Future Business Leaders of America (FBLA) Business Management Practice Test

How does Management By Objectives (MBO) improve employee performance?

1. By annualized salary raises

2. By involving employees in goal-setting

3. By rewarding only the highest performers

4. By minimizing supervisory involvement

The correct answer is: By involving employees in goal-setting

Management By Objectives (MBO) significantly enhances employee performance by actively involving employees in the goal-setting process. This approach fosters a sense of ownership and accountability among employees, as they are not just passive recipients of organizational objectives but are instead active participants in defining their own performance targets. When employees partake in setting their goals, they are more likely to be motivated and committed to achieving them because they have a clear understanding of what is expected and see the relevance of these goals to their personal and professional development. Involvement in goal-setting also promotes alignment between individual objectives and the overall organizational mission, leading to greater coherence and teamwork. Employees can express their insights and aspirations regarding their work, making the objectives more meaningful and attainable. The collaborative nature of MBO can also enhance communication within the organization, as it encourages discussions between management and employees regarding progress, challenges, and necessary adjustments to goals. Additionally, this method provides a structured framework for measuring performance based on specific, agreed-upon objectives, allowing for a more objective evaluation process and ultimately contributing to improved job satisfaction and job performance. This contrasts with other options, which do not emphasize employee involvement in goal-setting as the central factor in boosting performance.