What are MBO and MBP?
Management by objectives (MBO) is a staff appraisal method based on the results achieved against pre-set objectives.
When the objective-based and competency-based appraisal methods are used together, the term mixed appraisal is used.
Usually, rewards (financial or in kind) are linked to the objectives.
An MBO system can only draw attention to the short term, focusing on departmental efficiency and, in effect, preventing the company from steering towards its strategic objectives.
With the growing instability of the environment and the market, it has become essential to use management systems that are global rather than departmental, in order to have a systemic view of the business.
The new methodology proposed to overcome the limits of MBO is called Management By Performances (MBP): it makes it possible to create a real link between strategy and operational activities, and it allows business results to be measured by aligning them with the company strategy, by identifying financial and non-financial performance measures suited to supporting decision-making consistently with the pre-set strategic objectives, and with all the improvement initiatives to be undertaken in order to achieve those strategies.
To increase the motivation and performance of managers and staff, almost all companies today adopt sophisticated rewarding and MBO systems.
The underlying logic is simple: by assigning specific, measurable objectives and linking financial rewards to achieving them, people’s performance is believed to increase.
But is that really the case? Studies on human motivation are numerous and, over the years, have taken very different directions.
The motivational logic linked to the reward system currently represents the “mainstream” of applied motivation, at least as far as its adoption within companies is concerned.
However, studies and research are beginning to emerge that seem to go in a direction completely opposite to the dominant one.
At the heart of this new view of motivational dynamics is the distinction between so-called “autonomous” or intrinsic motivation, when a person feels an inner drive to carry out a certain activity or pursue a goal, and “controlled” or extrinsic motivation, when a person is forced or pushed to behave in a certain way and to reach certain targets.
Motivation and performance: two different concepts.
Performance involves evaluating the results of a certain behaviour, indicating how well or badly a task has been carried out, and it is often tied to external standards set by the organisation and checked by management; motivation, on the other hand, is one of the main factors underlying performance.
In reality, it is limiting to consider motivation alone as the decisive element of the result, since there are numerous factors involved in determining performance, such as personality and technical skills, the difficulty of the task to be carried out, the availability of tangible and intangible resources, and working conditions.
This allows us to state that a high level of motivation does not always guarantee a high level of performance; at the same time, good performance does not necessarily imply that motivation is high.
A person may therefore do their job excellently not so much because they are motivated to do it, but because their knowledge and skills allow them to, or simply because they are obliged to do that job.
There are three main factors that drive individuals to adopt certain behaviours in order to achieve work objectives: the need for achievement, typical of excellence-oriented people with a strong sense of responsibility, always ready for new challenges; the need for affiliation, typical of those who want to establish and maintain good relationships with others, work in a team and avoid any conflict; and the need for power, typical of those in managerial and leadership roles who have a strong desire to exercise emotional and behavioural control (positive or negative) over others.
When it comes to motivation in companies, the old carrot-and-stick theory still prevails. John Whitmore, one of the fathers of coaching, put it well: “The carrot and the stick are pervasive and persuasive motivators.
But if you treat people like donkeys, you will get donkey performance.”
The question now is: are companies ready to rethink the logic and tools with which they tackle the issue of motivation at work?
