Management by Objectives (MBO)
- Theory / Concept Name
- Management by Objectives (MBO)
- Description
Peter Drucker introduced MBO in The Practice of Management (1954) as a systematic process where managers and employees jointly set objectives, define responsibilities, and use objectives to guide activity and evaluate performance.
MBO Process Steps
- Set organisational goals — senior management sets overall goals.
- Cascade objectives — goals are broken down through the hierarchy to departments and individuals.
- Employee participation — employees and managers jointly agree on specific, measurable objectives.
- Monitor progress — regular check-ins against agreed objectives.
- Evaluate performance — results compared against set objectives; feedback provided.
- Reward achievement — recognition and rewards tied to objective attainment.
Key Principles
- Objectives must be SMART (Specific, Measurable, Achievable, Relevant, Time-bound).
- Participation increases commitment.
- Regular feedback is essential.
Knowledge Worker
Drucker also coined the term knowledge worker — an employee whose primary job involves handling information, and predicted the rise of the knowledge economy.
- Theorist / Pioneer
- Peter Drucker
- Year
- 1954
- Category
- Modern