Define, advantages, disadvantages, Industry using the Method

Management by Objective (MBO)

https://www.clearpointstrategy.com/blog/types-of-performance-management-systems

Created by influential management consultant Peter Drucker, Management by Objectives (MBO) has
many variations. Essentially, it centers on creating a set (anywhere from two or six) of organizational
objectives, which are then used as guideposts for creating individual employee objectives.

Some of its key characteristics are:

 Objectives are not necessarily linked to one another. (This is different from the BSC approach,
where objectives are aligned within an overall strategy.)

 Objectives may be defined as part of a collaborative effort between leaders and employees. The
idea is that employee participation creates buy-in, and helps clarify the path to obtaining the
objectives.

 Objectives are the main focus of MBO; less emphasis is placed on how those objectives will be
achieved. Organizations tend to rely on either measures or projects (but rarely both). The key to
making MBO work is to create a structure that clearly differentiates between projects and
measures. They don’t work the same way, so trying to lump them together will inevitably cause
confusion.

The term Management by Objectives has been around a while, but you don’t always see it in strategy
documents. One way to recognize this approach is by looking at the strategic plan, which might have a
set of goals and then objectives. You will also then see a list of activities or actions that the organization
is grouping together to try to improve those goals and objectives.

https://possibleworks.com/blog/5-modern-methods-of-performance-appraisal/

In this method, managers and employees collaborate together to identify, plan, organize, and
communicate objectives. This is usually for a specific appraisal period and objectives are validated using
the SMART (Specific, Measurable, Achievable, Realistic & Time-sensitive) method.

After setting clear goals, managers and employee interact periodically to discuss the feasibility of
achieving set objectives and the progress made. These measures of progress help analyze the
contributions of an employee at the end of the review period. Success is rewarded with appraisals like
salary hike or promotion, whereas others are re-evaluated for further training.

Pro: Success is measured on tangible and measurable goals with constant interaction between manager
and employee.

Con: Intangible aspects like interpersonal skills are not considered.

Ideal for: Businesses of all sizes, evaluation for top-management positions like directors, executives, etc.

Used by: Retail giant Walmart extensively uses the MBO method for managing the performance of its
employee across all levels.
Balance Scorecard

https://www.clearpointstrategy.com/blog/types-of-performance-management-systems

In our humble opinion, the Balanced Scorecard (BSC) is one of the best types of performance
management systems available, and for good reason: 88% of BSC users say the framework is extremely
or very useful in helping them achieve their goals.

What makes the BSC unique is that it combines four different business perspectives—financial, customer,
internal processes, and people—to help companies understand and achieve their organizational
objectives.

Its main components:

 Objectives—high-level organizational goals that state what your organization is trying to

accomplish strategically, broken down according to the four perspectives

 Measures—key performance indicators (KPIs) that help you understand if you’re accomplishing
your objectives strategically.

 Initiatives—key action programs developed to achieve your objectives, sometimes referred to as

projects.

Some key points about the BSC are:

 It facilitates alignment across divisions and departments because you can link departmental
objectives to the overall organizational objectives. You can also see how measures and projects
are connected to organization-level measures.

It requires a structured reporting process. Creating a BSC is predicated on reviewing your strategy on a
regular basis—and you

http://www.thehrpractice.in/prerana-archives/2017/5/11/balanced-scorecard-management-funda-
jan08

 Financial perspective: This examines if the company’s strategy, implementation and execution
are contributing to the company’s bottom-line improvement. It incorporates tangible strategy
outcomes in traditional financial terms like cash flow, costs, ROI, revenue growth etc.

 Customer perspective: This defines the value proposition of the organization to satisfy its
customers to generate more sales through the most desired (i.e. the most profitable) customer
groups. The measures selected for the customer perspective measure both the value delivered
to the customer like delivering committed quality or service and the outcomes of this value
proposition like customer satisfaction, market share etc.

 Internal process perspective: This is concerned with the processes that create and deliver the
customer value proposition. It focuses on all the activities and key processes required in order
for the company to excel at providing the value expected by the customers both productively
and efficiently. Some measures are accident ratios, defect rates etc.
  Learning and growth perspective: This is concerned with the intangible assets - jobs (human
capital), the systems (information capital), and the climate (organization capital) of the
enterprise basically the infrastructure needed to meet ambitious objectives in the other three
perspectives. Measures can include employee satisfaction, internal promotions %, employee
turnover etc.

