Objectives need to be SMART:

1. They should be concrete and specific.
2. They should be measurable and controllable.
3. They need to be achievable / attainable and must be set within constraints.
4. Different objectives must correlate with each other and be relevant.
5. They should be related to a time frame.

Areas Which Need Objectives

Peter Drucker identified eight key areas in which organizations need objectives:

1. Market standing
2. Innovation
3. Productivity
4. Physical and financial resources
5. Managerial performance and development
6. Worker’s performance and attitudes
7. Profitability
8. Public and social responsibility

Back to MBO

This approach was proposed by Peter Drucker in the 1960s.

By definition, Management by Objectives shows:

1. A personnel management system
2. Where organizations set, plan, monitor, and achieve specific objectives
3. With mutual cooperation of both high-level and low-level employees

To achieve greater efficiency and performance, employee motivation is very important.

Management by Objectives (MBO) is one of the best approaches to achieve this.

MBO: The Process

The process of MBO involves six key steps that systematically incorporate managerial activities toward effective achievement of individual and organizational objectives:

1. Determining organizational goals
2. Determining employees’ objectives
3. Constant monitoring of progress and performance
4. Performance evaluation
5. Providing feedback
6. Performance appraisal (rewarding the performers)