This is some basic concept of management by objectives. Hopefully this presentation will help u people in better understanding of this..................thank you.

1. Management by Objectives
(MBO)
Rabeesh Verma
ICAR-IARI, New Delhi

2. HISTORY OF MBO
• Peter Drucker -1954 in his book ‘The Practice of Management’.
• The Two Eras
– 60’s 70’s 80’s – MBO comes in vogue
• Idea: improve management & productivity by being more defined.
Having a goal in mind makes it easier to achieve it.
• Principals:
– Top level strategic goals & objectives (g-o)
– Supportive objectives and action plans for lower level
– Organizational role and mission statement. Specific action plan
for each member through participative decision making
– Establish standards
– Periodic assessment
– The idea had Assumption that more defined about traditionally broad
state of g-o would lead to performance improvement. Which was acted
as a weakness.

3. HISTORY OF MBO
– 80’s and 90’s – SMART Goal era
• SMART: Specific Measurable Actionable Reasonable Time-
Bound.
• Idea: A goal that doesn’t shape behaviour is ineffective
• Theory suggested that SMART parameters were good predictors
of influential or effective goal.
• They gave an impression that they are pointed, have an edge, have
a sense of energy created by the specify, time limit and
measurement
• Issues:
– Didn’t address ‘the human nature’ issue.
– didn’t address the importance of successfully responding to
obstacles and issues as essential to reaching a goal.
– Underemphasize the importance of environment/context.
– Emphasize the setting of goals over the working of a plan.

4. THE MBO CONCEPT
 defined as a process whereby the performance goals
and objectives are set by each subordinate in
collaboration with his superior at the start of the
appraisal period within an organization
 Key features are : Goal setting, Choosing course of
action and decision making
 Employees more likely to fulfill their responsibilities
when they are actively involved in defining
objectives

5. MBO IS A PROCESS
A process consisting of a series of interdependence and
interrelated steps:
•The formation of clear, concise statements of
objectives
•The development of realistic action plans for their
attainment,
•The systematic monitoring and measuring of
performance and achievement, and
•The taking of corrective actions necessary to achieve
the planned results

6. THE PROCESS

7. SMART GOAL SETTING
• Described by Paul J. Meyer
• Guides people and organisations to set objectives
• Helps in setting Key Performance Indicators like performance management
and personal development

9. RECENT RESEARCH
• Management by Objectives is still practiced today, with a focus
on planning and development aiding various organizations.
• following criticism of the original MBO approach, a new
formula was introduced in 2016, aiming at revitalizing it, that is
the 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.
• While the practice is used today, it may go by different names -
the letters "MBO" have lost their formality, and future planning
is a more standard practice.

10. ADVANTAGES OF MBO
• Means of planning and control
• Superior and subordinate both set the goals together
• The means to achieve the goal is discussed
• MBO aids in structural changes wherever it seems
necessary and transforms the structure for good
• Reveals organisational deficiencies
• Elicits people’s commitment
• Demonstrates objectivity and reduces element of
judgment

11. • Motivation – Involving employees in the whole process of
goal setting and increasing employee empowerment. This
increases employee job satisfaction and commitment.
• Better communication and coordination –
• Clarity of goals.
• Subordinates tend to have a higher commitment to
objectives they set for themselves than those imposed on
them by another person.
• Managers can ensure that objectives of the subordinates are
linked to the organization's objectives.
• Common goal for whole organization means it is a unifying,
directive principle of management.
ADVANTAGES OF MBO

12. DISADVANTAGES OF MBO
• Subordinate feels uncomfortable
• Lacks Objective clarity (quantity enhancement or quality
enhancement? If for organisation or for individual ?)
• Too much multi-tasking !!!
• Positive and active participation from subordinates is not easily forth
forthcoming.
• Truly verifiable goals are not easy to formalize
• Emphasis is put in short-range goals, whereas long-range goals are
avoided
• Goals remain inflexible and rigid.
• Over-use of quantitative goals jeopardizes the qualitative aspect.
• Time-consuming nature of management by objectives

13. CASE STUDY
• The Marketing manager of AMK Enterprises, Roopali Deshmukh (Deshmukh) stepped out of the
conference hall in a pensive mood after an important meeting called by the CEO. The meeting was
attended by the heads of various departments in the company and was convened to discuss the
targets for the coming assessment year. Deshmukh had a formidable sales target to achieve and
wondered how she would be able to meet those seemingly impossible goals. This fear was further
aggravated by the fact that the productivity levels of employees in the company had been falling.
Deshmukh was under tremendous pressure from the management to improve the performance of her
team. She also had to deal with the decreasing levels of employees’ morale in her 24-member team.
As a first step, Deshmukh informed her team members about a meeting that she planned to hold the
next day. She then drafted a plan of action that she intended to discuss with her team.
• The next day, Deshmukh began the meeting by informing her team members about the corporate
meeting she had attended. She then said, “We have a difficult task ahead for this year, and your
participation and involvement is essential to achieve the goals”. She then invited suggestions from
her team members regarding the role to be played by each of them. The meeting then progressed on
to setting of individual targets for by each team member as, it was felt that this would help in
accomplishing the organizational goals. Specific goals were, therefore, set and agreed upon by all
the team members. The team aimed to increase the organizational profits by 18% over the next six
months. They sketched out a plan of action to achieve the targets set for the team and decided that
they would meet once every two months to monitor their progress.

14. • Two months later, the team met again and received their progress. Deshmukh also gave a feedback
on the performance of every member of the team. The team then collectively identified the areas of
improvement and decided upon the measures they would take to overcome their deficiencies. This
continued for the rest of the year. The final review meeting was held just before the yearly corporate
meeting attended by the top management. The team was surprised to see that they had achieved their
targets.
• Thus, effective planning and control mechanisms helped the team achieve their short term goals, and
this in turn, helped in the achievement of the organizational objectives. Besides, the employees were
also motivated as the management gave adequate recognition to their involvement and participation
in achieving team goals. The target to be achieved by the team was highly challenging. This further
motivated the team members as they had better opportunities to prove their problems solving skills.
Thus, the outstanding performance of the sales team helped the organization achieve in the long
term.
• Questions for Discussions:
Roopali Deshmukh followed the practice of management by objectives (MBO) while setting
goals for team members. Discuss the various phases of the MBO process that helped her team
achieve its goals

15. ANSWER
• Roopali Deshmukh implemented the MBO process as an intervention to improve the productivity of her
sales team. She successfully implemented the process by following a sequence of effective planning, control
and development. The following are the various phases of the MBO process that led to its success:
• The MBO program was initiated by the top management which set the overall organizational goals and
communicated them to the people down the hierarchy. However, the management did not interfere much
with the means of achieving the objectives. In other words, it gave adequate autonomy to its employees to
implement the progress.
• Deshmukh then drafted a plan of action to achieve the targets decided by the management for the year.
• She invited employee participation in various aspects of implementation of the program. She encouraged her
team members to decide the role each one would play in role to achieve the team’s target. She sought their
suggestions to play in order to achieve the team targets that each individual would achieve. These short term
targets were in line with the team’s long term goals and objectives.
• Deshmukh also set specific time frames specific time frames for the accomplishments of the targets. Thus
the goals were not only specific but also time bound.
• Deshmukh closely monitored the performance of all the team members without actually interfering in their
job. She also offered positive feedback to her subordinates and this helped them overcome their
shortcomings and perform effectively.
• Thus the MBO program implemented in the sales team proved to be beneficial to both the employees and the
management

16. THANK YOU….