Management by Objectives (MBO): Meaning & HR Guide

Management By Objectives (MBO)

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MBO or Management by Objective is the strategic approach towards achieving the goals of the organization. The purpose of MBO is to improve the performance of the company by clearly defining the goals and strategy for them. Both goals and the strategies are agreed upon by management as well as the employees who actually work on them.

The term was first outlined by management guru Peter Drucker in his 1954 book, The Practice of Management. According to the theory, having a say in goal setting and action plans encourages participation and commitment among employees, as well as aligning objectives across the organization. It was majorly established to compare the actual performance with the defined objectives by clearly defined before any actions.

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