The Five Key Steps Of a Management by Objectives System

Learning to run a successful business is a complicated process that can only be achieved through experimentation and experience. There are many schools of thought on how to best lead employees, but the reality is that every employee is different, and no two employees will react the same way to a leadership style. 

However, everyone needs to start somewhere, which usually means adopting a management system and adjusting it to fit your employees. 

This article will look at the Management by Objectives (MBO) system and the five steps required to run it effectively.

Set Company Objectives

The first step of the management by objectives system is to set company objectives. The objectives must be attainable and measurable goals. Measurable goals are goals that can be measured using analytics and data. For example, an objective can be wanting to increase website traffic by two hundred percent or to launch a new product line. These goals should be set with a time limit and be adaptable to change. The best company objective aligns with the company culture and acts as an extension of previous goals. 

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Translate Objectives to Employees

Once you have set your objectives, you must accurately relay the goals to your employees. It is your responsibility to meet with the employees individually to establish attainable goals and to discuss the larger company objectives

Employees Set Individual Objectives

In this step, employees establish their objectives that, in totality, will help accomplish the larger company objectives. These objectives must also be measurable and attainable. In your meeting with your employees, you will discuss timelines and critical measurements used to track their goals and how their personal goals will assist the company’s objectives.

Monitoring of Employees

Objectives and key results (OKRs) are popular goal-setting methods companies and employees use. It allows one to set attainable goals and track your progress in meeting them. Setting OKRs is essential for this step. 

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Here is where you will monitor your employees on their ability and progress to meet their personal and company objectives. To monitor your employees, you need to work together to set goals and objectives that can be accurately measured. You will gather data and metrics to see if their objectives and key results are being met on time.


The final step in the Management by objectives methodology is evaluation. In this method, you will evaluate your employee’s work in achieving their personal goals and how they helped the company meet its larger objectives. It’s up to you to give constructive feedback praising what they are doing right and pointing out areas that need improvement. Effective two-way communication is essential for the management of an objective system to work. So you must be open to receiving feedback from your employees on the company’s larger objectives and their process in trying to achieve them.

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The Management By Objectives System Is A Great Place To Start

No two employees will react to a management system the same way, so you must be willing to adjust accordingly to create a healthy work culture. However, you will need a starting point, and the Management by Objective system can be a great place to start building an efficient company culture. 

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