Management by Objectives
MANAGEMENT BY objectives (MBO) is a powerful delegation technique that you can use with competent employees for planning work over extended time periods. You use this technique by sitting down with the employee and developing realistic, measurable objectives for a planning period of one, three, six, or even twelve months.
The starting point of MBO management is selecting the right person to be in charge of a specific project. You then sit down with the person you’ve selected and agree on specific time-bounded goals that need to be accomplished in the upcoming planning period. This is an active process between the manager and the subordinate, requiring considerable discussion and give-and-take between the two people.
The more that the employee can discuss the job or goal with the manager, the more committed the employee will be to completing the job when he finally begins.
There seems to be a direct relationship between conversation and commitment. Your goal as a manager is for the other person to take ownership of the project and treat the project as if it was his personal responsibility, rather than yours.
MBO is not something that you do in five minutes. It’s a process that goes back and forth over an extended period of time until you both agree on a clear set of goals and objectives with clear time lines and numbers attached to them.
Agree on the Steps to Be Followed
Once you are clear about your goals and objectives, the next step is to agree on the plan, or the steps that need to be taken to accomplish the task. Planning is an active process between the manager and the subordinate, with ample time for discussion and coming to agreement on exactly how the goal will be achieved and the steps that will be taken.
The amount of time necessary for setting clear goals and objectives, and developing plans, will be in direct proportion to the experience and competence of the subordinate in this area. With people who have satisfactorily completed similar tasks in the past, the discussion can be quite brief. You can simply say something like, “This is what needs to be done, and by this date. Do you have any questions?” Usually, there will be a few questions about timing, scheduling, and budgets. Once these questions are answered, you can hand over the task and largely forget about it because you have complete confidence that the person will once again complete the task satisfactorily.
Regularly Evaluate and Compare
Once you hand off the task to one of your employees, you continue to evaluate and compare the results agreed upon. For example, if you and your subordinate set an objective to achieve a certain level of sales over the course of the next twelve months, then you would compare the sales results on a monthly basis with the standards and goals that you have agreed upon.
Your leverage and effectiveness as a manager will grow in direct proportion to your ability to develop competent subordinates who can take the job and get it done without referring back to you. MBO is one of the fastest and most consistent ways of developing confidence and competence in your subordinates. You start by giving people smaller tasks and responsibilities, and then allowing them to go about achieving the task in their own way. As they complete smaller tasks, they grow in their ability to start and complete ever-larger tasks.
Your goal is to reach the point where you can delegate entire tasks and turn them over to other people completely.
Can You Leave?
To ascertain how good a manager you are, consider this: How long you can be away from your office without confusion setting in? Many managers are reluctant to take vacations or time off for fear that their staff’s performance will start to crumble as soon as they are away for a couple of days.
But when you manage by objectives, and your employees are competent and confident in their ability to carry out their tasks, you can be away for extended periods of time and your business or department will continue to function smoothly. Once you have agreed clearly on what is to be accomplished, and when, and how, and when you are going to check on results, you can then turn the task over completely to others and let them run with it.
Management by objectives is a tool that you only use with competent, experienced employees. To use MBO correctly, subordinates must be given the authority—to spend money, make decisions, utilize resources, and command the services of other people in the organization—that is commensurate with the responsibility.
Practice Situational Leadership
In his work on situational leadership, Paul Hersey describes the four phases of employee development. Each person starts off at a new job and then evolves and grows over time through the four stages of telling, selling, delegating, and finally, participating.
In the telling phase, you give the new employee specific directions on exactly what you want done, how it is to be done, when it is to be done, and to what standard of quality. You then measure and monitor to make sure the new person is on top of the job.
In selling, you go one step beyond telling, and both motivate and persuade the other person to do the job that you have clearly described.
Delegating is the process that you only use with competent people who have demonstrated the ability to do the job in the past. With delegation, you and the other person agree on what is to be done, when, and to what standard. You then manage with regular contact and interaction to make sure that everything is on schedule.
MBO Requires Participation
At the highest level of management, you practice participation. This is where MBO comes in. This style of management is used with competent people in whom you have complete confidence. You sit down together and discuss the work that needs to be done, agree on time horizons and budgets, and then turn the work over to others completely.
The final stage of MBO is to give staff members complete freedom to do the job in their own way. The feeling of complete freedom, combined with the responsibility to get results, both motivates performance and builds confidence in people. The more you can structure the work environment so that people are free to work toward predetermined objectives, the more positive and persistent they will be in completing the task.