Which description best defines Management by Objectives (MBO)?

• A. A method of budgeting focusing on expenses.
• B. A system for budgeting annual expenses.
• C. A system where managers and employees set specific, measurable goals together.
• D. A theory of organizational culture.

Answer: (C)

Management by Objectives centers on collaborative goal setting and measured performance. In this approach, managers and employees work together to define what should be achieved, ensuring the goals are specific, measurable, and aligned with the organization’s broader aims. They establish a time frame, agree on the necessary actions and resources, and regularly review progress. Success is judged by the degree to which those agreed-upon objectives are reached, which strengthens accountability and clarity of expectations. This focus on joint planning and outcome-based evaluation distinguishes it from budgeting exercises or theories of culture, making the description of managers and employees setting specific, measurable goals together the best fit.