Difference Between Management by Objectives (MBO) and Management by Exception (MBE)

Management by Objectives (MBO) and Management by Exception (MBE) are two management strategies. The former focuses on setting specific, measurable, achievable, relevant, and time-bound objectives for individuals and teams within an organization, and the latter identifies and addresses significant deviations from expected performance.

What is Management by Objectives(MBO)?

Management by Objectives (MBO) is a management strategy that focuses on setting specific, measurable, achievable, relevant, and time-bound objectives for individuals and teams within an organization. The process involves collaboration between managers and employees to establish objectives that are aligned with the organization’s overall goals, and regular communication and feedback to ensure progress toward those objectives. MBO provides a framework for goal-setting and performance management that emphasizes employee participation, ownership, and accountability. It encourages employees to take responsibility for their work and align their efforts with the organization’s mission and objectives. MBO also promotes ongoing communication and collaboration between managers and employees, which can help to identify and address performance issues and provide opportunities for coaching and development.

What is Management by Exception(MBE)?

Management by Exception (MBE) is a management approach that identifies and addresses significant deviations from expected performance. The idea behind MBE is that managers should focus their attention on addressing exceptions or issues that deviate from the norm, rather than spending time monitoring routine operations. In MBE, managers establish performance standards and thresholds for various areas of the organization, such as sales, production, or customer service. Managers intervene to address the issue when actual performance falls outside these standards or thresholds. This allows managers to focus their time and resources on areas of the organization that require attention, rather than micromanaging routine operations. MBE is particularly useful in organizations with large volumes of data or complex operations, where it can be challenging to monitor all activities effectively. By focusing on exceptions or deviations, managers can prioritize their efforts and ensure that they address the organization’s most critical issues.

Difference Between  Management by Objectives (MBO) and Management by Exception (MBE)

Bases	Management by Objectives (MBO)	Management by Exception (MBE)
Focus	MBO focuses on setting specific, measurable, achievable, relevant, and time-bound objectives for individuals and teams. It focuses to achieve objectives that contribute to the organization’s overall success.	MBE focuses on identifying significant deviations from expected performance. It focuses to address issues or exceptions that deviate from expected performance.
Basis	MBO is based on goal setting. The basis of MBO is to establish specific objectives and measure progress toward achieving them.	MBE is based on exception reporting. The basis of MBE is to identify significant deviations from expected performance and take corrective action.
Approach	MBO is a proactive approach to management. It involves setting goals and proactively managing progress toward them.	MBE is a reactive approach to management. It involves identifying issues or exceptions and reacting to them.
Monitoring	MBO, managers actively monitor progress toward objectives. It requires managers to monitor ongoing progress toward objectives and provide feedback and guidance to employees.	MBE, managers only monitor deviations from expected performance. It requires managers to intervene when significant deviations from expected performance occur.
Communication	MBO emphasizes ongoing communication and feedback between managers and employees. It requires ongoing communication between managers and employees to ensure that progress is being made toward objectives.	MBE communication is typically limited to reporting exceptions or issues. Its communication is limited to reporting significant deviations or issues.
Accountability	MBO, managers intervene to support and guide employees toward achieving objectives. It encourages employees to take ownership of their objectives and be accountable for achieving them.	MBE, managers intervene to address significant deviations from expected performance. It places more accountability on managers to identify and address significant deviations.
Intervention	MBO, managers intervene to support and guide employees toward achieving objectives. In this managers intervene to provide guidance and support to employees.	MBE, managers intervene to address significant deviations from expected performance. In this managers intervene to address issues that deviate from expected performance.