Management By Objective (MBO)
A Time Tested Management Method Classic That Works –
With the Right People
By Bob Norton
Management by Objective (MBO) is the basic “blocking and tackling” of management. It is simple, effective and can be used to some degree with most people who have some capability for forethought. Unfortunately this is not everyone. Here is a simple step-by-step description of how to use this powerful classic management method, which should be in every manager’s repertoire. It doesn’t always work for everyone; as the book Good to Great says, “you have to have the right people on the bus,” as no one can manage incompetent people to do a great job. However, if you have good people, then MBO is an indispensable tool. MBO should have a consistent structure and format that people understand and expect for best results in pretty much any group over five people.
Goal setting on paper is magic. Some people claim, and I cannot dispute, that writing goals down once and then just sticking the paper away hidden for a while will greatly increase the chances of these goals ever being achieved. My experience tells me this is absolutely true. I do believe there is a human psychology at work here that opens up the brain to perform and ask powerful questions that help us achieve more by tapping into our deeper brain and subconscious capabilities. Effectively we send the subconscious mind on a mission to find answers and we will get back intuition, ideas and other results we are sometimes not even aware of. Sometimes I get amazing answers in a dream, like Watson and Crick did in figuring out the double helix structure of DNA. I have even come up with some of my most brilliant solutions in dreams. The solution is my first thought when I awaken in the morning. You can enhance this by asking yourself a key empowering question when you are falling asleep. Your subconscious will set to work that night and offer help.
The first step in MBO is to define the objectives for the individual or the department (if this list is for a department manager). This is mostly the boss’s responsibility, but should be a participatory process with interaction, buy-in and agreement. Typically this should be a monthly process. I would use the following steps, depending on the capability of the person or manager you are managing:
1. Make a list of objectives for the coming month (or with more senior people ask them for the first draft of that list) at least a week before month end.
2. Review these to see that they are consistent with broader corporate priorities, resources and other commitments. Make sure most are objectively measurable, ideally with hard numbers compared to a historical and consistent benchmarks.
3. Meet with the person to review each objective and talk through any detail that needs to be added to insure complete buy-in and acceptance of accountability for achieving these goals without excuses based on others or outside forces that may be out of their control. This step is necessary and should be done one-on-one and in person as this sends the message this is serious business and you will hold them to these objectives. This meeting need not last more than 15-30 minutes though.
4. Most of the time you should meet monthly just before the first of the month for a meeting just on MBO goal setting with all the staff. This is AFTER you have individual agreement with the individuals. Publish each individual’s list to all other managers on the same level, merged with all their individual goals. This is the broader division, department or corporate goal list for the month.
5. Benchmark weekly progress at weekly staff meetings, requiring people to report where they are on each goal so far that month IN FRONT OF ALL OTHER MANGERS.
6. Always include at the special monthly meeting a separate time to report the level of completion achieved on each goal. Do not mix it with other business that can fog the reporting. Some will not be accomplished and will be ongoing. If everything always is accomplished, you are probably not setting aggressive enough goals and should challenge your people more. People are never scolded for not making goals (at least not in public), but they are required to “stand up” and explain why a goal was missed in front of the group. Once this is standard operating procedure, the group understands the process and knows that this person bought into that goal as achievable just four weeks ago. Maybe something has changed – that happens – but odds are there is some peer pressure and competition to look good that motivates people that little extra bit to achieve more than they would without any goals. In fact it is probably a lot more.
7. Go back to #1 and start all over again for the next month. Each month will get better as people get the system down and begin to challenge themselves, and sometimes even enjoy their work more and look forward to it.
By being consistent with this process and holding everyone accountable you will create a culture of responsibility, performance and reward for results. You will help to avoid the idea that cuddling up to the boss gets you somewhere, as everyone sees what everyone else does, and you will also be coordinating the troops to arrive at the destination at the same time. Would the army send in four groups without communications among them? Never, that would be disaster, but some senior managers do this.
Be consistent, fair and challenge people and you can get double the results of the average team. MBO does not allow people to coast through their job and most will actually get more fulfilment and will respect their boss for doing a good job too.
Now read MBO for the longer term: Management By Objective (MBO)
The Bigger Picture Annual Planning Process