How can you measure the performance of your sales teams without a method to analyze their progress? It isn’t possible. This is where Management by Objectives (MBO) can come in handy for your organization, helping you track your employee contribution to your company.

Let’s see in detail about this strategic management model.

What is Management by Objectives (MBO)?


Management by Objectives is a process in which employees are assigned individual goals depending on the overall goal of the organization. In this way, everyone contributes and works towards a shared vision with clearly defined objectives.

Every employee can have a say in goal setting, and the final one will be arrived at based on the agreement between management and employees. This eventually leads to better participation and involvement from your teams.

How to Design an MBO Model for Your Organization?


If you’re a manager who’s looking forward to creating an MBO model, here’s how you can do it. 

Define Organizational Goals

This is the very first step in creating an effective MBO. Your employees must know what your goal is and by what time you want to achieve it. 

For example, the goal can be to increase revenue by 20% by the end of the year. This can be further broken down by senior management with quarterly goals as well.

Determine Employee Objectives


Once you’ve set the organizational goal, put down the plan on how you want to achieve it. This is where you’ve to work with each employee and clearly define the goal for everyone. Your employees would know what’s expected of them, and you all can work towards achieving the organizational goal. Make sure that you also specify the incentives they’ll get on reaching their target.

Keep a Track of the Performance

MBO can also facilitate measuring your employees’ performance effectively. Monitor how each employee has faired in the course of reaching their goal. Some of them can lag, a word of motivation and a little guidance from managers can be vital in this case to get back on track. 

Review the Performance 

By now, you’d know who all are performing well, and which employees aren’t up to the mark. Evaluate each of their performance, and ensure that you reward the best ones.

Give Your Feedback

After you’ve thoroughly analyzed the performances, let your employees know about the areas of improvement. Share with them some actionable insights, which they can implement in their work going forward. On the other hand, you can also bring your team together for short discussions as and when needed, so that you don’t have to wait till the end of a timeline to share your feedback.

Benefits of MBO

Improves Employee Performance

Employees are involved all through the process, right from setting their own goals. This in turn makes them see how they can help the company grow. With such involvement & planning, they wouldn’t mind putting their hands and getting the job done, thereby leveling up their performance.

Better Transparency is Created Between Teams

This is another benefit of following the MBO method. Involving every team in the process means they’re all on the same page on what has to be done individually, and in which direction the company is heading towards.

Improves Communication

Managers can be open about their expectations, and employees can share their honest feedback on what they think is achievable, and what isn’t. This leaves no room for any further confusion.

Rewarding Non-measurable Objectives

When your objectives are quantitative, they can be measured easily. But, when they are qualitative like keeping a clean CRM, coming up with an industry-specific demo instance, etc., MBOs help to drive those behavioral changes as well.

Final thoughts

MBOs can be a great way to help your company reach its goals, and improve employee morale as you all work towards a common target. This is a crucial aspect of building a positive work culture. Above all, when you want to track the performance of your team, a commission automation tool like Everstage can make things easy for you. From giving your reps real-time visibility on their commissions to helping them with forecasting, a lot of complex tasks can be simplified. Book a demo with us to know more. 

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