Six Steps of Management by Objectives - Essay Example

A periodic appraisal of actual employee performance against previously agreed-upon standards would indicate the degree to which employees have succeeded in achieving those goals. Employees are also made to understand how their contributions influence the overall success of business objectives.

Drucker and other management experts have identified six steps in the MBO process. The first step is Motivation, whereby employee inputs are considered and respected in setting goals for each individual. The keywords during this step are 'empowerment', 'job satisfaction', and 'commitment'. By involving themselves directly in the goal-setting process, it is believed that employees will show more commitment to the success of the organization. The next step of the process is about ensuring that proper communication and coordination exist between managers and employees so that performance reviews are conducted openly and transparently. By making the goals clear both management and workers can be expected to be on the same page.

The six steps involved in MBO can be summarized as follows: Setting the overall business goals; Setting goals about departments within; Deliberating within departments to achieve a consensus; Agreeing upon commonly understood and discussed goals; Setting goals for individual employees; and finally Monitoring performance against set goals.
A key advantage of the MBO model is that it can be applied across organizational domains such as sales, services, human resources, finance, information technology, etc. This is due to the generic nature of the six steps, whose points find application in all domain contexts. The challenges in implementing this model lie in quantifying employee performance, which is not always easy. The aid of a Management Information System can facilitate this task.

To overcome this problem, Edwards Deming suggests reverting to strong leadership instead of employee empowerment. Also, the success of individual objectives may fail to have a synergistic effect if the broader plan of operation is flawed. In other words, individual goal-setting cannot mitigate the disadvantages of an unwieldy business model or a discouraging economic environment Read More