The MBO (management by objectives) process consists of a cycle of four steps setting goals, planning action, implementing plans, and reviewing performance.
Setting goals: In the first step, top managers formulate the overall organizational goals and plans and then work with middle managers to develop goals for the organizational divisions or units they manage. In turn, middle managers work with first-line managers to set goals for their departments or groups. During this process, managers and employees at all levels, in collaboration with their supervisors, also set individual goals for performance.
Planning action: In the second step, managers determine exactly how their individual and group goals will be accomplished. During action planning, managers decide on the "who, what, when, where, and how" details needed to achieve each objective. Managers also prepare a schedule for the action plan to ensure that goals are reached on time, and this schedule is reviewed when individual performance is being evaluated.
Implementing plans: Once managers have made a commitment to achieve specific goals and have received approval for their plans, the third step is implementation. To control their own performance, managers must be allowed to implement their plans in their own way. This element of self-control allows managers to channel their expertise for the benefit of the organization while allowing them to develop their professional skills more fully as they tackle the challenges of implementation.
Reviewing performance: In the last step of the MBO process, managers periodically review the performance of the people they supervise and evaluate how well the plans are working in achieving group and individual goals.
Setting goals: In the first step, top managers formulate the overall organizational goals and plans and then work with middle managers to develop goals for the organizational divisions or units they manage. In turn, middle managers work with first-line managers to set goals for their departments or groups. During this process, managers and employees at all levels, in collaboration with their supervisors, also set individual goals for performance.
Planning action: In the second step, managers determine exactly how their individual and group goals will be accomplished. During action planning, managers decide on the "who, what, when, where, and how" details needed to achieve each objective. Managers also prepare a schedule for the action plan to ensure that goals are reached on time, and this schedule is reviewed when individual performance is being evaluated.
Implementing plans: Once managers have made a commitment to achieve specific goals and have received approval for their plans, the third step is implementation. To control their own performance, managers must be allowed to implement their plans in their own way. This element of self-control allows managers to channel their expertise for the benefit of the organization while allowing them to develop their professional skills more fully as they tackle the challenges of implementation.
Reviewing performance: In the last step of the MBO process, managers periodically review the performance of the people they supervise and evaluate how well the plans are working in achieving group and individual goals.
