How to Transition from Traditional Management to MBO (Management by Objectives)

June 20, 2023

Depending on your company’s mission and goals, traditional management styles may no longer be the best fit. The way we manage teams has changed drastically in the last few years and there are now more remote workers than ever before. HR managers can benefit from evaluating different management styles to discover which one will best complement their organization. In this article, we are going to break down how to successfully transition from traditional management to MBO (Management by Objectives). We will also highlight the advantages of choosing Talentia’s HCM software to clearly define and successfully achieve your company’s goals.

What is MBO?

MBO is a management approach that requires all managers to define and set specific objectives to be achieved within a specific time period through continuous dialogue. Both the HR manager and employees will bring clear and achievable goals to the table. Together, they will discuss and work to come to an agreement on what the deliverables will be and when they should be achieved. Deadlines, reevaluations and rewards are a few of the targets that the manager and team members will have to decide jointly.

5 steps to help make the switch to an MBO management style

1. Define organizational objectives

When objectives are clearly defined and seen as achievable, employees will know what they can realistically attain. Use the SMART method to define realistic goals for your organization:

  • Specific – define what needs to be improved
  • Measurable – determine which key performance indicators (KPIs) will be used
  • Achievable – ask what capacity or skill set is required
  • Relevant – decide whether the objective is important or not
  • Time-bound – calculate when it can be accomplished

2. Adapt objectives into achievable goals

Planning plays a key role in the MBO process. This helps managers and teams work together to adapt and translate their overall objectives into small, actionable steps. After setting attainable goals, the next step will be boosting team performance and motivating your teams.

3. Monitor performance

As you monitor your team’s performance while using the MBO style, keep the lines of communication open. During this process, open communication provides major benefits for both parties. Use a performance management tool and assess whether objectives and key results (OKRs) and KPIs are being met.

4. Evaluate progress

Formal evaluations can be scheduled quarterly, semi-annually or annually. However, it is not only important to hold regular evaluations with your employees, but it is also vital to promote proactive and continuous feedback. Make sure that it is honest and constructive to effectively contribute to your employees’ progress. This type of continuous feedback can provide a boost in productivity.

5. Reward accomplishments

Lastly, reward your team through both intrinsic and extrinsic means. Cultivate intrinsic motivation by challenging team members, instilling a sense of belonging in them, recognizing their hard work and implementing team-building activities. Extrinsic rewards may consist of direct praise, a bonus, a salary increase, more responsibility in their current role or paid time off (PTO).

Manage MBO with HR management software

The best way to manage the MBO process is an HR management software. It can assist HR departments by clearly defining objectives, increasing employee motivation and satisfaction, reducing workplace conflicts and managing stress levels with real-time data analysis.

Talentia has redesigned the Performance Module and has been enhanced with flexible, hybrid workplaces in mind. Set up different types of achievable goals within the organization and enable your whole team to view and track them. Lastly, the continuous feedback will allow teams to instantly share ideas, comments, endorsements and earn badges. Keep your team’s communication constant and open, this way you will propel them towards success.