#Notes 6.3 From Management by Objectives to the Balanced Scorecard

Management by Objectives (MBO)

A systematic and organized approach that allows management to focus on achievable goals and to attain the best possible results from available resources.

MBO aims to increase organizational performance by aligning the subordinate objectives throughout the organization with the overall goals that management has set.

MBO was where managers should focus their time and energy. Effective MBO managers focus on the result, not the activity. 

MBO is about setting goals and then breaking these down into more specific objectives or key results. 

MBO involves :

1. setting company-wide goals derived from corporate strategy
2. determining team- and department-level goals
3. collaboratively setting individual-level goals that are aligned with corporate strategy
4. developing an action plan, and 
5. periodically reviewing performance and revising goals.

The broader principle behind MBO is to make sure that everybody within the organization has a clear understanding of the organization’s goals, as well as awareness of their own roles and responsibilities in achieving objectives that will help to attain those goals.

In MBO systems, goals and objectives are written down for each level of the organization, and individuals are given specific aims and targets.