Submitted by: Andrew Michaels

As the chief executive officer of your company, you can make management-by-objectives (MBO) work for you and your business. You gain an extra advantage when you use MBO for managing your new company right from the start. If you re planning to engage in folder printing business for example, specializing in presentation folders and have targeted big time companies as customers, you need MBO. That s because you won t have to undo less effective, more traditional ways of management that have become static and obsolete, as what happened with so many companies that have operated in the old and conventional ways.

The new way is to sit down with those who report directly to you and work out with them the major objectives of your company so you can get your desired results. For example, you must present to them the direction or where you want your company to be in the future.


When you start your own company, there may be only one or two people who will work with you. Maybe one designer of presentation folders and one cashier for your printing business. As your company grows, and you add managers to your list of personnel, you ll want to go through the same procedure with a larger group.

Then you ll work with each of your subordinates in helping them set their personal objectives. Since they know what the major objectives of the company are, they can fit their plans in with yours. You may assign an authority for carrying out one or two of the company objectives to each of the people who report to you. They will then develop the plans for the activities they will engage in to accomplish these major objectives. The result will be a network of plans aimed at achieving the overall objectives of the company.

All personnel will know how their efforts fit in with the overall effort of the company. The network of plans composes a productivity improvement program for your business, and each member will have something to say about his or her contribution to the result.

All plans will be written down informally in memos from subordinates to the boss. In essence, these memos will be a record of agreement between the two personalities. They become a confirmation of a sort of psychological contract of work. The subordinate says in essence: We ve agreed to what I m supposed to accomplish during the next six months or year; and I understand how many efforts will contribute to the productivity of the business. You ve done your part by coaching me in the discussion we have had. In one or two instances, you ve shown me that I m reaching too high; in others, I set too low a target. But now we re agreed, and I m willing to be judged by how well I do in reaching those targets. Of course we both understand that if I fail to achieve an objective because of circumstances beyond my control, you ll take that into consideration when assessing my performance.

In putting MBO to work for you, the process should result in plans and objectives that contribute to the input and output aspects of productivity improvement. Be sure that plans contain an appropriate balance between efficiency-type objectives and effectiveness-type objectives. The MBO will serve as your guide in achieving your dreams for your business. It will also be your back-up or support to become an effective and efficient manager of your own business or company.

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