Assume you are appraising the performance of a subordinate. Management by objectives (MBO) is a process whereby you and your subordinate jointly identify common organizational and personal development goals, set individual performance objectives, and meet regularly to measure accomplishments against plans. MBO concentrates on specific objectives achieved rather than activities. Performance is appraised by comparing end results to plans.
Before the appraisal period, meet with your subordinate to discuss organizational mission. Mutually establish tough, realistic, measurable, and attainable performance objectives to be achieved during the appraisal period. It is suggested that you jointly identify one each of the following types of objectives:
1. Regular/routine. Purpose: organizational stability; status quo. Keeps organization at a steady state; maintains the status quo. Derived from job description.
2. Problem-solving. Purpose: organizational healing. Corrective action to restore the output of the organization to normal, or to return to the steady state condition.
3. Innovative. Purpose: organizational growth; new directions. Concerned with instituting changes in the organization to make it better in some specific way. Often derived from ideas learned outside the organization.
4. Personal development. Purpose: self-development of subordinate. Accomplished on subordinate’s own time, such as education and community activities. Concerned with developing the individual for greater future responsibilities in the organization and in life.
During the appraisal period, meet at regular intervals to discuss your subordinate’s progress toward objectives, and find ways to solve problems that may have arisen. At the end of the appraisal period, fill out a performance report based on the record of specific accomplishments. (Subordinate could almost fill out his or her own report, knowing how well the objectives were accomplished during the appraisal period.)
In summary, MBO is an objective, forward-looking system of managerial leadership that focuses on accomplishments, not simply activities. You and your subordinate know quite specifically in advance what he or she should be doing. Measurement of performance occurs throughout the entire appraisal period.