Management by objectives (MBO) is a process of defining objectives within an organization so that management and employees agree to the objectives

and understand what they need to do in the organization. The term "management by objectives" was first popularized by Peter Drucker in his 1954 book 'The Practice of Management'.[1] The essence of MBO is participative goal setting, choosing course of actions and decision making. An important part of the MBO is the measurement and the comparison of the employees actual performance with the standards set. Ideally, when employees themselves have been involved with the goal setting and choosing the course of action to be followed by them, they are more likely to fulfill their responsibilities. According to George S. Odiorne, the system of management by objectives can be described as a process whereby the superior and subordinate managers of an organization jointly identify its common goals, define each individual's major areas of responsibility in terms of the results expected of him, and use these measures as guides for operating the unit and assessing the contribution of each of its members.[2]
===Unique features and advantages of the MBO process=== The principle behind Management by Objectives (MBO) is for employees to have a clear understanding of the roles and responsibilities expected of them. They can then understand how their activities relate to the achievement of the organization's goal. MBO also places importance on fulfilling the personal goals of each employee.

Some of the important features and advantages of MBO are: 1 Motivation Involving employees in the whole process of goal setting and increasing employee empowerment. This increases employee job satisfaction and commitment. 2 Better communication and Coordination Frequent reviews and interactions between superiors and subordinates helps to maintain harmonious relationships within the organization and also to solve many problems. 3 Clarity of goals 5 Subordinates tend to have a higher commitment to objectives they set for themselves than those imposed on them by another person. 6 Managers can ensure that objectives of the subordinates are linked to the organization's objectives.

== Domains and levels == Objectives can be set in all domains of activities (production, marketing, services, sales, R&D, human resources, finance, information systems etc.).

Some objectives are collective, for a whole department or the whole company, others can be individualized. == Practice == Objectives need quantifying and monitoring. Reliable [[management information systems]] are needed to establish relevant objectives and monitor their "reach ratio" in an objective way. Pay [[incentive]]s (bonuses) are often linked to results in reaching the objectives.

== Limitations == There are several limitations to the assumptive base underlying the impact of managing by objectives, including:

1. It over-emphasizes the setting of goals over the working of a plan as a driver of outcomes.

2. It underemphasizes the importance of the environment or context in which the goals are set. That context includes everything from the availability and quality of resources, to relative buy-in by leadership and stakeholders. As an example of the influence of management buy-in as a contextual influencer, in a 1991 comprehensive review of thirty years of research on the impact of Management by Objectives, Robert Rodgers and John Hunter concluded that companies whose CEOs demonstrated high commitment to MBO showed, on average, a 56% gain in productivity. Companies with CEOs who showed low commitment only saw a 6% gain in productivity.

3. Companies evaluated their employees by comparing them with the "ideal" employee. Trait appraisal only looks at what employees ''should be'', not at what they ''should do''.

When this approach is not properly set, agreed and managed by organizations, self-centered employees might be prone to distort results, falsely representing achievement of targets that were set in a shortterm, narrow fashion. In this case, managing by objectives would be counterproductive.

The use of MBO must be carefully aligned with the culture of the organization. While MBO is not as fashionable as it was before, it still has its place in management today. The key difference is that rather than 'set' objectives from a cascade process, objectives are discussed and agreed upon. Employees are often involved in this process, which can be advantageous.

A saying around MBO "What gets measured gets done", Why measure performance? Different purposes require different measures is perhaps the most famous aphorism of performance measurement; therefore, to avoid potential problems SMART and SMARTER objectives need to be agreed upon in the true sense rather than set. ==Arguments against== MBO has its detractors, notably among them [[W. Edwards Deming]], who argued that a lack of understanding of systems commonly results in the misapplication of objectives.<ref>Deming, W. Edwards, "Out of the Crisis", The MIT Press, 1994, ISBN 0262541165</ref> Additionally, Deming stated that setting production targets will encourage resources to meet those targets through whatever means necessary, which usually results in poor quality.<ref>[http://www.pmhut.com/demings-14-points-andquality-project-leadership Deming s 14 Points and Quality Project Leadership] ''J. Alex Sherrer, March 3, 2010''</ref>

Point 7 of Deming's [[W._Edwards_Deming#Key principles|key principles]] encourages managers to abandon objectives in favour of leadership because he felt that a leader with an understanding of systems was more likely to guide workers to an appropriate solution than the incentive of an objective. Deming also pointed out that Drucker warned managers that a systemic view was required <ref>Drucker, Peter, "Management Tasks, Responsibilities, Practices", Harper & Row, 1973</ref> and felt that Drucker's warning went largely unheeded by the practitioners of MBO.

Change Management
Someone who has worked in a corporation or with a large organization might have heard the phrase change management used from time to time. Change management has been around for a while, but has become extremely popular with organizations or corporations that would like to initiate significant change to processes that can include both work tasks and culture. Change management can be defined as a set of processes that is employed to ensure that significant changes are implemented in an orderly, controlled, and systematic fashion to effect organizational change. One of the goals of change management is with regards to the human aspects of overcoming resistance to change in order for organizational members to buy into change and achieve the organizations goal of an orderly and effective transformation.

The ADKAR Model

Change management has been developed over a period of time and one of the models that has played an influence in change management is the ADKAR model. Procsi developed the ADKAR model. In this model, there are five specific stages that must be realized in order for an organization or an individual to successfully change. They include:
y y y y y

Awareness An individual or organization must know why a specific change or series of changes are needed. Desire Either the individual or organizational members must have the motivation and desire to participate in the call for change or changes. Knowledge Knowing why one must change is not enough. An individual or organization must know how to change. Ability Every individual and organization that truly wants to change must implement new skills and behaviors to make the necessary changes happen. Reinforcement Individuals and organizations must be reinforced to sustain any changes. If not, an individual or organization will probably revert to their old behavior.

Organizational Change Management

Organizational change management takes into consideration both the processes and tools that managers use to make changes at an organizational level. Most organizations want change implemented with the least resistance and with the most buy-in as possible. For this to occur, change must be applied with a structured approach so that transition from one type of behavior to another will be smooth.

Managements Role in the Organizational Change

In most cases, managements first responsibility is to identify processes or behaviors that are not proficient and come up with new behaviors, processes, etc. that are more effective. Once changes are identified, it is important for managers to estimate the impact that they will have on the organization and individual employee on many levels including technology, employee behavior, work processes, etc. At this point management should assess the employees reaction to an implemented change and try to understand the reaction to it. In many cases, change can be extremely beneficial. However, certain changes sometimes produce a tremendous amount of resistance. It is managements job to help support workers through the process, which is at times very difficult. The end result is that management must help employees accept change and help them become well adjusted and effective once these changes have been implemented.

The Importance of Buy In

For an individual or organization to achieve change effectively, it is important that individuals in the organization who need to make modifications to their behavior exhibit buy in. Buy in means that the organization as a whole understands that the changes that need to be made are ultimately beneficial to both the individual and the organization. In addition, each individual and the organization as a whole have to work hard to make the necessary behavior modifications. If an organization tries to make changes that are inherently bad or that the organization does not receive positively, it will be much more difficult or close to impossible to implement these changes without significant resistance. Organizations can enhance buy in by first explaining the changes to be made, citing issues with current procedures and then communicating the benefits for both the individual and organization.