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  • Set goals – not day to day but rather goals that answer at least a portion of the “where are we going” question and then are linked with other goals Plans – Steps required Review – make sure plan is working; Is corrective action necessary either in the plan or the execution? CAUTION : Don’t get locked into PREDETERMINED behavior or sacrifice QUALITY to “MEET” goal
  • Set goals – not day to day but rather goals that answer at least a portion of the “where are we going” question and then are linked with other goals Plans – Steps required Review – make sure plan is working; Is corrective action necessary either in the plan or the execution? CAUTION : Don’t get locked into PREDETERMINED behavior or sacrifice QUALITY to “MEET” goal
  • 12 Management by objectives (MBO)is a system of allowing employees to work with their supervisors in setting performance objectives in an effort to achieve organizational outcomes. It emphasizes participation to set goals that are tangible, verifiable, and measurable. MBO’s appeal lies in its emphasis on converting overall organizational objectives into specific objectives for units and members of the organization. As the figure above shows, the organization’s overall objectives are translated into specific objectives for each succeeding level (divisional, departmental, or individual) in the organization. But because lower-unit managers jointly participate in setting their own goals, MBO works from the “bottom-up” as well as from the “top down.” The result is a hierarchy of objectives that links objectives at one level to those at the next level. And for the individual worker, MBO provides specific personal performance objectives. So each person has an identified specific contribution to make to his or her unit’s performance. If all individuals achieve their goals, then their unit’s goals will be attained and the overall objectives of the organization will become a reality.

Ch 4   pom   shirufi mam Ch 4 pom shirufi mam Presentation Transcript

  • Chapter 4 :-Essentials of Planning andManaging by Objectives Module 2 :- Planning Asst. Professor :- Shirufi Daruwala Parul Institute of Management and Research Asst. Prof. Shirufi Daruwala 1
  • Mod-2
  • Definition of Planning Planning involves selecting missions and objectives and the actions to achieve them; it requires decision making, that is, choosing from among alternative future courses of action amongst all alternatives. Asst. Prof. Shirufi Daruwala 3
  •  It is a bridges the gap from where we are to where we want to go. Asst. Prof. Shirufi Daruwala 4
  • Why Goals are important for an organization1. Goals provide a sense of direction2. Goals focus our efforts3. Goals guide our plans and decision4. Goals help us to evaluate our progress
  • Fig. 4-1 Close Relationship of Planning and Controlling Asst. Prof. Shirufi Daruwala 6
  • Types of PlansPlans can be classified as:1. Missions or purposes2. Objectives or goals3. Strategies4. Policies5. Procedures6. Rules7. Programs8. Budgets Asst. Prof. Shirufi Daruwala 7
  • Types of Plans1. The mission, or purpose, identifies the basic purpose or function or tasks of an enterprise or agency or any part of it.Eg : the purpose of business is production and distribution of goods and services.The purpose of courts is of laws and their application.The purpose of university is teaching , research, services to the community.Eg : Dupont – “ better things through chemistry. Asst. Prof. Shirufi Daruwala 8
  • 2. Objectives2. Objectives, or goals, are the ends toward which activity is aimed.It represents not only the end point of planning but also the end toward which organizing , staffing, leading and controlling are aimed. Asst. Prof. Shirufi Daruwala 9
  • 3. Strategy Strategy is the determination of the basic long‑term objectives of an enterprise and the adoption of courses of action and allocation of resources necessary to achieve these goals. Asst. Prof. Shirufi Daruwala 10
  • 4. Policies Policies are general statements or understandings that guide or channel thinking in decision making Polices help to decide issues before they become problem. E.g.6 of policies :- L&T only first class students are recruited. Only B school students are recruited. Only of following high standard of business ethics – TATA group. Employees satisfaction and engagement policies, retention policies, setting competitive prices etc. Asst. Prof. Shirufi Daruwala 11
