Easy Explanation, Pooja Godiyal, Assistant Professor

1. MRS. POOJA GODIYAL

2. Introduction
• A strategic management model that aims to improve organizational
performance by clearly defining objectives that are agreed to by both
management and employees
• According to the theory, having a say in goal setting and action plans
encourages participation and commitment among employees, as well
as aligning objectives across the organization
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3. • The term Management by Objectives (MBO) was coined by Peter
Drucker in 1954.
• Drucker stressed that such a program was an excellent system by
which to integrate the activities and balance the objec- tives of an
organization
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4. Definition
• “A process whereby the superior and subordinate managers of an
enterprise jointly identify its common goals, define each individual’s
major areas of responsibility in terms of the results expected of him,
and use these measures as guides for operating the units and
assessing the contribution of each of its members.”
-George S. Odiome
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5. Definition
• MBO is a comprehensive managerial system that integrates many key
managerial activities in a systemic manner, consciously directed
towards the effective and efficient achievement of organizational
objectives.
Heinz Weihrich and Harnold Koontz
• MBO is a process in which there is periodic agreement between a
superior and a subordinate on the subordinates objectives for a
particular period and a periodic review of how well the subordinate
achieved those objectives.
Wendell L French
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6. Principles of MBO
• Cascading of organizational vision, goals and
objectives
• Specific objectives for each member
• Participative decision making
• Explicit time period
• Performance evaluation and feedback
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7. Objectives
• Translate main statement into operational terms
• To give directions and set standards for the measurement of
performance
• To measure and judge performance
• To relate individual performance to organizational goal
• To foster increasing competence and growth of subordinates
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8. Objectives
• To enhance communication between superiors and subordinates
• To serve as a basis for judgments about salary and promotion
• To stimulate subordinates motivation
• To serve as a device for organizational control and integration
• To set long term and short term objectives
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10. Steps in Management by MBO
1. Define organizational goals
• determine or revise organizational objectives for the entire company.
This broad overview should be derived from the firm's mission and
vision.
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11. Steps in Management by MBO
2. Define employee objectives
• Translate the organizational
objectives to employees.
• Drucker used the acronym SMART
(specific, measurable, acceptable,
realistic, time-bound) to express
the concept.
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12. 3. Continuous monitoring performance and progress
• Though the management by objectives approach is necessary for
increasing the effectiveness of managers, it is equally essential for
monitoring the performance and progress of each employee in the
organization.
• Objectives should be measurable in order for employees and
managers to determine how well they are met.
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13. 4. Providing feedback
• The most essential step is the continuous feedback on the results and
objectives, as it enables the employees to track and make corrections
to their actions.
• The ongoing feedback is complemented by frequent formal
evaluation meetings in which superiors and subordinates may discuss
progress towards objectives, leading to more feedback.
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14. 5. Performance appraisal
• Performance reviews are a routine
review of the success of employees
within MBO organizations.
6. Performance evaluation
• Within the MBO framework, the
performance review is achieved by
the participation of the managers
concerned
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15. • Management by objectives helps employees appreciate their on-the-job roles
and responsibilities.
• The Key Result Areas (KRAs) planned are specific to each employee,
depending on their interest, educational qualification, and specialization.
• The MBO approach usually results in better teamwork and communication.
• It provides the employees with a clear understanding of what is expected of
them. The supervisors set goals for every member of the team, and every
employee is provided with a list of unique tasks.
• Every employee is assigned unique goals. Hence, each employee feels
indispensable to the organization and eventually develops a sense of loyalty to
the organization.
• Managers help ensure that subordinates’ goals are related to the objectives of
the organization.
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16. • Management by objectives often ignores the organization’s existing
ethos and working conditions.
• More emphasis is given on goals and targets. The managers put
constant pressure on the employees to accomplish their goals and
forget about the use of MBO for involvement, willingness to
contribute, and growth of management.
• The managers sometimes over-emphasize the target setting, as
compared to operational issues, as a generator of success.
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17. • MBO puts increased strain on employees to meet the goals in a
specified time frame.
• In addition, if management solely relies on MBO for all management
responsibilities, it can be problematic for areas that don't fit under
MBO.
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18. • Support from all
• Acceptance of MBO programme by managers
• Training of managers
• Purpose
• Organizational commitment
• Allocation of adequate time and resources
• Provision of uninterrupted information
feedback
• Politics
• Participation
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19. Implications in nursing
• It measures and judge performance
• It correlates individual performance to organizational goals.
• It clarifies the job responsibility expected from the staff
• It fosters the increasing competence and growth of the subordinates
• It provides a data base for estimating the salary and promotion
• It stimulate subordinate’s motivation
• It help in organizational work control and integrating
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20. • Management by Objectives (MBO) is an approach adopted by
managers to control their employees by implementing a series of
concrete goals that both the employee and the organization aim to
accomplish in the immediate future and work accordingly to achieve.
• The MBO approach is implemented to ensure that the employees get
a clear understanding of their roles and responsibilities, along with
expectations, so that they can understand the relation of their
activities to the overall success of the organization.
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