What is the MBO?

Last Update: Apr 26, 2024 |


Mitali Srivastava

MBO means Management By Objective - is a comprehensive device for effective planning, directing, controlling and performance appraisal, all in one.

The MBO Process - There are seven steps using to explain about MBO

Step 1- Setting an organization's common goals and measures of performance

  • Identifies areas of its business where success is vital.
  • Sees where it is in these Key result areas
  • Decides how to measure performance in these Key Result areas

Step 2- The organizational structure is reviewed incorporating any revisions that might be necessary to accomplish the improvement in these KRA's

Step 3- Superior Set goals and Subordinate proposes goals in KRAs along with the performance.

Step 4- Joint agreement on subordinates goals and measures and milestones is reached.

  • Alignment between subordinate,s and superior's objectives
  • The joint plan of action of what needs to be done, by whom and by when

Step 5- Feedback of interim results is provided and compared with the milestones

Step 6- Cumulative period review of subordinate's performance vs targets. This is a forward-looking exercise.

Step 7- Review of organizational performance:

  • In this review, the goals and measures of performance are revised, if necessary and the annual cycle of the MBO process start again.

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