  • 5. Procedures Procedures are plans that establish a required method of handling future activities. They are chronological sequences of required actions. Eg : company made a policy of vacation to employees. Now procedure would be :- Implementing this policy,setting rates of vacation pay, methods for calculating them, maintaining records , and to design procedure for applying for leave. Eg : to get admission in M BA also there is a procedure where students have to give online exam, reporting , paying fees , taking admission etc. Asst. Prof. Shirufi Daruwala 12
  • 6.Rules Rules spell out specific required actions or nonactions, allowing no discretion. E.g :- No smoking That is certain action must or must not be taken. Asst. Prof. Shirufi Daruwala 13
  • 7. Programs Programs are a complex of goals, policies, procedures, rules, task assignments, steps to be taken, resources to be employed, and other elements necessary to carry out a given course of action. E.g. company’ s 5 year plan. Asst. Prof. Shirufi Daruwala 14
  • 8. BudgetA budget is a statement of expected results expressed in numerical terms. the financial operating budget is often called a profit plan. Asst. Prof. Shirufi Daruwala 15
  • Steps in Planning1. Being aware of opportunities2. Establishing objectives or goals3. Developing premises4: Determining alternative courses5. Evaluating alternative courses6. Selecting a course7. Formulating derivative plans8. Quantifying plans by budgeting Asst. Prof. Shirufi Daruwala 16
  • STEPS INVOLVED IN PLANNING1. Being aware of opportunities In light of : The market Competition What customers want Our strengths Our weakness2. Establishing Objectives/ Setting Objectives or Goals where we want to be and what we want to accomplish and when3. Developing Premises In what environment – internal or external will our plans operate?4. Determining Alternatives What are the most promising alternatives in accomplishing our Objectives
  • STEPS INVOLVED IN PLANNING5. Evaluating alternative courses Which alternatives will give us the best chance of meeting our goals at the lowest cost and highest profit?6. Selecting a course Selecting the course of action we will pursue7. Formulating derivative plans (Supporting plan) Such as plans to: Buy equipment Buy Materials Hire and train workers Develop new product
  • STEPS INVOLVED IN PLANNING8. Quantifying plans by budgeting Develop such budgets as: Volume and price of sales Operating expenses necessary for plans Expenditures for capital Equipment Co-ordination of Short and long-range plans
  • Fig. 4-2 Steps in Planning Asst. Prof. Shirufi Daruwala 20
  • Making Planning EffectiveLinked to Long term objectivesConsistencyEveryone participatesFeasibleFlexibleSimpleTop Management Support
  • Verifiable Objectives Objectives are the important ends toward which organizational and individual activities are directed. It can be long term, short term, broad or specific. An objective is verifiable when at the end of the period one can determine whether or not the objective has been achieved. Asst. Prof. Shirufi Daruwala 22
  • The Nature of Objectives Objectives state end results and overall objectives need to be supported by sub objectives. Thus, objectives form a hierarchy as well as network. Organizations and managers have multiple goals that are sometimes incompatible and may lead to conflicts within organization, group or individual. Hierarchy of objectives It ranges from the broad aim to specific individual objectives. Asst. Prof. Shirufi Daruwala 23
  • Fig. 4-3 Relationship of Objectives and theOrganizational Hierarchy Asst. Prof. Shirufi Daruwala 24
  • HOW TO SET CORPORATE OBJECTIVES Socio-economic purpose To become the leading supplier of computers in Mission statement LondonTop down approach Overall objectives of org. Bottom-up approach To increase sales in London by 10% in the next 5 years Corporate objectives e.g. (marketing department) to Departmental objectives achieve a 10% share of the computer market in London within the next 5 years Individuals and team e.g. to design questionnaires targets as part of market research
