Management by Objectives (MBO) Examples

 

What is MBO (Management by Objectives)?

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Management by Objectives (MBO) is the management concept and framework coined and popularized by Peter Drucker, the management consultant, educator, and author who has been described as ‘the founder of modern management’ for his 1954 book The Practice of Management.

List of Company Performance MBO Examples

MBO is the process of defining top company goals and using them to define employees’ objectives. This helps all company contributors see their accomplishments in connection to the company’s top priorities as they carry out their individual tasks, reinforcing alignment between activity and outcome, which dramatically increases productivity. MBO processes are intended to identify an employee’s main objectives, later graded with group input.

The performance review process helps identify mistakes and errors. It also allows for a brainstorming session about what the company might need to change in order to meet its main objectives in the future.

Goals are set for sole contributors, team leaders, department executives and for the CEO, so everyone has a sense of what they are supposed to be contributing to the team as well as how it fits into the big picture.

Objectives are essential to ensuring that all contributors spend their time at work productively and are working towards a concerted outcome. They also teach those at a company about how much they are truly capable of accomplishing in a set amount of time. If quarterly goals end up being too easy, they can be adjusted to be more ambitious or vice versa during the review process. It is important to set goals that are aspirational, so employees are met with real challenge.

We recommend three objectives maximum, or sometimes only one objective. This forces employees to discover what their truly essential priorities ought to be. As Peter Drucker noted, “Do first things first, and second things not at all.” Overall, the MBO process consists of five steps:

  • Set company objectives
  • Cascade objectives to employees
  • Monitor
  • Evaluate performance
  • Reward performance

Another rule is to quantify your objectives. This is to set about defining a very clear idea of success, which will be important later in the review process, though not every objective is quantifiable. Rules like this are helpful guidelines, but do not necessarily need to be applied all the time. Top company goals are sometimes non-quantifiable. Company culture, for instance, is a considerably valuable asset and one that deserves to be a high priority, though it is too intangible to quantify.

Though Management by Objectives (MBO) is intended to help define and manage a set of goals, the goals themselves will be at least a little bit different for every company. It allows companies to express their individuality as well as their top priorities and, most important, to execute on them. In order to help you get a handle on what MBOs look like, we’ve provided some examples for different industries below. Here, we give you an idea of what the actual MBOs might be for a CEO, team leader and a sole contributor.

If you’re interested in MBOs, you may also be interested in OKRs, a similar goal setting and tracking management process. To learn more, check out a basic description of OKRs and some examples as well.

 

Company Performance MBO Examples

Top Company MBO

  • Become market leader
  • Achieve cash flow of $500,000 per month
  • Become a member of the fortune 500
  • Increase CSAT to 90%
  • Increase customer retention rate to 92.5%
  • Decrease OPEX by 5%
  • Expand sales abroad by 10%
  • Increase Gross Margin by 10%
  • Increase assets to debt ratio by 15%
  • Reduce carbon footprint by 5%
  • Raise brand profile by 25%
  • Promote or hire one new departmental executive
  • Achieve payback period of 1.5 year for new products
  • Increase win ratio by 10%

 

Marketing MBO Examples

  • Generate 1,000 new Marketing Qualified Leads (MQL) per month
  • Earn 40% of overall company revenue from marketing efforts
  • Increase annual product subscribers by 35%
  • Increase marketing ROI by 7.5%
  • Triple social media following
  • Double newsletter subscriptions
  • Double unique web traffic
  • Increase regular weekly website visitors by 45%
  • Increase landing page conversion rates by 30%
  • Increase surveyed brand awareness by 25%
  • Get 10 media placements
  • Hire 5 new account executives
  • Implement continuous A/B testing of landing pages
  • Collaborate with sales department to devise quality lead definition

 

Sales MBO Examples

  • Achieve the new bookings target of 50 per month
  • Hit the win rate of 20%
  • Achieve average deal size of $150 000
  • Decrease sales cycle to 3 months

 

Human Resources MBO Examples

  • Maintain employee satisfaction index of 85%
  • Keep quarterly retention rate at 97%
  • Increase employee engagement to 85%
  • Maintain compensation at 10% above industry average
  • Meet with sales department to define sales hiring requirements
  • Hold a minimum of three interviews for new hires
  • Increase rate of meeting new hire deadline to 80%
  • Get 15% of hires from employee references
  • Hire a training agency for the sales department
  • Implement 1-on-1 automation system in Q2
  • Increase departmental ROI by 5%
  • Hold two company-wide events
  • Implement a leadership training program
  • Give at least 1/3 of all managerial positions to internal applicants

