MBOs (Management by Objective)

Improves employee motivation and commitment.
Contributed by

Ellie Hill

Published March 26, 2024

What Is MBOs (Management by Objective)?

MBOs stand for Management by Objective.

MBOs are designed to boost employee commitment and increase productivity through clarity and understanding.

  • Leaders define Company Objectives for a cycle (typically 12m) and share widely
  • Leaders then set individual Objectives (privately)
  • Employees have autonomy in how they aim to achieve
  • 100% achievement is expected with linked compensation


Sales: Increase the average sales to $10,000

Marketing: Increase social media likes by 40%

Customer Service: Increase customer satisfaction by 30%

Human Resources: Improve retention rate by 15%

Why Do MBOs (Management by Objective)?

One of the main benefits of MBOs is that it improves employee motivation and commitment and allows for better communication between management and employees.

However there are some limitations to this framework:

  • Focuses on ‘What’ not ‘How
  • It’s a time-consuming process to craft
  • The pressure to meet objectives can damage morale and retention
  • Link to extrinsic rewards shapes team dynamics in new ways

How to do MBOs (Management by Objective)?

1. Leadership team define Company Objectives for a cycle (typically 12 months) and share widely throughout the organisation.

2. Leaders at team level then set individual Objectives (privately)

3. Employees then have autonomy in how they aim to achieve these objectives.

Links we love

Check out these great links which can help you dive a little deeper into running the MBOs (Management by Objective) practice with your team, customers or stakeholders.

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