What is Management by Objectives (MBO)? What are its advantages and disadvantages?

Introduction The use of management objectives was first widely advocated in the 1950s by the noted management theorist Peter Drucker. MBO (management by objectives) methods of performance appraisal are results-oriented seeks to measure employee performance be examining the extent to which predetermined work objectives have been met. Usually the objectives are established jointly by the supervisor and subordinate. An example of an objective for a sales manager might be: Increase the gross monthly sales volume …

…MBO system is to get managers and empowered employees acting to implement and achieve their plans, which automatically achieve those of the organization. The MBO style is appropriate for knowledge-based enterprises when your staff is competent. It is appropriate in situations where you wish to build employees' management and self-leadership skills and tap their creativity, tacit knowledge and initiative. MBO is also used by chief executives of multinational corporations (MNCs) for their country managers abroad.