Management by objectives
Management by objectives is a performance management approach in which managers and their superiors jointly agree specific, measurable targets at the start of a period and evaluate results against those goals at period end, promoting.
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Management by objectives runs in three steps: manager and superior first negotiate specific, time-bound targets, such as cutting complaint response time to 48 hours; the manager then pursues those goals with the agreed authority and resources; and actual performance is measured against the stated objectives at period end, feeding both evaluation and next period's targets. Bilateral agreement builds ownership an imposed budget lacks.
Check yourself
A logistics company requires each department head and their line director to negotiate a written set of measurable targets at the start of each quarter — such as achieving a 97% on-time delivery rate and reducing fuel cost per kilometre by 3%. Results against these agreed targets are reviewed at quarter end and feed directly into each manager's annual appraisal. Which performance management approach does this describe?