Management by objectives
Management by objectives (MBO), also known as management by results (MBR), is the process of defining specific objectives within an organization that management can convey to organization members, then deciding on how to achieve each objective in sequence. This concept was first popularized by Peter Drucker in his 1954 book The Practice of Management.
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- Objectives are goals established to guide the efforts of the company and each of its components. Effective management is always management by objectives. An organization can grow and change in an orderly and progressive manner only if well-defined goals have been established to guide its progress. Not only must there be an objective for the total organization, but, since each component can accomplish only limited work, there should be spelled out division and departmental goals which serve as specific guides for subordinate units. These enable individual managers to operate with maximum freedom but always within the framework of over-all company objectives. Unless such goals are established, there is likely to be haphazard activity, uneconomical commitment of capital funds, poor utilization of people, and mediocre operating results over the long term.