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Management by Objectives (MBO)
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Management by Objectives (MBO)


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MBO- History, Process, SMART goal setting, Advantages and Disadvantages, MBO in a practical context.

MBO- History, Process, SMART goal setting, Advantages and Disadvantages, MBO in a practical context.

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  • 1. Management by Objectives Presented By: Nidhi Navadia (33093) Nikhil Singhal (33094) Nitish Pareek (33095) Pavan Chengalvala (33096)
  • 2. History of MBO • • • • • Peter Drucker first describes this approach in 1954 in his book ‘The Practice of Management’. Becomes prominent in 1960 it spread in the 1970s and 80s to midsized organizations, commercial and other. In the mid-2000s it is viewed in many circles as a somewhat dated technique not well adapted to the rapid changes and uncertainties of a dynamic Information Age. The Two Eras – 60’s 70’s 80’s – MBO comes in vogue • Idea: improve management & productivity by being more defined. Having a goal in mind makes it easier to achieve it. • Principals: – Top level strategic goals & objectives (g-o) – Supportive objectives and action plans for lower level – Organizational role and mission statement. Specific action plan for each member through participative decision making – Establish standards – Periodic assessment – The idea had Assumption that more defined about traditionally broad state of g-o would lead to performance improvement. Which was acted as a weakness.
  • 3. History of MBO – 80’s and 90’s – SMART Goal era • SMART: Specific Measurable Actionable Reasonable Time-Bound. • Idea: A goal that doesn’t shape behaviour is ineffective • Theory suggested that SMART parameters were good predictors of influential or effective goal. • They gave an impression that they are pointed, have an edge, have a sense of energy created by the specify, time limit and measurement • Issues: – Didn’t address ‘the human nature’ issue. – didn’t address the importance of successfully responding to obstacles and issues as essential to reaching a goal. – Underemphasize the importance of environment/context. – Emphasize the setting of goals over the working of a plan.
  • 4. The MBO Concept • Process of defining objectives within an organisation • Key features are : Goal setting, Choosing course of action and decision making • Employees more likely to fulfill their responsibilities when they are actively involved in defining objectives • Used in various domains of activities • Collective and individual objectives • Necessary quantifying and monitoring • MIS helpful in setting relevant objectives and monitoring their ‘Reach Ratio’ • Incentives linked with results
  • 5. The Process Defining organizational goals Performance Appraisal (Punishment/R eward) Defining employee objectives Providing feedback Continuous monitoring of performance and progress Performance evaluation and review
  • 6. SMART Goal Setting • Described by Paul J. Meyer • Guides people and organisations to set objectives • Helps in setting Key Performance Indicators like performance management and personal development Specific Measurable Attainable Relevant Time Bound • Clear and Unambiguous • Concrete criteria for measuring progress • Realistic and within reach • Aligned with other goals • With a time frame
  • 7. Advantages of MBO • 1) Means of planning and control • 2) Superior and subordinate both set the goals together • 3) The means to achieve the goal is discussed • 4) MBO aids in structural changes wherever it seems necessary and transforms the structure for good
  • 8. Disadvantages of MBO • 1) Subordinate feels uncomfortable • 2) Lacks Objective clarity (quantity enhancement or quality enhancement? If for organisation or for individual ?) • 3) Too much multi-tasking !!! • 4) Low initial goal set by subordinates
  • 9. MBO in a practical context: Case of Accenture • Linked to the Accenture core values and the three key leadership contribution areas of people developer, business operator and value creator.