Management by Objectives. SMART
(Drucker)

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Defining objectives for employees and directing their performance against these objectives. Explanation of Management by Objectives of Peter Drucker. ('54). SMART.



  

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Peter Drucker - Management By ObjectivesWhat is Management by Objectives? Description

MBO relies on the defining of objectives for each employee and then to compare and to direct their performance against the objectives which have been set. It aims to increase the performance of the organization by matching organizational goals with the objectives of subordinates throughout the organization. Ideally, employees receive strong input to identify their objectives, time lines for completion, etc.
MBO includes continuous tracking of the processes and providing feedback to reach the objectives.

 

Peter Drucker

Management by Objectives was first outlined by Peter Drucker in 1954 in his book 'The practice of Management'. According to Drucker managers should avoid 'the activity trap', getting so involved in their day to day activities that they forget their main purpose or objective. One of the concepts of MBO was that instead of just a few top-managers, all managers of a firm should participate in the strategic planning process, in order to improve the implementability of the plan. Another concept of Management by Objectives was, that managers should implement a range of performance systems, which are designed to help the organization to function well. Clearly, Management by Objectives can thus be seen as a predecessor of Value Based Management.

 

Principles of Management by Objectives

  • Cascading of organizational goals and objectives,

  • Specific objectives for each member,

  • Participative decision making,

  • Explicit time period, and

  • Performance evaluation and provide feedback.

Management by Objectives also introduced the SMART method for checking the validity of the objectives, which should be 'SMART':

  • Specific

  • Measurable

  • Achievable

  • Realistic, and

  • Time-related.

In the 90s, Peter Drucker put the significance of this organization management method into perspective, when he said: "It's just another tool. It is not the great cure for management inefficiency... Management by Objectives works if you know the objectives, 90% of the time you don't."

 

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Recent User Comments
Garvita - India MBO - Significance for Employees? "How is Management By Objectives important for an employee?"    4
Amey - India How to Implement Management By Objectives? "How should one implement management by objectives?"    2
 - UAE Management By Objectives Examples "Can anyone give some examples of organizations using MBO Successfuly today?"    4
Prakash Sewsagur - Mauritius SMARTER than SMART "From my experience, I would write smarter now instead of only smart as Endurane & Responsiveness are both of great importance."    3
 - India MBO and Clear Objectives "MBO gives clear direction to an employee what he is paid to do.... Under SMART whatever you do beyond set objectives goes in vain... Clearly defined objectives will be a greater use to him to avoid this. The million dollar question here is, how many of us work with clearly defined objectives???"    3
Best User Comments
Robert - Ireland Disadvantages of MBO? "I'm trying to build a complete list of all disadvantages of Management by Objectives:
1. May lead to suboptimalization: people or departments are not stimulated to look beyond their own objectives and help eachother.
2. Innovation is not stimulated.
3. The time and paperwork involved.
4. Potential misuse by superiors who simply assign (rather than negotiate) objectives.
5. Subordinates may try to negotiate easy goals.
6. Watch out for unrealistic (too high) expectations about what can be reasonably accomplished.
7. Inflexible, rigid."		    48
Ana - UK Reference of SMART Goals "Does anyone know the reference for SMART goals? I checked in Peter Drucker’s book: “The practice of management” and did not find it. Is really Peter Drucker who invented this acronym? Thank you,"    46
Heylen - Belgium Essence of MBO "MBO somewhat resembles farming, each animal or plant is allowed to individually produce a product. The farmer is there to give guidance, to control and support the process. Whatever you can imagine for a farmer to do wrong, actually also applies to managers applying MBO. This includes negligance through abdication of authority, failing logistical support, lack of forecasting future demand, etc."    44
Amit Srivastava - India SMART Management Works! "A very nice article. Organizations transcend from good to great because people use SMART goals as foundation for every day work and strive every day to beat the goals."    38
Frank - Netherlands SMARTIE! "We often use 2 extra terms: Inspiring en Enthousiasm. It puts the word SMART into another perspective. If your people don´t accept the objectives, it won´t work...."    18
 - Russia Achievable vs. Realistic "I don`t see much difference between the terms "Achievable" and "Realistic", I`d rather say "Results-oriented" or "Results-directed"."    9
Helen - Ireland Setting SMART Objectives "What would be the best SMART objectives to set for the first-line manager, who just started on the job in the retail industry in the current economic crisis"    8
Gabriel - Nigeria MBO vs. CSA "In the principle of Management By Objective, MBO, just like Facilitated Team Workshop in Control Self Assessment, CSA, points out the importance of involvement of employees in decision making.
This makes the employees feel like they are part of the system. They will assume the processes as theirs and they will be better equipped to give qualitative feedback to the managers or supervisors."		    3
Nirbhay Singh - India MBO Needs Tracking and Feedback "I would like to dedicate my opinion on MBO. It aims to increase organizational performance by aligning goals and subordinate objectives throughout the organization. MBO includes ongoing tracking and feedback in the process to reach objectives, employees get strong input to identifying their objectives, time lines for completion etc..."    1
 - India Smart is Always Smart... "This is called you define your objectives... Though the implementation is tough.. The results are far from your imagination... Thats how they say... "good things don't come easily" - good to read it here."    0
Raphael - Cameroon Management Without Objectives? "Is it even possible to manage without objectives? Even when we don't seem to detect clearly the objectives of a particular management, there must be some kind of objective. In this way, we are tempted to ask what's new in Drucker's MBO, if not simply clarifying the concept."    0
Chipo - Zimbabwe Circumstances for MBO "Does MBO work in times of uncertainity and change?"    0
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Copyright 2009 12manage - The Executive Fast Track. V10.4 - Last updated: 11/7/2009. All names tm by their owners.



