Points Covered - > Definition > History > Concept and framework - Process of MBO 1. Define organizational goal 2. Define employees objectives 3. Monitoring performance 4. Performance evaluation 5. Providing feedback 6. Performance Appraisal > S.M.A.R.T - Specific - Measurable - Achievable - Relevant - Time Oriented > Advantages - Motivation - better communication and coordination - clarity of goals - Higher commitment to objectives - Common goal > Limitations - Lack of understanding of systems - Misapplication of objectives - Production targets - Encourages managers to abandon objectives - Over - emphasis on setting goals - Under emphasis on importance of the environment > Optimal MBO

1. MANAGEMENT BY OBJECTIVE

2. DEFINITION
• Also known as management by results (MBR)
• Popularized by Peter Drucker.
• Defining specific objectives
• How to achieve each objective in sequence.
• Reinforces a positive work environment
• Measurement and comparison of an employee's actual
performance

3. HISTORY
• Peter Drucker’s - The Practice of Management 1945
• Mary Parker Follett’s - The Giving of Orders 1926
• George Odiorne’s - Book Management Decisions by Objectives

4. CONCEPT &
FRAMEWORK
 6 STEPS OF MEETING THE GOAL
1.Define organizational goal
2.Define employees objectives
3.Monitoring performance
4.Performance evaluation
5.Providing feedback
6.Performance Appraisal

5. S.M.A.R.
T
• The mnemonic S.M.A.R.T. is associated with the process of setting objectives in
this paradigm. "SMART" objectives are:
 Specific
 Measurable
 Achievable
 Relevant
 Time-oriented

6. ADVANTAGES
 Proponents argue that benefits of MBO include:
1. Motivation
2. Better communication and coordination
3. Clarity of goals
4. Higher commitment to objectives
5. Objectives of the subordinates are linked to the organization's objectives.
6. Common goal

7. LIMITATIONS
• Lack of understanding of systems
• Misapplication of objectives.
• Production targets
• Encourages managers to abandon objectives
• Over-emphasizes the setting of goals
• Under-emphasizes the importance of the environment

8. OPTIMAL
MBO
 OPTIMAL MBO, which stands for its components, namely:
• (O) Objectives, Outside-in
• (P) Profitability (budget) related goals
• (T) Target Setting
• (I) Incentives & Influence
• (M) Measurement
• (A) Agreement, Accountability, Appraisal, Appreciation and
• (L) Leadership Support.

9. THANK YOU