MBO in Practice – An Interim Administration Essay

The term MBO, i.e. management by objectives, is a term 9 out of 10 SMEs likely will not know. However, it can be said that half of these companies use it or its components. This is a very logical and practical method. In particular, how does it help SMEs in practice?

Management by Objectives (MBO) is a method of business management that places the most emphasis on the outcome and pays little attention to how that outcome (goal) is achieved. As a result, employees have more freedom to find the most appropriate method for achieving their goals. However, this requires that both managers and individual employees be able to work independently and creatively. It is appropriate to divide the goals that have been established into three categories: regular goals, problem-solving, and development goals. Regular goals relate to the common activities performed by the employee within the main content of his work. The problem-solving category, in turn, includes goals related to solving or preventing the most common problems an employee may encounter. Development goals include goals related to personal growth and employee skills development. However, all objectives are always subject to basic requirements that are in line with the company’s mission and vision as well as its overall strategic objectives.


1) Increase employee motivation, satisfaction and loyalty

The MBO method then assumes that the employees themselves will be involved in creating partial goals. It naturally supports the corporate environment, as employees feel directly involved in running the company and have an opportunity to influence what happens in it, thus increasing their satisfaction, motivation, and loyalty.

“Maintaining employee enthusiasm and satisfaction should be the goal of companies of all sizes, but it is especially important for small and medium-sized enterprises. In smaller teams, everyone’s commitment is much more to knowing the performance of the entire company. Last but not least, satisfaction is also related to employee turnover. Smaller companies generally have more difficulty finding employees than large companies, which naturally attract people. ” Says Jerry Gemilka, ICU director for the companies that provide it Activation And the Interim administration Small and medium companies.

2) Improves internal communication

As mentioned earlier, the MBO method is based on the fact that employees are actively involved in creating micro-goals. But it is impossible to imagine that employees will simply invent these goals from nothing and start working on them. In practice, the method usually works Administration It proposes goals based on the main goals of the company, its vision, and its mission, then this proposal is passed on to the employees, who use it as a basis for setting their operational goals. However, these goals must be approved again by management and verified later. Thus the cycle of communication, reporting, feedback and regular meetings between staff and management will begin. “In many companies, there is still an invisible barrier separating executives from inferior employees, and the two groups often have difficulty overcoming this barrier. But this is certainly not good for effective internal communication. By placing such an emphasis on communication between management and their subordinates. MBO helps break down these barriers. “ Jerry Gemilka explains.

3) Support planning and simplification of evaluation

It is crucial for businesses to plan. However, in order to define a good plan, it is imperative that you know exactly which goals the company wants to achieve. It is the first step in implementing the MBO method that requires goal setting, precise and understandable definition. Clearly defined goals will support both short and long term planning, and thanks to the need for regular monitoring – preferably weekly – to achieve goals, it will be possible to respond flexibly to deviations from the plan, as well as to solve potential problems once they are detected in the regular evaluation. The reporting and evaluation system for achieving goals will be excellent feedback for employees. Thus they will have a continuous overview of their performance, which is another advantage at a time when many employees, especially the younger generation, rely on quality reviews.


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