Process of Management by Objectives

MBO is usually described as a cyclical process carried out in the following stages, repeated each performance period:

1. Setting overall organisational objectives — top management first identifies the broad, overall objectives of the organisation for the coming period, derived from its long-term mission and strategy.
2. Cascading and setting individual/departmental objectives — these overall objectives are broken down and translated into specific objectives for each division, department, and finally each individual manager/employee, through a joint discussion between each superior and their immediate subordinate, so that individual objectives genuinely support the objectives of the level above.
3. Matching objectives with resources — the resources (budget, manpower, equipment, time) needed to achieve each set of objectives are identified and allocated, so that targets set are realistic and achievable, not merely aspirational.
4. Action planning — each individual/department draws up a specific action plan describing the activities needed to achieve their agreed objectives, along with a realistic timetable.
5. Implementation — the action plans are put into effect, with each individual working towards the objectives they helped set.
6. Periodic review of performance — at fixed intervals during the period (e.g. quarterly), actual progress is reviewed against the agreed objectives, and problems are identified and discussed jointly while there is still time to act on them. …