  • Key Results Areas  Key Results Areas: Areas in which performance is essential for success  These are more specific and overall objectives of organization  According to Peter Drucker KRA are :- innovation, productivity, physical and financial resources, profitability, workers performance and attitude, and pubic responsibility. Asst. Prof. Shirufi Daruwala 26
  • Multiplicity of objectives Objective are normally multiple. Eg university mission is education and research is not enough. It would be much more than that :- attracting good quality students and faculties Offering basic training in professional fields Discovering and organizing new knowledge through research. Asst. Prof. Shirufi Daruwala 27
  • How to Set ObjectivesCompare nonverifiable with verifiable objectives Nonverifiable  verifiable objectives1. To make a reasonable 1. To achieve ROI of 12 % profit. at the end of fiscal year2. To improve 2. Is issue a 2 page monthly communication newsletter beginning 13. To improve productivity July 2012. 3. To increase productivity by 5 % by 31 december 2012. Asst. Prof. Shirufi Daruwala 28
  • Evolving Concepts in MBO Management by objectives is a comprehensive managerial system that integrates many key managerial activities in a systematic manner and is consciously directed toward the effective and efficient achievement of organizational and individual objectives. Asst. Prof. Shirufi Daruwala 29
  • Management by Objectives(MBO): Management by Objectives (MBO): This approach is proposed by Peter Drucker in his book ‘The Practice of Management’. MBO refers to a formal set of procedures that begins with goal setting and continues through performance review. MBO goes beyond setting annual objectives for organizational units to setting performance goals for individual employee Asst. Prof. Shirufi Daruwala 30
  • THE NATURE & PURPOSE OF MBOMBO is concerned with goal setting and planningfor individual managers and their units.The essence of MBO is a process of joint goalsetting between a supervisor and a subordinate.Managers work with their subordinates to establishperformance goals that are consistent with higherorganizational objectives.MBO helps clarify the hierarchy of objectives as aseries of well-defined means-ends chains.
  • ESSENTIAL STEPS FOR MBO Set Goals (The most difficult step)  What are we trying to accomplish? Develop Action Plans  “What do we need to do to get there?”  Groups and individuals Review Progress  “How are we doing?”  Periodically (How Often?) Appraise Performance  Rewards?
  • STEPS FOR MBO STEP 1: SET GOALS STEP 2: DEVELOP PLANS •Corporate Strategic goals Action plan •Departmental goals –Course of action –For both workgroups and •Individual goals individuals Review Progress &Appraise Performance Take Corrective Action –How are we doing? –Do we need to restate our goals? STEP 3: REVIEW PROGRESS STEP 4: APPRAISEOVERALL PERFORMANCE
  • OBJECTIVE SETTING In an MBO, good goals are SMART goals: S specific S U M measurable C A achievableWORK HAVE C R result oriented E T time-related S S
  • Uses of MBO1. Appraisal Tool- Performance appraisal2. Motivating individuals3. Strategic planning Asst. Prof. Shirufi Daruwala 35
  • Other integration of MBO Human resource planning and development Career planning Reward system Budgeting Asst. Prof. Shirufi Daruwala 36
  • What Is Management by Objectives?Organizational Objectives Divisional Objectives Departmental Objectives Individual Objectives
  • Elements of MBO system
  • Systems Approach to MBO Asst. Prof. Shirufi Daruwala 39
  • Benefits of Management byObjectivesClear Goals: Motivate employees. Improve managing through results-oriented planning. Clarify organizational roles, structures, and the delegation of authority. Encourage commitment to their personal and organizational goals. Facilitate effective controlling, measuring of results, and implementation of corrective actions. Asst. Prof. Shirufi Daruwala 40
  • Failures of Management by ObjectivesFailure to teach the philosophy of MBOEmployees may go for unethical means to achieve goalsand objective.Difficulty in setting verifiable goals with right degree.The major reason for MBO failure is lack of topmanagement supportSome firms may overemphasize quantitative goalsSome managers will not sit down and work out goals withtheir subordinatesEncourage individual rather than team efforts
  • Asst. Prof. Shirufi Daruwala 42