Encyclopedia of Leadership

13.4

MANAGEMENT BY OBJECTIVES

Inspired by Peter Drucker, Paul Hersey, Ken Blanchard, and George Odiorne.

Management by Objectives (MBO) is a timeless and venerable leadership tool. Although its

heyday (the 1960s through the 1980s) has now past, the basic principles of MBO remain rele-

vant. At the time of its introduction, MBO was a reaction to the micromanagement practice of

controlling the activities of others, while paying only indirect attention to the actual business

results an individual or workgroup was achieving. Nonetheless, adapted to present-day orga-

nizational reality, this tool is useful for helping leaders set goals, then plan and manage toward

achieving those goals.

MBO comes in many variants, but these principles are common:

• Effective leaders lead by clarifying goals, then determining and managing activities to
  achieve them.


• The clearer the goal—what you are trying to accomplish—the better the chance of
  achieving it.


• Goal setting is a collaborative activity. (In the original organizational milieu of MBO,
  this goal-setting process started at the top and cascaded down. In much faster-moving,
  modern organizations, goals are clarified at all levels and in real time.)


• Success is measured by how well goals are achieved—”What gets noticed is what gets
  measured,” and “What gets measured gets done.”

One typical variant of MBO viewed the process as a funnel with business results as the end

target.

A typical MBO set of statements would include:

 Role or Responsibility Statement

This statement describes the general reason for the job or workgroup. It answers ques-

tions like:

“What is the reason this job exists?”or “What is the basic function of this workgroup?”

402 SECTION 13 TOOLS FORLEADINGPERFORMANCE

General

Specific

Role or

Responsibility

Statement

Key

Result

Areas

Objectives

Indicators/

Measures

Action

Plans

Short-term

Long-term