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 that was popularized and coined by Peter Drucker management consultant, educator, and author described as “the founder of modern management” in his 1954 book The Practice of Management.

List of Company Performance MBO Examples

MBO is the process of defining top company goals and linking them to employees’ objectives. This helps employees seeing their accomplishments in connection to company priorities as they achieve their objectives, which reinforces performance and alignment. An important part of MBO is identifying objectives and results expected of an employee together by the manager and employee and then using that as measures for managing and gauging the team, department, and company performance toward their goals.

Objectives are absolutely important because otherwise there is no way to identify mistakes and errors.

Thinking through what are the most important objectives for your company, department, team or an individual contributor and how one should formulate and achieve them instead of many objectives concentrate on very few. Reflect on how much one can accomplish in week’s, month’s and quarter's time?

We would recommend 3 and in some cases only one objective but very important one and then concentrate on that. As Peter Drucker coined “Do first things first, and second things not at all.” Overall the MBO process consists of 5 steps:

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

The another rule is to quantify your objectives. There are some that you can’t quantify but they are still important so don’t fall into the trap of quantifying all objectives especially top company one. Sometimes the more important an objective for the company the less it is quantifiable. For instance, how would you measure the company culture the importance of which we all aware.

Though management by objectives helps to define the process of setting objectives there is no an ultimate list of objectives that is suitable for all. Here we give you the idea what MBO examples might be for a company, team or individual.

You might be interested in the next big thing that is even more effective than KPIs Objectives and Key Results or OKRs. To learn more, check the OKR goals examples here.

Company Performance MBO Examples

TOP Company MBO

  • Achieve cash flow of $500 thousand per month
  • Decrease OPEX by 5%
  • Increase Gross Margin by 10%
  • Achieve payback period of 1.5 year for new products

Marketing MBO Examples

  • Agree on the sales qualified lead definition with sales by the end of Q2
  • Generate 2000 marketing qualified leads (MQL) per month
  • Increase conversion rate from paid search to 8%
  • Implement continuous A/B testing of lending pages in Q1

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

  • Hire 10 sales representatives
  • Maintain overall employee happiness index over 85%
  • Assure 1-year overall retention rate of 99%
  • Implement 1-on- 1 automation system in Q2

Engineering MBO Examples

  • Maintain the ratio of successful sprints above 0.8
  • Achieve team velocity of 40 story points per sprint
  • Maintain the team happiness index above 8
  • Maintain the NPS of a team above 8

Product Management MBO Examples

  • Create a knowledge base on new product features
  • Achieve 5 thousand monthly unique visitors
  • Reduce customer acquisition cost (CAC) by 10%
  • Rise new monthly recurring revenue (MRR) to $100 000

Customer Success MBO Examples

  • Decrease monthly churn rate to 5%
  • Achieve NPS of 8
  • Hit upsell rate of 10%
  • Decrease onboarding time to 5 days

Customer Support MBO Examples

  • Increase issues that are resolved in the first contact by 10%
  • Achieve average handle time of 5 minutes
  • Reduce call abandonment to 5%
  • Meet baseline CSAT of 85%

Finance MBO Examples

  • Reduce bill processing time to five days
  • Implement a new accounting system
  • Develop a 1 year operating budget
  • Develop procedures for cash handling and budgeting

Operations MBO Examples

  • Achieve software development cycle 2 weeks or less
  • Attain test cycle time of 3 days
  • Reduce failure rate by 10%
  • Improve time to recover 2x times

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