Presented by : Anitha D’souza Niya Saritha Sneha Vineetha
In the slides that follow:
Need and importance
Hierarchy of Organizational Objectives
Steps in MBO
Every rational human activity must have certain clear-cut objectives or goals. Objectives constitute a source of legitimacy which justifies the activities of the organization and indeed its very existence. Moreover objectives serve as standards for assessing the success of the organization.
Management by Objectives:
It is also called ‘Management By Results’ and has drawn considerable attention of both academicians and practioners for two reasons: first it focuses sharply on the objectives or results which a manger is expected to achieve within a specified period. Second it emphasis participate management, and approach which provides high motivation to individuals in an organization. The term MBO was coined by Peter Drucker in 1950. Since then many organizations have adopted this in some form or other.
“ Management By Objectives is a comprehensive managerial system that integrates many key managerial activities in a systematic manner, consciously directed towards the effective and efficient achievement or organizational objectives.”
Characteristics of Objectives:
1. Multiple in Nature
2. Have a hierarchy
3. It may be long term or short term
4. It may be tangible and intangible
5. They are interdependent
Need and importance if Objectives:
1.Unity of planning
2.Means of decentralization
4.Basis of control
5.Tool of coordination
Hierarchy of Organizational Objectives :
* Mission- Corporate objectives
* Divisional Objectives
* Departmental Objectives
* Individual Objectives
Features of MBO:
Objectives must be operational; they must be capable of being converted into specific target and specific assignment.
It is not a piece-meal tool of personnel management for measuring performance, but an overall management technique concerned with realization of objectives at each level in the organization.
The goals are determined by mangers in consultation with their subordinates.
Result Oriented: This approach concentrates on ends rather than means and is diagnostic rather than punitive in character. Systems Approach: It seeks to ensure the accomplishment of both personal and enterprise goals by creating goal congruence. Concentration on Key Result Areas: By identification of key result areas, MBO ensures that due attention is given to the priority areas which are crucial for good performance and growth of the organization.
Process of MBO
Steps in MBO:
The process of MBO revolves around the setting up of the organization goals and the goals of various divisions and subdivision. It is a never ending process. The continuous nature of the process of MBO not only ensures sustained concentration of efforts towards organizational objectives but also helps in modifying objectives to suit the change situation. The steps in MBO are described below:
1. Setting of organizational objectives:
Before setting of objectives a detailed assessment has to be made of the various resources at its disposal. A market survey must be conducted to know what types of goods and services required by the community.
2. Formulation of departmental Objectives:
The top management must determine the objectives of every departments.They should discuss the objectives with departmental managers so that a statement of agreed objectives may be evolved.
3. Establishing goals or targets of subordinates:
Each subordinate sets the goals of his job and discuss the same with the superior. Once this process is complete there will exist a meeting of minds of each superior and his subordinates as to what is to be accomplished and why is to be accomplished.
4. Establishing check-points or Key result areas:
Few KRA’s in which objectives must be set:
5. Follow-up and periodic review of progress:
The superior must make a periodic review of the progress in achieving the subordinate’s targets. Even the targets may be revised in the light of changes in the environment. It is also ensured that there is a continuous contact between the superior and the sub ordinates so that things do not go out of control.
6. Appraisal of performance and counseling:
The performance of every individual is evaluated in terms of standards or end result clearly agreed up on the superior and the subordinate. The performance review is aimed to assess the subordinates to improve his performance in future. For low performers management should give counseling and recognisition.
Advantages of MBO:
MBO is being increasingly recognized not merely as a philosophy of management, but also as a system which aims at synchronizing the objectives of the individuals with the objectives of the organization. Some of the advantages are as follows:
Unity of Planning
Human Motivation through fitting individual goals into organizational goals.
Unity of direction
Decentralization of authority
Sense of identification
Means of analyzing training needs for growth
Disadvantages/ Difficulties in MBO:
A system of MBO has certain weaknesses. Some of them are as follows:
Difficulty in setting quantitative target
Emphasis on short term goals
Resistance to change
Lack of training
Lack of follow-up
Problems in objective setting.
Effective implementation of MBO:
Top Management support
Education about MBO
Active participation in goal setting
Decentralization of authority
Orientation of executives
Integration of MBO programs
Feedback for self direction and self control
MBO is a modern Performance management tool, which is very useful in the current scenario where high performance is required by an organization as well as an individual to become stable in the competitive world with rapid speed of business cycle. It helps to enhance organizations efficiency along with employee efficiency.