Describe the management by objectives (MBO) approach and explain how it overcomes the limitations of results-based reviews.

Question

What will be an ideal response?

Answer 1

In an MBO, employees establish objectives (such as production costs, sales per product, quality standards, and profits) by consulting with their managers and are then evaluated based on meeting those objectives. An MBO system consists of a cycle that begins with setting the organization's common goals and objectives and ultimately returns to that step. The system acts as a goal-setting process whereby objectives are established for the organization (Step 1), departments (Step 2), and individual managers and employees (Step 3). Employees help establish specific goals, but those goals are based on a broad statement of an employee's responsibilities prepared by the person's supervisor. The employee-established goals are then discussed with the supervisor and jointly reviewed and modified until both parties are satisfied with them (Step 4). The goal statements are accompanied by a detailed account of the actions the employee proposes to take to reach the goals and how they will be measured (the metrics). During periodic reviews, the progress the employee makes toward the goals is then assessed (Step 5). The goals and metrics may be changed at this time as new or additional information is received. After a period of time, the employee does a self-evaluation and documents what he or she has accomplished. The person and his or her manager then jointly review and discuss the self-evaluation (Step 6). The final step (Step 7) is reviewing the connection between the employee's performance and the organization's.