Which of the following describes management by objectives?

Management by objectives (MBO) is a collaborative process wherein both management and employees participate in setting the organization’s goals and objectives. This approach emphasizes the importance of employee involvement and commitment to the objectives that are established. By engaging employees in the development of objectives, MBO fosters greater accountability and motivation since individuals are more likely to be invested in goals they helped create. This shared participation not only creates a clearer understanding of expectations but also enhances communication between management and staff, which can lead to better overall performance.

In contrast, the other options do not accurately represent the principles of MBO. Setting objectives without employee input does not harness the team's insights or foster a sense of ownership. Additionally, while annual goals are common, MBO is not strictly limited to this timeframe; objectives can be reviewed and adjusted more frequently as necessary. Focusing solely on financial goals ignores the broader range of objectives—such as operational, personal development, or strategic goals—that can also be critical to an organization’s success under the MBO framework. This highlights the comprehensive nature of MBO in encouraging a well-rounded approach to organizational performance.