Management by objectives : how to set it up effectively

“I prefer managing objectives to managing timetables. I organize myself and carry out my missions with flexibility on schedules, with teleworking. The two values that make me feel good are autonomy and a sense of community” says Charles David, 26, consultant at Enza Conseil, to the French newspaper Le Monde. Managing by objectives (MBO), opposed to the classic task management method, is on the rise. It may date back to the 1950s when it was conceptualized by the pope of management Peter Drucker, but it has a particular echo today as it matches the expectations of the modern workforce, in search of greater autonomy and flexibility in their work.

Definition of “Managing by objectives”

The main idea of MBO? Set objectives and goals to achieve rather than impose a list of operational tasks. For Peter Drucker, setting clear objectives for teams is one of the 6 missions of the manager, the other 5 being: defining the mission of an entity, analyzing and organizing work to create a feeling of satisfaction among staff, informing and listening to employees, evaluating the results and finally training employees on an ongoing basis.

So, what are the advantages of management by objectives? At a time when task monitoring is made more complex by remote work, how do you go about setting it up? How to set the right goals?

The advantages of management by objectives and the method to implement it

Managers must make sure to set objectives that are both relevant for the company and engaging for the employee. To do this, Peter Drucker recommends translating the company's strategic objectives into operational objectives for the team. The idea is therefore to identify the performance to be achieved by the company, then by each department, and then by each employee. We then speak of “cascading” objectives, from the highest level down to the employee. According to Peter Drucker, everyone must be able to trace their contribution to the collective objective, may they be at the top or bottom of the organization. It is motivating, empowering and rewarding.

Management by objectives has the following advantages, it:

Enables leaders to take the time to convey the company's vision and strategy to the entire team. This exercise makes it necessary to clarify the positioning of the company and its mission, and therefore to increase the feeling of belonging of employees who feel more involved. Everyone really feels they are part of the team.

Offers greater autonomy to employees, therefore empowering them as they become more engaged: managers give a roadmap, with one or more goals to achieve, but employees choose how they want to fulfill the objective. It also allows them to use their creativity to achieve goals.

Clarifies employees’ missions: defining an objective makes it possible to agree on the employee's priorities and the means to achieve them. If the employee does not have clearly defined objectives, he or she may feel that the work to be done is insurmountable.

Creates the foundation for a privileged dialogue and a pact of commitment between the employee and the manager.

Develops the career of employees: everyone can grow, by clearly measuring their success and their skills evolution.

Officially rewards employees, who experience a real sense of personal accomplishment: each objective to be fulfilled is a challenge to be met, the achievement of objectives brings true satisfaction. Whether financial (individual or team bonuses) or non-financial (verbal recognition, invitation to lunch, gift vouchers, training, etc.), rewards make it possible to recognize the work done and build employee loyalty in the long run.

And of course, it increases the performance of the company.

The most difficult task for the manager will be to identify the right objectives. What goals should you set? Why this one and not another? Remember, a poorly defined or inconsistent goal is almost more detrimental than no goal at all. The SMART method, which first appeared in the Management Review in 1981, in a post entitled: “There is a S.M.A.R.T way to write management’s goals and objectives”, helps us to see things more clearly. SMART stands for “specific”, “measurable”, “ambitious”, “realistic” and “time-bound”. It is therefore a question of relying on these 5 criteria to validate an objective and succeed in a project:

S for specific: this means that the objective must be clearly defined, simple to explain and precise. For example: “Make the brand more visible on social networks” is too vague a goal, which will not lead to action. On the other hand, “gain 500 subscribers by the end of the month” is more engaging.
M for measurable: it is mandatory to choose an objective that can be measured by a metric, this will allow you to know whether or not you have reached your objective. The magic question to ask is: “How much?”. It is not necessarily a quantity (“increase our turnover by 15%”). It can also be based on a frequency (“make 3 posts per week on LinkedIn”; “have a one-to-one meeting every week”) or a qualitative output (“reduce delivery problems by 50%”). Finally it can be a milestone if it’s truly significant (“new website live by the end of current quarter” or “new feature X launched for all our users”).
A for ambitious, but also for achievable or appropriate: a goal must above all be a source of inspiration and motivation to succeed in drawing on the necessary resources and finding the energy to surpass oneself. It must be ambitious, but must remain at a minimum accessible, otherwise it will remain theoretical.
R for realistic: realism and ambition is the perfect combo! Ask yourself: “Does my goal really make sense, compared to my skills or even to the company, the market, the competitors?” A goal that is not realistic may demotivate.
T for temporally defined: when the timing and deadlines are clearly defined, we organize and mobilize more intelligently. It is said, moreover, that the difference between a dream and a project is a date!

