Management by Objectives

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  • Topic: Management, Goal, Management by objectives
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Management by ObjectivesMBO

Management by Objectives (MBO)

Can be defined as a process
whereby the performance goals
and objectives are set by each
subordinate in collaboration with
his superior at the start of the
appraisal period.

MBO is a Process


A process consisting of a series of
interdependence and interrelated steps:
 The formation of clear, concise
statements of objectives
 The development of realistic action
plans for their attainment,
 The systematic monitoring and
measuring of performance and
achievement, and
 The taking of corrective actions
necessary to achieve the planned
results

THE MBO PROCESS

Define
Organisational
goals

Defining
Employee
Objectives and
Organisational
Objectives

Reporting &
Reviewing

Continuous
Monitoring of
performance
and progress

Providing
Feedback

Performance
Evaluation &
Review

MBO is a Philosophy


Reflects a Proactive way of
managing that is
Result Oriented
Emphasizes accomplishments
rather than inputs
Encourages participation at all
levels of and organisation



Objectives setting and participative
management are integrally linked by :
 Allowing employees to participate
in the setting of objectives
 Encouraging everyone to work
towards accomplishment of
general organisational objectives

MBO Framework






MBO provides the basis for making
functional budget estimates
Evaluation of MBOs provides a way
to communicate purpose &
accomplishments to the public.
MBO provides a way to involve and
motivate staff.

Four Basic Principles


Unity of management action is more likely
to occur when there is pursuit of a common

objective






Greater the focus on results on a time
scale, greater the likelihood of achieving
them
Greater the participation in setting
meaningful work with accountable results,
greater the motivation for completing it
Progress can only be measured in terms of
what one is trying to make progress
towards.

Three Constituent Processes
 Participative

Decision

Process
 Goal Setting
 Objective Feedback

GOAL ACHIEVEMENT
MANAGEMENT
 Goals
 Objectives
 Management

Policies
 Programs
 Actions
 Criteria


mechanism

The test of SMART Objectives


Every objective must meet these
criteria







Is
Is
Is
Is
Is

it
it
it
it
it

Specific?
Measurable?
Appropriate?
Realistic?
Time Bound?

MBO Includes Evaluation






Preliminary evaluation may call for
adjusting objectives
Performance evaluation focus on
how well employees accomplish
their specific unit objectives
Evaluation includes assessment of
how to improve. Evaluation
catalogues yearly accomplishment.

Advantages of MBO






Effective Planning & Control
Reveals organisational deficiencies
Elicits people’s commitment
Demonstrates objectivity and
reduces element of judgment

Limitations of MBO









Presupposes fixing of individual
responsibilities
It is difficult to make comparative ratings
of individuals because each individual
goals are different from others
Time consuming
Presumes a certain level of trust
throughout the hierarchy
Less applicable in routine jobs.

Reasons for failure of MBO




Absence of a fully committed and
involved top management.
Dictatorial rather than participatory
development of management
objectives.

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