I hear this usage a lot, “Maybe we can give them an MBO” or “I’d like to include MBOs in the plan”. However, this doesn’t really make sense so permit me a short rant if you will.
MBO stands for “Management By Objectives” which means it isn’t a measure, it is a process. The approach was formalized and named by renowned management and strategy boffin, Peter Drucker in the 1950s in his game-changing book, “The Practice of Management”.
Drucker didn’t intend for MBO to solve all ills, rather saw it way to formalize the process of performance management and provide a framework within which companies could operate to make the process fairer and more productive. Since Drucker came up with this process, it has been rolled out, copied, and adapted the world over and continues to this day as the performance management process of choice.
It is not possible to overstate the level of influence that Drucker had on modern management. Barely a performance management conversation goes by where we aren’t using his concepts. The acronym SMART (Specific, Measurable, Acceptable, Realistic and Time-bound), regularly used even outside of performance management, was created by Drucker as a means to ensure that MBO is effective.
So there it is, MBO is not a noun, “an MBO” isn’t a thing, and they aren’t components of plans or measures of performance. What most people really mean when they say this is simply “a performance measure” or “a goal”.
Short rant over.