Management by Objectives (APO)

Management by objectives (APO) arises in the 1950s due to the strong pressure experienced by private companies in North America, during the economic depression that followed the crisis of 1929. Also known as results-based management, it is an administrative model that originally constituted a financial method of evaluation and control.

What is management by objectives?

It is an administrative process that starts from the clear definition of the goals, objectives and organization priorities.

This system is ideal for managers and subordinates to work together to create goals and expected performance. achieve, agreeing on the strategy to reach them and periodic review of progress, monitoring efforts, evaluating personal performance based on goals and allocation of rewards based on progress.

The Management by Objectives implements effort management through planning and administrative control, the company is based on the definition What to do? and Where do you want to go with what you want to do? to achieve the desired results.

In conclusion, this system employs planning at all levels of the organization, based on the initiative and responsibility of each individual on her work, integrating the individual objectives with the departmental and general objectives of the business.

This process consists of the following phases:

• Initial phase: It is the stage where managers and employees meet to set the objectives, methods and tools that will be applied to achieve and measure them and also negotiate agreements and responsibilities.
• Follow-up phase: Stage of constant meetings to observe the actions that are carried out and the scope of them.
• Evaluation phase: Carried out at the end of the term established for the fulfillment of the goals and objectives, in order to evaluate and undertake corrective measures for the next performance.

Characteristics of management by objectives

• It serves as a guiding strategy for individual action of the different departments and employees of the organization.
• The individual needs and objectives of work are coupled in the business strategy as a whole.
• The objectives are operational and carried through a cascade process, which works from the bottom up. above and vice versa, the derivation is a pyramid that relates the objectives of a level to those of the consecutive. In this way the general objectives of the company become the specific objectives for each subsequent level.
• Specify goals that allow tangible measurement of objectives.
• Allow joint participation of manager and employee in decision making.
• The work team reaches consensus on how to achieve the proposed goals and objectives.
• Each objective has an explicit term for its fulfillment, usually this term corresponds to the administrative exercise and can be quarterly, half-yearly or annually.
• It is based on constant feedback about performance, so that certain actions can be approved or corrected.
• Employ participatory leadership and teamwork.
• It shows the commitment of workers at different levels.

Importance

The importance of this process lies in the fact that it is aimed at achieving goals, thanks to the fact that all the objectives to be achieved are defined. within the company and also involves managers and employees, who work motivated and clear with their work to reach them. Which on the other hand ensures that these goals are realistic and have a demarcated path to follow to reach them.

The results with this administration will always be positive, since it allows measuring the performance of each employee, regarding the objectives and standards established to work and contrast the performance.

The fact that it involves the employee in planning generates a sense of commitment in them, as an important part of the work group, the exceeding the goals generates benefits for both parties, caused by this win-win, the employee gives importance to each of the responsibilities.

The representation of managers throughout the process reinforces the credibility and importance of the process by providing subordinates with the opportunity to gain new knowledge and develop new skills that lead to personal success coupled with the success of the company.

In a general sense, the importance of this type of administration lies in its application in all business areas, be it productive, sales, services, systems, etc.

Strengths and advantages of management by objectives

• It allows each worker to be clear about what management and the company expect from his performance.
• Goals and deadlines to be met are jointly established between the employee and manager, which helps each party to commit effectively to it.
• There is good communication between the boss and subordinates, it is exercised participatory leadership, where everyone's opinion is taken into account.
• Workers clearly know the goals of the organization.
• The monitoring and evaluation process focuses on specific achievements, which in a way is fairer with the worker, who bears the challenge and takes responsibility for it.
• It generates high levels of commitment to the performance and image of the organization.
• Control is more effective against verifiable goals.

Weaknesses and disadvantages of management by objectives

• It can present difficulties in carrying out goal setting.
• Lack of a strong representation of authority, so it is not possible to convey the philosophy of this type of administration.
• Risk to meet short-term goals.
• Sometimes the evaluation process to measure performance can put stress on employees.
• The system needs dedication and effort from all the parties involved, otherwise it can become a failure that also represents a waste of time and money for the company.
• The existence of an authoritarian and centralized management style does not correspond to this type of administrative process, so it is necessary change the communication style if you want to implement it or you will have serious problems and conflicts when carrying it out under these terms.
• It requires adaptation and change.