Management by objectives (DpO) can become an effective way to improve performance and, with the digitization of the process, increase the profitability of an organization. In this article, we explain what management by objectives means, what are its main advantages and how a management software by objectives facilitates this management. For this, we have the expert vision of Endalia, a leading company specializing in Human Resources and Payroll.
What is management by objectives?
Management by objectives is a strategic management model that aims to improve performance and efficiency by establishing clear objectives for each employee. Managers and employees discuss objectives that should be adjusted to the overall goals of the organization, as well as to the capabilities of each professional. These concepts of management by objectives come from Peter Drucker’s 1954 book: The Practice of Management.
Currently, the digitalization of these business processes makes it easier for us to manage and helps us to really achieve DpO objectives. To carry out this work and offer a digitalization solution, there are organizations like Endalia, a company specializing in human capital management (HCM) and payroll solutions, with the ability to manage the various human resources processes.
Thus, below, we deepen the advantages and phases of the process in the hands of Endalia, a company expert in the development, management and digitization of management processes by objectives.
Endalia is a pioneer to be a fully integrated cloud solution that provides both a SaaS software product for internal human resource management, as well as software services (SeS) for clients who are also looking to professionally outsource some of their process.
Endalia’s approach is to support its clients in payroll management and to set up solid HR organizational processes. Its focus and focus on delivering cutting-edge products and automating processes in the human resources area has earned it its position as a top-level software solution that meets HR needs.
Thus, in the following points, we deepen the subject with the expert advice of Endalia.
What are the advantages of management by objectives?
The main advantage of management by objectives is an increase in transparency in the general functioning of the company. In fact, goals are clearly set and employees know exactly what their tasks are and what results are expected of them. This, in turn, leads to several positive results. For starters, more transparency means better communication between managers and employees. There is less confusion about professional roles and it is easier to hold everyone accountable for their part.
Management by objectives also increases employee productivity and motivation. By setting clear goals and tasks for each employee, the DpO ensures they are focused on the most relevant tasks. Additionally, as employees work toward a goal that has been described as important to the organization, they can see how their work positively impacts the business. This allows professionals to see their work as meaningful and to feel valued by the company, which leads to increased engagement.
What are the phases of the management by objectives process?
Now that we know what management by objectives is and what are its advantages, let’s see the main steps to follow in an organization to achieve it:
The first step in managing by objectives is to establish or review the business objectives for the year. It will be necessary to define company goals, domain goals and individual goals. These must be aligned with the vision and mission of the organization. We recommend that you use SMART criteria: define specific, measurable, achievable, relevant and time-bound goals.
During the year, there must be continuous monitoring and there must be a monitoring committee. There will also be a period for changing goals to make adjustments. Regular monitoring of employee progress is crucial to understanding whether planning is working or whether certain changes are needed. In this phase, one can ask questions about the objectives: are they still realistic? Are they timely? Are they still relevant?
The DpO should include performance reviews. Reaching the goal is not the end of the process. The impact of the goal should be assessed and determined whether similar goals could be achieved more effectively in the future.
The benchmarking committee should take over the reward system and recognition programs by introducing, for example, variable pay and salary review. Internal equity must be guaranteed and individual professional development needs must be analyzed.
This entire process can be digitized into a management by objectives software, improving the efficiency of each phase, as well as facilitating collaboration between employees, human resources, managers and management.
In summary, defining clear objectives and maximizing them is the main proposition of Management by Objectives, a system that has been delivering results for decades and in which new technologies have led to a revolution in the management of the human resources department, leading the system at a high level of efficiency. And you, do you apply management by objectives in your organization?