1. Topic : MANAGEMENT BY OBJECTIVES (MBO)
QUESTION 1.
What is Management by Objectives
Definition :
Management by Objectives(MBO) is defined as process when the superior and subordinate
jointly identify common goals, define each individual's major areas of responsibility and the
results expected of him. Later, these measures are used as guidlines to assess the contribution
of each individual.
Discussion :
Management by Objectives is an overall philosophy of management that focuses on goals and
end results. Management by Objectives is based on the presumption that people perform
better when they know what is expected of them and can relate their personal goals to
organisation goals. It also assumes that people are interested in the goal setting process and in
evaluating their performances against the target.
In MBO a competitive environment is encouraged. Rewards in different forms are normally
given for individuals who achieve their objectives. These rewards can be in monetary
form(cash, bonus, commission etc) or in non-monetary form(recognition, awards trips,
special trainings, promotion etc). There are benefits of MBO that includes more participation
of employees in goal settings, more effectiveness in achieving goals and competition.
Characteristics of MBO Management by Objectives
. It includes participative goal setting.
.It clearly defines each individual's responsibilities in terms of results.
.It focuses attention on what must be accomplished (goals), instead of how it is to be
accomplished (methods).
.It converts objectives needs into personal goals at every level in the organisation.
.It establishes standards or key performance indicators(KPI) as operating guides and also as
basis of performance evaluation.
.It is a system directed toward effective and efficient achievment of organizational and
personal goals.