MANAGEMENT By OBJECTIVEPresentation By: Rohit Kushwaha
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Management By Objective (MBO)Management comprehensive by objectives" was first popularized objectives “MBOtermby Objectives (MBO) is a process ofthat integrates many key The is a "management managerial system agreeing upon by Peterwithin an organization soinbook The Practice of Management. The term managerial activities that management and employees agree to the Drucker in his 1954 a systematic manner, consciously directed towardsobjectives and understand what they are in the objectives.” the effective achievement of organizational organization. MBO was coined by Peter Drucker in 1954. Business, thats easily defined - its other peoples money.
Heinz n Koontz define MBO as“ a systematic manner and that is consciously directed towards theeffective and efficient achievement of organizational and individualobjectives.” HAROLD KOONTZ MANAGEMENT A Global Perspective
Need For MBO STEP 1: SET GOALS STEP 2: DEVELOP PLANS•Corporate Strategic goals•Departmental goals Action Plans•Individual goals Review Progress & Take Corrective Action Appraise Performance STEP 3: REVIEW PROGRESS STEP 4: APPRAISEOVERALL PERFORMANCE
Management By Objective PRINCIPLES of MBO 1. Cascading of organizational goals and objectives 2. Specific objectives for each team member 3. Participative decision making 4. Explicit time period 5. Performance evaluation & feedback
OBJECTIVE SETTING Setting the Objective S Specific U Measurable C WORK Achievable HAVE C Result Oriented E Time Related S S
Strategy of MBO MBO Strategy : Three Basic Parts All individuals within an organization are assigned a special set of objectives that they try to reach during a normal operating Performancegiven to individuals on the basis of how close they Rewards are reviews are conducted periodically to determine period. These individuals are mutually settheir agreed upon by how close objectives goals. come to reaching their to attaining and objectives. individuals and their managers.
Guidelines for writing objectives 1. Commitment to actionGuidelines 2. Specify a single key result 3. Specify a target date 4. Should be measureable and verifiable 5. Individual objectives related to higher objective of organization 6. Understandable 7. Should be consistent with organizational resources 8. Should be mutually acceptable by both supervisor and subordinates.
Steps in the MBO process Establish specific goals Develop overall Formulate action plan for various organizational by identifying problem departments, subunits objectives areas and individualsAppraise performance Conduct periodic Implement and of the employees review of the plans maintain self control feedback
Advantages of MBO1. Improves employee motivation2. Improves communication in the organisation3. Flags up and highlights training needs required to achieve objectives4. Improves overall performance and efficiency5. Attainment of goals can lead to the satisfaction of Maslow’s higher order needs
Better ManagingMbo helps managers to allocate organizational resources and plan activities effectively
Clarity in Organizational Action Mbo identifies the key result areas where organizational efforts are needed. A clear definition of the objectives in the key result areas helps in relate theorganization with its environment organizational objectives are always influenced by the external environment organizational functions.
Encouragement of Personal EnvironmentThe biggest advantage of mbo is that it encourages personal commitment to goals by employees. The mbo programs gives employees the responsibility of setting their own objectives.
Personal SatisfactionMBO brings about personal satisfaction by allowing employees to participate in setting their objectives and by appraising their performance in a rational manner.
Other BenefitsBases for organizational changeDevelopment of effective control
DISADVANTAGES OF MBO1. May demotivate staff if targets are too high and unrealistic, also if imposed rather than agreed2. Requires the cooperation of all employees to succeed3. Can be bureaucratic and time consuming (meetings, feedback)4. Can encourage short-term rather a more focused long-term growth5. Objectives may go out of date and can restrict staff initiative and creativity6. Setting targets for certain specialised employees may be difficult
SOURCES of MBO FAILURES1. Lack of top management commitment and follow through on MBO.2. Employees’ negative beliefs about management’s sincerity in its efforts to include them in the decision-making process.