CHAT GPT

As an HR Manager, you can play a crucial role in implementing and using the balanced scorecard to drive
organizational performance. Here's how you can relate to each perspective of the balanced scorecard:

1. Financial Perspective:

 You can contribute by ensuring that HR initiatives align with financial objectives. For
example, by implementing cost-effective recruitment and retention strategies to
minimize turnover costs.

 Tracking HR-related expenses such as training costs, recruitment expenses, and HR

department budget to ensure they are in line with overall financial goals.

2. Customer Perspective:

 HR plays a significant role in creating a positive employee experience, which directly

impacts customer satisfaction. By focusing on employee engagement, development, and
satisfaction, you contribute to creating a workforce that can deliver excellent service to
customers.

 Conducting employee satisfaction surveys and using feedback to improve HR practices

and policies, ultimately leading to better customer service.

3. Internal Processes Perspective:

 HR processes such as recruitment, onboarding, performance management, and training

directly impact internal operations. Streamlining these processes, improving efficiency,
and ensuring alignment with organizational goals contribute to overall operational
effectiveness.

 Monitoring key HR metrics such as time-to-fill, turnover rates, and training effectiveness
to identify areas for improvement and optimize internal processes.

4. Learning and Growth Perspective:

 HR is responsible for fostering a culture of learning and development within the

organization. Providing opportunities for employee training, skills development, and
career advancement contributes to the organization's ability to innovate and adapt to
change.

 Tracking employee training participation, skill development, and career progression to

measure the effectiveness of learning initiatives and identify areas for further
investment.
Overall, as an HR Manager, you can leverage the balanced scorecard framework to ensure that HR
initiatives are aligned with the organization's strategic objectives and contribute to driving performance
across all perspectives. By focusing on financial, customer, internal process, and learning and growth
metrics, you can demonstrate the value of HR in achieving organizational success.

https://matterapp.com/blog/performance-management-examples

10 brands and their performance management strategies and examples

Top brands all around the world use employee performance management examples like employee
feedback, employee recognition and goal-setting to develop their business strategies. Here are some
employee performance management examples that top brands around the world use:
1. Video games industry: Top brands in this industry create employee performance management
examples by focusing on employee appreciation and setting employee goals. For example, Valve
Corporation is a well-known software company that released an employee performance
management tool called “Kudos” that lets employees recognize each other. Besides employee
performance management examples like goal setting and employee recognition, Valve
Corporation uses employee feedback such as employee performance management. A typical
example is that employees can leave notes on a software project if they have a new idea about
it, which the team lead may consider when he makes a new update project plan.

2. Airbnb employee performance management software (which can be found on BetterManager) is

employee feedback/review that has employee performance management by employee feature.

3. LinkedIn performance management metrics include employee goal setting, where employees set
their long and short-term targets. They are further evaluated on how successful they were in
meeting those targets. Also, this employee performance management example includes 360-
degree feedback as well as employee recognition.

4. Facebook employee performance management software helps managers to provide employee

feedback/review and employee goal setting; employee performance management example also
includes employee coaching.

5. Microsoft’s employee performance management strategy is employee goal-setting, where

employee's progress toward their goals is constantly monitored. This employee performance
management example focuses on contributing to business growth as well as personal
development of employees.

6. Dell provides managers with employee performance management software which includes
employee feedback/review application.
7. Uber employee, performance management example, includes employee goal setting and
employee recognition, employee performance management by peer (employees appreciate
their co-workers for good work).

8. Twitter employee goal-setting is one of the best employee performance management examples
because it's an employee goal-setting by employee feature which allows employees to set their
targets and track their progress. Employee performance management example also includes
employee coaching.

9. Disney employee goal setting an example is an employee performance management

technique where employees set goals related to the company’s business metrics and employee
development. Employee feedback/review application also comes with this employee
performance management software.

10. IBM employee performance management software is an employee feedback/review application

(360-degree feedback) that allows employees to provide managers with employee feedback and
make necessary improvements. This employee performance management example also includes
goal-setting application.