Senior Professional in Human Resources (SPHR) Certification Practice Exam 2026 - Free SPHR Practice Questions and Study Guide

Management by Objectives (MBO) is fundamentally characterized by a collaborative goal-setting process, which involves both management and employees working together to establish specific and measurable objectives. This method aims to align individual performance with the organization's goals, ensuring that everyone is moving in the same direction and understands their contributions towards the overall success of the organization.

In MBO, the relationship between objectives and performance is emphasized, promoting a sense of ownership among employees for their performance outcomes. This collaboration encourages open communication, fostering an environment where employees feel valued and motivated to achieve both their personal targets and the organization’s aims.

The other options, while they may have a role in various management approaches or practices, do not capture the essence of MBO to the same degree. A clear annual performance review does not encapsulate the proactive nature of the goal-setting process that is integral to MBO. Strict adherence to company policies, while important for compliance, does not promote the dynamic engagement found in MBO’s collaborative environment. Lastly, a randomized selection of team leaders is not related to MBO principles or its structure, as MBO relies on defined roles and responsibilities to meet set objectives.