Management by Objectives

Because one of the goals of Management by Objectives (MBO) a business management technique you probably studied in school and/or utilize in some capacity within your organization today is to ensure that objectives (goals) of one level within an organization are supportive of and aligned with the objectives of the other, we'll review MBO in this chapter. After all, one of the main purposes of the Project Initiation process is to ensure that authorized projects support the strategic objectives of the sponsoring organization.

MBO is not covered explicitly by the PMBOK. However, PMI expects project managers to understand this management philosophy and how it aligns with managing projects.

For the exam, you need to understand three philosophical points and three general process steps.

The management philosophy points are as follows:

• Because MBO uses goal setting and periodic reviews, it is a natural fit for managing projects.

• A project must be consistent with corporate objectives.

• Due to its top-down nature, MBO only works if management supports it.

And here are the MBO process steps:

• Establish clear and achievable objectives.

• Periodically check whether objectives are being met.

• Take corrective actions on any discrepancies.