 

Software Engineering MBO Examples

  • Complete 350 story points per team
  • Complete at least 400 points of review
  • Migrate completed story points less than a week after completion
  • Launch 3 new product features
  • Develop 20 new front-end software tests
  • Launch alpha testing phase
  • Meet with customer service and product departments for development coordination
  • Increase system architecture speed by 25%
  • Maintain system architecture up-time of 99.9%
  • Maintain rate of no more than 3 P-0 and P-1 bugs at once
  • Participate in one hackathon
  • Prioritize blocker bugs
  • Optimize UI for 15% faster onboarding process
  • Conduct review of programming team optimization

 

Product Management MBO Examples

  • Successful product launch ($500k in quarterly revenue)
  • Grow subscriber revenue by 20%
  • Maintain 85% CSAT score
  • Maintain Net Promoter Score of 80
  • Ideate for three new product features
  • Meet with programming and marketing departments to collaborate on new features
  • Maintain production consistency ratio of 99.8%
  • Meet with 10 high value clients ($50k+) for product feedback
  • Complete survey of 250+ new customers to gauge new product interest
  • Complete assessment of customer product usage behavior through software monitoring
  • Contribute 50k in revenue by collaborating with the software engineering team to complete a product demo
  • Create annual product plan to integrate competitors’ strongest product features
  • Identify 5 leading competitors’ product strategies
  • Complete market projections of product lifecycles

 

Customer Success MBO Examples

  • Earn $100k in customer-success-related revenue
  • Increase customer-success-related CSAT score to 90%
  • Decrease onboarding time to three days
  • Decrease customer service tickets during onboarding by half
  • Achieve 20% higher customer satisfaction with onboarding process
  • Increase customer references of qualified leads by 20%
  • Maintain detailed profile of each premium client ($25k+)
  • Increase contribution to premium client acquisition ($25k+) by 10%
  • Monitor premium client ($25k+) software usage behavior to detect challenges
  • Decrease customer success related quarterly churn rate by 15%
  • Collaborate with sales department to increase upselling by 10%
  • Collaborate with sales department to increase cross-selling by 10%
  • Collaborate with marketing department to develop new target segment
  • Devise annual customer success plan

 

Customer Support MBO Examples

  • Maintain CSAT rating of 85%
  • Decrease average first-response time to less than 10 minutes
  • Meet customer-support related SLA agreements
  • Increase customer service call capacity by 40% (open new call center)
  • Decrease tickets per resolution by 20%
  • Reduce call abandonment to 3.5%
  • Hire and train 8 new outsourced workers
  • Reduce incidence rate by 10%
  • Reduce manager call intervention by 15%
  • Maintain customer service feedback database
  • Complete 5 new customer service script scenarios
  • Collaborate with product department to help fix product issues
  • Collaborate with customer support department to provide excellent service to premium customers ($25k+)

 

Finance MBO Examples

  • Help raise $1m in new funding through investment preparation
  • Finish financial planning and revenue projection
  • Develop annual operating budget
  • Develop annual procedures for cash handling and budgeting
  • Complete independent financial audit
  • Increase rate of debt collection by 25%
  • Increase financial automation by 5%
  • Finish reviewing and approving compensation agreements
  • Research and approve the use of some crypto-currencies
  • Resolve 50% of outstanding contract conflicts
  • Maintain regulatory financial compliance
  • Conduct patent research, application and resolution
  • Increase asset to debt ratio by 2.5%
  • Help increase quarterly shareholder value by 2.5%

 

Operations MBO Examples

  • Create annual operational plan
  • Project seasonal consumer demand prediction
  • Reduce software development cycle by 2 weeks by instituting Agile
  • Hold bi-weekly meetings to adapt planning throughout software engineering process
  • Reduce software testing time to one week/li>
  • Reduce product failure rate to under 2.5% (5/1 ROI)
  • Reduce product sourcing and logistics expenses by 5%
  • Reduce logistics shipping travel time & distance by 5% (local sourcing)
  • Deliver 98.5% of products on time
  • Fulfil 98.5% of SLAs
  • Fulfill 100% of warranty obligations
  • Help facilitate the fixing of new P-0 and P-1 bugs within 72 hours
  • Contribute to 1.5% quarterly growth in company shares
  • Seek one independent operational consulting report

 

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