Another theory, that of Locke and Latham, born in the 1990s, is similar to the SMART method, but the two researchers add to it the notion of commitment (“commitment”) and dialogue (“feedback”), which are part of of the 5 principles to follow according to them to manage effectively by objectives (1-Clarity; 2-Complexity; 3-Challenge; 4-Commitment; 5- Feedback). For the employee to be fully involved, they recommend that the objectives be validated by the employee: the choice of objectives must be the subject of collaborative work on the part of both parties. Feedback is also very important in the process: the role of the manager is to provide permanent feedback to employees. The latter must also feel free to discuss the progress of their objectives and any difficulties encountered.

Finally, the OKR method, invented by Peter Drucker and which we explain in detail in this article, also accompanies the manager and the employee in a sustainable way in setting objectives. OKR: “O” for “objectives” and “KR” for “key results”. The purpose of this method? Define not only the objectives but also the expected results. If, for example, the objective of the company is to increase its notoriety, “Key Result #1” will be to obtain 20 press releases over the year. Key Result #2 will be to recruit an influencer marketing specialist. In other words, the objective sets the course and the associated “key results” detail the milestones for achieving the mission, thanks to easily measurable indicators.

To summarize, here is a little tip to help your employees formulate their objectives: “I want to VERB OF ACTION (reduce, increase, gain in …) + WHAT (customer satisfaction, sales, community, notoriety …) .” = GOAL.

For the goal to become an objective, it is necessary to add quantified indicators. Specify HOW MUCH (10%, 20%...) and by WHEN (over the year, before April 20, in the third quarter...).

In summary, a goal = ACTION VERB + WHAT + HOW MUCH + WHEN.

How Popwork Makes Goal Tracking Easier

Managers need to define objectives and key results, greenlight figures with management, share the information with their teams… but the work does not stop there! Throughout the year, the challenge for managers will be to ensure that they do not take their eyes off these objectives.

Objectives should be new year’s resolutions (that is to say, list them in a notebook, then close the notebook and never go back to it). Managers have to make these objectives visible and useful. The idea is to integrate objectives and their monitoring into the daily life of teams. In order to achieve this, we have created two modules at Popwork.

The “objectives” module allows you to visualize all the objectives of each of your team members. All you have to do is create the objectives first by adding for each objective:

a title
a due date
a description (key results)

Once a month, employees are invited to update the status of each of their objectives: “on track”, “behind”, “at risk” or “achieved”... as well as a qualitative comment. The comment can be used to justify the choice of status or simply be a question, a reflection, or a request that serves as a starting point for a conversation with the manager. Through this module, our desire is to provoke dialogue around objectives at least once a month.

Managers and employees have access to an overview thanks to a visual and colored curve indicating the status of the objective, month after month. This perspective not only helps to follow the progress of the objective at a glance, it also serves to know how to best support the employee over time: which objective is on the right track? Which one seems more complex to achieve? For such an objective, perhaps the timing should be changed? Additional resources? Coach the person more?

Using such a module saves time as the updates are automatic. Furthermore, the objectives are always accessible, presented visually and integrated into a tool used on a daily basis. No need to open a new document or file, it is in your shared workspace.

The “achievements” section of Popwork invites collaborators to share wins or achievements. By visualizing these positive steps, it becomes easier for managers to take the time to value and congratulate their collaborators when an objective is achieved.

A few points of attention

As you will have understood, defining objectives can be time-consuming if you don’t stick to a method or do not use tools to make it efficient. Once you have found what best suits your management style, make sure to:

remain flexible and take into account organizational changes or the economic context, in order to update objectives regularly. The objectives allow you to have a trajectory: regularly measure your actions and do not hesitate to readjust your objectives regularly if necessary.

avoid micromanagement. Beware of not bossing your team members around and avoid reporting on too small a task. Your team will never feel motivated if they are constantly monitored. Remember: ideally, the manager identifies with the employee the objective to be achieved, but leaves it up to the latter to decide how to achieve it.

set up management rituals, 1:1 meetings and/or team meetings to open the dialogue. This makes it possible to recall the fundamental questions (What is the company's big project for the year and what is your mission within this project? What are the objectives of each person?), to give feedback and to encourage collaborators, who will feel listened to and supported. It is also during these meetings that you get to know your employees better, to give them objectives that correspond more to their qualities, skills and areas of interest… while encouraging them to step out of their comfort zone!