Bye-Bye MbO! From fixed to relative performance

For decades, organizations of all sizes and from all kinds of industries have curated and perfected management practices such as fixed target setting, target negotiation, planning, budgeting, forecasting, plan-actual variance reporting, incentives-setting, and individual performance appraisal. Now, things are changing: Those practices, usually combined under brands such as Management by Objectives, Merit Pay, or Pay-for-Performance have recently come under fire. If markets and work are becoming ever more dynamic, how can static, annual rituals remain effective and appropriate to improve or even control performance?

By Niels Pflaeging

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