How to set MBOs for the Executive Team

1. Make it collaborative

First, the MBOs must be a team effort to create. Even if the objectives are good, the executive team will resent them if they are dictated by the CEO. The process should start with a group discussion, outlining the major objectives for the year, and then translating them into smaller chunks each quarter.

2. Be realistic

The most annoying thing for executives in the MBO process is when unrealistic objectives are constantly suggested. If we sold $50K MRR last quarter, and there hasn’t been any change in our product, market our resources, we aren’t suddenly going to sell $150K next quarter.

3. Have regular check points

It’s great to plan MBOs on January 1st, but when it’s mid-February and a ton of unanticipated challenges are on the table, the team needs to come together and be realistic about what is going to be achieved. Your weekly executive meetings and status reports (using a tool like Weekly Update to get it in writing) are perfect opportunities for reality checks based upon progress.

4. Ensure that resources align

If we do set lofty objectives, they need to be matched with proper resource allocation. That means if we are going to double sales goals, there needs to be alignment with our sales team ramp up and hiring. Marketing needs to be on the same page for generating a proportional volume of leads.

5. Be transparent with the board

This process can go wrong very quickly if the board’s expectations are different than the executive team. The CEO needs to be transparent with the board on the MBOs selected, the plan to achieve them and potential risk factors that come up along the way.