Steps of management by objectives:

a. First step is to establish the goals and each subordinate is to attain. In some organizations superiors and subordinates work together to establish goals. In other, superior establish goals for the subordinates. The goal typically refers to the desired outcome to be achieved. These goals can then be used to evaluate employee performance.

b. This involves the performance standard for the subordinates in the previously arranged time period. As the subordinates perform, they know fairly well what there is to do, what has been done, and what remains to be done.

c. In this the actual level of goal attainment is compared with the goals agreed upon. The evaluator explores reasons or the goals that were not met and for the goals that were exceeded. This step help to determine possible training needs. It also alerts the superior to conditions in the organization that may affect a subordinate but over which the subordinate has no control.

d. The final step involves establishing new goals, and possibly new strategies for goals not previously attained. At this point the subordinate and superior involvement in the goal setting may change. Subordinates who successfully reach the established goals may be allowed to participate more in the goals setting process the next time. The process is repeated.