the manager communicates with the employee on the results obtained during the intermediate stages.
Reward during an annual evaluation interview
The reward in management by objective often takes the form of performance bonuses, to be determined with management. In any case, it is important to bear in mind that the MBO excludes all forms of sanctions in the absence of objectives achieved, at the risk of exerting too much pressure likely to harm the individual interests of employees.
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