  ● India (Jabeen) SMART and MBO "The SMART method of checking MBO validity is impressive."



  ● Martin (USA) MBO Disadvantages "Here's a couple of weaknesses in the MBO assumption base that I use:
1. It emphasizes the setting of goals over the working of a plan.
2. It underemphasizes the importance of the environment or context in which the goals were set. That context includes everything from the availability and quality of resources, to relative buy-in by leadership and stakeholders.
3. It doesn't address the importance of successfully responding to obstacles and constraints as essential to reaching a goal. The model didn’t adequately cope with the obstacles of:
· Defects in resources, planning and methodology,
· The increasing burden of managing the information organization challenge,
· The impact of a rapidly changing environment, which could alter the landscape enough to make yesterday’s goals and action plans irrelevant to the present."

  ● Ken (England) SMART "I think the SMART acronym is often misrepresented as Specific Measurable Achievable Realistice and Timebound. I think people have difficulty with the Achievable and Realistic elements. Try Specifc Measurable Alligned Relevant and Timebound. I think it is much better and I actually think this is the correct acronym. Why? Would a Vinci have designed a Helicopter with the usual acronym. Think Realistic!!!"
  ● Markus (Germany) Who invented SMART "I really would like to know when the acronym smart was firstly used and who used it."

  ● Kingsley (Nigeria) Human Resources "What exactly are the steps and relevance of Management By Objective?"

  ● Shahadat (Bangladesh) Is MBO operational? "Is Management By Objectives an operational everyday job? If yes, how?"
  ●  (INDIA) SMART Mgt. "Hi.. Actualy i realized that in my own organization."

  ● farrokh mehta (india) SMART Goals "Make it SMARTER. Goals must be Energising and Reviewed"

  ● Gemma (UK) MBO - SMART "Achievable v realistic... Is achievable more relevant to the individual completing the tasks? Whilst realistic may tak into account external factors out of the control of the individual?"
  ● Pam (USA) SMART: Achievable vs Realistic "An easy way to see the difference between achievable and realistic is with weight loss. Is having a goal of losing twenty pounds in two weeks SMART? It is specific, measurable, achievable, but losing twenty pounds in two weeks is not realistic. Changing the time frame can make this achievable and realistic."

  ●  (South Africa) Objectives in Economic Crisis "What is very important in these times is customer retention - business must look after their customers in hard times and do what they do well. Customers are spending less, but let that at least be with you."



  ● Prakash Sewsagur (Mauritius) Agreed, but Possible! "I totally agree with you, however I have now people applying this method to the perfection...."

  ●  (India) smart "Smart is the guide line to achieve the desire goals"